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That section prohibited the application of duress in connection with an Australian Workplace Agreement (AWA). 2 The parties have agreed on a proposed penalty namely $10,000 for the first contravention and $5,000 for the second contravention and have submitted an agreed statement of facts and agreed written submissions. 3 At the hearing I said that the proposed penalties appeared to me to be appropriate and I made orders accordingly. My reasons for making such orders are as follows. As well as its own employees, Zinifex used the services of workers employed by Skilled Group Limited and TESA Group Pty Ltd (collectively, the Labour Hire Companies). The Labour Hire Companies were contractually entitled to pass on to Zinifex any wage increases which they were obliged to pay to their workers. 5 Until 1 September 2007 Zinifex was bound by the Zinifex Hobart Smelter Enterprise Award (the Zinifex Award) made by the Tasmanian Industrial Commission (the TIC). 6 Immediately prior to 21 September 2005 the Zinifex Award operated subject to the overriding operation of the Zinifex Hobart Smelter Enterprise Agreement 2004 (the Zinifex Agreement), an industrial agreement registered under the Industrial Relations Act 1984 (Tas). However, the Zinifex Agreement had not yet been recognised by the TIC as binding on the Labour Hire Companies or their employees at the Smelter. 7 By a decision of the TIC made on 21 September 2005 (and subsequently affirmed on appeal) the TIC determined that the Labour Hire Companies were bound by the Zinifex Award in relation to employees working at the Smelter. 8 Prior to the TIC decision Labour Hire Companies employees at the Smelter would generally work a rotating roster of four days on --- four days off with a twelve hour shift on each day worked. The rates charged by the Labour Hire Companies to Zinifex did not make any provision for the payment of overtime penalties for work after eight hours. 9 The effect of the TIC decision was that employees of the Labour Hire Companies who worked at the Smelter became entitled to be paid overtime rates for all hours worked in excess of eight hours per day. This meant that the extra cost to the Labour Hire Companies would be passed on to Zinifex. 10 As a result of the TIC decision, and with the knowledge and approval of Zinifex, the Labour Hire Companies decided to invite employees engaged in the Smelter to enter into AWAs. 11 On 9 December 2005 a discussion took place at the Smelter between, on the one hand, Mr Mark Emmett, who was the Superintendent of Electrolysis at the Smelter, and, on the other hand, Labour Hire Companies' employees Geoffrey Holmes, Shaun Russell and David Scurrah. Mr Emmett was aware that some labour hire workers had signed AWAs and some had not, and there were enough employees who had signed AWAs to take the place of the non-AWA labour hire employees. Mr Holmes and Mr Russell each signed his copy of the Skilled AWA shortly afterwards. 13 At the time of the meeting Mr Emmett knew and intended that by securing the employment of employees of the Labour Hire Companies at the Smelter under AWAs Zinifex would effectively override the conditions of employment provided by the Zinifex Award and that it was reasonable for those employees to assume that Mr Emmett would, or at least could, give effect to the consequences referred to in the statements he made to them. 14 By making the statements Mr Emmett sought to have each of the Labour Hire Companies' employees enter into AWAs with their respective employers. Neither he nor Zinifex were parties to the employment relationship between these employees and their respective employers. 15 The statements made by Mr Emmett were likely, and intended, to pressure the employees to agree to the respective AWAs offered to them without regard to whether each wished to do so. The statements achieved that result. 16 By reason of his position as the Superintendent of Electrolysis at the Smelter and his responsibility for the engagement of workers through the Labour Hire Companies, Mr Emmett enjoyed a significant power disparity in relation to the employees. 17 The foregoing establishes the first contravention. The second contravention concerned Mr Geoffrey Bailey, an employee of Skilled. He did not immediately sign an AWA. Bailey No I haven't. Emmett Why haven't you signed it? Bailey The advice I've got from the Union and from the other blokes that I am working with, including the full timers, is not to sign it. Emmett Alright, that's up to you, but I'll give you a little scenario, we've got 26 or 27 blokes down in Castings [where Bailey worked at the time], and only one hasn't signed the AWA, and I'll put it this way, we will not be needing his services anymore and we won't be ringing him for work. Bailey So what you are saying is that if I don't sign that agreement, I won't be able to work here anymore? Emmett The labour costs here are about $90,000 per month and there is no way that I am going to pay another $40,000 under the Award. Bailey Fair enough, I'll get back to you. Emmett Well, we want the things signed by next week. 18 At the time of the conversation Mr Emmett knew and intended that Mr Bailey would, if he agreed to the AWA, be paid lower wages in respect of each twelve hour shift as compared to wages payable for a twelve shift under the Zinifex Award. 19 Mr Emmett knew and intended that by securing the employment of Labour Hire Companies' employees at the Smelter including Mr Bailey under AWAs, Zinifex would effectively override the conditions of employment provided by the Zinifex Award for the employees of the Labour Hire Companies working at the Smelter. 20 It was reasonable for Mr Bailey to assume that Mr Emmett would, or at least could, give effect to the consequences referred to in the statements made in the conversation with him. By making the statements to Mr Bailey, Mr Emmett sought to have Mr Bailey enter into an AWA with his employer Skilled. 21 Neither Mr Emmett or Zinifex were party to the employment relationship between Mr Bailey and Skilled. Statements to Mr Bailey were likely, and intended, to pressure Mr Bailey to agree to the AWA offered to him, without regard to whether he wished to do so. 22 By reason of his position as the Superintendent of Electrolysis at the Smelter and his responsibility for managing the engagement of workers through the Labour Hire Companies, Mr Emmett enjoyed a significant power disparity in relation to Mr Bailey. 23 Generally it is accepted that Mr Emmett acted within the scope of his responsibilities with Zinifex and that Zinifex is liable for his conduct. By reason of Zinifex's contractual relations with the Labour Hire Companies, Zinifex had a legitimate concern about the cost implication for its own business of the TIC decision. In the circumstances it was reasonable to expect that Zinifex would provide Mr Emmett with guidance about what was and what was not acceptable conduct in relation to dealing with Zinifex concerns about the cost implication of any response by the Labour Hire Companies to the TIC decision. However Zinifex did not provide Mr Emmett with any such guidance. 25 Zinifex no longer operates, owns or has any connection with the Smelter. It sold the Smelter to Nyrstar Limited in September 2007. 26 Zinifex has never previously been found to have engaged in similar conduct to that alleged in the current proceedings. 27 At all relevant times Zinifex was an employer with a long history of collective bargaining with employees at the Smelter. Throughout this period Zinifex utilised enterprise bargaining agreements and awards to set the terms and conditions of its employees' employment. At no point did Zinifex enter into AWAs or State-registered individual agreements under the Tasmanian legislation with its employees. 28 Zinifex became aware of these proceedings when it was served with the application and statement of claim in December 2007. It sought a determination that the applicant was not empowered to bring the current proceedings. I decided that objection adversely to Zinifex: Smith v Zinifex Australia Ltd [2008] FCA 532. After that decision was handed down Zinifex co-operated with the enforcement authority and has agreed to these facts without the need for a trial. Although the Zinifex objection failed, it was clearly arguable and not an exercise in delay or obstruction. The contraventions were not the implementation of a deliberate policy, but rather arose out of a reaction to the particular circumstance created by the TIC decision. In the light of Zinifex's industrial history and the fact that it no longer has any connection with Smelter, there is not a substantial need for specific deterrence in this case. On the other hand, the contraventions are of a law regarded seriously by the Parliament, as the maximum penalties indicate. General deterrence is relevant. I think in all circumstances the penalties sought to be imposed are reasonable. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | admitted application of duress in connection with australian workplace agreement in contravention of workplace relations act 1996 mitigation of penalty due to actions of respondent no substantial need for specific deterrent general deterrence relevant industrial law |
2 A number of questions in relation to practice and procedure have arisen as a result of the course adopted by Mr Russell, who is not legally represented. 3 These questions arose incidentally in the course of a directions hearing on 8 February 2008. Submissions concerning them were heard at a further directions hearing on 22 February 2008, following the lodgement of an outstanding appeal statement by the Commissioner and the filing by direction of written submissions and an affidavit by Mr Russell. On 22 February 2008, I made certain directions for the further conduct of the two appeals but reserved for further consideration whether the answering of these questions required the giving of any further directions. Order 52B, r 4(3) makes provision for the commencement of a taxation appeal by the filing of an application in Form 55D. 6 Section 14ZZN is found within Part IVC of the TAA. Section 14ZL of the TAA materially provides that Part IVC applies if a provision in an Act provides that a person who is dissatisfied with an assessment or decision may object against it in the manner set out in that part. In my opinion, that concession was correctly made. 9 In Krampel Newman Partners Pty Ltd v Commissioner of Taxation [2001] FCA 976 ; (2001) 113 FCR 306 at 312, [15] , Ryan J concluded that s 14ZZN of the TAA does not evince an intention contrary to the effect of s 23 of the Acts Interpretation Act 1901 (Cth), which is that the singular includes the plural. I respectfully agree. Thus, there is nothing in s 14ZZN of the TAA which forbids the inclusion in the form of initiating application which is lodged with this Court of appeals against more than one objection decision. 10 Krampel Newman concerned objection decisions each of which related to objections against income tax assessments. Does it make any difference here that one of the primary tax liabilities is in respect of income tax and the other is in respect of a net amount for the purposes of the GST Act ? In my opinion it does not, for the following additional reasons. 11 Another feature of s 14ZZN is that it makes indifferent, generic provision for an appeal in respect of whatever constitutes an "appealable objection decision", as defined. That definition is to be found in s 14ZQ of the TAA. The effect of that definition is that, subject to an exception that is of no present relevance, an "appealable objection decision" is any "objection decision", another term defined by s 14ZQ. That definition, in turn, directs one to s 14ZY(2) of the TAA. Again subject to an exception of no present relevance, the effect of that subsection is that an "objection decision" is any decision of the Commissioner in respect of a "taxation objection". "Taxation objection", too, is a defined term (again, s 14ZQ) and that definition provides that a "taxation objection" has the meaning given in s 14ZL. I have already made some reference above to s 14ZL. It suffices to add that the effect of s 14ZL(2) is that an objection to which Part IVC of the TAA applies is a "taxation objection". 12 By this circuitous path the position reached is that each of the objection decisions with which Mr Russell is dissatisfied and to which he refers in the application he filed may be the subject of an appeal to this court under s 14ZZN of the TAA. Each is an "appealable objection decision". There is nothing in s 14ZZN which explicitly mandates that an "appeal" lodged with the Court is competent only if it concerns one or more assessments in respect of the same type of taxation liability. 13 There is also good reason not to imply any such intention. In Deputy Commissioner of Taxation v Brown [1958] HCA 2 ; (1957-1958) 100 CLR 32 , at 40-41 Dixon CJ noted, albeit as he acknowledged without at the time a judicial decision to that effect, that it was generally assumed that " under the Constitution liability for tax could not be imposed upon a subject without leaving open to him some judicial process by which he could show that he was not taxable or not taxable in the sum assessed ". As Dawson J later noted in Deputy Commissioner of Taxation v Richard Walter Pty Ltd [1995] HCA 23 ; (1994-1995) 183 CLR 168 , at 222, the general assumption to which Sir Owen Dixon referred did receive later judicial recognition: (His Honour referred to MacCormick v Federal Commissioner of Taxation [1984] HCA 20 ; (1984) 158 CLR 622 ; Deputy Commissioner of Taxation v Truhold Benefit Pty. Ltd. [1985] HCA 36 ; (1985) 158 CLR 678 at 684 ; Air Caledonie International v The Commonwealth [1988] HCA 61 ; (1988) 165 CLR 462 at 467). Section 14ZZN of the TAA therefore serves the important constitutional end of expressly providing for recourse by the person affected to the judicial power of the Commonwealth for a challenge to an administratively assessed taxation liability. Section 15A of the Acts Interpretation Act 1901 (Cth) counsels that Acts should be read and construed subject to the Constitution and so as not to exceed Commonwealth legislative power. Section 14ZZN provides for a fixed time limit within which to engage this constitutionally necessary right of challenge. In the face of language that did not expressly forbid the practice and whose language was broad enough on its face to permit it, it would be a strong thing to discern by implication a prohibition as to joinder which would foreclose by a technicality of form such an important and necessary right. 14 Moreover, the prospect that out of a single investigation by the Commissioner's staff there might emerge controversies in respect of both a GST and an income tax liability is by no means remote. The present case apart, in Peerless Marine Pty Ltd v Commissioner of Taxation [2006] AATA 765 ; (2006) 63 ATR 1303 what emerged from the one investigation was a controversy as to whether the taxpayer was carrying on a business such that it was entitled to allowable deductions for expenditure incurred in the construction of what was alleged to be a prototype for a class of luxury motor cruiser and a related GST controversy as to whether, in respect of that same expenditure, it was entitled to input tax credits. The taxpayer elected to challenge the objection decisions in the Administrative Appeals Tribunal ("Tribunal") rather than in this Court and the Tribunal heard and determined the GST and income tax controversies together. Had it sought to appeal those decisions, s 14ZZN of the TAA would have permitted the joinder of those appeals in the one application, in my opinion. A construction of s 14ZZN which would facilitate such joinder has about it such an obvious convenience and practicality that it is to be preferred to one which would not. 15 Thus, the mere fact that Mr Russell has chosen to join in the one form of application appeals in respect of both income tax and GST assessments and related administrative penalty assessments does not, of itself render any of the appeals incompetent. 16 That is not to say that the adoption of such a course binds the Court to hear each of the appeals together. On some occasions it may be convenient to hear and determine a GST appeal together with an income tax appeal; on other occasions it may not be. Order 52B r 3 incorporates by reference, inter alia, the directions hearing provision made by O 52A r 13. Questions as to whether there ought to be separate hearings would be apt subjects for determination at a directions hearing. 17 As it happens, in this case Mr Russell wishes all appeals to be heard and determined at the one time and the Commissioner does not oppose this course. It seems to me that this is the convenient course to take in the circumstances. To explain why that is so requires some brief reference to the background facts at least insofar as they are presently revealed by the appeal statements that the Commissioner has filed as well as in an affidavit sworn and filed by Mr Russell in which he details the history and nature of a partnership of which he and his now former wife were once members. 18 By a written agreement executed in New Zealand on 1 January 2000 Mr Russell and his then wife formed a partnership for the purpose of carrying on the business of the provision of public accounting and corporate administration services in New Zealand and elsewhere under the name "A W Russell & Co". Their agreement specified that the partnership was to commence after 1 April 2000. In, it seems, February 2000 Mr Russell and his then wife arrived in Australia from New Zealand. 19 Mr Russell is an accountant by profession. Juan International Limited [formerly known as The Ancath Corporation Ltd ("Ancath")] is a New Zealand company whose sole shareholder was Mr Russell's former wife. Mr Russell was a signatory on Ancath's bank account. 20 In August 2000 Mr Russell applied for a position of Office Manager with Tradecorp International Pty Ltd ("Tradecorp") in Mackay, Queensland. 21 On 4 August 2000, Tradecorp and Ancath entered into a contract for the accounting services of Ancath's senior accountant, Mr Russell. The contract sum was $45,000 per annum plus 8% superannuation. Under the contract Mr Russell was entitled to, inter alia, 8 days paid sick leave and 4 weeks annual paid leave in addition to statutory holidays. 22 On 24 September 2001, Tradecorp and Ancath made a variation to their contract. The contract sum was varied to $65,000 per annum plus a superannuation allowance. 23 Mr Russell provided his services at the premises of Tradecorp from September 2000 to June 2004. 24 Ancath issued monthly tax invoices to Tradecorp for professional services. 25 After 20 March 2001, Ancath instructed Tradecorp to pay GST to A W Russell & Co, described in such invoices as its Australian agent. 26 Tradecorp made monthly payments by telegraphic transfer to Ancath's bank account in New Zealand for Mr Russell's services, less an amount for GST which was paid to the partnership's bank account in Australia. 27 Mr Russell included partnership distributions (amounts equal to the GST paid by Tradecorp to the partnership) as income in his tax returns for the income years ended 30 June 2001, 2002, 2003 and 2004 ("relevant income years"). Mr Russell did not include any other income in his tax returns for the relevant income years. 28 Mr Russell and his now former wife separated on 23 February 2004. Effective from that date she also resigned as a member of the partnership. She no longer lives in Australia. She is said by Mr Russell to be presently at a locale in the French countryside where the mail service is slow and where she has no access to the internet. She has informed Mr Russell that she has no desire to return to Australia. Later in 2004, Mr Russell registered the name "A W Russell & Co" as a name under which he carried on business in Australia. 29 Relying on s 84-5 of the Income Tax Assessment Act 1997 (Cth), the income tax assessments issued by the Commissioner for the relevant income years have included income from what is said to be the rendering of personal services by Mr Russell. 32 Having regard to the foregoing, it seems likely that there will be common issues of fact to be decided in relation to each of the appeals in relation to the affairs of the partnership and Ancath. Hence it is convenient to hear the appeals together. 33 The remaining issue, whether Mr Russell alone is a proper party to the GST appeal, is controversial. 34 The Commissioner's submission is that the proceedings should be brought in the name of the "entity" which lodged the relevant business activity statements or at least that Mr Russell's former wife should be a party to the proceeding. He does not, in terms, contend that the GST appeal as lodged is incompetent for want of a proper party, only that there is an irregularity which ought to be rectified. For his part, Mr Russell does not wish to involve his former wife in the appeal but is prepared so to do if needs be. 35 The Commissioner's submissions take as their starting point a feature of GST, which is that liability in respect of this tax, like sales tax before it, is not dependent on the issue of an assessment. Rather, liability for GST arises upon the due date for payment: see s 33-5 of the GST Act and s 105-15 in Schedule 1 to the TAA. So much may be accepted. 36 It is then submitted that the TAA nonetheless permits the making of an assessment of a net amount and that such an assessment is and was in this case appropriately raised in respect of the relevant GST "entity". That "entity" is in this case a partnership. Under the general law a partnership does not have a legal personality separate from its members. By definition though a partnership is an "entity" for the purposes of the GST Act : s 184-1(1) of the GST Act . Within the GST Act the expression "you" applies to "entities" generally in the absence of a contrary intention: definition of "you" in s 195 -1 of the GST Act . The right of objection to a GST assessment is expressed by s 105-40 of Schedule 1 to the TAA to be exercisable by "you" in respect of a reviewable indirect tax decision " relating to you ". These matters are said by the Commissioner to have the consequence that a taxation appeal in respect of a GST assessment should be brought either in the name of the relevant GST "entity or at least in the names of each of the partners. It is further submitted that this position is not affected by the subsequent dissolution of the partnership between Mr Russell and his former wife as the cause of action accrued prior to the dissolution of that partnership. 37 Were a partner's liability for GST only joint, the Commissioner's submission might have some attraction. Under the general law of partnership (and prior to the death of any of the partners) every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while a partner: s 12(1) of the Partnership Act 1891 (Qld). The rules of court provide that, subject to any grant of leave to the contrary, where an applicant claims relief to which any other person is entitled jointly with him, all persons so entitled shall be parties with him: O 6, r 3(1) of the Federal Court Rules . Further, O 42 r 2 of the Federal Court Rules permits a claim brought by two or more persons claiming as partners to be brought in the name of the partnership. When so brought any party may apply on notice to be furnished with the names and places of residence of those who were partners at the time when the cause of action arose: O 42 r 3 of the Federal Court Rules . It is possible for a partner to institute proceedings in the name of the partnership without the prior consent of his fellow partners but, if such a course of action is taken, the court may direct that the proceeding be stayed until that partner has given his fellow partners a full indemnity, together with security in respect of costs: Seal and Edgelaw v Kingston [1908] 2 KB 579, at 582. 38 As it happens, in Sutherland v Gustar (Inspector of Taxes) [1994] Ch 304 , an analogous controversy arose in the United Kingdom in respect of the competency of the purported institution of an appeal by one partner, against the wishes of his fellow partners (who had reached an agreement satisfactory to them with the Inspector of Taxes), in respect of a joint assessment of the partnership to income tax which had been confirmed by the general commissioners. Under the then applicable legislation in the United Kingdom, a partner's liability to income tax was joint. What is important to one partner may not matter to another. Similar divergences of interest, and differences of view about what is the best course for the partnership, can and do arise regarding other aspects of partnership business. Here, as elsewhere in the law, the courts evolved practical solutions. In the context of litigation, the courts devised procedures which protect a would-be plaintiff partner by permitting him to go ahead with court proceedings but also protect the partners who do not wish to become embroiled in the proceedings. The traditional means used to achieve this end was for the minority partner to be permitted to bring the proceedings in the name of the partnership. Every partner is an agent of the firm, a principle now enshrined in section 5 of the Partnership Act 1890 (53 & 54 Vict. c. 39). But the other partners had to be protected by an adequate indemnity. " [1994] Ch at 310. 40 The Court of Appeal solved the problem thus posed by construing the statutory procedural code for the institution of taxation appeals in a way which enabled any person assessed to tax to institute an appeal in respect of the assessment irrespective of whether he had been assessed alone or jointly with others. This does not enable the person giving the notice then to conduct the appeal as though he were acting for all the partners. He has authority only to act and speak for himself, unless his co-partners authorise him to act for them. If they do not, and if they wish to pursue a different line, they may do so. But an appeal against the joint assessment having been set in motion, they, along with the partner who gave the notice of appeal, are appellants for the purposes of the Act of 1970. Accordingly, notice of the hearing must be given to them, and their concurrence is needed if the appeal is to be settled or abandoned pursuant to section 54. " [1994] Ch at 312. Nonetheless, were liability in respect of a GST assessment joint, there would, with respect, be much to commend in the adoption of a similar approach to that adopted in Sutherland v Gustar to the construction of the right to appeal to this Court against an objection decision conferred by s 14ZZ of the TAA on a "person dissatisfied" and in related practice and procedure. The "person dissatisfied" with the Commissioner's objection decision in respect of a GST assessment might well, for just the reasons identified by the Court of Appeal in Sutherland v Gustar , be but one of a number of partners. 42 Yet a partner's liability in respect of GST and any related administrative penalty is not just joint, but rather joint and several. It would seem incongruous in these circumstances to construe the right of appeal conferred by s 14ZZ of the TAA as being dependent upon the consent of each partner or even to require that each other partner be given notice of a challenge to an objection decision by one of them. 44 The word "person" in s 14ZZ of the TAA bears its ordinary meaning of referring to natural persons as well as bodies corporate and bodies politic: s 22 Acts Interpretation Act 1901 (Cth) and includes the singular as well as the plural: s 23 Acts Interpretation Act 1901 (Cth). As earlier noted, under the general law a partnership is not a separate legal entity. A partnership is not a "person". The liability in respect of GST being joint as well as several s 14ZZ of the TAA would certainly permit the members of a partnership jointly to institute an appeal against an objection decision in respect of a GST assessment if so disposed but the effect of that section is that it is not mandatory that each partner be a party to the institution of an appeal for that appeal to be competent. 45 It follows, in my opinion, that the GST appeal was regularly instituted by Mr Russell in his own name. Neither do I see any need for him to give his former wife notice of the institution of the appeal. My tentative view therefore is that the costs of and incidental to the making of these directions should be Mr Russell's costs in the appeals in any event. However, before making any order as to costs, I propose to allow the parties a short time to consider these reasons and that proposed costs order and to file and serve such written submission, if any, as they would wish to make in relation to costs. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | taxation whether an income tax appeal and a gst appeal may be instituted by the filing of one application whether each partner must be a party to a gst appeal practice and procedure |
These are the reasons why I made those orders. They are: The plaintiffs appear to have grouped ATIPL and AFML together because Messrs Silvia and Cummins are the administrators of both them of them. In all three cases the administrators were appointed on 6 May 2009. Section 439A(1) of the Act requires the administrator of a company under administration to convene a meeting of the company's creditors within the "convening period" as fixed by subs (5) or as extended under subs (6) of s 439A. Section 439A(5) defines the convening period. In the circumstances of the present cases, that period was the period of 20 business days beginning on the day after the administration began. The three administrations began on 6 May 2009 (see s 435C(1) of the Act). The next day was 7 May 2009. The period of 20 business days expires on 3 June 2009. Section 439A(6) empowers the Court to extend the convening period on an application made, relevantly, during the 20 business day period. The present application has been made within that period. For the reasons given in the following section, the first and third plaintiffs seek an order extending the convening period up to and including 30 September 2009. Since the present convening period is due to expire on 3 June 2009, the extension sought is a little less than four months. It remains to note that s 439A(2) provides that the meeting must be held within five business days before, or within five business days after, the end of the convening period. The first and third plaintiffs seek an order under s 447A(1) of the Act to permit the three meetings to be held at any time during the convening period as extended or within five business days thereafter. The Group is a large group of companies, comprising 37 active companies and 123 dormant companies. Most of the active companies are special purpose vehicles (SPVs). The Group owns seventeen investment or development properties (real estate). There are extensive cross-collateralised securities and obligations within the Group. In excess of ten secured lenders are owed approximately $550 million. The parent company is Austcorp International Limited (AIL), of which AGL, ATIPL and AFML are wholly owned subsidiaries. ATIPL is the trustee of the Austcorp Towers Investment Trust (ATIT), and AFML is the responsible entity of the Austcorp Towers Trust (ATT) and the Austcorp Property Trust (APT). The public has invested some $50 million in units in the ATT. The ATT has invested some $50 million in units in the ATIT, which has lent some $50 million to APT. APT has in turn lent some $50 million to AGL. As noted above, numerous SPVs, owning seventeen investment properties, are subsidiaries of AGL. The SPVs are not in administration. Negotiations are in progress directed to realising value of the underlying assets. The major chargeholder, BOS International (Australia) Limited, which holds a first ranking charge over the assets and undertakings of AGL and AFML, has consented to the granting of the extension of time. In Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110 ( Lombe ), Barrett J noted the changes made by the 2007 Act to subss 439A(5) and (6), and the introduction of the new subss (7) and (8). His Honour observed (at [29]) that there is a question as to whether s 439A as amended has caused s 439A(6) to be available on successive occasions. The present application is the first application for an extension and therefore the question does not arise before me. Counsel submitted that s 439A(7) is applicable, but it is not. That subsection, which provides that the Court may extend the convening period only if satisfied that it would be in the best interests of the creditors to do so, applies only where the application for the extension is made after the convening period has expired. In the present case, the application was made during the convening period. Lengthy extensions have been granted where the administrator's investigations are complex, see, for example Re AFG Insurances Ltd [2002] NSWSC 803 (Barrett J) (five months); Re Chemeq Ltd (Administrators Appointed) ; ex parte McMaster [2007] WASC 154 (Le Miere J) (almost six months); ABC Learning Centres [2009] FCA 454 (Emmett J) (ten months). Mr Silvia's evidence is that the merits of any DOCA will take three to four months to emerge. Pending the proposal of any DOCA, he suggests that it would be in the interest of all creditors to allow time to the administrators to attempt to deal with or realise the individual properties held by the Austcorp companies. The administrators are to seek funding from the various SPV creditors in relation to the specific projects, as their own funds are limited. According to Mr Silvia's affidavit, it is currently unknown whether a DOCA will be proposed. If it is proposed, it is likely to take the form of a consolidated fund that would include unsecured creditors of the SPVs, where those creditors might otherwise receive no dividend. The SPVs are not currently under administration, although, according to Mr Silvia's evidence, some of them may in due course go into administration and may execute DOCAs specific to them respectively. In his opinion, however, in the immediate term it would be in the interests of creditors that the SPVs avoid being placed into receivership or administration in order to minimise costs and maximise asset sale prices. This course would increase the return to creditors. Mr Silvia's affidavit states that the extension of the convening period will not unduly prejudice any other stakeholder. He intends to continue his efforts to obtain funds for the payment of employee entitlements. Mr Silvia further states that the extension of the convening period will not prevent the administrators from investigating such issues as they need to investigate; nor affect any potential actions that might be taken by a liquidator, if one were to be appointed. At the first meeting of creditors of AGL, Mr Silvia as Chairman informed those present that he and Mr Green proposed to seek the extension of the convening period for up to four months. According to Mr Silvia, no creditor sought to be heard in opposition to that course. At the first meeting of the creditors of each ATIPL and AFML, Mr Cummins as Chairperson asked those present whether they had any objection to the Administrators seeking an extension of the convening period of three to four months. Again, no creditor sought to be heard in opposition to that course. In their first report to the committee of creditors of AGL, Mr Silvia and Mr Green informed the committee that it would take three to four months for the merits of any DOCA proposal to emerge, and that they (Messrs Silvia and Green) proposed to seek an extension of the convening period for no longer than four months. At the first meeting of the committee of creditors of AGL, the members of the committee agreed unanimously that the administrators should make an application to the court to extend the convening period for a period no greater than 4 months. The members of the committee of creditors of AFML have signed a circular resolution indicating that they agree with the proposed extension. I considered on the basis of the evidence referred to above that it was in the interest of creditors that the extension of a little less than four months that was applied for should be granted. In Daisytek [2003] FCA 575 ; 45 ACSR 446 , I noted that the granting of an extension of time left untouched the problem that s 439A(2) required that the meeting be held within five business days after the extended convening period. The 2007 Act altered the position to require that the meeting be held within five business days before or within five business days after the end of the convening period or that period as extended. The plaintiffs seek an order under s 447A of the Act that would permit the holding of the meeting at any time within the period of the extended convening period and five business days thereafter. It was my opinion that such a " Daisytek order" should be made. Such an order has often been made; cf Lombe [2009] NSWSC 110 , In the matter of Global Food Equipment Pty Ltd (Under Administration); Carter v Global Food Equipment Pty Ltd (2007) 25 ACLC 1173 ; [2007] NSWSC 901 (White J); In the matter of LED Builders Pty Ltd (Administrators Appointed) [2008] NSWSC 633 (Austin J). I also thought it appropriate to reserve liberty to any creditor to apply. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren . | extension of time for convening of second meeting of creditors of company in voluntary administration applicable principles. corporations |
The proceeding is an application brought by a workplace inspector seeking the imposition by the Court of penalties on the employer for breaching the Hospitality Industry --- Accommodation Hotels, Resorts and Gaming Award 1998 ("the award"). As the relevant time period during which the breaches occurred spans from 14 August 2000 to 9 November 2007, the application relies on s 178 (now repealed) of the Workplace Relations Act 1996 (Cth) ("the Act "), as it applied prior to 27 March 2006, and s 719 of the Act as it applied thereafter. 2 From 14 August 2000 until 9 November 2007, Mrs Healey carried on a business as a sole trader under the business name "Theatre Royal Hotel". The business included accommodation facilities, a restaurant and a café-bar. During that time persons employed by her were entitled to the benefit of the award. There were 41 employees of Mrs Healey who were engaged as casuals and who were paid below award rates and, in one case, not paid at all. Clause 15.2.2(a) provides certain allowances for work performed between 7 pm and midnight on week days and work performed between midnight and 7 am on those days. In addition, cl 15.2.2(a) provides for a Monday to Friday casual loading. Clause 15.2.2(b) provides for a Saturday casual loading. Clause 15.2.2(c) provides for a Sunday casual loading and cl 15.2.2(d) provides for a public holiday casual loading. 5 Clause 18.1 of the award sets the wage rate for the various classifications of employees covered by the award. Clause 15.5 of the award sets junior rates for those employees who are 19 years of age or younger. 6 The parties are agreed that Mrs Healey breached eight terms of the award. Clause 15.5.1, by failing to pay junior employees at the correct classification rate. He commenced employment on 1 May 2004 and worked at the hotel until 6 November 2006. During Mr Tom Friend's employment he was underpaid by $221.25. Mrs Healey breached each of the eight terms of the award set out above in respect of Mr Tom Friend. Mr Tom Friend was originally engaged as a Level 2 Food and Beverage Attendant (Junior). Mrs Healey, as with all her other employees (except Ms Jodi Buck), employed him on a flat rate of hourly pay below the award rate. He later became entitled to adult rates. He was not paid any of the loadings set out in cl 15.2.2 when he qualified for them. Mrs Healey breached her obligation to pay him a weekday loading at award rates on 83 occasions. She likewise failed to pay him the Saturday loading (29 times), the Sunday loading (7 times) and the public holiday loading on one occasion. Sixty times, Mrs Healey failed to pay him the 7 pm to midnight allowance and, once, the midnight to 7 am allowance. 8 Ms Jodi Buck worked for Mrs Healey for two days, on Thursday 14 April 2005 and Friday 15 April 2005. She received no payment at all for that work. She did not receive the correct classification rate for an adult Level 2 Food and Beverage Attendant Grade 2 and she did not receive her Monday to Friday casual loading. For the total 9 hours worked on those two days, Ms Buck should have received $150.75. It was not until 4 June 2007 that Mrs Healey agreed that she had "underpaid" Ms Buck and undertook to make good that deficit. 9 Ms Debra Barker was employed by Mrs Healey from 2 March 2006 to 4 August 2006 as a Level 2 Food and Beverage Attendant Grade 2/Guest Services Officer Grade 2. She received a flat hourly rate of $17.85 for all work performed by her. Each of the eight obligations set out at [6] above, apart from the junior rate payment, were breached by Mrs Healey in respect of Ms Barker. There were 48 relevant underpayments. Twenty-five were referrable to failure to pay the correct Monday to Friday loading. Nineteen concerned the Saturday loading. Four were referrable to the Sunday loading. There were 23 breaches of the 7 pm to midnight allowance provision and one of the midnight to 7 am allowance provision. Ms Baker was underpaid $515.32 in total. She had to wait until 4 June 2007 before Mrs Healey agreed to make good the underpayments. 10 Ms Jessica Hodgson was employed as an Introductory/Level 2 Food and Beveridge Attendant (Junior). Her employment spanned from 16 May 2005 to 13 November 2006. On commencement, Mrs Healey paid her a flat hourly rate of $13.08. This reduced on 27 June 2005 to $12.50. It further reduced on 23 July to $11.72 and increased back to $12.50 on 27 February 2006. There were 173 underpayments in respect of Ms Hodgson. There were 100 breaches of the weekday casual loading provision. There were 56 breaches of the Saturday loading provision and 16 of the Sunday loading provision. One breach of the public holiday loading provision occurred. There were 90 breaches of the 7 pm to midnight allowance provision and four of the midnight to 7 am allowance provision. It was not until 13 August 2007 that Mrs Healey acknowledged that she had underpaid Ms Hodgson in the sum of $1,138.35. 11 Mr Marcus Whitton worked for Mrs Healey only from 20 March 2006 until 27 March 2006 inclusive. He was engaged as a Level 3 Kitchen Attendant Grade 3. He received a flat rate of $17.91 for the Friday, $21.49 for the Saturday and $25.06 for the Sunday. He was underpaid by $4.57 in total. Mrs Healey acknowledged the underpayment on 4 June 2007. Mr Whitton's payments were close to the award rate. He is the only employee, the subject of this application, who was paid a different rate depending on what day of the week the work was performed. 12 Ms Sian Williams was employed from 2 April 2004 until 20 December 2004 as a Level 2 Food and Beverage Attendant Grade 2 (Junior). She received a flat hourly rate of $13.72. Mrs Healey underpaid Ms Williams in 103 respects. There were 50 breaches of the obligation to pay the weekday loading, 32 concerning the Saturday loading, 20 concerning the Sunday loading, 1 concerning the public holiday loading, 48 concerning the 7 pm to midnight allowance and 2 concerning the midnight to 7 am allowance. Ms Williams was underpaid $754.69. It was not until 4 June 2007 that the underpayment was acknowledged by Mrs Healey. 13 Mrs Healey underpaid various other employees. Below their names are set out. The numbers beside each name indicate the type of breaches by reference to the 8 set out at [6] above. The total underpayment in respect of the employee is also set out. Ms Pearce complained that she had been paid in accordance with "a purported AWA [Australian Workplace Agreement]", instead of at the award rate. The parties also agree that the eight award obligations set out at [6] above are the applicable provisions that have been breached for the purposes of s 719(2) of the Act and s 178(2) of the Act as it applied prior to the Workplace Relations Amendment (Work Choices) Act 2005 (Cth). 15 As seen from the discussion of the circumstances of some employees and a summary of the balance of them, there were 41 employees affected by various numbers of breaches of the relevant provisions. In total there were 254 breaches of the eight relevant terms of the award. Some 186 breaches occurred prior to 27 March 2006 and 68 breaches occurred after that date. The total gross underpayment figure is $18,405.71. In Gibbs v Mayor, Councillors and Citizens of City of Altona [1992] FCA 374 ; (1992) 37 FCR 216 at 223, Gray J held that each separate obligation found in an award should be regarded as a term for the purposes of s 178. The same would now apply to s 719. Tracey J applied the same approach in Kelly v Fitzpatrick [2007] 166 IR 14 at 17. I therefore reject the submission of counsel for Mrs Healey, Mr Green, that there was one single course of conduct which was constituted by Mrs Healey paying a flat rate of pay to her employees instead of the award rate plus loadings and allowances. Mr Green submitted that 70% of the maximum was an appropriate figure. In reply, Mr Zeeman did not take issue with that percentage. He submitted that a mid to high range penalty is appropriate for many of the breaches of the relevant terms of the award. The agreement of counsel is an important factor in the assessment of penalty. However, ultimately the assessment is a matter for the Court. 21 Despite her counsel's concession, I consider the appropriate assessment of the penalties to be applied to be 50% of maximum allowable. 22 In accordance with the approach of Gray J in Gibbs , I consider it appropriate to examine the circumstances of each relevant employee and assess an appropriate penalty for each breach. This may mean that in many instances no penalty will be imposed for breaches. 23 Apart from Mr Whitton and Ms Jodi Buck, Mrs Healey employed the affected employees on a flat casual rate in breach of the award. In each of those 39 cases the critical offending conduct was the setting of a rate below the award rate. The failure to pay appropriate loadings and allowances flowed from the setting of the incorrect rates of pay for the relevant classifications. The 50% figure referred to above should apply to the maximum penalty available for all breaches of cl 18 of the award which is applicable, as at their commencement date, to all but seven employees. Those seven commenced as juniors. Clause 15.5.2 was breached in respect of them. In other words, depending on the time of commencement of the employee a fine of 50% of the maximum should be imposed 41 times. In seven of those cases the relevant breach will be that of cl 15.5.1 because seven of the 41 employees commenced as junior employees. 24 As set out by Tracey J in Kelly v Fitzpatrick at 16-17, prior to 10 August 2004, the maximum penalty for breach of s 178 was $2,200 for an individual. Since that time it has been $6,600 for breach of s 178 and, on and after 27 March 2006, s 719. 26 The balance commenced after 10 August 2004. Three of them commenced as juniors. $1,100 multiplied by 20 equals $22,000. A penalty of $1,100 will be imposed on Mrs Healey in respect of each of the 20 persons named at [25] above. A sub-total of those penalties is $22,000. 28 Fifty per cent of $6,600 is $3,300. $3,300 multiplied by 21 is $69,300. The number 21 is referrable to the balance of the 41 employees who were first engaged by Mrs Healey after 10 August 2004. A penalty of $3,300 will be imposed in respect of each such employee. A sub-total of those penalties is $69,300. 29 The total penalties for breaches of cls 15.5.1 (in respect of juniors) and 18 (in respect of adults) amount to $91,300. Putting to one side the non-payment of Ms Jodi Buck, the major transgression was the setting of a flat rate for all purposes for every employee, except Mr Whitton. Even Mr Whitton was not paid the amount due under the award. Accordingly, seven penalties will be imposed for breach of cl 15.5.2 and 34 for breach of cl 18. The failure to pay the correct casual loadings and allowances in breach of cl 15.2.2 involved Mrs Healey in a failure to comply with obligations which "substantially overlap" (in the words of Gray J in Gibbs at 233) with the obligation to set the appropriate adult or junior rate for the relevant classification as required by cls 15.5.1 and 18. Consequently, I impose no penalty for breaches of cl 15.5.2 of the award. I also impose no penalties for additional breaches of cls 15.5.1 and 18 in respect of payments made to employees in the weeks subsequent to the commencement. This exercise may also be described as did Graham J in Australian Ophthalmic Supplies at [71] as ensuring that the figure provides an appropriate response to the conduct which led to their breaches. However, the Court must engage in what Gray J described in Australian Ophthalmic Supplies at [27] as an "instinctive synthesis" and arrive at a figure which Graham J said at [73] should be "just and appropriate". 32 The conduct which led to the breaches occurred over seven years. The only evidence before the Court to explain it is found in the agreed statement of facts at paragraphs 8 and 9 where reference is made to OWS receiving a complaint from Ms Tracey Pearce. There is no other evidence with respect to AWAs in which Mrs Healey is the employer. Even if the rates set were struck in accordance with incomplete AWAs, there is no evidence that any employee agreed to their terms. In any event, this does not explain other strange features of this matter such as the non-payment of Ms Jodi Buck, the downward adjustments in the rate applicable to Ms Hodgson and the attempt to give some loading to the rate of Mr Whitton but to no-one else. 34 The evidence is consistent with Mrs Healey paying wages as she saw fit, in ignorance, defiance of, or with recklessness as to the application of, the award. The widespread nature of the breaches and their long duration would ordinarily call for a high penalty. Indeed, a salient feature of this matter is the lack of evidence from Mrs Healey explaining the underpayments. The only ameliorating factors are Mrs Healey's lack of prior transgression, her co-operation with OWS and her payment of the underpayments. However, in the latter respect, some employees were not paid their correct entitlements until August 2007. Of course, the need for general deterrence cannot be understated. 35 Considering all of the factors set out in the preceding paragraph and in particular the absence of Mrs Healey's prior breaches of the Act and the total level of underpayments my "instinctive synthesis" of the facts and circumstances to arrive at a "just and appropriate" figure leads me to reduce the $91,300 figure to $70,000. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | award breach penalty breaches in relation to eight terms of award breaches in relation to 41 employees over seven year period whether multiple breaches should be considered single course of conduct application of totality principle industrial relations |
The Federal Magistrate dismissed an application for review of a decision of the Refugee Review Tribunal (the Tribunal) signed on 25 January 2008. The Tribunal affirmed the decision of the delegate of the first respondent, the Minister for Immigration and Citizenship (the Minister), not to grant the appellant a protection visa. The appellant is a citizen of Bangladesh. In his visa application he indicated that he had worked as a railway porter in Bangladesh between 1994 and 1998. The appellant lived in Singapore from 1998 to 2004 and worked there as a construction worker. He came to Australia in February 2007. The delegate rejected the appellant's claim based on a fear of persecution as a porter or construction worker in Bangladesh on the grounds that it disclosed no Convention reason. The appellant then instituted an application to the Tribunal which fixed a hearing for 4 July 2007. On 2 July 2007 the migration agent then acting on behalf of the appellant sent a letter by fax seeking an adjournment on the basis that the appellant needed time to formulate a new claim based upon a fear of persecution on the grounds of political opinion. The Tribunal adjourned the hearing until 19 July 2007. At that hearing the appellant's agent was present. During the hearing the appellant made claims that he was active in student politics and was a college president of the student arm of the Awami League between 1991 and 1996. He said he was involved in a protest in Dhaka in 1993 which resulted in a criminal charge being laid against him. The charge had not been determined when he left Bangladesh but in 2004 he heard that the case had finished and nothing had happened as the charges were fraudulent. He said he was attacked in 1993 by members of a rival party and spent two weeks in hospital with a leg injury but the police did not act when he made a complaint. The appellant then said that in 1996 he was arrested and tortured by the army over three days following elections which were boycotted by the Awami League. He was told that if he gave up his political activities the army would let him go. When he was released he and his family decided he would have to leave Bangladesh and he then went to Singapore. He said that in Singapore in 2001 he became a member of an informal Awami League group that met about once a month and provided assistance to people from Bangladesh. He continued to be politically active in Australia and went to a protest in Canberra in late May 2007. As a result of these activities he claimed that his picture and name were in newspapers in Bangladesh and on the internet, and that people from a rival party had threatened his family in June 2007. Because of this publicity he said he would be arrested and killed if he returned. Following the hearing on 19 July 2007, the appellant wrote to the Tribunal in October 2007 indicating that he had terminated the services of his agent because the agent had not treated him fairly. On 25 October 2007 the Tribunal wrote to the appellant inviting him to comment on the fact that no mention had been made of his political activities until the letter from his agent dated 2 July 2007. On 19 November 2007 the appellant sent a letter to the Tribunal explaining that he had written out his life story for the purpose of preparing his application for his agent but the agent did not submit it for him. Furthermore, the agent had threatened that he would not longer assist the appellant unless he did not say anything about his political activity to the Tribunal at the hearing on 19 July 2007. Then at the final hearing before the Tribunal on 23 November 2007 the appellant appeared without his agent and said that the agent had earlier advised him very strongly not to put forward his political claims. The Tribunal in its decision rejected the appellant's political claims. It found that they were entirely untrue and were raised at the last minute to strengthen the appellant's case. These arise firstly out of the applicant's failure to make these claims until two days before the first scheduled hearing. The applicant has explained that this was due to the poor advice and influence of his agent, who told him not to raise the issue. The Tribunal finds this inherently implausible, especially as the applicant gave the impression of being an articulate and intelligent man, who would have an understanding of the process of a protection visa application. He has shown, since his agent ceased to act for him, that he is well able to prepare and argue his case before the Tribunal. The initial claims made at the hearing on 19 July 2007 were very basic. The subsequent submission from the applicant, provided on 19 November 2007, ran to 13 pages of typed English translation. According to the applicant, it was this document which he prepared for the agent at the time of the review application. It contains a wealth of detail not mentioned by the applicant prior to its submission on 19 November 2007. The applicant's explanation for this (that he only mentioned the important things at first) is not accepted as plausible. There are events in the written statement which are of considerable import, but were simply not raised by the applicant in his oral evidence. The Tribunal is of the view that, if they were true, these important events would have been mentioned at the first hearing. In light of the allegations, the relevance of the allegations to a fair determination of the applicant's case, and the difficulty the applicant had in himself investigating the allegations, the Tribunal should have investigated the allegations. Its failure to do so gave rise to jurisdictional error. In that case, Kenny J at [60] --- [67] considered and applied a long line of authority recognising some situations which are exceptional to the established proposition that "the Tribunal has no general obligation to initiate enquiries or to make out an applicant's case for him or her". In some cases, a decision of the Tribunal has been characterised as made unreasonably in a jurisdictional sense, if it failed to obtain important information on a critical issue, which it knew or ought reasonably to have known was readily available to it. Kenny J held in that case that the Tribunal should have inquired into the qualifications of an interpreter at a Departmental interview, whose interpretation of a critical admission was called into question. She characterised the case as "rare and exceptional", and the inquiries which she thought were required as "not difficult to make and straightforward" (see [77] --- [79]). Similar conclusions have been reached in other recent cases (cf. SZJBA v Minister for Immigration & Citizenship [2007] FCA 1592 ; (2007) 164 FCR 14 at [59] --- [60], and SZIAI v Minister for Immigration & Citizenship [2008] FCA 1372 at [29] ). However, all the authorities have emphasised that the obligation to initiate inquiries is exceptional, and arises from some special circumstance in the procedures followed by the Tribunal, in which there is "readily available and centrally important" information which it is obviously reasonable to expect the Tribunal to obtain (cf. SZICU v Minister for Immigration & Citizenship [2008] FCAFC 1 at [29] ). In the present case, the Tribunal in November 2007 received complaints from the applicant in writing about his migration agent, in response to its written invitation that he should address the implications of the delay in his presenting his 'political' claims, both to the Department of Immigration and then to the Tribunal. The Tribunal was aware that the applicant had terminated the employment of his agent in October 2007, at a time when its file confirmed that there were difficulties communicating with the migration agent. It afforded the applicant the opportunity to attend a hearing to explain again his delay in making his claims and how his agent was responsible. It considered the applicant's evidence, but made no other inquiries into the matter. There is no evidence suggesting that it ever contemplated taking other steps to investigate the applicant's complaints about Mr Solaiman, nor that the applicant requested or expected this. In these circumstances, I do not accept that there was any special or exceptional reason for the Tribunal to have taken any further inquires into the applicant's complaints about Mr Solaiman. The applicant's submissions to me were unable to identify with precision the suggested inquiries, and the information which would then have been discovered by the Tribunal. In effect, it is only suggested that the Tribunal should have conducted a disciplinary inquiry of the sort conducted by the Migration Agents Registration Authority into a complaint. However, plainly this was not its statutory function. It is suggested that there were oral inquiries of Mr Solaiman, and summons powers in relation to Mr Solaiman's file and Mr Solaiman, which could have been pursued by the Tribunal. However, no particular 'readily available' information which could have verified the applicant's complaints was pointed to. Significantly, the applicant has now had available the coercive powers of the Court both in relation to Mr Solaiman's testimony and his file, but he was unable to present to the Court any information which the Tribunal could have easily discovered, and which would have verified the applicant's present explanation for the delay in making his 'political' point. Moreover, this ground sits uncomfortably with Ground 2. If, as I have above accepted, the Court itself inquires into whether Mr Solaiman fraudulently withheld the applicant's 'political' claims from both the Department and the Tribunal until July 2007, then it would seem to be immaterial to the existence of jurisdictional error whether, and how, the Tribunal made the same inquiry. I have not been persuaded to accept allegations by the applicant which are, indeed, more serious than those made to the Tribunal. There now seems no reason for remitting the matter to allow the same allegations to be further investigated by the Tribunal. I am therefore not persuaded that any jurisdictional error occurred as argued in Ground 3. I also would have refused relief which might have arisen from any defects in how the Tribunal investigated the applicant's complaints about Mr Solaiman, as a result of my findings in relation to Ground 2. On 26 February 2009 the appellant filed a notice of appeal in this Court. Bearing in mind that Mr Solaiman attended the first hearing and contined to communicate with the Tribunal via email thereafter, it was unreasonable for the Tribunal not to have made some enquiries of Mr Solaiman regarding the exact nature and circumstances under which the PVA was made, who typed it, whether he in fact advised the appellant not to highlight the political claim as claimed. There is no general duty on the Tribunal to make inquiries. The Federal Magistrate identified the relevant test to be applied when considering whether a duty to inquire arises and he applied that test to the circumstances of the case. The emphasis in the appeal was on an allegation that the Tribunal acted unreasonably because there were diametrically opposed versions of the reason for the appellant not including the political claims in the visa application and the Tribunal was bound to resolve the conflict by making inquiries of the agent. This is not a proper characterisation of the situation facing the Tribunal. It had different explanations from the appellant on different occasions as to the omission of the political claim. In November 2007 the appellant's version of events was that he had written a comprehensive account of his political activities and the agent had failed to lodge it as part of the visa application and had threatened him not to say anything about the claim in the July hearing. The agent was not present when these allegations were made. The Tribunal was entitled to take the view that this explanation was so improbable that it could reasonably be rejected without further inquiries. The Federal Magistrate did not err in concluding that the Tribunal did not fall into jurisdictional error by refraining from making inquiries of the agent about the circumstances in which the political claims were not included in the visa application. The Federal Magistrate stated that even if he had determined that the Tribunal failed to inquire about the circumstances of the absence of the political claim from the visa application he would have refused relief on discretionary grounds because there would be no utility in remitting the matter to the Tribunal. One of the arguments presented to the Federal Magistrate was that the agent had committed fraud on the Tribunal by acting contrary to the appellant's instructions by failing to include the political claim in the visa application. The Federal Magistrate rejected this argument and made findings that the agent had acted in accordance with his instructions. Any inquiry as sought by the appellant therefore would not assist him because such inquiry would confirm that the political claims only came into existence shortly before the hearing on 19 July 2007. If it were otherwise, and the Court were required to inquire into the extent to which the failure by the Tribunal to comply with its statutory obligations to accord an applicant a fair hearing prejudiced the applicant, the imperative obligation imposed on the Tribunal might well be blunted. Although the issue does not need to be determined I accept the first respondent's submission that the present case does not involve imperative statutory obligations within the meaning of that judgment. Further, I agree with the Federal Magistrate that there is a strong discretionary reason in favour of refusing relief. The inquiry which the appellant contended that the Tribunal should have conducted had to be undertaken by the Federal Magistrate in the context of the challenge to the Tribunal's decision. It would be odd, to say the least, if the Federal Magistrate had concluded that the appellant had not instructed the agent to include the political claim and yet remitted the matter to the Tribunal to determine that very same question. This is the more so when it is appreciated that both parties subpoenaed the agent to give evidence before the Federal Magistrate but neither side called on the subpoena. The agent answered the subpoena by filing an affidavit in which he set out his version of events. The appellant sought to tender the affidavit without calling the agent and intended to invite the Federal Magistrate to find that the contents of the affidavit were false. The Federal Magistrate upheld the first respondent's objection to such a course. Following discussion with the Court the appellant's counsel applied to amend the second ground of appeal. The application was refused as the proposed ground had no hope of success. It asserted that the Tribunal had failed to consider the appellant's risk of future persecution in Bangladesh when the reasons of the Tribunal on their face clearly showed that the Tribunal had given consideration to the very issue. Further reasons for dismissing the ground were given orally by the Court during the hearing. The original form of the ground alleged errors which on their face did not amount to jurisdictional errors. The written submissions similarly failed to identify any arguable jurisdictional errors. It is desirable that the first respondent move the Court prior to the hearing in such circumstances to have such groundless allegations rejected before written submissions are required. Given the Tribunal's serious reservations about the genuineness of the applicant's claims and of his evidence as a whole the Tribunal is not satisfied that such threats occurred. If that were so the inclusion of consideration of evidence about the appellant's activities in Australia would be contrary to s 91R(3) which required such evidence to be disregarded where, as here, the Court has found that those activities were undertaken to strengthen the appellant's claim: see SZJGV v Minister for Immigration and Citizenship [2008] FCAFC 105 ; (2008) 247 ALR 451. This argument should not be accepted. The reference to evidence as a whole read in context excludes the evidence of the appellant's Australian conduct. It is unreal to suggest that the Tribunal having just said that it disregards the appellant's conduct in Australia, in the next sentence contradicts itself. | appeal appellant complained about conduct of migration agent during second hearing before refugee review tribunal whether tribunal had duty to initiate enquiries whether tribunal failed to obtain important information on a critical issue that was readily available whether case is rare and exceptional and arises from special circumstances migration |
He travelled to and from Australia on various occasions between April 1993 and February 1996 pursuant to valid visitor and student visas. His student visa ceased on 15 March 1997 and his last entry to Australia was on 4 February 1996. He made an application on 19 September 2000 for migration to Australia as the partner of a person whom I will describe as 'the sponsor'. The first respondent (the Minister) declined to allow Mr Bunnag's visa application. It was determined that Mr Bunnag and the sponsor were not in a genuine and continuing marital relationship. Mr Bunnag has challenged that decision in the Migration Review Tribunal (the Tribunal). 2 The Tribunal reached the same conclusion. At the heart of the appeal and put in a variety of ways, is the contention for Mr Bunnag that the Tribunal in reviewing the Minister's decision could and should have done more to ascertain the mental health of the sponsor before arriving at its conclusion. It is contended that the mental health of the sponsor was a critical issue and could easily have been clarified by the Tribunal. It is said that to fail to do more was manifestly unreasonable. The Court was grateful for the considerable assistance of Mr Hurley who appeared pro bono for Mr Bunnag and argued this proposition most forcefully. Mr Bunnag told the Tribunal that the sponsor had attended the hearing but had not remained in the building as she had not been well. The Tribunal also received a letter from Mr Bunnag's employer concerning his efforts to obtain medical reports and doctors' assessments as to the medical condition of the sponsor. The Tribunal sent a letter on 5 December 2005 to Mr Bunnag requesting further information in relation to his relationship with the sponsor, her medical condition, her periods of hospitalisation and the nature and extent of support which she provided him. 4 On 6 January 2006, Mr Bunnag asked for further time to respond to the Tribunal's 5 December 2005 letter and on 10 January 2006 he informed the Tribunal that medical reports as to the sponsor's condition may take some months to finalise. He provided information to the Tribunal on 18 January 2006 in the nature of statutory declarations and informed the Tribunal that the hospital treating the sponsor was not willing to release any further information concerning her medical condition. 5 Following this communication, the Tribunal provided Mr Bunnag with a notice under s 359A of the Migration Act 1958 (Cth) (the Act) asking Mr Bunnag to comment on further information specifically on this occasion, firstly, on information which had been gathered by officers of the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) on two visits to Mr Bunnag's home in Sill Street, Bentley on 9 September 2004 and 10 November 2004 and, secondly, to respond to information which had been obtained from records in Centrelink indicating that the sponsor's address was not Sill Street in Bentley at that date and that the sponsor had informed Centrelink that she and Mr Bunnag had separated in May 2002. 6 Mr Bunnag duly responded to the Tribunal on 28 February 2006 by letter apparently not received until 7 March 2006. The decision of the Tribunal was handed down on 28 March 2006. 7 The Tribunal gave its decision after addressing the relevant regulations. The detail of its reasoning process will be considered below in the context of the primary ground of appeal. 8 Additionally, the Tribunal did have regard to evidence gathered by officers of DIMIA during the visits to the home in 2004. This information had been put to Mr Bunnag for his comment. It also had regard to various limitations in the evidence considering the alleged continuing five year relationship between Mr Bunnag and the sponsor, including there being relatively few photographs of the couple in a variety of places, documents in joint names, detailed statements in support of the relationship or indications from the sponsor that she was in a genuine and continuing relationship. Pursuant to the Act there is provision for classes of visas. Regulations prescribe criteria for the various visas: s 31(1). 10 For a Partner (Residence) Class BS (subclass 801) Permanent visa as described in sch 2 to the Migration Regulations 1994 (the Regulations) the criteria to be satisfied at the time of the decision are set out in cl 801.221 of the Regulations. It requires more than the formality of marriage. Section 474(1) of the Act provides that a privative clause decision is final and conclusive. It must not be challenged, appealed against, reviewed, quashed or called into question in any court and is not subject to prohibition, mandamus, injunction, declaration or certiorari in any court on any account. The definition of a privative clause decision is provided by s 474(2) of the Act to the effect that it is a decision of an administrative character made, proposed to be made or required to be made under the Act. Certain decisions are excluded. Section 486A provides that an application to the High Court for constitutional writ (mandamus, prohibition, certiorari, injunction or declaration) in respect of a privative clause decision must be made to the High Court within 35 days of the actual notification of the decision. The effect of that is to preclude the High Court from making an order allowing an application outside that period. This decision has been upheld by the Court in Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476. The validity of the section is based on the fact that it does not purport to ask the jurisdiction conferred by s 75(v) of the Constitution as it does not protect decisions that involve jurisdictional error from review. 15 The first ground before his Honour was an allegation of error by the Tribunal in law because Mr Bunnag and the sponsor were in a lawful marriage at the date of his application as opposed to the date of the Tribunal decision. Therefore, it was argued, there was no need to decide when that marriage ceased to satisfy the Regulations of the Migration Regulations . The Federal Magistrate held that what the Tribunal actually found was that Mr Bunnag and the sponsor were married on 7 December 2000 validly and that at the time of the decision they remained legally married but for the purpose of the Regulations, the Tribunal was still required to consider not only whether they were married but whether they had a mutual commitment to a shared life as husband and wife to the exclusion of all others and their relationship was genuine and continuing and whether they lived together or did not live separately and apart on a permanent basis. In his reasons ( Bunnag v Minister for Immigration & Anor [2007] FMCA 1843). 1.15A(5), which provides that if two or more persons have been living together at the same address for six months or longer that fact is to be taken to be strong evidence the relationship is genuine or continuing. The Tribunal did not ignore this requirement. There is specific reference to reg. 1.15A(5) in the heading prior to paras. 57-58 of the Tribunal Decision. The Tribunal considered the issue, and concluded that the Applicant did care for the Sponsor, but only intermittently, and that he was unaware of the Sponsor's day to day whereabouts. The Tribunal has not ignored the reg. 1.15A(5) requirement: rather its effect has been displaced by the weight of other evidence. The Federal Magistrate held that s 359C(1) of the Act allowed the Tribunal to make a decision on the application without taking any further action to obtain additional information where information sought from an applicant had not been given before the time for giving it had passed. 17 The third ground was that there had been a breach of the requirements of natural justice. That ground was rejected. The Federal Magistrate observed that s 357A of the Act provided that the relevant provisions of that Act exhaustively stated the natural justice rule in migration matters. There had been a hearing, Mr Bunnag had been invited to provide information relevant to the issues, he had been invited to respond to information which might have led to adverse findings, several months passed between the seeking of information and the giving of the decision and Mr Bunnag failed to provide any sufficient information to satisfy the Tribunal on the key issue. In these circumstances, the Federal Magistrate held that there could be no argument of a breach of the requirements of natural justice. 18 The fourth ground before the Federal Magistrate was an assertion that the Tribunal failed to take into account a relevant consideration and therefore its decision was unreasonable. That consideration was said to be the mental health of the sponsor at the date of the Tribunal decision. His Honour held that ground was untenable because it was clear that the Tribunal did take into account the health factor and, in any event, unreasonableness of a 'high level' would be necessary to establish jurisdictional error in accordance with NBKG v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 238 at [9] . 19 Ground 5 raised further natural justice issues which were not made out. 20 Ground 6 alleged that the secretary of DIMIA may not have forwarded the complete Departmental file to the Tribunal but no jurisdictional error or review was disclosed in relation to that speculation. 21 Ground 7 was apparently not pursued. 22 Ground 8 was that the Tribunal did not comply with s 359(1) of the Act as it failed to have regard to information provided to the Tribunal in a letter dated 18 January 2006 by Mr Bunnag's authorised representative by way of response to a s 359 notice. The Federal Magistrate held that an examination of these documents revealed they conveyed little information concerning the sponsor. The Federal Magistrate concluded the Tribunal did have regard to the information contained in those letters. Ground 8 was rejected. 23 Ground 9 which also failed was that the Tribunal had erred at law by refusing to consider exercising the powers of s 353(1), s 363(1)(a) or s (3)(a) of the Act. The Federal Magistrate held that the Tribunal was entitled to make its decision without further notice or without making further inquiries under s 359 or s 363 of the Act and no request had been made by Mr Bunnag under s 362 for any evidence to be called. His Honour concluded that no duty was imposed by s 359 or s 363 in circumstances where s 362 was not called or made by Mr Bunnag. There was accordingly no jurisdictional error on the part of the Tribunal or failure to afford natural justice. 24 Ground 10 was an assertion that the notice under s 359A of the Act was not given to Mr Bunnag. Mr Bunnag said he had nominated Mr Chu as his authorised recipient. His Honour held that an applicant is deemed to have been given a document if the document was given to the applicant's authorised recipient regardless of whether or not the authorised recipient was also a registered migration agent (ss 379A and 379G - Minister for Immigration and Multicultural Affairs v SZFDE [2006] FCAFC 142 ; (2006) 154 FCR 365 at [235] (there was a successful appeal to the High Court from this decision on a different point relating to fraud by the migration agent rather than in relation to these provisions)). 25 Ground 11 was an assertion that Mr Chu was treated as a registered migration agent by the Tribunal and that material provided by Mr Chu was not information given by Mr Bunnag for the purposes of s 359A(4)(b) of the Act. His Honour rejected the suggestion that the Tribunal treated Mr Chu as a registered migration agent but merely treated him as an authorised recipient. 26 His Honour rejected the grounds and dismissed the application for review. The decision of the Tribunal was made on 28 March 2006. In its statement of findings, the Tribunal addressed whether Mr Bunnag and the sponsor were in a married relationship at the time of the decision as required by cl 801.221(2)(c) and reg 1.15A. To do this the Tribunal had to consider the matters set out in regs 1.15A(3)(a)-(d). It considered the evidence in relation to each of those issues and set out its conclusions by reference to the Regulations. Specifically, the Tribunal had regard on several occasions to what had been put before it about the mental condition of the sponsor. It also referred to sending Mr Bunnag an invitation under s 359 to provide further information including details of the sponsor's medical condition and the periods of time in which she had been hospitalised. There was a response requesting an extension of time. That extension was granted. 29 It is certainly true that the Tribunal referred to evidence gathered by officers of DIMIA in 2004 but this was specifically in relation to the issue of whether or not at the time of the decision the couple were living together or whether they were living apart on a permanent basis. The Tribunal referred to the claim by Mr Bunnag that they were now living together on a permanent basis but it was not satisfied that this was so on the evidence. This was a credit finding. 30 The Tribunal by putting the material to Mr Bunnag also thereby gave him the opportunity to comment on what occurred in 2004 so as to enable him to express a view generally both as to what occurred in 2004 and whether the state of circumstances there described still existed or not. The Tribunal did not confine its consideration of the evidence and relevant factors to the evidence from those earlier home visits. However, the limitations of the evidence to which the Tribunal alluded were particularly significant in the context of Mr Bunnag's claim that he and the sponsor were and had been in a continuing five year relationship. The Tribunal did not accept this proposition. It concluded there was insufficient evidence for it to be satisfied that the couple were indeed in a genuine and continuing relationship at the time it made its decision. It was not satisfied that at the time of the decision they lived together or that they did not live apart on a permanent basis. 31 Part of this ground of appeal also raises a suggestion of breach of natural justice. The provisions of s 357A of the Act make it clear that the content of Div 5 of Pt 5 is an exhaustive statement of the natural justice hearing rule as it is to be applied in hearings before the Tribunal ( SZCIJ v Minister for Immigration and Multicultural Affairs & Anor [2006] FCAFC 62 and Minister for Immigration and Multicultural and Indigenous Affairs v Lat [2006] FCA 61 ; (2006) 151 FCR 214). 32 It is clear, again however, that the Tribunal did invite comment from Mr Bunnag in the letter of 5 December 2005 and again also in its letter of 22 February 2006. He responded to each of those invitations. It did not hand down its decision until 28 March 2006. Mental health of the sponsor was said to be a critical issue because it explained the lack of permanent cohabitation between the couple. It was said to be an issue on which inquiries were made and therefore thought to be of sufficient importance to establish the correct answers yet the Tribunal, when it was well within its power to obtain the correct information, failed to pursue opportunities to do so. 34 Of particular emphasis was the fact that the employer who was assisting Mr Bunnag with his application informed the Tribunal that it had not been possible to obtain the medical records of the sponsor. The reason for this, which was known to the Tribunal, was that the sponsor was not in a fit state to provide an informed consent to the giving of her records. Mr Chu, who was assisting Mr Bunnag, suggested to the Tribunal that it may be able to make the health inquiries direct. As counsel for Mr Bunnag submitted, it was open to the Tribunal to defer making any final decision until this issue had been established or to issue subpoenas in order to establish the correct answers to the decision or to inform Mr Bunnag that he could request the Tribunal to issue subpoenas or conduct other inquiries. 35 While this, on its face, sounded like a complaint about the merits of the decision reached by the Tribunal, the submission at law which was made by counsel for Mr Bunnag was that the need to make those further inquiries was so fundamentally central to the issue the Tribunal was required to determine and was also information which could be readily obtained, that to make a decision without that information was so wholly unreasonable as to fall within that rare class of cases characterised by Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223. 36 For this submission to succeed, the obviousness of the lack of reasonableness must be established. This was an issue extensively examined by her Honour, Kenny J in Minister for Immigration and Citizenship v Le [2007] FCA 1318. These authorities stretch back over the life of the Tribunal: ... (citations omitted). On the other hand, there is authority for the limited proposition that, in certain rare or exceptional circumstances, the Tribunal's failure to enquire may ground a finding of jurisdictional error because the failure may render the ensuing decision manifestly unreasonable in the sense used in Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223 (" Wednesbury Corporation "). In Wednesbury Corporation at 230, Lord Greene MR summarised what he saw as a fundamental common law principle when he said "[i]t is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere". He added that " to prove a case of that kind would require something overwhelming ". A finding of jurisdictional error on the ground of unreasonableness is rare compared with other grounds: see Applicant M17 of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1364 at [29] per North J. It is sometimes said that there must be something exceptional about the case to attract the ground. Although the position in Australia may differ from that in England, the decision in Wednesbury Corporation would support the proposition that an exercise of power that is unreasonable in this sense may ground a finding of jurisdictional error. In Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at 352, McHugh, Gummow and Hayne JJ held that the concept of jurisdictional error relevant in the present context derives from the general law, as explained in Craig v The State of South Australia [1995] HCA 58 ; (1995) 184 CLR 163 at 179. Craig did not refer expressly to Wednesbury unreasonableness, but the High Court accepted that the list of errors to which Craig referred was not exhaustive. In any event, the reference in Craig to the fact that, in some circumstances, erroneous findings or mistaken conclusions provide a ground of error may cover this form of error. Thus, a failure by a decision-maker to obtain important information on a critical issue, which the decision-maker knows or ought reasonably to know is readily available, may be characterized as so unreasonable that no reasonable decision-maker would proceeded to make the decision without making the enquiry: see Prasad at 169-170 per Wilcox J; ... (other citations omitted). In this circumstance what vitiates the decision is the manner in which it was made. Since this is a limited proposition, it does not conflict with the larger statement that the Tribunal is under no general duty with respect to making enquiries: see Prasad at 169-170 per Wilcox J and Azzi v Minister for Immigration and Multicultural Affairs [2002] FCA 24 ; (2002) 120 FCR 48 at 73-74 per Allsop J; but contrast SZEGT v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1514 at [20] - [22] per Edmonds J. Today, at least in the context of migration cases, judicial discussion of the significance of a failure to obtain further information on a critical issue ordinarily commences with Prasad . In Prasad , Wilcox J expressed the view, in obiter dictum, that it was unreasonable in the circumstances of the case (where a 'spouse' visa was at issue) not to seek out the explanations of certain inconsistencies in the material before the decision-maker. It was plain enough that explanations for the inconsistencies were readily ascertainable. Equally, it is exercised in an improper manner if the decision-maker makes his decision --- which perhaps in itself, reasonably reflects the material before him --- in a manner so devoid of any plausible justification that no reasonable person could have taken this course, for example by unreasonably failing to ascertain relevant facts which he knew to be readily available to him. The circumstances under which a decision will be invalid for failure to inquire are, I think, strictly limited. It is no part of the duty of the decision-maker to make the applicant's case for him. It is not enough that the court find that the sounder course would have been to make inquiries. But, in a case where it is obvious that material is readily available which is centrally relevant to the decision to be made, it seems to me that to proceed to a decision without making any attempt to obtain that information may properly be described as an exercise of the decision-making power in an manner so unreasonable that no reasonable person would have so exercised it. It would follow that the court, on judicial review, should receive evidence as to the existence and nature of that information. 38 Mr Bunnag had the onus of satisfying the Court that the mental capacity of the sponsor was an issue of such importance that failure to complete inquiries in relation to it would be so wholly unreasonable as to render the decision void by virtue of jurisdictional error. 39 Counsel for the Minister made a compelling case for the fact that this inquiry had ensued over a very long period of time, ample opportunity had been given to Mr Bunnag to satisfy the Tribunal as to many matters, only one of which was the mental capacity of the sponsor. Her mental capacity was not amongst the items which the Tribunal was required to consider pursuant to the Regulations. It was simply an issue which might go to the question of explaining the nature of the particular relationship which would otherwise not fall within the Regulations. 40 Counsel for Mr Bunnag stressed that the sponsor's mental capacity was critical as it explained the gaps in the relationship which the Tribunal identified. 41 To resolve that difference of view, it is necessary to examine the procedure and reasoning process of the Tribunal. 42 The Tribunal held a hearing of the application for review on 9 November 2005. At that hearing Mr Bunnag and Mr Chu attended and gave evidence under affirmation. Mr Chu was Mr Bunnag's employer and friend. He also informed the Tribunal that he was Mr Bunnag's authorised representative. Evidence was given about the sponsor who was then a 25 year old female citizen of Australia, born in Australia in 19 September 1980. In the visa application under review, it was claimed that Mr Bunnag first met the sponsor in Bentley, Western Australia on 31 June 1999 and they began a relationship in Perth on 17 July 1999. They were invited to attend an interview with DIMIA on 8 December 2000. They were married the day before the interview on 7 December 2000. They attended the interview and submitted two statutory declarations. One was made by a gentleman who claimed to have introduced the couple and the other was made by the sponsor's sister stating that she was 'close' to her sister and that she visited Mr Bunnag's home regularly. 43 Subsequently, in 2001, Mr Bunnag provided various other documents to DIMIA including a completed Centrelink rent assistance questionnaire and an agreement to take residential premises in Ascot, Western Australia. That document shows Mr Bunnag's name, his brother and sponsor's name in a different type face. The lease provided that the premises were not to be occupied by more than two persons. 44 In mid-2001 (31 July 2001), Mr Bunnag was granted a subclass 820 visa. It ceased on 24 November 2004. Since that time he had held a bridging visa. On 22 September 2003, DIMIA wrote to Mr Bunnag care of his representative requesting, amongst other things, documentation to support the claim that the parties' relationship was genuine and ongoing. 47 On 5 May 2004 a delegate and another DIMIA officer conducted a home visit at Mr Bunnag's address. A written record of the home visit is contained in the files. The officers ascertained that all of the occupants appeared to be male. On or about July/August 2004 further inquiries were conducted as to the authenticity of certified copies of tenancy agreements and other documents. 48 In September 2004, two officers from DIMIA conducted a home visit at Mr Bunnag's new property in Bentley, Western Australia. According to the record of that visit, Mr Bunnag admitted to providing false documents to DIMIA. The officers ascertained from the home visit that the sponsor did not reside at the premises with Mr Bunnag and the parties were not in a genuine and continuing relationship. The officers observed that the sponsor did not have any clothes or shoes in the house. Mr Bunnag produced a bottle of perfume which he said belonged to the sponsor. 49 Later that month, DIMIA sent Mr Bunnag a notice of intention to consider cancellation of his visa under s 109 of the Act regarding the four manufactured documents. The cancellation did not proceed and in a letter to DIMIA dated 29 September 2004, Mr Bunnag admitted providing the manufactured documents but claimed that he and the sponsor moved to the address in Bentley some time 'towards the end of last year' and that the marriage with his wife 'has and always (sic) been genuine and continuing'. 50 In November 2004, Centrelink advised DIMIA that the sponsor's address at that stage was in East Victoria Park, Western Australia and that Mr Bunnag and the sponsor had separated in May 2002. On 10 November 2004, two officers from DIMIA conducted a second home visit to the Bentley address. The officers ascertained from the visit that some women's clothes and cosmetics were in the house but that the couple slept in separate rooms when she stayed at the house and that she had moved to another house. There is a record of the home visit on DIMIA's file. Every day I am living in the unknown ... as a result my wife has also suffered so much to a point that she is mentally sick ... As a result it was concluded that Mr Bunnag had failed to satisfy clause 801.221 of the Regulations. 53 On 10 December 2004, Mr Bunnag lodged an application for review of DIMIA's decision with the Tribunal. Because of the difficult times (financial and social issues) we had some arguments and she left me for a while. My immigration problems also gave me a lot of stress. That was some time ago. But today we are still married and together, living at our new house. My wife is a little mentally sick recently due to the pressures. She needed money to see the doctor but I didn't have any because I don't have enough, so she told Centrelink that she was separated so she could get more money to see her doctors. The last time DIMA interview her she was very scared and panicked and didn't feel right to be in there. Submission to follow. None of those documents touched on the mental capacity of the sponsor. In February 2005, Mr Bunnag was provided with access to DIMIA's file and, in particular, access to the notes made at the site visits made by DIMIA's officers to review Mr Bunnag's home. Later that month Mr Bunnag submitted additional evidence to DIMIA including various statements, photocopies and documents similar to those submitted in December 2004. Again, there was no material submitted touching on the question of the mental capacity of the sponsor. 55 On 16 June 2005, Mr Bunnag's representative and work colleague, Mr Chu, lodged a submission with supporting documents with the Tribunal. On this occasion, Mr Chu stated in essence that the sponsor suffers from mental illness which has had an adverse impact on the parties' relationship and that he believed that the parties' relationship was genuine and continuing. He provided a substantial number of further documents intended to support the genuineness and continuing nature of the relationship. None of the enclosures touched on the mental capacity of the sponsor. 56 On 29 August 2005, Mr Chu lodged further documents and on this occasion included a letter from Royal Perth Hospital to the sponsor in August concerning her appointment for a diagnostic EEG. On its face, this document would not necessarily go to any question of any mental capacity of the sponsor but in an indirect fashion may indicate that the sponsor was seeking diagnosis in respect of some health condition. 57 On 9 November 2005, further evidence was provided by Mr Bunnag. On this occasion, amongst a deal of other evidence there was reference to the sponsor being unwell with an unspecified illness for some time and a statement that she 'has been hospitalised for long periods of time at Bentley Hospital'. Mr Bunnag said that he would seek to obtain the sponsor's medical records from Bentley Hospital. He also said that the sponsor had come to the Tribunal hearing however she did not give evidence as she was too unwell to remain in the building and so she left. Counsel for Mr Bunnag places emphasis on the fact that the Tribunal was alerted from this evidence that at least Mr Bunnag was informing it that the sponsor had been unwell with an unspecified illness for some time and had been hospitalised for long periods of time at the Bentley Hospital. There is no indication in this material that the reason for hospitalisation pertained to mental capacity but in itself, perhaps the more important issue was the hospitalisation 'for long periods of time'. In any event, Mr Bunnag, at that stage, was saying that he would seek to obtain the sponsor's medical reports from the hospital. 58 On the same day as the hearing, 9 November 2005, Mr Bunnag wrote to the Tribunal regarding his efforts in obtaining medical reports and indicated that there may be some delay in obtaining them. On 5 December 2005, the Tribunal sent Mr Bunnag an invitation under s 359(2) of the Act to provide further information relating to a variety of matters including details of the sponsor's medical condition, details of her hospitalisation and the nature and extent of any support provided by him to her. In response, on the same day, Mr Chu wrote to the Tribunal saying that the sponsor had been deteriorating, her behaviour had been strange and absurd, that her behaviour had taken a toll on Mr Bunnag and that they were not receiving any assistance from the Government of Australia. That letter was handwritten but by a typed letter of the same day, Mr Chu wrote to the Tribunal informing it that he was still waiting to retrieve the sponsor's medical files. He enclosed further copies of utility bills and correspondence addressed to Mr Bunnag or the sponsor at the Bentley address. 59 On 6 January 2006, Mr Chu wrote to the Tribunal stating that following receipt of its letter of 5 December 2005 he and Mr Bunnag had contacted Bentley Health Service to try to obtain details of the sponsor's medical conditions and the periods of time which she had spent hospitalised. They had not been able to obtain any details as the sponsor was still an inpatient 'and unless she is discharged, the medical reports will not be completed as yet'. It was also said that Dr Simone Carter 'whom we are dealing with is currently on leave and won't be back til Monday, 9 January 2006. Consequently we may expect further delays in obtaining the relevant documentations (sic)'. 60 Counsel for Mr Bunnag stressed that the Tribunal did not quote in its decision a sentence appearing in the letter in the following terms. 'However, you may try to contact them directly being a division of the Australian Government'. Counsel for the Minister stressed that if that was a request, it was followed immediately with these words 'alternatively, we may have to wait til Monday before we receive any further notices. As such, I hereby write to you to be allowed additional time to accumulate the documentations (sic)'. In my view this letter is a request for additional time to accumulate the documentation. That request was granted. It may have been open to the Tribunal (as suggested) to pursue those inquiries itself but that was not what was being sought by or on behalf of Mr Bunnag. What was sought and what was given was additional time to source the documentation. 61 In any event, it may well have been surprising for the Tribunal by this point after the topic had been raised on a number of occasions that there was no clarification at all from Mr Bunnag as to the period of time in which the sponsor had been hospitalised, the nature and extent of the support that he had given or indeed any clarification even in lay terms of her illness. It would have been open for the Tribunal to conclude or consider at this point that in a marriage of the type described by the Regulations, it might be expected that Mr Bunnag could provide at least some details on all of those matters. On 10 January 2006, Mr Bunnag's representative wrote to the Tribunal stating that Dr Simone Carter had advised him that the sponsor's doctor had not provided her with medical reports and that they may take months to be finalised. 62 Dr Carter had already, on 21 November 2005, provided Mr Chu with clear written advice that before proceeding to comply with the request for any medical reports that she required to have a dated and signed consent from the sponsor. Before proceeding with your request, I require a dated, signed consent from your client, within the past 12 months; this is a policy of Bentley Health Service. Also we require the date of birth of your client. Please note that we have over one million patients listed in our global database and it is hence imperative that a DOB is provided in order to correctly confirm the identity or your client. I will wait to hear from you with the above information supplied before proceeding with your request. It also enclosed a letter from Bentley Health Service to Mr Chu of 18 January 2006 to that effect. Certain other documents were also enclosed which did not go to the question of the mental capacity of the sponsor. From this information the Tribunal may well have been alerted that the sponsor was unwell. But neither Mr Bunnag nor Mr Chu provided the Tribunal with the information which had been sought in the 5 December 2005 letter. 64 On 22 February 2006, the Tribunal sent Mr Bunnag an invitation under s 359A of the Act to comment on any adverse information relating to the site visits by DIMIA in 2004 and the Centrelink records indicating that in November 2004 the sponsor was living in Victoria Park, Western Australia and that the couple had separated in May 2002. Counsel for Mr Bunnag complains that this information was irrelevant as at the time of the decision which was almost two years later. However, the basis upon which Mr Bunnag had proceeded in his application was that the marriage had been close and continuing throughout the period including the period when the visits were made. This information was therefore capable of going to the veracity of Mr Bunnag's claims in relation to the nature of the marriage during the relevant period of time and therefore by inference, also at the time that the decision was to be made. In any event, there was the opportunity for Mr Bunnag to explain, if it had been the case, as to the circumstances found by DIMIA's officers in 2004 and, if it were so, why those circumstances no longer existed in 2006 at the time of the Tribunal's determination. 65 On 7 March 2006, Mr Bunnag did respond through Mr Chu. He observed in relation to the site visit in May 2004 that during that period the sponsor was frequently admitted to Fremantle Hospital. That was the first occasion on which this response had been given. The Tribunal was also informed by Mr Bunnag that the lack of the sponsor's clothes in his house in September 2004 was explained by the fact that she had moved out temporarily to live with her sister in Winthrop and then with friends in Victoria Park, that they had tried to reconcile on a number of occasions and operated on the basis that the sponsor would stay from time to time with Mr Bunnag. As to the visit on 10 November 2004, Mr Bunnag advised that that the sponsor has her own keys to the house and she would come and go as she wished. He advised that the couple lived in separate rooms due to her mental condition. 66 In relation to the information that the sponsor was living in Victoria Park in November 2004, this was said to be during the period when they were attempting to reconcile. 67 As to the separation on 1 May 2002, Mr Bunnag repeated his explanation that the sponsor lied to Centrelink about their separation in order to obtain more money from Centrelink and that Centrelink had now been advised that Mr Bunnag was the sponsor's partner. Mr Chu concluded that the couple were currently still married to one another, living in a very unique situation together and going through difficult periods in their lives. 68 The Tribunal, having considered the evidence and history proceeded to analyse the considerations for spousal relationship in accordance with reg 1.15A(3) at the time of the decision. It first analysed the financial aspects of the relationship. There was joint bank account but with very few transactions and the balance usually in the order of only a few hundred dollars. The joint utilities account was 'bogus'. There was no other evidence of any joint ownership of real estate, other major assets, joint liabilities or any pooling of financial resources especially in relation to major financial commitments or the basis of sharing of day to day household expenses. The Tribunal then went on to consider the nature of the household. It concluded that they did not live together as husband and wife. It concluded, however, that the sponsor did spend some time at Mr Bunnag's home but this was infrequent and irregular. It observed no medical evidence had been provided to the Tribunal to indicate the nature or extent of the sponsor's 'conditions'. 69 As to the social aspect of the relationship, there were statutory declarations and two wedding invitations addressed to both Mr Bunnag and the sponsor. It was concluded that the evidence before the Tribunal including Mr Bunnag's own evidence did not entirely support the claim that they had lived together throughout the five year marriage apart from a short separation due to the sponsor's illness and disagreements. It was concluded that there was little evidence of the degree of companionship or emotional support which the sponsor drew from Mr Bunnag. The Tribunal did accept that the indications were that the sponsor had some unspecified health issues. It was also accepted that this may play some role in the lack of evidence. Nevertheless, there was very little evidence before the Tribunal from which an inference of mutual commitment could be drawn. As to the question of whether the relationship was genuine and continuing, the Tribunal concluded that while Mr Bunnag may care for the sponsor and support her while she was unwell at most, that care occurred on an intermittent basis only as Mr Bunnag was unaware of the day to day whereabouts of the sponsor. There are also some statements in support from the review applicant's friend and representative stating that they believe the couple is in a continuing relationship. The sponsor came and went from his property on an irregular and an increasingly infrequent basis. • The couple did not sleep in the same room at that property. • The lack of evidence reflecting the couple's commitment to one another, especially the sponsor's commitment to Mr Bunnag. • The sponsor had some correspondence addressed to her at his property but there were few signs of her actually living at the house on a regular basis. At most she appeared to stay at the house occasionally in a bedroom separate to his and with or without his knowledge. 72 From these factors it can be seen that the mental health issue was but one possible issue which could be relevant to the Tribunal's considerations. It was not a 'critical' issue. 73 In my view ample opportunity had been afforded Mr Bunnag to answer the Tribunal's questions on the topic. He did not do so. This ground fails. The Federal Magistrate would not take into account those documents and took into account only such documents that were before the Tribunal at the time it gave its decision. 75 His Honour's ruling in the Federal Magistrates Court was correct given that his Honour was not conducting an appeal in the nature of a rehearing but was exercising judicial review in order to establish whether or not jurisdictional error had occurred. It seemed clear that the documents concerned were designed to persuade his Honour that there was other evidence which, had it been before the Tribunal, may have caused it to reach a different decision. In reality, this is simply seeking a merits review. This ground therefore fails. No jurisdictional error is made out. The Tribunal had given Mr Bunnag ample opportunity to provide information which was sought by the Tribunal. Very little on the topic of the sponsor's health had been provided. Mr Bunnag informed the Tribunal by letter 10 January 2006 that the information would be available by 19 January 2006. In that communication he did not ask for additional time. Some of the information reflected in the 5 December 2005 letter did not require any access to medical records. That information has been described by the Tribunal in its decision. For example, it sought details of periods of time when the sponsor had been hospitalised during the relationship and the nature and extent of any support that Mr Bunnag provided to her. As the Tribunal noted, he provided little information in response to those requests. No jurisdictional error is made out. Given the application had been on foot since 19 September 2000, time was not a significant issue. 78 I consider the Tribunal gave Mr Bunnag ample time including an extended time to provide information and made a decision only after that time had lapsed. More than four months at that stage had passed since the actual hearing. Section 359C does not call for further inquiry into the reason why information or comments are not given. 79 In relation to this ground of appeal, I consider that no jurisdictional error is made out. In my view the Tribunal discharged its obligations under the Act in every respect in relation to the issues it was required to determine for the purposes of the application. This ground also fails. The learned Federal Magistrate erred in failing to hold that the MRT made a decision in excess of its jurisdiction by failing to consider the exercise of the powers given by s 353(1) , 363 (1)(a) and (3)(a) of the Migration Act where the Appellant was not able to obtain information about the mental health of the sponsor/spouse without intervention of the MRT. 9. The learned Federal Magistrate erred in holding there had been no request by the Appellant for the Tribunal to exercise the powers given by s 353(1) , 363 (1)(a) and (3)(a) of the Migration Act . 10. The learned Federal Magistrate erred in failing to construe s 362 of the Migration Act as limited to proceedings relating to Bridging visas referred to in s 338(4). Taking s 353 to refer to s 359(1) , which was the section argued before the Federal Magistrate, it is true that the Tribunal's powers extend to a power to request the making of an investigation or medical examination or to summons a person to appear before the Tribunal and to produce documents. 84 As I have previously observed, in my view the mental health of the sponsor was not a 'critical issue'. There was a significant body of material before the Tribunal other than the sponsor's mental health. The highest the Tribunal's reference to her health is placed is when it concluded that it could not attach much weight to the sponsor's health as an explanation for her frequent absences from the home and the evidence does not show 'the nature, extent and duration' of the her health issues. Other than a technical explanation of the health issue, Mr Bunnag had ample opportunity to answer the Tribunal's questions in relation to the nature, extent and duration of her health issues, hospitalisation etc during the relevant period. 85 The absence of evidence on the health issues was just one of the issues on which there was an absence of evidence in the context of a five year relationship according to the Tribunal. In my view the issue is not critical and ample opportunity, in any event, had been afforded to Mr Bunnag to provide information from a lay perspective which would deal with the specific questions which had been put to him by the Tribunal. 86 This case is therefore quite distinguishable from Le [2007] FCA 1318. In that case a statement to the effect of withdrawal of sponsorship because the marriage relationship had ended had been mistranslated. It is also clearly distinguishable from SZJBA v Minister for Immigration and Citizenship (2007) 98 ALD 270. See also SZICU v Minister for Immigration and Citizenship [2008] FCAFC 1 at [29] . The appellant is to pay the costs of the first respondent to be taxed or agreed. I certify that the preceding eighty -eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | whether jurisdictional error obligation to obtain additional information requirements of natural justice hearing rule wednesbury unreasonableness migration |
The Tribunal affirmed the decision of a delegate of the then Minister for Immigration and Multicultural Affairs ("the Minister") to refuse to grant a Protection (Class XA) Visa ("the visa") to the appellant pursuant to the provisions of the Migration Act 1958 (Cth) ("the Act"). He speaks Tamil. Prior to leaving Sri Lanka he owned and ran a grocery shop in Pottuvil. He arrived in Australia on 8 July 2007, travelling on a false passport issued in the name of another person. On 22 August 2007, he lodged an application for the visa in a name said to be his real name (and so found by the Tribunal). A delegate of the Minister refused the application for the visa on 6 December 2007 and on 4 January 2008, he applied to the Tribunal for a review of that decision. Before the Tribunal, the appellant claimed that he had a well-founded fear of persecution from Sri Lankan government forces and the Karuna group on the basis of his Tamil ethnicity and Muslim religion, and possibly his imputed political opinion due to his perceived support of the Liberation Tigers of Tamil Eelam ("LTTE"). It is an issue whether he also made a claim on the basis of being a member of a particular social group, namely Muslim businessmen in Sri Lanka. The appellant's claims were based upon three separate and distinct claims or sequences of events. The first was that he was forced to pay money in Pottuvil to the LTTE prior to April 2004, and after that to the Karuna group which was backed by the army. The appellant was abducted by the Karuna group in 2005 and was released after a ransom was paid ("the Karuna group extortion incident"). The second claim arose out of an incident in September 2006 when a number of people were massacred. It was believed that the army Special Task Force ("the STF") commander was involved although there were attempts to put the blame on the LTTE. Since that incident the appellant's brother has been missing. There was a protest against the massacre and the army accused the appellant of organising the protest and threatened to kill him. The appellant claimed that on 15 June 2007 he was taken to a camp by the STF, beaten for participating in the protest and accused of supporting the LTTE. The appellant claims he was forced to sign a statement written in Sinhalese and was told that his brother had joined the LTTE. He then left for Negombo ("the protest incident"). The third claim arose out of a bomb explosion in Negombo in June 2007 when the police mounted a cordon and search operation. The police went to the place where the appellant was living. When the police found he was from Pottuvil, the appellant claims he was detained, beaten and his identity card retained by the police. The appellant was only released the next day following the payment of a bribe by his brother-in-law to a police officer who was a body guard to a Muslim Minister ("the Negombo incident"). The Tribunal found that the extortion was directed at the appellant based upon a perception of his wealth and was aimed at him individually. The Tribunal accepted that the appellant participated in the protest march, but it did not accept that he had led the march or had organised it. The Tribunal found that the appellant had been vague about what he had done to organise the march and did not accept the claim because of its vagueness and implausibility. The Tribunal accepted that the appellant was questioned by police following a bomb explosion in Negombo but did not accept that he was detained or beaten. The Tribunal found that had the appellant been suspected of being involved in the bomb explosion, he would not have been released upon the payment of any bribe. The Tribunal did not accept that the appellant's brother-in-law, in the space of twenty four hours and living on the other side of Sri Lanka, was informed about the appellant's detention and was able to organise his release through the payment of a bribe. In any event, the Tribunal found that the Negombo incident did not constitute persecution for a Convention reason as the appellant was not targeted individually, but was rather detained as part of a sweep of the area following the bomb explosion. In relation to the Karuna group extortion incident, the appellant submitted that the Tribunal had failed to analyse the appellant's case as he had articulated it and had failed to assess the appellant's claim for refugee status on the basis that the appellant was a member of a particular social group. In relation to the Negombo incident, the appellant submitted that the Tribunal failed to examine the appellant's claims from a Convention perspective. In relation to the protest incident, the Tribunal erred in failing to clarify the appellant's claims. The Federal Magistrate considered that there was force in the criticism that the Tribunal's description of the appellant's particular social group namely, "businessmen in Sri Lanka" was wrong. He found that the appellant never asserted that he faced persecution arising out of membership of any defined social group. The appellant had claimed and had told the Tribunal that the main purpose for which he had been abducted was because he was a Muslim and that the Karuna group did not like a Muslim person growing his business in that area. The Federal Magistrate analysed this claim as one that claimed that as a Muslim he faced prejudice and concluded that the Tribunal expressly found that the appellant would not face persecution because of his religion and that the extortion was directed at him because of a perception of his wealth and was aimed at him individually. The Federal Magistrate found that the claim in relation to the Negombo incident fell "squarely within the area of merits review". The appellant asserted in his written submissions that the Tribunal had failed to consider the appellant's claims from a "Convention perspective. " The Federal Magistrate found that the Tribunal's findings were open to it on the evidence and particularly that the Tribunal reached its decision on the basis that the appellant was "roundly disbelieved". The Federal Magistrate found as misconceived the appellant's claim that the Tribunal failed to clarify what the appellant was saying given its view that the appellant's explanations about the protest incident were vague. The Federal Magistrate considered the transcript of the hearing before the Tribunal and concluded that it showed that the Tribunal properly explored with the appellant apparent inconsistencies put forward by him and the protest incident. The Federal Magistrate concluded that the Tribunal's finding in relation to this claim was well open to it on the material before it and did not give rise to jurisdictional error. In relation to the Karuna group extortion incident, it was contended in substance that the Federal Magistrate fell into error in not finding that the Tribunal had not addressed the appellant's claim to be a refugee on the basis that he had been persecuted because he was a member of a particular social group namely Muslim businessmen in Sri Lanka and that the Tribunal had erred in finding that the extortion was directed at the appellant because of his personal wealth, in respect of which finding there was no evidence. In relation to the protest incident, it was contended that the Federal Magistrate erred in finding that it was open to the Tribunal to reject the appellant's explanations on the grounds of vagueness and that the Federal Magistrate should have found that the Tribunal should have clarified any aspects of the appellant's claims or evidence which it considered to be vague or implausible. In relation to the Negombo incident, it was contended that the Federal Magistrate erred in finding that the Tribunal's findings in relation to this incident was open to it on the material before it and the Tribunal made no jurisdictional error in the manner in which it dealt with the application. At the hearing of the appeal the appellant developed the Karuna group extortion incident ground and submitted that the appellant had claimed before the Tribunal that he had been persecuted on the ground that he was a Muslim businessman. It was submitted that the social group which was the subject of persecution was Muslim businessmen but the Tribunal proceeded on the basis that the appellant's claim of persecution was based upon his membership of a particular social group "namely businessmen in Sri Lanka". The Federal Magistrate considered that this description by the Tribunal was wrong. The appellant submitted that the Tribunal would fall into jurisdictional error if it did not assess the appellant's claim as it was presented to the Tribunal. The appellant relied on the observations of Lander J in SZBJH v Minister for Immigration and Citizenship [2008] FCA 501 , particular at [40]-[42]. The appellant claimed refugee status by reason of being a member of a particular social group. He was entitled to have his application assessed as against that claim, not as against some other claim. But in order to find jurisdictional error in respect of the particular social group identified by the Tribunal it is necessary to determine what was the appellant's claim and evidence as to his membership of a particular social group. I have read the transcript of the hearing before the Tribunal and in the context of the first ground of appeal, the relevant passages are found at pp7 and 8 of the transcript. The appellant's answers to the questions put to him by the Tribunal are set out in par [18] of the reasons for judgment of the Federal Magistrate. Although the appellant did not articulate a specific or particular social group of which he claimed to be a member it was appropriate for the Tribunal to determine whether it could distil out of the appellant's claims and evidence a particular social group of which he was a member which was the subject of persecution. The Federal Magistrate was correct in par [20] of his reasons when he said that the appellant did not say that he was a member of a social group "businessman in Sri Lanka". The Tribunal finds that the extortion was directed at the applicant based on a perception of the applicant's person [sic] wealth and aimed at him individually". Although the Tribunal may have been in error in identifying the particular social group as it did, it made a specific finding that the appellant had not been persecuted by reason of his religion, that is to say because he was a Muslim. These findings were responses by the Tribunal to the claims made by the appellant. I consider that the Tribunal assessed the appellant's application against the claims he made albeit that it also considered a claim which he did not make, namely one based on membership of a social group being businessmen in Sri Lanka. What is relevant is that the Tribunal specifically referred to and addressed the claim of the appellant that he had been persecuted and feared persecution in the future by reason of the fact that he was a Muslim. Consistently with the principles enunciated in NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 144 FCR 1 at 19 and SZBJH v Minister for Immigration and Citizenship (supra) at [40]-[42] the Tribunal responded to, and dealt with, the claims which the appellant had articulated and which also arose on the materials before it. Even if the Tribunal had addressed the question whether the appellant was a member of a social group, namely Muslim businessmen in Sri Lanka, its reasoning discloses that it would have rejected that claim having regard to its findings that the appellant had not been targeted in the past and would not be targeted in the reasonably foreseeable future for the reason of his race or his religion or his political opinion and that the extortion was directed at him based on a perception of his personal wealth and aimed at him individually in respect of which there was material upon which it was open to the Tribunal to make these findings: see Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 197 ALR 389 at 394-395. The ground of appeal based upon the Negombo incident does not disclose, in its terms, any jurisdictional error. In substance it challenges the Tribunal's fact finding process and conclusions. At the hearing of the appeal the appellant developed this ground by submitting that there was a constructive non-exercise of jurisdiction in that the Tribunal failed to consider the appellant's claim and instead looked at the Negombo incident in isolation. In short, the appellant submitted that the Tribunal did not address the substance of the appellant's case in relation to this incident. I reject that submission. The Tribunal articulated clearly the circumstances out of which the appellant's claim in relation to this incident arose. The appellant submitted that the Tribunal did not consider the incident in the context of the appellant's claim to be a refugee. That is not a correct analysis of the Tribunal's reasoning. In its reasoning, the Tribunal set out in some detail the claims made by the appellant in relation to this incident. The Tribunal also canvassed the incident with the appellant in the hearing as the transcript discloses. The Tribunal did not accept the appellant's evidence as to the circumstances involved with the incident as credible and did not accept his evidence. It was open to the Tribunal so to find on the material before it. The Tribunal then reasoned that even if it were to accept all the claims made by the appellant in relation to this incident it found that there was not an instance of "Convention persecution" since the appellant was detained as part of a sweep of the area following an explosion and was not targeted specifically, nor for any Convention reason. The Federal Magistrate found that the claim in relation to this incident fell squarely within the area of merits of review, and in my opinion, the Federal Magistrate did not err. The ground of appeal in relation to the protest march incident is predicated on the Tribunal's finding that it did not accept the appellant's claims in relation to this incident because of "the vagueness and implausibility" of the claim. The appellant submitted that this disclosed jurisdictional error because it was open to the Tribunal to clarify the claims which were vague and implausible according to it which it failed to undertake. The Tribunal explained in its reasons specifically why it did not accept the appellant's evidence and claims in relation to this incident. It was open to the Tribunal on the material before it to find that it did not accept those claims. Further, I am satisfied, as was the Federal Magistrate, that a reading of the transcript of the hearing in relation to the Tribunal's questioning and the appellant's answers in relation to this incident demonstrates that the Tribunal explored with the appellant aspects of the claims in relation to this incident which troubled the Tribunal. The reasoning of the Tribunal and the reasoning of the Federal Magistrate did not disclose any jurisdictional error in relation to the Tribunal's findings and the Federal Magistrate's conclusion in relation to this incident. The appeal should be dismissed with costs. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | judicial review protection visa whether error in assessing claim on basis of membership of a particular social group. migration |
2 On 30 November 2007 orders were made dismissing the Application and Statement of Claim as against both Respondents, namely the Commonwealth of Australia and the State of New South Wales. Also on 30 November 2007 orders were made that any amended application and any amended statement of claim were to be filed and served by 5pm on 29 February 2008. No such amended application and no such amended statement of claim were then filed. 3 The matter came back before the Court on 10 March 2008 and on that occasion a further opportunity was given to the Applicants to file any proposed amended application and any proposed amended statement of claim. That was to be done by 25 March 2008. No such proposed amended application and no such proposed amended statement of claim were filed in accordance with those orders. 4 Presently before the Court are two Notices of Motion , one filed by the Commonwealth and one filed by the State of New South Wales. 5 The First Applicant opposed the hearing of those Motions today and relied upon two principal submissions. First, Ms Von Reisner contended that she did wish to file an amended application, a draft of which was provided to the Respondents and to the Court. She sought the opportunity to clarify the language employed in that proposed amended application but stated that the draft sufficiently reflected the principles which she wished to agitate should leave be granted to amend. 6 The second basis relied upon in opposing the hearing of the Motions was that there were outstanding requests made under both Commonwealth and State Freedom of Information legislation. Insofar as the Commonwealth was concerned it was agreed that a request had been made on 23 October 2007 of the Department of Housing and a response provided on 8 November 2007. Since that date there have been subsequent discussions between the First Applicant and officers of the Department with a view to clarifying the scope of the request made. The First Applicant maintained that a request had been made on 2 March 2008 of the New South Wales Minister of Housing, the Premier's Office and the Auditor-General, but that no response had since been provided. The State of New South Wales was not in a position today to agree that such requests had been made. Presumably the relevance of the requests made under the Freedom of Information legislation was to secure the provision of further documents which could facilitate, or assist, the drafting of any further pleadings. 7 The First Applicant also contended that this Court could not entertain either Motion by reason of section 78B(1) of the Judiciary Act 1903 (Cth). 8 It is considered that an order should now be made which finally resolves the applications made and the proceedings generally. No further opportunity should be given to the Applicants to file any further amended application in the present proceedings. The Applicants, it is considered, have already been given an ample opportunity to file such pleadings as they wish and have failed to do so. 9 Moreover, it is considered that the proposed amended application sought to be filed today goes well beyond the issues as previously sought to be raised and seeks relief which is substantially different. 10 Substantial reservation is expressed with respect to the proposed Applicants of that draft amended application. At present there are two Applicants. The proposed further pleading is in the nature of a representative proceeding and seeks to add six children ranging in age from one to thirteen years. At present there are two Respondents. 13 It is considered that the proposed amended application goes beyond the scope of any amendment to the existing proceedings and is, in substance, an entirely new proceeding. 14 It is further considered that the proposed application is embarrassing in substance. If what was sought was only an opportunity to be extended to allow the language of the application to be clarified, that opportunity would be granted. The deficiencies in the proposed amended application, however, are considered to be so fundamental that in whatever form it would be embarrassing should it be filed. 15 Section 78B of the Judiciary Act , it should be noted, is not considered to have any present application. Section 78B(1) requires a cause to be " pending " in a federal court. At present there is no such cause " pending ". All that is before this Court is a proposal to file an amended application. Even if this be not correct, s 78B has no application where a pleading raises trivial or unarguable points: Deputy Commissioner of Taxation v Warwick (No 2) [2004] FCA 918 , 56 ATR 371. In Pham v Secretary, Department of Employment and Workplace Relations [2007] FCAFC 179 it was further observed that the matters there sought to be raised were frivolous or vexatious. It is considered that the proposed application in the present proceedings raises issues which are frivolous or vexatious or unarguable. Accordingly, section 78B does not require this Court not to proceed further. The proceedings be dismissed as against both Respondents. 2. The First Applicant is not to commence any proceedings in this Court without the prior leave of the Court, excluding any application to appeal or seeking leave to appeal from this decision. 3. The Applicants to pay the costs of the First Respondent of and incidental to these proceedings including any reserved costs. 4. The Applicants to pay the costs of the Second Respondent of and incidental to these proceedings including any reserved costs. I certify that the preceding sixteen (16 ) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | judiciary act 1903 (cth) s 78b(1) requires a cause to be " pending " in a federal court proposal to file amended application is not a cause " pending " s 78b further has no application where a pleading raises trivial or unarguable points, or is frivolous or vexatious proposed amended application considered to be frivolous or vexatious or unarguable practice and procedure |
He signed a new contract of employment on 18 August 2000 when appointed to a new position with Airservices ('the Contract'). His employment with Airservices was subsequently terminated with notice with effect from 31 January 2006. A dispute arose with respect to the quantum of the termination payment to be paid to him. In particular, the issue was whether he was entitled to a bonus payment calculated on a pro rata basis for his final months of service of less than a full financial year. Put another way, at issue was whether the obligation on the part of Airservices to pay to the applicant ' an amount equal to Total Attainable Remuneration which would have been received and a payment in lieu of accrued Annual Leave ', as set out in clause 10 of the Contract, included an obligation to pay a proportion of the bonus which the applicant would have received had his employment remained on foot until the bonus payments were made at the end of the financial year. A further question arose as to whether his recreation leave and long service leave entitlements should have been calculated by reference to an amount including the bonus component. Broadly speaking, the dispute between the parties concerned: the construction of clause 10 of the Contract; and reliance on representations said by the applicant to have been made to him concerning his entitlements. The claims of each of those other 33 individuals arose out of circumstances substantially similar to that of Mr Fowler in that: each was employed by Airservices Australia in a senior management position; each had signed a new contract of employment with Airservices in substantially the same terms as the contract signed by Mr Fowler; each had received a letter of offer from Airservices prior to signing the new contract of employment, with some variations in those letters; each had been terminated or had resigned from his or her employment with Airservices; each claimed that upon termination or resignation, Airservices did not pay their recreation leave and long service leave entitlements at a rate that took into account the bonus component; with one exception, each claimed that upon termination or resignation of his or her employment, Airservices did not pay the bonus component on a pro-rata basis for periods of service of less than a full financial year; and each had relied upon alleged representations as to the bonus component. After attempts to resolve the dispute between the parties, Deacons sought instructions from each of the 34 individuals (including the applicant) to commence proceedings as a representative proceeding by way of an application under Part IVA of the Act. One of these individuals instructed Deacons that he wished to withdraw from any further involvement in the representative proceeding. Each of the remaining 33 individuals (including the applicant) signed a costs agreement with Deacons (the 'Deacons clients'). By a variation to the costs agreement, each Deacons client agreed to contribute to the legal costs of the representative proceeding proportionally in accordance with the proportion that his or her maximum individual claim bore to the combined total of the Deacons clients' maximum individual claims. Therefore, the proceedings were commenced on behalf of a group comprising persons who had been employed by Airservices, who claimed to be entitled to a similar kind of payment upon termination of their employment and who had signed a costs agreement with Deacons and instructed Deacons to act for them in the proceedings. The group was thus identified by criteria not limited to those associated with the nature of the claims themselves ( Multiplex Funds Management v P Dawson Nominees [2007] FCAFC 200 ; (2007) 164 FCR 275 at [137] ---[141] per Jacobson J). While I am informed that there are other former employees of Airservices not listed in Attachment 1 who otherwise come within the description set out in paragraph 2 of the application, those persons have not signed an agreement with Deacons. Those persons will not be bound by the proposed settlement. Following earlier unsuccessful attempts at settlement, including an attempted mediation, the matter has now been settled between the parties on the basis recorded in a "Deed of Release and Confidentiality". Subsequently, a letter was sent to each Deacons client enclosing a s 33J Notice, which notified them of the date set by the Court, being 24 July 2009, by which they may opt out of the proceedings. Deacons did not receive notification from any Deacons client that he or she had determined to opt out of the representative proceedings. Deacons has received continuing instructions from each Deacons client, with the exception of Mr Balachandran, in relation to the conduct of the proceedings subsequent to 24 July 2009. I shall continue to refer to the Deacons clients excluding Mr Balachandran as the 'Deacons clients'. I shall discuss Mr Balachandran later in these reasons. During the course of the representative proceedings Deacons has sought, and received, instructions from each Deacons client, in relation to all offers of settlement that have been made. Similarly, each Deacons client has been informed of the method to be used to calculate the proportion of any settlement that he or she would receive, taking into account legal costs and disbursements. Each Deacons client notified Deacons either in writing or orally to accept an offer of settlement put on behalf of Airservices on or about 21 August 2009. Oral or written instructions have been received from each Deacons client that the terms of the proposed Deed of Release and Confidentiality are acceptable. Each Deacons client was provided by email with a schedule that detailed the proposed distribution to be made to that person as part of the proposed global settlement. I am informed that each notified Deacons client has responded. Each has approved the proposed global settlement and the methodology of proposed distribution. There has been some query by some of the Deacons clients as to the specific allocation but that does not affect the fact that, as at the date of the hearing of this notice of motion, each of the 33 members of the group comprising the Deacons clients has given instructions to settle as proposed. Each of the Deacons clients was notified via email that the proposed application to the Federal Court to approve the proposed settlement was to be heard on 17 September 2009. I am informed that each Deacons client replied by email or by telephone. Each Deacons client has instructed Deacons that he or she is prepared to execute the Deed of Release and Confidentiality to give effect to the proposed settlement. Accordingly, I made an order as sought in the notice of motion that the applicant is not required to give any further notice pursuant to s 33X(4) of the Act of the application for approval of the settlement. Mr Balachandran is a named Deacons client. His wife, Mrs Balachandran, had informed Deacons that Mr Balachandran has been ill with the result that he has difficulties with memory and ' does not know what he is saying '. Subsequently, Deacons received a letter from a doctor who has the joint care of Mr Balachandran at the Neurosurgery Service at Royal Price Alfred Hospital. The letter states that Mr Balachandran has undergone multiple brain operations for a condition which caused profound cognitive impairment such that, as at 9 September 2009, he did not have the intellectual capacity to manage his own affairs. Deacons subsequently received a copy of a general power of attorney whereby, in or about 1991, Mr Balachandran had appointed Mrs Balachandran as his attorney. On 14 September 2009, Mrs Balachandran was provided with the schedule that detailed the proposed distribution to be made to Mr Balachandran as part of the proposed global settlement. Mrs Balachandran was also sent a hard copy of the Deed of Release and Confidentiality. Mrs Balachandran has informed Deacons that she approves the proposed settlement, the methodology for distribution and the proposed distribution to Mr Balachandran. It follows that each of the members of the representative group has been informed of the proposed settlement, the method of distribution and the actual or approximate amount to which he or she is entitled. None has opposed the proposed settlement and each has indicated approval. In summary, should the proceedings progress to a full hearing, Airservices would submit that, on a proper interpretation of the terms of the Contract and letters of offer entered into by the Deacons clients and Airservices, Airservices was not required to pay a pro-rata bonus on termination of employment to the Deacons clients. Airservices would argue that, on a proper interpretation of the terms of the relevant contracts of employment and letters of offer and the Long Service Leave (Commonwealth Employees) Act 1976 , it was not required to pay to any Deacons client on termination of employment an amount in lieu of accrued but untaken annual leave or long service leave at a rate which included a bonus component. Further, Airservices denies making the representations that the Deacons clients claim were made during the course of negotiation and explanation of the Contract to them. The Court's task is to assess whether the compromise is fair and reasonable ( Lopez v Star World Enterprises Pty Limited (1999) ATPR 41-678 ; [1999] FCA 104 at [15] per Finkelstein J). In the present case, each Deacons client has had the benefit of advice from solicitors and counsel as to how his or her interests are best served in the litigation and by the proposed settlement. My task is to determine whether the proposed settlement is fair and reasonable having regard to the claims made on behalf of the group members who will be bound by the settlement ( Williams v FAI Homes Security Pty Ltd (No 4) [2000] FCA 1925 ; (2000) 180 ALR 459 at [19] per Goldberg J). While the nine factor test adopted by Goldberg J in Williams is not a rigid test to be applied, it is useful as a guide ( Haslam v Money For Living (Aust) Pty Limited (Administrators Appointed) [2007] FCA 897 at [20] per Gordon J. ) The approach to be taken by the Court was recently reviewed by Jessup J in Darwalla Milling Co Pty Ltd v F Hoffman-La Roche Ltd (No 2) (2006) 236 ALR 322. Jessup J pointed out that there is little specificity that can be attached to the words "fair" or "reasonable". His Honour expressed the opinion that the practical judicial approach appears to be to identify any features of a settlement that are obviously unreasonable or unfair ( Darwalla at [39]). The evidence establishes that the proposed global amount, the methodology for distribution and the effect of the settlement on the payments to be made to the individual members has been adequately set forth to each of those members of the Deacons client group. As was the case in Darwalla, no objection, and no matter said to be unfair or unreasonable, has been raised in this case by any group member who will be covered by the settlement. As a result, I, like Jessup J in Darwalla , am left with only the broadest criteria to assess the reasonableness and fairness of the proposed settlement. As noted by Jacobson J in Taylor v Telstra Corporation Ltd [2007] FCA 2008 at [63] , Jessup J also said at [50] that he did not consider that it was the Court's function under s 33V to second guess the applicants' advisors in the answer to the question whether the applicants ought to have accepted the respondent's offer. The question is whether the agreed settlement falls within the range of a fair and reasonable outcome, taking everything into account. As Jessup J also pointed out in Darwalla , there is rarely, if ever, a case in which there is a unique outcome which should be regarded as the only fair and reasonable one. Deacons has presented a letter of advice from Mr Sharma, the partner of Deacons who has been involved in the conduct and carriage of these proceedings. Mr Sharma recognises that he provides his opinion in relation to the proposed settlement on his own behalf and on behalf of the other Deacons partner involved in the conduct and carriage of the proceedings, in their capacity as officers of the Court. That advice sets out a history of the negotiations, including the fact that negotiations were conducted for the applicant and the Deacons clients by senior and junior counsel. Counsel joined with Deacons in recommending the proposed settlement to the Deacons clients. Mr Sharma's opinion sets out the perceived strengths and possible weaknesses and complexities of the claim, and adverts to the time and costs estimated to be incurred if the matter were to proceed to a hearing on the second set of issues concerning the alleged representations made by Airservices to the Deacons clients ('the representations issue'). Senior counsel for Airservices also has an obligation to assist the Court in ensuring that the settlement is fair and reasonable. Airservices is obliged to conduct proceedings as a model litigant. Senior counsel for Airservices assures the Court that the proposed settlement and the percentage of each claim that will be received by each member of the group ' is more than fair and reasonable ' to each Deacons client. He also notes that this settlement took place before the construction of clause 10 of the Contract was determined; depending on that outcome, there may have been the need to hear the representations issue. In line with Mr Sharma's advice, Airservices notes that if the matter proceeds to a hearing, it has the potential to be of considerable length and complexity, particularly if it were to proceed to a hearing on the different representations alleged to have been made to each Deacons client. It is difficult, without entering into a detailed consideration of the strengths and weaknesses of the respective cases, to determine whether the settlement truly reflects the likely outcome of the proceedings. Airservices has explained the defences that it would have brought to bear in the proceedings. A hearing involving 33 different sets of alleged representations, which are generally denied by Airservices, would indeed be long and complex. This would diminish the amount that would ultimately be paid to each Deacons client, even if each such person were successful. Accordingly, I am satisfied that the percentage of each claim that is to be received by each Deacons client is, at the least, fair and reasonable, taking into account Airservices' detailed defences and the likelihood that the matter would be lengthy if it proceeded to its conclusion, with the attendant costs and the general vicissitudes of litigation. I am fortified in that conclusion by the opinion of Mr Sharma on behalf of Deacons and the fact that there was a mediated outcome during which the Deacons clients were represented by senior and junior counsel. Further, senior counsel for Airservices, acknowledging his obligation to the Court and the obligation of Airservices as a model litigant, has expressed the view that the settlement is more than fair and reasonable for the Deacons clients. This percentage is used to calculate the proportion of the global settlement sum to be paid to each Deacons client, allowing for costs. This enables the Court to understand the basis on which the amounts payable to the individual members of the group have been calculated. Where the global settlement and the method of distribution have been established, the fact that there is a degree of uncertainty in the precise distribution does not prevent approval being given to the settlement ( Lopez ). There has already been payment by the Deacons clients on account of costs incurred to date. The proposed schedule for distribution takes account of those payments of costs and it follows that the individual group members have been notified of, and approve the quantum of, the costs incurred. I am satisfied that there is no need for further evidence of the reasonableness of those costs. The first class of documents consist of the costs agreements between the Deacons clients and Deacons, the schedules showing the payments to be made to each Deacons client, which include the costs payable by each member of the group, and the opinion of Mr Sharma as to the history of the matter and his perceptions of the strengths or weaknesses of the Deacons clients' case. The applicant seeks an order that the first class of documents be kept confidential from Airservices. Airservices does not seek access to this class of documents and consents to their remaining confidential. In my opinion such a course is appropriate, as the documents relate to the arrangements between the Deacons clients and their solicitors, Deacons. A confidentiality order is sought in respect of a second class of documents but not that they be kept confidential from Airservices. The second class of documents was, initially, the Deed of Release and Confidentiality and the amended Deed of Release and Confidentiality in their totality, and the schedule setting out the proposed distribution of the global settlement sum to each Deacons client ('the distribution schedule'). At the hearing, the second class of documents was limited only to the distribution schedule and a specific clause of each Deed: clause 2.1. That clause sets out the global settlement sum to be paid by Airservices to the Deacons clients. That figure is the same in both the Deed and amended Deed. The amendment to the Deed relates to the withholding of tax from the settlement sum and is irrelevant for present purposes. Airservices contends that the publication of the global settlement sum would be embarrassing and misleading because there are other employees of Airservices, who are not part of the Deacons clients group, who may be subject to contracts of employment similar to the Contract but who do not allege representations by Airservices. Airservices emphasises that, from its perspective, the global settlement was reached by taking into account the contractual issue and the individual allegations of representations, the cost of litigation and the time involved in that litigation. Airservices submits that it is appropriate to keep the global settlement and the individual payments confidential, as it is prejudicial to Airservices to make public that settlement amount. Further, Airservices says that it is reasonable to assume that one of the factors taken into account in determining the settlement was the fact that the settlement would be accompanied by a deed of confidentiality. Both parties support an order that clause 2.1 of the Deed and amended Deed be kept confidential. The Deed and amended Deed provide that the Deacons clients must not disclose the content of the Deed (which includes the global sum), or any discussions or correspondence relating to the negotiation of the Deed or the subject matter of the proceedings without the consent of Airservices. That clause, agreed between the parties, would be put at naught if the documents that set out the payments were made public. The requirement of confidentiality forms part of the settlement of the proceeding. In my view, it is appropriate that the confidentiality order be made. I certify that the preceding thirty eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | court approval of representative proceeding group members tightly confined and have provided continuing instructions to applicant's solicitors all group members have approved proposed settlement global settlement sum and settlement distribution method specified counsel and solicitors recommend settlement whether any further notice required pursuant to s 33x(4) of the federal court act whether settlement is fair and reasonable whether global settlement sum should be kept confidential practice and procedure |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural and Indigenous affairs (as it was then known) refusing to grant a protection visa to the appellant. He arrived in Australia on 5 January 2005. The appellant claimed to have a well-founded fear of persecution from members of the SNDP and Rashtriya Swayamsevak Sangh (RSS) for reason of his Christianity and for his imputed activity of converting Hindus to Christianity. 3 The appellant claimed he was a Christian actively involved in his church and was involved in assisting impoverished families in the community. His claims related to the church mediating a dispute between two Hindu families associated with the SNDP, one of which was the family of a man named Gopalan. The appellant claimed that Gopalan was a leader of the SNDP and an area member of the RSS. He says that Gopalan made false claims to the police about him. The police however, he says, investigated the matter and warned Gopalan. The appellant was later beaten by Gopalan and five other members of the RSS. This beating was allegedly to dissuade him from trying to convert people to Christianity. He claimed that Gopalan also threatened to kill the appellant and that his associates ('goons') vandalised the appellant's property. 4 The appellant indicated there was no State protection due to corruption and political influence. He claimed an inability to relocate because the RSS was a national organisation and because his wife was sick. At the hearing the Tribunal attempted to contact the two priests of the appellant's church. The first telephone number provided by the appellant was not connected and the second resulted in a successful connection but there was a language barrier preventing communication with those answering the telephone call. 6 In relation to the claims, the Tribunal accepted the appellant's evidence as to the dispute with the Hindu family. However, it found his claims of on-going persecution were not credible as there was a large and influential Catholic population in his district. The Tribunal found the RSS was linked to the Bharatiya Janata Party (BJP) and also found the appellant would obtain adequate State protection in his own district. The Tribunal noted the BJP was in opposition, had minimal support in the appellant's electoral district and the government in the district was overwhelmingly supported by parties which did not support the BJP or RSS. 7 The Tribunal did not accept relocation would be necessary. However, it saw no difficulty in the appellant relocating and nominated various places to which the appellant could relocate. The Tribunal found the appellant did not have a well-founded fear of persecution in India for a Convention reason ( Convention Relating to the Status of Refugees 1951 as amended under the Protocol Relating to the Status of Refugees 1967 ). 9 In oral evidence at the hearing before the Federal Magistrate, the appellant indicated that he had relocated 40 km to his sister's house but the house had been bombed by opponents. He challenged the Tribunal's inability to contact the priests, wanted time to provide records of the bomb incidents, wanted to submit information to the Tribunal about matters occurring after its decision and gave other factual evidence. The appellant filed an affidavit on 25 September 2007 which submitted further evidence as to his claims. 10 The Federal Magistrate considered the appellant's affidavit of 25 September 2007 and held that the evidence within it was not before the Tribunal and was not relevant to the question of jurisdictional error on the part of the Tribunal. In relation to the grounds of the application, his Honour considered all the grounds that were raised by the appellant. He found no jurisdictional error was established. 11 His Honour found the Tribunal was entitled to have regard to country information it considered relevant, that the use and weight of it was for the Tribunal to determine and that this use was excepted by s 424A(3)(a) of the Migration Act 1958 (Cth) ('the Act'). 12 The Federal Magistrate also found the Tribunal properly understood the claims and found there was no well-founded fear of persecution for a Convention reason. It is not clear therefore why the Tribunal went on to also consider the possibility of the applicant's relocation. The Tribunal's findings as to the credibility of the fear and availability of adequate state protection, a factor which is relevant to the issue of whether the fear is well-founded (see Minister for Immigration and Multicultural Affairs v Respondents S152/2003 [2004] HCA 18) were not attendant with such doubt or lack of sufficient confidence as to require it to ask the so-called "what if I am wrong question" ( Minister for Immigration and Ethnic Affairs v Guo [1997] HCA 22 ; (1997) 191 CLR 559 (" Guo "); Wu Shan Liang). That is, to consider whether there was an alternative on which to base the decision to affirm the delegate's decision. Even if the Tribunal's finding as to relocation in India being a reasonable option for the applicant was attendant with legal error, the Tribunal's clear finding as to the credibility of the claim to fear harm and the availability of adequate state protection in his local area stand either separately, or certainly jointly, as an independent and unimpeached basis on which the delegate's decision was affirmed ( VBAP of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 965). The Tribunal had unsuccessfully attempted to contact the Parish priest who could provide corroborative evidence. Consequently the Tribunal should have considered the alternative position where its finding the appellant was not at risk was wrong and should have given the appellant the benefit of the doubt where it had entertained the possibility the claims were plausible. 2. The Federal Magistrate erred in finding the evidence (as to the death of the priest) occurred after the Tribunal hearing. 15 Although the first ground of appeal is directed against the Tribunal rather than the Federal Magistrates Court, for the purposes of this appeal, the grounds will be considered as alleging a failure on the part of the Court below to identify those failures of the Tribunal. In written submissions, the appellant appears to advance altogether different grounds of appeal, namely, that the decision was induced or affected by actual bias of the Tribunal. Several particulars of the actual bias are set out but the main particular was the findings themselves. 17 As to the allegations of bias in the written submissions, I would not permit this matter to be raised on the appeal. It was not argued in the application for review by the Federal Magistrates Court nor was it included as a ground of appeal in the appeal to this Court. It is clear that an allegation of bias must be distinctly made and proven: Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at [69] per Gleeson CJ and Gummow J. It would be a rare and extreme circumstance that bias on the part of the Tribunal would be established simply by reference to the reasons produced by the Tribunal: SCAA v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 668 at [38] per von Doussa J. See also SBBF v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 358 at [16] per Tamberlin, Mansfield and Jacobson JJ. 18 The allegation of bias is entirely without foundation and is rejected. However, the Tribunal, although it did attempt to contact one of the priests of the appellant's church and was unsuccessful in doing so, had no obligation to inquire in that sense: Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at [1] per Gleeson CJ and [43] per Gummow and Hayne JJ. It is well established that it is for the appellant to advance whatever evidence or argument he or she wishes to advance in support of a contention that he or she has a well-founded fear of persecution for a Convention reason: Abebe v Commonwealth [2004] HCA 32 ; (1999) 197 CLR 510 at [187] per Gummow and Hayne JJ. 20 While it may be appropriate to adopt a liberal attitude concerning proof of persecution in the context of an application for recognition as a refugee, there is no obligation on the Tribunal to uncritically accept any or all of the appellant's assertions: Randhawa v Minister for Immigration, Local Government and Ethnic Affairs (1994) 52 FCR 437. 21 This issue was not raised as a ground of appeal in the Federal Magistrates Court. Before it can be argued in this Court, the appellant must demonstrate that it is expedient and in the interests of justice that new grounds of appeal be raised: SZINP v Minister for Immigration and Citizenship [2007] FCA 1747 at [22] . 22 At the hearing of the appeal, the appellant sought to tender an affidavit to which was annexed a document entitled 'Certificate' dated 02.01.08. The document bears the seal of St Stanislaus Forane Church and its phone number. It appears to be signed by Jose Panthalanbaram. In related to the same incident the SNDP Gundas had killed Fr. Job recently. So I feel that if [the appellant] come back to India now will be a risk to his life in future. I will remember him in my daily prayers. Secondly, it was said to constitute hearsay. Counsel acknowledged in respect of the second ground of objection that the evident absence of the witness might constitute an exception. 24 It is certainly clear from its date that the Certificate was not before the Tribunal or the Federal Magistrates Court. It is also apparent that the reason for the inability to contact the priest whom the Tribunal originally sought to contact might be explained by his death. In this 'Certificate' the death of a priest appears to be attributed to the actions of the SNDP Gundas. 25 The difficulty in relying upon these circumstances as an appropriate ground of appeal is that there is no evidence as to jurisdictional error whatsoever, either on the part of the Tribunal or on the part of the Federal Magistrates Court. 26 What is really sought to be achieved is the production of this Certificate by way of fresh evidence previously unavailable to the appellant but which clearly the appellant had sought to adduce and which does, on its face at least, appear to have a possible bearing both on the reasonable fear issue and the relocation issue each of which were found adversely to the appellant. 27 While the Certificate might qualify as fresh evidence on the very topic of the Tribunal's inquiry and which was otherwise unavailable to the appellant, unfortunately it does not have relevance to this appeal. It is not open for an appellant to ask the Court to admit new evidence for the purpose of inviting the Court to disagree with a factual conclusion reached by the Tribunal: MZXHY v Minister for Immigration and Citizenship [2007] FCA 622 (30 April 2007). 28 Fresh factual issues cannot be raised on an application limited to jurisdictional error unless they bear on some jurisdictional error alleged: M211 of 2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 660 (28 May 2004). 29 I am unable to take the affidavit and Certificate into evidence as it is not relevant to jurisdictional error and thus does not qualify as being relevant for the purposes of s 56(2) of the Evidence Act 1995 (Cth). It is not entirely clear how this ground is said to support the appeal. The position of the appellant put at its highest, would appear to be that unbeknown to him, the parish priest who the Tribunal was trying to contact at his request in order to verify his claims, had died, his death occurring prior to the hearing. Again, attempting to understand the appellant's claim, it appears to be that he only learned of this information recently. That explains the inability to contact the parish priest when the Tribunal attempted to do so. Moreover, the material contained in the Certificate, it would be said, supports all of the claims made by the appellant and explains why the Tribunal was unable to contact the particular priest. While these propositions were not articulated in that way by the appellant, it seems that this constitutes the thrust of his claim at its highest. But seen that way, there was nothing in ground 2 which takes his argument beyond the argument in ground 1 which I have already decided has to be rejected as it is not possible to take into evidence the affidavit with the attached Certificate. The affidavit has no relevance to jurisdictional error. 31 No jurisdictional error has been established and the grounds of appeal must fail. The appellant is to pay the costs of the first respondent. I certify that the preceding thirty-two (32) numbered paragraphs are true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | fresh evidence obligation to obtain additional information bias migration |
Pending the hearing of the application for confirmation, MDU and Avant have applied to the Court for an order under s 17C(5) of the Act dispensing with the need for compliance with s 17C(2)(c). 2 Section 17B of the Act provides that no part of the insurance business of a general insurer may be transferred to another general insurer except under a scheme confirmed by this Court. Section 17C(2)(c) relevantly provides that an application for confirmation of a scheme may not be made unless an approved summary of the scheme has been given to every affected policyholder . An approved summary is a summary approved by the Australian Prudential Regulation Authority ( APRA ). An affected policyholder is a holder of a policy affected by a scheme. 3 MDU is a wholly owned subsidiary of United Medical Protection Limited ( United ), in that 34.78% of its issued shares are held by United and 65.22% of its shares are held by Avant, which itself is a wholly owned subsidiary of United. The Avant group provides insurance and other services to medical practitioners, dentists and related professions in Australia. Each of MDU and Avant carries on an insurance business in Australia and is a licensed insurer under the Act. MDU and Avant propose a scheme whereby the whole of the business of MDU will be transferred to Avant in order to simplify the structure and operations of the group. MDU's portfolio of insurance contracts will be assigned to Avant. 2. The whole of the insurance business and assets of MDU will be transferred to Avant, including benefits arising from reinsurance contracts. 3. Avant will assume all liabilities and be entitled to all benefits as insurer under the insurance contracts as if it were a party. 4. (b) Avant will be entitled to the benefits of and to take action in respect of the insurance contracts and will be entitled to the benefits of and to take action in respect of the reinsurance contracts within MDU and its re-insurers. It has only a limited number of policies, all of which were issued during the period 1 July 1997 to 31 December 1998 to medical practitioners and dentists. All of the liabilities under the insurance contracts issued by MDU were reinsured. However, by reason of the insolvency of HIH Casualty and General Insurance Limited, which was the re-insurer in respect of a share of the liabilities, MDU is not fully reinsured. 6 In respect of 1997 claims and 1999 claims there are no longer any open files. However, there are still 10 open files in respect of claims notified during 1998. At present there is an outstanding estimate in respect of only one of those, in the sum of approximately $130,000. The 10 open files are notifications involving children. None is yet statute-barred and one involves a potential major claim. The incident files were individually reviewed in December 2005 and all of the patients in respect of which the claims were notified are still of a young age. While none of the files can yet be closed, there has been no activity in respect of nine of them since notification in 1998. 7 Avant has approximately 30,000 policyholders, who would be affected policyholders within the meaning of s 17C(2)(c). Since it is proposed to amalgamate the business of MDU and Avant, there is at least theoretically a possibility that the policyholders of Avant would be affected by the transfer because there would be further claims possibly open to be made on the assets of Avant, albeit assets that would be swollen by the amalgamation of the assets of MDU. 8 Mr Adrian Gould, a fellow of the Institute of Actuaries of Australia and a fellow of the Institute of Actuaries (London), has prepared a report on the proposed transfer. A section of that report deals with the financial effects of the proposed scheme. In particular, Mr Gould's report deals with the financial position of Avant after the implementation of the proposed scheme. The scheme will take effect on 19 March 2008. Mr Gould has considered the implications notionally on the basis that the proposed scheme took effect as at 31 December 2007. 9 Mr Gould embarked on a comparison of the prudential security ratios required by APRA in relation to both companies. APRA requires that the ratio of APRA-approved capital base of an insurance company to the minimum capital requirement of that company be at least 150%. As at 31 December 2007, the ratio of Avant's capital base to the minimum capital requirement was 319%. Thus, it is significantly in excess of APRA's requirement. APRA has a minimum capital requirement which is far in excess of the charges that would normally be taken into account in calculating that requirement so far as MDU is concerned. The effect of that minimum is that the ratio for MDU as at 31 December 2007 was 162%. Apart from the artificial minimum, the ratio would have been very significantly greater than the ratio of Avant. 10 Following the national implementation of the proposed scheme as at 31 December 2007, the ratio of the merged business would have been 321%. Thus, the affected policyholders of Avant will in effect be better off as a result of the amalgamation. That is the consequence of the absorption of the assets of MDU with only a very disproportionate amount of liabilities to be included. 11 It is apparent that, although theoretically the policyholders of Avant are affected policyholders within the meaning of s 17C, it is inconceivable that they would be worse off as a consequence of the amalgamation and in fact would be better off. In those circumstances, the disadvantage of incurring the costs of giving an approved summary of the scheme to every Avant policyholder far outweighs the extent to which such a policyholder might be prejudicially affected by the scheme. 12 While there are only 10 MDU policyholders who have notified claims in respect of the periods to which I have referred, there are in fact some 14,000 policyholders who would be affected policyholders under the Act. While none have made a claim and it is highly unlikely now that a claim will be made, it is still possible. Accordingly, such policyholders are affected policyholders within the meaning of s 17C. However, having regard to the time that has elapsed since the currency of the policies, it is apparent that it is highly unlikely that there would be any prejudice to such policyholders by reason of the transfer. Since no claims have been notified it is impossible to assess the likely quantum of any claim that might arise. Having regard to the time that has elapsed it seems to me that it is sufficiently unlikely to allow the requirement of s 17C(2)(c) to be dispensed with in relation to the policyholders of MDU. 13 In all of the circumstances, I consider that it is appropriate to accede to the application that has presently been made for an order dispensing with the need for compliance with s 17C(2)(c). I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. | scheme of arrangement transfer of insurance business under the insurance act 1973 (cth) notification of affected policyholders whether appropriate to partially dispense with requirement for notification insurance |
He is the managing director of North East Equity Pty Limited, and he has effectively controlled the company since he established it. In September 1998 North East Equity purchased a carrot processing plant at Mandogalup Road, Wattleup, which is south of Fremantle in Western Australia. The plant had previously been operated by the Sumich group, but that group had gone into receivership. However, after the purchase, North East Equity continued to sell some carrots and other produce under the Sumich brand name. 2 In 2002 Mr Tana negotiated with his then friend, David Proud, to replace some of the less sophisticated Sumich plant with a more modern processing plant. Mr Proud was the principal of a business called Proud Machinery, which operated under the trading name of Proud Nominees Pty Limited. I will refer sometimes to both Proud Machinery and Mr Proud simply as 'Proud'. The negotiations took many months. 3 In October 2002 North East Equity agreed with Proud Machinery to pay it $3 million to purchase and install new equipment for the carrots processing plant. The new equipment was installed in March 2003. Since then Mr Tana and Mr Proud have disagreed about whether the new plant and equipment were satisfactory. 4 North East Equity claimed many millions of dollars in damages and economic loss based on loss of carrots sales, breach of contract, contraventions of s 52 of the Trade Practices Act 1974 (Cth) and negligent misstatement, although in final address an alternative claim was also made in the order of $1 million. North East Equity also claimed that Proud Machinery and Mr Proud had represented that the plant and equipment would perform at the standards set in the contract, which was the basis of its claims of contraventions of s 52 of the Trade Practices Act and in negligence. There were many disputes as to whether the new plant, as finally installed by Proud Machinery, operated either to the contractual or represented standards, and how any loss of North East Equity should be assessed. 5 A further complicating factor is that, after entry into the contract with Proud Machinery, North East Equity financed the acquisition of plant and equipment by entering into a master lease with the Bank of Western Australia Limited, under which the bank took an assignment of all of North East Equity's rights under the contract with Proud Machinery. That raised an issue whether North East Equity could sue Proud Machinery for breach of contract. 1. Mr Tana asked for a plant that could process and pack 150 tonnes in an 8 hour working day. Mr Tana explained that the purpose of the 8 hour day was to condense his packing operations into a one-day shift, and thus avoid paying his workers penalty rates. Mr Tana said that he told Mr Proud that he needed to achieve a minimum temperature of 5deg.C for the cores of the carrots when they were packed. 7 Mr Tana also asked that the plant have the ability to grade, automatically or mechanically, the carrots into various sizes, in order to replace the then-present process where this grading was done manually. Carrots can be graded by sorting them according to their width (or girth) and their length. Ultimately, as part of the contract, North East Equity's staff specified to Proud Nominees five widths and three lengths into which the carrots should be able to be graded by the new plant. 8 Mr Tana and Mr Proud agreed that the new plant would result in an increase in the efficiency of North East Equity's labour usage, compared with the existing Sumich plant. 9 In the course of their discussions, Mr Tana told Mr Proud that the principal source of carrots for the Wattleup plant would be an existing farm at Guilderton. Guilderton was about one hour's drive north of Perth. Mr Tana explained that it was his intention to establish a larger farm, to replace the majority of the suppliers of the Wattleup plant. This new farm was to be at Lancelin, about 180 km north of Wattleup, and further up the Western Australian coast from Guilderton. Mr Tana's long-term plan was to have both his growing and packing operation on the premises at Lancelin. But, he needed an interim plant at Wattleup until he brought the Lancelin operation into production. A new processing and packing plant would be built at Lancelin. 10 Mr Proud told Mr Tana that he had recently been involved in supplying a Queensland carrot producer, Kalfresh, with a new automated carrot processing line. Mr Tana sent North East Equity's maintenance manager, John Webster, to Queensland to inspect Kalfresh's plant prior to deciding to purchase the new plant from Proud Machinery. Mr Tana also travelled to Belgium to speak with the manufacturer of some of the proposed new plant and inspected three factories there to observe similar equipment in operation. North East Equity claimed that Proud represented that there would be savings on power costs based on Kalfresh's experience. 11 The new plant was installed in early March 2003. After that, the parties became engaged in disputes about its performance, which I will come to later in these reasons. 2. During the pre-contractual negotiations in July 2002 Mr Tana handed Mr Proud a copy of that note. Mr Tana could not recall doing this, but I am satisfied that he did. MUST MAKE CHANGES TO ACHIEVE ABOVE AT PM [PROUD MACHINERY] UNLESS CAUSED BY NEE [NORTH EAST EQUITY]. NEE ENTERS INTO AN AGREEMENT WHEREBY P[ROUD] MACH[INERY] CHARGES $233K FOR THE PROJECT COORD[INATION], MANAGEMENT AND SUPERVISION OF MANUFACTURE AND INSTALLATION OF EQUIP[MENT]. MATERIAL TO BE SPECIFIED e.g. SIZES, THICKNESS, MOTOR RATINGS etc (ALL MOTORS TO BE 25% OVER SPECIFIED). The references in the note to 'Brunogh [sic] and Gillenkirsch [sic]' were intended to refer to manufacturers of equipment intended to be used in the new production line. These were a Belgium company, Bruynooghe, which manufactured the grading and associated equipment which sorted carrots into various sizes by width (or girth) and length, and Gillenkirch, a German manufacturer of packing equipment. 3. Shortly after Mr Tana's note was provided, Mr Proud wrote to Mr Tana on 29 July 2002. First, the existing plant's equipment for receiving and polishing the carrots was to be retained. 16 That existing equipment operated in the following way. When carrots were brought to the plant, they were contained in large wooden crates. There is a significant issue as to the weight of carrots contained in those crates, which, depending on which account is correct, varied between 400, 410 and 450 kg. A forklift truck would pick up two of these crates at a time and move them to the tipping station. The forklift would raise the crates up to a level where they sat on a platform on the tipping station. After the forklift tines were withdrawn, the crates would be held in place on the platform. The platform would then tip, so that the carrots contained in the crates would spill into hoppers or large bins. From there, they were conveyed mechanically, on conveyor lines, to inspection or grading tables. At this point the carrots were visually assessed as they moved along a conveyor belt. Carrots that looked damaged or unsuitable would then be removed. Thus, sometimes when the carrots were tipped into the receiving hopper, they might have become broken or chipped by contact with some sharp edge or other carrots. Such carrots are not attractive to consumers, who prefer produce which appears to be in good condition. The rejected carrots, however, are able to be used commercially, for example, in commercial production of composite foods or in juice. 17 Obviously, the greater the accuracy at which unsuitable carrots are removed at this point, the more efficient the further processing will be. The subsequent stages of the processing plant will not have to deal with carrots that, ultimately, will not be packed at the end of the processing. 18 After the carrots passed along the conveyor belt across the inspection or grading stations, they then proceeded into brush washers. These machines used water and brushes which rotated and washed the carrots. Dirt and other residue, including root hair, were scrubbed off, so that the skin of the carrot appeared to be clean and fresh-looking. 19 Mr Proud's letter then proposed that a new stainless steel wet receiving hopper would be installed after the old brush polishers. This would spread the carrots more evenly. They would then be conveyed onto one of two flume elevators. These would carry the carrots upwards on their way to automatic grading. As the carrots passed upward on the flumes, they would be sprayed with water to rinse them. At the top of the elevator, two infeed vibrators would be positioned to spread the carrots evenly across the conveying belt, which was two metres wide. The vibrators were intended to be positioned to minimise the chance that any carrots might fall off the elevated platforms to which they had been carried. 20 Next, the diameter (or girth) sizers or graders would grade the carrots into five separate diameters. The diameters could be set by the operator of the equipment adjusting a hand wheel which was equipped with a gauge. As the carrots passed over the diameter graders, they would fall through holes in the conveying belt that were wider than the width of the carrots. After the carrots fell through such holes, they were received onto other conveyor belts. The smallest carrots would fall through first, followed by progressively larger ones. The lower conveyor belts ran horizontally away from the diameter grader. Mr Proud said that the diameter graders would be accessible from a suitable platform and stairway, and would be serviced by a centralised lubrication unit. He said that there would be automatic lubrication systems as well. He said that the output for Mr Tana's expected production would allow for the graders to operate at the lower end of their available speed '... which will reflect in the quality and service of each of these units'. 21 The five lower or 'exit' conveyors would carry, respectively, five streams of graded carrots ranging from smallest to largest. The smallest and the extra large carrots would be taken by their two conveyors directly to a receiving water tank. The small/medium, medium and large carrots would be transferred to three stainless length graders. These would run horizontally to the exit conveyors. The letter of 29 July 2002 said that the length graders '... have the ability to split these diameters into two selections which will then transfer into the desired chiller tank'. The letter said that, in order to control the transfer of selected sizes to the correct water tanks, 24 pneumatic gates would be positioned at appropriate locations. The gates would be activated from the main control panel for the whole system. 22 In the letter, Mr Proud recommended that nine receiving water or chiller tanks be installed. The receiving tanks would each hold up to 10 tonnes of a particular grade of carrots. Mr Proud wrote that those '... will give you one tank for each of the selected diameter and length grade and one extra tank for the purpose of receiving any grade which exceeds the ten tonne capacity allowed. This will also give you an opportunity to have a spare tank in the case of a pump malfunctioning or for cleaning purposes as it is possible to drain any tank without interfering with the others'. For example, the smallest diameter carrots would have been conveyed from the initial exit conveyor underneath the commencement of the diameter grader directly to a receiving tank. That tank would be full of chilled water intended to cool the carrots' core temperature to the 5deg.C referred to in Mr Tana's note. 23 The receiving tanks could be emptied by the plant operator causing air to agitate the carrots from below, and water to flow out of the tank into an intra-lock exit conveyor. The exit conveyor would allow the chilled carrots, which had been carried out of the receiving tank, to be conveyed to the packing stations. And, the exit conveyor also drained the water propelling the chilled carrots out of the receiving tanks into the return water tank. A water compensation tank would also be installed to hold any water that could not be used immediately. Next, water which had been recycled through the return water tank was pumped through a drum filter to remove debris. Then the chiller tank would receive the filtered water. Chilling coils were placed inside that tank which would lower the water to the desired temperature. Mr Proud wrote that he was proposing to make further enquiries with Mr Webster about North East Equity's refrigeration requirements. Mr Proud said he would then be able to evaluate the existing refrigeration plant and what changes might be proposed. 24 Mr Proud said that the exit conveyors and gate system proposed would enable the operator to select any size and diameter of carrot to be sent to a particular packing site. He said that he had allowed for a one-bin filling station which would have the ability to receive any size selected. Delivery belts would control the flow of the chilled carrots to the intended packing station. A graphical operator interface results in a user friendly operation. A modem is installed to assist in program changes or troubleshooting. The water being pumped escapes into the Return Tank at a rate which is controlled through a PT100 Temperature Sensor. A PID Control Loop calculates the speed of the pump and the blower motor to ensure this controlled feed. Mr Proud proposed that there be two additional Newtec/Gillenkirch carton filling stations, to make a total of five. The way these carton filling stations worked was that the weighing machine would be set to measure either 10 or 20 kg quantities of carrots. The desired quantity would then be packed into an appropriate 10 or 20 kg carton by the Gillenkirch packing machine. Before the carrots went to the weighing machine, they would be conveyed over a final grading table. At that point, they would be inspected for quality. The persons at the grading table would pick up and throw into designated tubes, first, Class 2 carrots and, secondly, any damaged carrots which had not been removed at the initial grading. Class 2 carrots were ones that either had escaped notice in the initial grading, or subsequently had become damaged as they passed along the various parts of the processing. Thus, carrots may have chipped or been damaged when they fell as they passed through the diameter or length grader holes or as they were mixed about in the process of being received into or taken out of the chilling tanks. The persons performing visual inspections at the final grading tables would remove these imperfect carrots from those destined for the carton filling stations. Mr Proud suggested that the existing tanks in the old system be repositioned to receive, by conveyor belts, the carrots that were rejected at the final inspection tables. 27 The 29 July 2002 letter also noted that the weighing and packaging equipment used in the existing prepack line could be included in the new design. Mr Proud suggested that he might be able to increase the productivity of the prepack line with new equipment. The prepack line was used to weigh automatically and then pack very small carrots into plastic bags of, say 0.5, 1 or 2 kg, each for display for sale in supermarkets. Small and small/medium carrots would be conveyed for prepacking from a chilling tank to a conveyor with a grading table. From there, the sorted carrots would be conveyed to where they were weighed and packed into plastic bags, and then to cartons whence they would be carried along the final conveyor. 28 In addition, Mr Proud had incorporated Mr Tana's proposal that the existing hand-packing line be retained and incorporated into the new plant. This line conveyed particular classes of carrots which were hand-packed in smaller quantities. For example, the handline could process carrots that required closer than usual inspection, and those of which a small volume had been received. 29 Next, all of the packed cartons were conveyed to two robots located at the end of the various lines, which automatically removed the cartons from the lines and stacked them onto pallets ready to be moved into the cool room by a forklift. On 1 August 2002 Mr Webster provided Mr Tana with a list of matters for consideration. He pointed out that an 8 hour shift was, in reality, only 7 hours of work, after taking account of the employees' rest breaks and an amount of inefficiency in an ordinary working day. He then gave a worked example to show that, in 7 hours, the five packing machines could process 7,350 cartons of 20 kg each, equivalent to 147 tonnes. He had based this on each of the Gillenkirch packing machines being able to process three and a half 20 kg boxes per minute consistently over the whole of the seven effective working hours of an 8 hour shift. 32 Mr Webster wrote that this level of output would occur as long as the brush washers could keep up with the present 14-15 tonnes per hour to produce what he called 'a good polished carrot'. ? hrs. He noted that one of the drawings then being considered showed five inspection tables, one at each box filler, and observed that probably only three were required. He suggested that one inspection table could be used for two box fillers, so that only three inspection tables would be required between the five box fillers. He commented that, because sizing should not be a problem for both girth and length, it would be possible to grade for Class 2 medium and large carrots at the inspection tables located prior to the box fillers. He said that the Class 2 carrots could then be able to be stored in the two old surplus Wyma (brand) wet tanks until they were packed later in the day. 34 Mr Webster wrote that he had had discussions with Ms Mirosevich and they had estimated that no more than 32 people would be needed to operate the new automated plant (leaving out the handline and prepack line). He gave an example of a 10 hour day in which the forklift and grading (at the inspection tables located immediately after the wet hopper) would start at 6.00am so that 45-50 tonnes could be accumulated in tanks by about 9.00am. The shift of workers operating at that section of the plant could finish at 2.00pm and a new team could arrive to do 3 hours more work until 5.00pm and then clean up for an hour. Thus, the second shift would do 4 hours per day. Mr Webster continued by observing that the pack out lines would be able to operate from 9.00am to 5.00pm for shifts of between seven and six effective working hours, or a 38 hour working week. 35 These observations to Mr Tana by his two principal employees responsible for the operation of the existing plant are of considerable significance. Mr Webster was commenting on both the quality of carrot and the capacity of the existing brush washing machines which were to be used as the initial feed for the new plant and equipment. Those machines could not supply 150 tonnes worth of good polished carrots in 8 hours. If they were worked continuously for 8 hours and produced the maximum that Mr Webster suggested of 15 tonnes per hour, they could only produce 120 tonnes in an 8 hour shift. 36 Both Mr Tana and Mr Proud understood that the brush washers could operate to process about 22.75 tonnes per hour, but that this would affect the quality of the carrots. I accept Mr Proud's evidence that, in 2002, he discussed with Mr Tana that, at that speed of processing, the carrots would be insufficiently polished and would retain some hairs and green matter. North East Equity's) product. Mr Tana was aware of the consequence of increasing the speed of the brush washers beyond Mr Webster's suggested 15 tonnes per hour. We can accelerate the process and in so doing brush off less of the epidermal layer or we can slow the process down. In that way, it would be possible for the work force, efficiently managed, to have the individual workers paid only for 8 hour or shorter shifts, but they would not all work during the same 8 hours in any one day. Indeed, as the expert evidence made clear, split shifts in the food packaging and processing industry are common. I am satisfied that Mr Tana was, at all times, fully cognisant of this fact. Moreover, I find that Mr Tana was aware, and believed that Mr Proud was aware, that the workforce at Wattleup took lunch breaks and two 'smoko' or rest breaks during the course of their 8 hour shifts, so that an 8 hour shift did not translate into 8 hours of work, but rather into 7 hours, as Mr Webster's memorandum illustrated. 5. Mr Proud had arranged for Mr Tana to make the visit. Before the visit, Mr Tana had an understanding of what Bruynooghe's processing system involved through his discussions with Mr Proud, his understanding of the drawings that Mr Proud had supplied showing possible configurations of the new processing line, and a video of the new Kalfresh plant operating which Mr Proud had shown him. Mr Tana understood that Bruynooghe's system of processing involved tank systems with water movement of the carrots, and that this feature would be an integral part of the upgrade which Mr Proud was proposing. By then, he was aware that the likely cost involved was between $2-3 million. Mr Tana understood that Bruynooghe's system involved initial grading of both the girth and length of the carrots together with a hydro-cooling system using chilled water to cool the carrots. While he was at Bruynooghe's head office, he met its managing director or owner, Stefan Parrein. He was given a presentation of the various parts of the system and was impressed by both what was presented and the presenters. 40 Messrs Parrein and Seldeslachts showed Mr Tana a DVD demonstrating the tank system and carrot movement. They explained to him what the DVD was demonstrating. He was then taken to observe three Bruynooghe plants in operation at various factories, one of which he considered to be similar to that which Mr Proud was proposing. Mr Tana enquired of the Bruynooghe personnel about a number of matters, including the tonnage which the graders could process per hour. He formed the view that Bruynooghe were capable of manufacturing the components, and he was comfortable with both their responses and his observations of the equipment in operation. 41 Prior to organising this visit, Mr Proud had shown Mr Tana a DVD of the Kalfresh plant with the Bruynooghe system in operation. While he was at Bruynooghe's offices he was shown drawings of the then current version of the design for the Wattleup plant. He said that he discussed the drawings in general terms with Messrs Parrein and Seldeslachts. They told him that they represented the system that was going to be provided for Mr Tana's job in Australia. 42 However, Mr Tana said in his evidence that he had not gone to Belgium to understand technical specific matters about the Bruynooghe line. He said that he did not ask them about the drawings or any aspect of them because he recognised the items and '... [s]o there was nothing for me to ask them in that'. He said that he had no concerns and was comfortable with what he had seen in Belgium and therefore did not raise any matters with Mr Proud. He noticed that, in Belgium, carrots were not graded after they had gone through the hydro-cooler tanks, apart from removing rejects. He said that he had not noticed any length grading occurring in the Belgium operations that he had been shown. 43 In his written evidence, Mr Tana went as far as claiming that he had no prior knowledge of the Bruynooghe tank system and '[a]ll of my knowledge came from [Mr] Proud's representations to me'. He said this in responding to Mr Webster's evidence that Mr Tana had rung him from Belgium sounding very excited and had said: 'It looks like this could be the way to go'. In cross-examination Mr Tana accepted the accuracy of Mr Webster's account. He sought to explain his written response to it as relating to his initial discussions with Mr Proud. I reject Mr Tana's evidence seeking to minimise his investigations, knowledge and understanding of the Bruynooghe system. I had availed myself of knowledge by going to see the system itself, by having sent John Webster by [sic] Queensland to view the system. He claimed not to recall whether he saw a length grader at a plant in Belgium. I infer that, in Belgium, Mr Tana ensured for himself by his discussions with Bruynooghe and his inspections, how each important part of the equipment described in Proud Machinery's letter of 29 July would operate. That is why he was so enthusiastic when speaking from Belgium with Mr Webster. I also find that Mr Tana observed in operation Bruynooghe length graders of the kind later installed in his new line. 6. On 30 September 2002, Mr Proud sent a letter to Mr Tana which began by referring to 'the following responses to your list of requests'. Mr Proud indicated that he would like to discuss them promptly. The only document in evidence that could amount to such a list appears to be the initial handwritten notes of Mr Tana, to which I have referred. It is likely (and I find) that Mr Proud's letter was addressing these. This calculates to 18.75 tonnes/hr final packout on the pallet. I have used the following as a basis of our calculations. Proud Machinery agreed to a penalty of $5,000 per day if the line were not operational by 7 March 2003, up to a maximum limit of $50,000. Mr Proud wrote that he would be in contact with Amaroo, a company in South Australia, which was building another processing plant at Renmark using equipment supplied by Proud Machinery to arrange training for Mr Webster and Ms Mirosevich when the new system was commissioned at Renmark. The letter continued by stating that Proud Machinery was responsible for all contractors on the installation, excluding power supply to the line, plumbing work and water supply. North East Equity would be responsible for the sea freight for up to 10 x 40 foot containers. Proud Machinery agreed to accept letters of credit for Newtec and Gillenkirch equipment and was negotiating with Bruynooghe for similar conditions. The irrevocable letter of credit would be claused to provide for a payment of 50% on shipping, 40% on delivery and 10% on commissioning. 7. It identified the supplier in each case, except for refrigeration which was to be advised. The clients must supply a modem connection to the Bruynooghe control board which will allow for fast and efficient factory back up. Proud Machinery also had the right to make minor alterations to the layout of the line, so that the produce could be handled more gently and efficiently. This calculates to 18.75 tonnes/hr final packout. The letter stipulated that all equipment would remain the property of Proud Machinery until final payment was made. It was signed by both Mr Tana and Mr Proud on behalf of their respective companies. In addition to the schedule of equipment and services, there was a schedule which identified different lengths and girths of carrots to be graded by the equipment and the tank to which they were to be sent, once graded, by the conveying equipment. 52 On 14 October 2002 an amendment was made to that schedule by North East Equity, and the amended schedule was faxed to Proud Machinery. The letter noted that, among other things, any alterations made by Proud Machinery to the layout of the line must not impact on its efficiency. It said that the contract price was fixed. Proud Machinery also transmitted some drawings at the same time as this letter. The drawings depicted an alternative configuration adding a sixth box filler, if that were required. They showed the dimensions of the grading tables located immediately before the carrots were conveyed to the box fillers. These depicted three persons standing at the grading tables, which were 3 metres in length, and showed chutes for the graders to throw Class 2 and reject carrots. 54 In a number of respects, I found Mr Tana to be an unsatisfactory witness. One instance of this was his evidence concerning his visit to the Bruynooghe factory in Belgium. In March 2001 Mr Tana wrote to Mr Proud complaining about the operation of the Gillenkirch packing units installed at Wattleup, and stating that he placed a large emphasis on manufacturer advice, '... as we expect that their equipment will do what it is meant to do'. He admitted in evidence that he did place a large emphasis on manufacturer advice. He took the trouble to visit Bruynooghe and to go on a tour of three different plants showing Bruynooghe's equipment in operation. Bruynooghe was the manufacturer of an integral part of the system that he was considering purchasing. It had the proposed drawings of the new plant available for discussion with Mr Tana when he visited. Yet, in his evidence, Mr Tana sought to convey that his dealings with Bruynooghe in Belgium were unimportant, notwithstanding that he was, at that time, contemplating a substantial investment of over $2 million in new plant. He claimed that he had no concerns about how Bruynooghe's systems applied to what was proposed at Wattleup. In addition, because of his perception of shortcomings in equipment that had been supplied by Mr Proud in the past, Mr Tana asserted that he had reservations during the course of negotiations for the new Wattleup plant about Mr Proud's business dealings. This was notwithstanding that he and Mr Proud were friends at that time, socialised together and would have dinner with their respective wives when visiting one another. Indeed, they had gone on an overseas trip together with their wives. He claimed that he regarded Mr Proud as a salesman. When he was taken to his handwritten notes during the course of cross-examination, Mr Tana had no recollection of sending them, or the circumstances in which he gave them to Mr Proud. He said that those notes represented his requirements '[a]s at that day', but that the discussions continued '... and the requirements were confirmed and finalised [in] a letter from David [Proud]'. Mr Tana accepted that the notes may have been given to Mr Proud during the course of their meeting during 2002, and that they did not represent his overall requirements. --- My requirements never changed . My requirements were still these but there was still a requirement for my operational personnel to fill in and that was a subsequent meeting or a meeting prior and that will have to come out with evidence from Mira [Mirosevich]. She sat in the office and they started to talk about sizing, about streams of carrots. That formed part of the contract as well. 58 Ms Mirosevich had been involved in the specification to Proud Machinery of how the carrots were to be graded and the tanks to which they were to be sent. This was a task she undertook with Mr Webster and Frank Chew, then the sales manager of North East Equity's carrot business. These specifications were originally supplied to Proud Machinery and included in Mr Proud's letter of 8 October 2002. Subsequently, the amendment made on 14 October 2002 was sent by North East Equity to Proud Machinery. In cross-examination Ms Mirosevich sought to assert, instead, that Mr Proud decided which tanks were to be used for what produce. Ultimately, she conceded that she had agreed to provide Proud Machinery and Mr Proud with the final specification of 14 October 2002. She sought also to distance herself from her involvement in considering the proposed designs of the plant before it was made, but I think this was because she was given tasks by Mr Tana which were beyond her abilities. I do not accept her evidence that suggested she had little involvement in those matters. It was important for her, as the production manager, to be substantively involved in this design and specification work, and I find that she was. 8. 60 North East Equity alleged that the contract was a contract for the sale of goods within the meaning of one of the Sale of Goods Act 1895 of Western Australia or South Australia, but it did not identify which Act applied. Both Acts were written on the template devised by Sir Mackenzie Chalmers in 1893. The proper law of the contract for the supply of the new plant is the system of law by reference to which the contract was made, or that with which the transaction has its closest and most real connection: Bonython v The Commonwealth [1950] UKPCHCA 3 ; (1950) 81 CLR 486 at 498 per Lord Simonds. The only connection with the law of South Australia was the location of Proud Machinery's head office there. A condition of the letters of credit was payment of 40% of the purchase price for the particular goods upon delivery to Perth. Effectively, performance of the contract had to occur either in Western Australia, or overseas in the various parts of the world from which Proud Machinery was sourcing supplies of items of plant and equipment to be installed. 62 The substantial obligation created by the contract was for Proud Machinery to supply and install, at Wattleup in Western Australia, the plant and equipment for which it was charging $3 million. That obligation, together with a consideration of the whole of the circumstances, leads to the conclusion that the proper law of the contract was the law of Western Australia. The transaction had its closest and most real connection with that State. Accordingly, I find that the Sale of Goods Act 1895 (WA) applied to contract. 63 North East Equity pleaded that the contract contained conditions implied by s 14(i) of the Sale of Goods Act based on representations said to have been made by Mr Proud to Mr Tana during the pre-contractual negotiations. In the former case, s 14(i) of the Sale of Goods Act ordinarily would operate to imply a condition that the goods be reasonably fit for the purpose for which they were required, as made known by the purchaser. In the absence of special circumstances, a contract to do work and supply materials will carry with it two implied warranties: first, that the materials are of good quality and free from latent defects; and secondly, that the materials are reasonably fit for their intended purpose: Helicopter Sales (Australia) Pty Limited v Rotor-Work Pty Limited [1974] HCA 32 ; (1974) 132 CLR 1 at 6 per Menzies J, at 8 per Stephen J, Barwick CJ agreeing with their Honours at 4 and Mason J agreed with Stephen J at 15; Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454. I am of opinion that because, not only was Proud Machinery to supply the goods, it was also to erect and install them, the contract was not merely a contract for the sale of goods, but was in substance a contract for the provision of work and materials: cf Hewett v Court [1983] HCA 7 ; (1983) 149 CLR 639 at 646-647 per Gibbs CJ, 650 per Murphy J, 655 per Wilson and Dawson JJ, 662 per Deane J. As Gibbs CJ noted, the distinction between a contract for the sale of goods and one for the provision of work and materials is frequently a fine one and the tests for distinguishing them are unsatisfactory and imprecise: Hewett 149 CLR at 646; see too Sutton KCT, Sales and Consumer Law (4 th ed, Lawbook Co, 1995) at [2.42]-[2.43]; Benjamin's Sale of Goods (7 th ed, Sweet & Maxwell, 2006) at [1-041]-[1-043]. 65 It follows that, whether the contract is properly characterised as a contract for the sale of goods or for the supply of work and materials, there was an implied condition that what was to be supplied (goods or work and materials) would be reasonably fit for the purposes for which the buyer (North East Equity) indicated they were required and that it relied on the seller's (Proud Machinery's) skill or judgment. 66 North East Equity alleged that the new plant and equipment were goods of a description that was in the course of Proud Machinery's business to supply. There is no question that that is correct. North East Equity also alleged that it relied on Proud Machinery's skill or judgment because it had made known, through Mr Tana's discussions with Mr Proud, expressly or by implication, the purposes for which the new production line was required. (c) The core temperature of packed carrots to be not more than 5deg.C. (e) An increase in efficiency of labour usage compared to the existing Sumich line. (f) The ability to process and pack carrots from more than one source without intermixing carrots from other different sources. I am satisfied that Proud Machinery was aware of each of those five terms or factors as a purpose for which the new line was required by North East Equity. Additionally, the circumstances in which Mr Tana and Mr Proud were discussing these matters would have conveyed to a reasonable person in Mr Proud's position that Mr Tana and North East Equity were relying on Proud Machinery's and Mr Proud's skill or judgment in the selection of appropriate plant and machinery to achieve those purposes. Mr Tana had told Mr Proud to evaluate the existing line by visiting it at the time of preparing a quotation for what was required. I am satisfied that Mr Proud (and hence Proud Machinery) appreciated, and a reasonable person in his position would have appreciated, that North East Equity (through Mr Tana) was relying on Proud's skill or judgment in recommending plant and equipment, and on those who might install it, to achieve each of the five purposes in sub-pars (a)-(e) that Mr Tana and Mr Proud had discussed. 69 However, the purpose specified in sub-par (a) changed, as the discussions evolved, from 150 tonnes in an 8 hour working day to 18.75 tonnes per operating hour, as will appear below. And, there is a dispute about whether there were terms or representations to the effect in sub-pars (f), (g) and (h) above. Consequently, there are also issues of how sub-pars (a) and (c) are to be understood. 9. In order to construe the terms of the contract, the Court seeks to place itself in the matrix of mutually known facts forming the background in which the parties contracted. Additionally, where terms are alleged to have been made orally, it is necessary to identify what, if any, oral terms were agreed. In Watson v Foxman (1995) 49 NSWLR 315 at 318-319 McLelland CJ in Eq explained that, where a party alleged in civil proceedings that conduct of another was misleading or deceptive, or likely to mislead or deceive, ordinarily it was necessary for that party to prove to the reasonable satisfaction of the Court first, what the alleged conduct was, and secondly, the circumstances which rendered it misleading. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. 72 The process of construction of a contract is undertaken objectively. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. This is so that the court can construe correctly both the express terms used by the parties and those which are included by implication in order to give effect to their presumed intention. In Royal Botanic Gardens and Domain Trust v South Sydney City Council [2001] FCA 760 ; (2002) 76 ALJR 436 ; 186 ALR 289 at [10] , Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said that it was appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question in a contract were used and, from those circumstances, to discern the objective which the parties had in view. They applied what Lord Wilberforce had said, namely that an appreciation of the commercial purpose of the contract "... presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating" ( Reardon Smith Line v Hansen-Tangen [1976] 1 WLR 989 at 995-996). The letter expressly said that this equated to 18.75 tonnes per hour at final pack out on the pallet (i.e. after the robots located at the end of the last conveyor). Moreover, that letter also referred to the packing capacities per hour of various components of the proposed new production line, namely the prepack line, the five Gillenkirch carton fillers and the handline. The letter expressed the conclusion that, by using those calculations and several combinations of them, the desired pack out of 18.75 tonnes per hour would be achieved. 74 While the parties had discussed, in their earlier negotiations, 150 tonnes being produced in an 8 hour working shift on one day, I find that the letter of 30 September 2002 made clear that the particular performance Proud Machinery and Mr Proud were warranting would be achieved by the proposed configuration of the new line (which would include the handline and the prepack line production). And, in the subsequent letter of 8 October 2002, signed by both Mr Tana and Mr Proud, the same warranty was given using the figure of 18.75 tonnes per hour at final pack out. 75 Mathematically, 18.75 tonnes per hour multiplies to 150 tonnes for 8 hours. However, the parties had identified specifically that the capacity of the plant was to be measured by a pack out rate of 18.75 tonnes per hour. How North East Equity proposed to run the plant, and how many continuous hours it proposed to have, were matters for it to determine. The production expert evidence, which I accept and discuss later in these reasons, demonstrated that the existing brush washers could process 22.8 tonnes per hour. The experts did not address the issue of the resulting quality of carrot processed at that speed. However, it was unlikely that the brush washers would process 22.8 tonnes per hour in any event, because most of the 18% rejects should have been removed at the grading tables located immediately before them. Mr Webster's memorandum of 1 August 2002 showed that because the existing brush washers, which were to be incorporated into the new line, could not process more than 14-15 tonnes per hour if a good quality were to be maintained, he and Mr Tana were aware that it was impossible, even if the whole plant operated continuously for an 8 hour day, to process more than 120 tonnes of good quality carrots. And, as that memorandum also showed, the plant did not operate for 8 hours continuously. Rather, in an 8 hour day, it operated for about 7 hours after allowing for lunch, smoking or tea breaks and other usual inefficiencies. I do not accept Mr Tana's evidence to the extent that it differed from Mr Webster's account of how the plant operated in practice. Mr Webster worked there full-time when he wrote the memorandum, whereas Mr Tana visited the plant often, but was not there continuously throughout the day. 76 I am satisfied that a reasonable person in the position of the parties would have understood the term 'per operating hour' in the contractual letters as referring to the actual time in which the plant was operating. I find that Mr Tana also had that understanding. Thus, in an 8 hour shift, Mr Tana understood that there were about 7 operating hours which would result in about 131.25 tonnes of packed product based on the rate of 18.75 tonnes per operating hour. And, after he deleted the handline, the stipulated result of an 8 hour day's production (with 7 operating hours) would be 122.85 tonnes (at 17.55 tonnes per hour). 77 I am satisfied that Mr Tana was fully aware of this limitation in his work force's operating hours when he decided that North East Equity would contract with Proud Nominees for the new line. I am also satisfied that a reasonable person in the position of the parties would have appreciated that Proud Nominees was representing and warranting that the packing machines could operate, initially, at the 18.75 tonnes per hour (and, after deletion of the handline, at 17.55 tonnes per hour), but that for good quality carrots, this output level could only be achieved by building up a store of carrots which had been processed through the brush washer operating at a slower speed. And, they would have appreciated that, when the letters of 30 September and 8 October 2002 referred to the capacity of the line to process 22.8 gross tonnes of carrots per operating hour, they must have had in mind the overall operation of the plant in a commercially efficient manner that would result, at the time of pack out, in a net output of 18.75 tonnes of good quality carrots. Both knew the quality limitations on the brush washers which prevented them feeding more than 15 tonnes per hour into the grading and chilling tank system, as Mr Webster's memorandum to Mr Tana of 1 August 2002 demonstrated. Equally, both knew that the existing brush washers had the capacity to process carrots at 22.8 tonnes per hour if North East Equity wished to use them at that speed, and so sacrifice quality. 78 Both parties knew that the existing brush washer equipment was to be employed in the new plant. They knew that the supply of carrots to a packing machine and packing lines out of the proposed tank system could come at a greater rate than 15 tonnes per hour. Thus, in the letter of 30 September 2002, Mr Proud identified maximum production capacities of 2.437 tonnes per hour for the prepack line, 24 tonnes per hour for the five Gillenkirch machines using 20 kg cartons, and 1.2 tonnes per hour for the handline, again using 20 kg cartons. The total of that production capacity was 27.637 tonnes per hour, far greater than the 18.75 tonnes per hour at final pack out, or 22.8 gross tonnes per operating hour. 79 Mr Tana and Mr Proud were experienced in how production plants in the food processing industry operated. Split shifts were common in that industry, as David Harris, an expert witness called by North East Equity, made clear. The parties also understood that the grading of the carrots was likely to lead to a faster build up of larger numbers of particular sizes of some carrots, principally the small/medium and medium ones, than other proposed gradings would produce. Those carrots, once they had been processed through the brush washers, and across the flumes and various graders would take some time to cool to a core temperature of 5deg.C in the chilling tanks. From there, they would have to be moved to pack them out in the last stages of the new line. The parties' common knowledge was that the initial input of carrots from the farm could not pass through the brush washers at more than 15 tonnes per hour, if quality was to be maintained. And they knew that, if the packing machines worked to their maximum capacities of up to 27.6 tonnes per hour, before the packing operation could commence on any given day, it would be necessary for a considerable volume of carrots to be processed through the brush washers and the graders, to then be stored and chilled in the tanks. 80 A reasonable person in the position of the parties would have understood, from the discussions and the background of mutually known facts, that it was necessary for the chilling tanks to accumulate carrots over a period of time before packing could commence, and that thereafter a flow of carrots had to be provided to the packing equipment. All of the production experts, Mr Harris, Gerd Gillenkirch and Oscar Manteca, in giving concurrent evidence, discussed a split shift arrangement as one which would be expected for the efficient operation of the new plant, just as Mr Webster had done in the memorandum to Mr Tana. 82 That memorandum was important. It showed how Mr Tana must have appreciated how the system would work. If the quality of the carrots were to be maintained, Mr Webster's memorandum indicated that there would not be a continuous feed of 22.8 tonnes of carrots for every hour of the day, resulting in 18.75 tonnes at final pack out. This was because, at that rate, the existing brush washers would not provide carrots at the same level of quality which North East Equity was then producing. Mr Tana's interest was in maximising production, maintaining quality and minimising his labour costs. Mr Webster's memorandum indicated a commonsense means of achieving those goals with the new plant. The figures that the letters of 30 September and 8 October 2002 discussed were average figures which combined the outputs of various parts of the plant over the course of an operating day, in which workers in different areas of operation would not themselves be working more than 8 hours at a time. Thus, when one came to calculating the operating costs of running the plant, it would be realistic to use an 8 hour working day, because the various shifts that employees in the different parts of the plant would be working were either 8 hours or 4 hours. 83 The letter of 30 September 2002 showed that, if 15 tonnes per hour were packed by the five Gillenkirch packing machines, and if the handline (with 1.2 tonnes per hour) and prepack line (with 2.437 tonnes per hour) were operated, then 18.637 tonnes per hour would be produced, slightly below the 18.75 tonnes. But even on those figures, the initial feed from the brush washer section of the line could not have supplied 18.637 tonnes in an hour, if good quality carrots were to be achieved. In that event, it was necessary to accumulate a supply in the chilling tanks for a period before there would be enough chilled carrots for a sufficient flow to the packing machines, in order to allow them to process more than 15 tonnes per hour. This was the very point that Mr Webster had made in his memorandum of 1 August 2002. On the other hand, for the reasons I give below when dealing with the expert production evidence, the brush washers were capable of running at the higher speed of 22.8 tonnes per hour. But, then the quality of the carrots would be affected. Proud Machinery was not responsible for the speeds at which the existing brushers would be used. North East Equity had required those machines to be retained and used. They had the capacity to run faster or slower, depending on the quality that North East Equity wanted. 84 With this background in mind, a reasonable person in the position of the parties would have appreciated that the figure of 18.75 tonnes per hour final pack out on the pallet, could only be achieved for good quality carrots in an efficiently run plant using a split shift for its work force. The letters of 30 September and 8 October 2002 stated that '... the line will have the capacity to process 22.8 gross tonnes of carrots per operating hour with a maximum of 18% rejects. This calculates to 18.75 tonnes/hr final packout on the pallet' (my emphasis). The parties both understood that the calculations were to produce the overall end result of 18.75 tonnes per hour packed out on the pallet. And, they understood that capacity and quality were not the same. This was because of the limitation of the capacities of the brush washers to process more than 15 tonnes per hour, and maintain suitable quality. It was possible to use the processing method envisaged in Mr Webster's memorandum of 1 August to achieve the overall result in the two letters, with the consequential cost savings resulting from a split shift and, if quality were to be maintained, an initial hourly input of less than 22.8 tonnes. A split shift could be used for both the 22.8 tonnes of initial input, and Mr Webster's sensible suggestion of the lesser initial input of 15 tonnes per hour. 85 The letters of 30 September and 8 October 2002 must be read in the context in which the parties had negotiated, consistently with their awareness of the quality limitation of the brush washers to process 15 tonnes per hour. I am comfortably satisfied that a reasonable person in the position of the parties would have understood the references in the letters of 30 September and 8 October 2002 to 22.8 gross tonnes and 18.75 tonnes (or 17.55 after the handline was deleted) per operating hour at final pack out, as specifying the end result of an efficient use of labour, including procedures along the lines referred to in Mr Webster's memorandum of 1 August 2002. 86 Mr Tana desired to have a new plant which could produce a range of sizes so that he could satisfy the markets into which North East Equity was selling in 2002 (when there was no quality problem with carrots). It would be inconsistent for him to have discussed with Mr Proud making a $3 million investment, if he intended to use the existing brush washers in a manner which would produce poor quality carrots before these were introduced into the sophisticated new equipment. 87 I am not satisfied that North East Equity has established its pleaded allegations that Proud Nominees entered into a contract which included a term or represented that the new line would have '... the capacity to process and pack in excess of 150 tonnes of carrots in an 8 hour working day (being equivalent to 18.75 tonnes per hour)' (sub-par (a)) in the sense of a continuous day. Nor am I satisfied that the alleged term or representation in sub-par (g) existed in that sense. Rather, I find that, at the time of entry into the contract, there was a term or a representation that the new line would have the capacity to process and pack at a rate of production per operating hour of 18.75 tonnes in terms of final pack out on the pallet. This later reduced to 17.55 tonnes, once Mr Tana deleted the handline. However, Mr Tana asserted that the new line began after the brush washers and that that portion had to have the capacity to produce the various agreed final package tonnages. That is, if I were to accept Mr Tana's evidence, the time which was taken to get the carrots to the point of exit from the brush washers should be ignored. That period was addressed by Mr Webster' s 1 August 2002 memorandum to Mr Tana. Mr Tana gave evidence that he understood that Mr Webster's memorandum involved people working separately, on differing shifts, over a 38 hour week; i.e. on a split shift without anyone working overtime. He discussed this with Mr Webster but claimed that he did not want such a result. Mr Tana gave no explanation why he did not want it. 89 I do not accept that Mr Tana would have insisted on scarifying the quality of the carrots in 2002 when a sensible and commercial means of operating the plant was put forward in Mr Webster's memorandum. Mr Tana's assertion made no sense, except to bolster a claim in these proceedings. I reject it. 90 Mr Webster also pointed out that, in an 8 hour day the workers had lunch and 'smoko' breaks which, with inefficiencies, meant that they worked productively for 7 hours. Mr Tana asserted that if one lost 12.5% of production 'just like that, you're very inefficient'. In re-examination he asserted that there was no need for a second 'smoko' break in an 8 hour shift. Given that the temperature in the shed could exceed 35deg.C, and that, unlike Mr Tana, Mr Webster actually worked inside the shed, I reject Mr Tana's evidence. 91 This cross-examination and re-examination fairly raised the issue of what an 'operating hour' was (if it had not been raised earlier). But, in any event, that is a question of construction. This did not require specific pleading. Given what Mr Webster' s 1 August 2002 memorandum said about the capacity of the brush washers to produce a good quality carrot, and the commonsense of the staff having breaks during an 8 hour shift, I am satisfied that the questions of what an 'operating hour' was, and what an 8 hour working day was, were always issues. Indeed, 18.75 tonnes per operating hour, if a working day's production occurred in 7 operating hours, was equivalent to 131.25 tonnes in an 8 hour shift, not 150 tonnes (which was equivalent to 8 operating hours' production at 18.75 tonnes per hour). And, in a later letter dated 8 May 2004 to Mr Proud, Mr Tana wrote: 'We are still working on an output expectation of 125 tonnes finished product in an 8 hour day (excluding prepack and handline)'. The letter then discussed how the split shift which North East Equity was then using was not able to process carrots quickly enough without, making any complaint that this was outside the 8 hour day. I am satisfied that Mr Tana and North East Equity intended, at all relevant times in 2002, to run split shifts as Mr Webster' s 1 August 2002 memorandum contemplated. That is, it argued that it did no more than inform North East Equity of what Mr North had said. I reject that argument. 93 The core temperature of carrots being packed was a matter of importance, which Mr Tana and Mr Proud had discussed. In those discussions, Mr Tana had made clear to Mr Proud that North East Equity and Sumich's business involved the export of a considerable volume of carrots which were to be processed at Wattleup. 94 While Mr Tana understood that Mr Proud was relying on others, particularly Mr North, in making the assurance in the letter of 30 September 2002, and that Mr Proud himself was not a refrigeration engineer and had no particular expertise in that field, a reasonable person in the position of the parties would have understood that Proud Machinery was assuming an obligation to supply equipment conforming to the quality of this assurance. 95 I am of opinion that an ordinary reasonable person in the position of the parties would have understood the reference to 'a maximum of 5 degree celsius core temperature' in the letter of 30 September 2002 as a contractual requirement and a representation that the refrigeration equipment in the proposed new line would operate so as to achieve a core temperature of carrots, at the time of final pack out, of no more than 5deg.C. Mr Proud denied that this was a requirement or a purpose which he and Mr Tana discussed. 97 I am not satisfied that such a requirement was discussed. Obviously, if carrots from different growers were to be segregated, it would be necessary for all of the carrots from one grower to have been processed past the first section of the line (tipping hopper and brush washers) before fresh carrots could be introduced from another source. The configuration of the proposed new line was detailed in the various drawings in evidence. These made clear that no segregation was possible unless carrots introduced from one source had been cleared out of either the whole production line, or those tanks into which processing was to take place of carrots from the second source. In any event, it would only be possible to segregate them by operating the plant in a way that allowed the carrots from the first source in the part of the line before the chilling tanks to clear before introducing those from the second source, because the second source carrots could then be directed to a separate empty tank. 98 There was no evidence that this could not be done. Of course, carrots from two different sources could not be introduced simultaneously at the commencement of the line if they were to be segregated. Segregation could occur only if carrots from one source were processed into chilling tanks before carrots from another were introduced at the commencement of the line, and directed toward different chilling tanks to those from the first source. If that were done, each supply could be packed from the different tanks and directed to different packing stations. 99 I am not satisfied that Mr Tana and Mr Proud discussed the concept of concurrent processing of carrots from difference sources before they had been directed separately into chilling tanks. Such a requirement was not in Mr Tana's list of production expectations, nor was it in any other document. 10. As I have found, North East Equity did make known to Proud Machinery that the new plant should achieve the first five purposes in the sense which I have found. 101 The fourth of those purposes namely, the ability to sort and grade the carrots into eight distinct streams of size and length grades, was communicated to Proud Nominees by North East Equity's employees, rather than by Mr Tana directly. This was achieved by the requirement in the facsimile of 14 October 2002 that various lengths and girths be able to be directed to particular tanks in the new line. 102 North East Equity alleged that the letter of 29 July 2002 conveyed representations as to how the new line would operate. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification. But the policy reasons lying behind the parol evidence rule and the objective theory of contract are recognitions of the tendency of parties to negotiations to attribute to some particular matter a significance that did not exist at the time of the conclusion of the contract. In an evolving negotiation ultimately leading to the conclusion of the contract, different positions are taken with respect to different subject matters. To attribute significance in the final expression of the parties' contractual relationship to something said earlier may create an unreal and inaccurate appreciation of the subject matter of the relationship actually entered into at the later time. Of course, many things are said and written to induce the entry of a person into a contract. Even the common law recognised that misrepresentations, innocent, negligent or fraudulent, provided grounds in particular circumstances entitling parties to relief from the consequences of entry into a contract. 107 Any statement or representation made during pre-contractual negotiations is apt to be misconstrued if taken out of context, or treated as if it were a contractual term simply because it was said or written. Negotiations to arrive at a contract are not themselves part of the contract. Sometimes, however, they may set the scene in which the contract is to be understood; on other occasions they may contain, or be the source of contractual terms. But, it is often not realistic to treat a pre-contractual statement in isolation as if it were made outside the context of an evolving negotiation, which the parties recognise is a process. That process will culminate when they finalise matters in a contract. 108 In a commercial setting between experienced business people, the express words of the contract, even if contained in exchanges of correspondence, will often be an authoritative guide as to the matters on which each party relied in entering the contract. They will know that often events will have moved on from earlier communications. Courts will be mindful that representations made early in a negotiation process, can be potent and can continue to influence a party's understanding of what is being discussed, or what becomes the subject-matter of a contract. Nonetheless, courts must also be realistic about how negotiations progress; they are not static and when the context evolves, so does the understanding of each party as to what, at the later point of time, is being discussed. Gibbs CJ noted in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 199 (in a passage approved by Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ in Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [102] ) that s 52 of the Trade Practices Act did not impose burdens which operated for the benefit of persons who failed to take reasonable care of their own interests. Gibbs CJ was discussing representations made to the public, as opposed to particular individuals. However, the judgment in Campomar 202 CLR at 83-84 [98]-[100] also discussed the need to consider all of the circumstances of the particular case. And, as McLelland CJ in Eq in Watson 49 NSWLR at 318-319 noted, recollections of pre-contractual conversations relied on as the source of an allegedly misleading or deceive representation can be affected by later events and the lapse of time. 109 Additionally, it is important to be mindful of the particular relations between the parties. Here, two experienced commercial men were discussing a proposed transaction over many months. The discussions involved a considerable degree of planning and reworking in the course of arriving at a final, evolved concept. That concept was the subject of their contract. It is important, in that context, to evaluate what effect any representation conveyed at an earlier point in the negotiations, had at the time of entry into the contract, and how, at that time, any such representation was understood. Also, as Gibbs CJ identified in Puxu 149 CLR at 199, it is important to evaluate whether, at the time the contract was made, the representee had taken reasonable care to protect his or her own interests. The context, including subsequent events, statements or writings which cast a different light upon an earlier representation may be all important in determining whether it continued to have any operative effect or the effect alleged. Subsequently, the discussions evolved the concepts until these were crystallised in the contractual correspondence commencing with the letter of 30 September 2002 and ending with the letter of 18 October 2002. Both parties knew that the design and the drawings for the proposed line under discussion had changed on a number of occasions in the period between 29 July and 30 September 2002. 111 I have already explained what I find to be the contractual terms that emerged from the negotiations in relation to the tonnage per hour that the new line was warranted to process. It is not reasonable to read either of the two letters in isolation from the context in which they were communicated. That context included the background of what preceded each letter. The 30 September 2002 letter replaced and updated what had been said and written earlier in relation to the tonnage per hour figure. I find that the only representation, relating to the capacity of the new plant to produce any tonnage of carrots per hour, on which Mr Tana and North East Equity acted in relation to, was embodied in the contractual term I have found at [87] above, arising from sub-pars (a) and (g). However, it was understood by Mr Tana and North East Equity, through him, in the context of the intervening events, including his visit to Belgium: see Puxu 149 CLR at 199 per Gibbs CJ. North East Equity alleged that this representation was not fulfilled when the plant was commissioned and in operation. That was because the outflow system was said to rely on a combination of water pressure and compressed air to force carrots onto the discharge conveyor. That method of removing carrots from the tank was said to cause product surges, and then droughts, for the sorting tables, resulting in delays and inefficiencies in the continuous operation of the line. The letter of 29 July 2002 said that there was a 'PID control loop' which would calculate the speed of the pump and blower motor to ensure a controlled feed. The letter also indicated that it was possible to bypass that program and operate the tank manually. 115 I am satisfied that a representation was made, which continued to the time of contract, that the chilling tanks could be controlled in a way that would make them capable of producing a constant product output for the packing line. However, the nature of the quality of the length sizing was not divorced from the constraint that length graders cannot always correctly sort or size carrots, because of the variety of shapes. This constraint was noted by the three experts' joint report. Both Mr Tana and Mr Proud were aware of imperfections in mechanical grading and the limitations of machines when they were negotiating. I will explain this finding later in these reasons. It was necessary for them to be chilled to a particular temperature so that, when sent to the packing line, they would be packed into the cartons at a core temperature of no more than 5deg.C. I am satisfied that that representation continued to the time of contract. Both parties knew that it was essential that the carrots be able to be packed at a temperature of no more than 5deg.C. I am satisfied that this representation continued up to the time of contract. Nothing was said or done to change the nature of that express statement. The negotiations had been conducted on the premise that the equipment, when installed, would involve North East Equity in a capital expenditure over $3 million to achieve the desired rate of packing per hour using, as I have found, split shifts to reduce the labour cost involved in the production process. I am satisfied that the representation alleged, that the new plant would increase production while reducing the man hours required to achieve it compared to the existing Sumich line, was made in the letter of 29 July 2002 and continued to the time of contract. The letter of 30 September 2002 said that Mr North advised Mr Proud that he, Mr North, would guarantee a maximum 5deg.C core temperature for the carrots. I have found that statement became a contractual term. This is because it amounted to a promise of performance of the refrigeration tanks. 121 On the other hand, viewed as a representation, the wording of the letter makes clear that Mr Proud was passing on what Mr North had told him. Mr Tana knew that Mr Proud was not an expert in that field. The ordinary and natural meaning of the repetition of Mr North's guarantee in the letter of 30 September 2002 did not involve Proud Machinery itself representing that it, as opposed to Mr North, was providing any guarantee of that level of performance. However, shortly after that, when the contract was made, Proud Machinery promised North East Equity that the maximum core temperature of carrots at the time of final pack out would be 5deg.C. I find that, at that time, Proud conveyed a representation to the same effect. Mr Tana understood that what Proud was conveying was based on Mr North's assurance. 122 Often when a person passes on what another has said, he or she gives his or her own imprimatur to the original statement. Thus, at common law, a person who passes on a rumour or statement made by another is treated as having the same responsibility as the source. And, in cases involving s 52 of the Trade Practices Act , the representor's conduct must be considered as a whole: Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60 ; (2004) 218 CLR 592 at 605 [38] - [40] per Gleeson CJ, Hayne and Heydon JJ. Once the contract was made, what Mr North had said, which Proud passed on to North East Equity, assumed a different character because Proud Machinery then accepted responsibility for achieving that level of performance. (x) The new plant would utilise electric power more efficiently than the existing Sumich line. (xi) The new plant would comfortably handle a capacity of 150 tonnes per day packed out in cartons and in doing so it would be operating at 'idle'. (viii) Did Mr Proud repeat orally the various written representations alleged? I do not propose to deal with the instances of those repetitions because it is not necessary to do so. First, the parties agreed that Proud Machinery would be paid $233,000 '... for the project management and co ordination of the equipment'. This was initially recorded in the letter of 30 September 2002. Ultimately, they agreed that this sum would be paid to Mr Proud's nominee, Steventon Lodge Holdings Pty Ltd. Next, Mr Webster wrote on North East Equity's purchase order of 1 October 2002 that the parties were in '... an agreed position to start production of [n]ew machinery' from Newtec, Bruynooghe and Gillenkirch. Then, Proud Machinery wrote in its letter of 8 October 2002 that it '... would like to confirm the terms and conditions of your contract to purchase the items listed in the attached schedule and included in drawing No SUM-000-Revision S'. The letter reserved to Proud Machinery '... the right to make minor alterations to the layout of the line in the event by changing the layout the produce will be handled more gently and efficiently'. The schedule listed each item of equipment and its supplier's name. 126 On the basis of my findings in relation to the implied contractual warranties, I am satisfied that Proud Machinery and Mr Proud represented that they had sufficient knowledge, skill and experience to procure and supervise the installation of the new line. Mr Proud was, to Mr Tana's knowledge, an agent for various equipment manufacturers. As Mr Tana said in evidence, he would describe Mr Proud as a salesman. He agreed that he did not deal with Mr Proud as an engineer. He said that he classified a lot of what Mr Proud told him 'as salesman talk'. Mr Tana had been buying plant and machinery for North East Equity from Proud Machinery through Mr Proud for a number of years. I am satisfied that Mr Tana knew that Proud Machinery and Mr Proud were distributing and selling complex products made and designed by others. 127 Mr Tana had had an experience in the past with Mr Proud involving a Campesato diameter grader, which had been installed in the old Sumich line at Wattleup. Mr Tana said that that experience caused him concern as to Mr Proud's reliability in selecting suitable equipment. That concern, coupled with Mr Tana's own understanding of Mr Proud's role as an equipment distributor and vendor, made it inherently unlikely that Mr Tana would have understood Proud Machinery to be representing to him that it had sufficient knowledge, skill and experience to design the new plant and equipment. 128 While Mr Proud might have been able to recommend particular equipment and manufacturers for the purposes of including these in the new line, I do not accept that Mr Tana believed or that Proud Machinery or Mr Proud represented to him that Proud Machinery or Mr Proud had any expertise in the design of that equipment or the line. That is why Mr Tana wished to see for himself the Bruynooghe factory and equipment of the type which was proposed. He already knew of the performance of the Newtec and Gillenkirch weighing and packing machines because they were installed and operating on the old line. 129 Moreover, Mr Tana saw at the Bruynooghe factory that it was preparing detailed plans and engineering drawings for at least so much of the proposed new plant as would be supplied by it. The proposed configurations of the technical equipment was schematically presented to North East Equity and Mr Tana by Proud Machinery using its draftsman, Brendan Grogan, as the discussions progressed from time to time. However, I am comfortably satisfied that Mr Tana did not understand Proud Machinery or Mr Proud to be representing that it or he was capable of designing, or would in fact design, the new plant and equipment or the line itself. I am not satisfied that such a representation was made by Proud Machinery or Mr Proud. From this, Mr Tana claimed that he inferred that North East Equity would be saving on its total power bill after the new plant was installed, as compared to what it spent beforehand. Mr Tana said that the issue of electricity was not a major issue in his decision to go ahead. He gave vague and unsatisfactory evidence that, sometime in late 2002, Mr Proud provided him with a dollar figure in the vicinity of $16,000 in relation to Kalfresh's consumption of electricity. He assumed that it was a per month figure, but did not recall whether Mr Proud had mentioned anything about per month. You're saying, if I've got it right, sometime in 2002 Mr Proud made reference to electricity consumption by Kalfresh at their operation, you have a figure in [y]our head of [$]16,000, you think that's what he said, he didn't say per month, you've assumed per month? --- Yes. --- I didn't make a big deal of it, no, sir. Mr Webster's memorandum was not a contemporaneous note but rather was written just before a significant test of the new plant was to occur, and after months of complaints by North East Equity. The memorandum concluded with Mr Webster's observation that he was not sure whether Mr Proud knew what the power costs were at the time of the alleged conversation, or if Mr Tana had provided Mr Proud with that information. I am not satisfied that Mr Webster's memorandum accurately recorded anything said by Mr Proud over a year beforehand. 132 On his return from Queensland, Mr Webster reported to Mr Tana that Kalfresh had informed him that its electricity costs were running below budget. Mr Tana recalled that during the negotiations in 2002, Mr Webster had told him that Kalfresh was making a saving on electricity. Mr Tana did not ask Mr Webster to investigate the question of Kalfresh's power consumption, nor did he ask Mr Webster about that topic on his return from his inspection of the Kalfresh plant. Mr Tana said that although the cost of electricity was a factor in his decision to go ahead with the contract, he would have gone ahead anyway with the decision to install the new plant. And, he said that had he known that there would not be a saving he would not have acted differently. 133 Mr Proud denied that he told either Mr Tana or Mr Webster during the negotiations in 2002 that there would be significant reductions in power costs if the new plant were installed, compared to those incurred in running the then existing plant. I accept Mr Proud's denial. 134 In late September 2002 Mr Proud was negotiating with Mr North about the terms on which Mr North would install the refrigeration and associated equipment for the new plant. Mr North had supplied the refrigeration equipment for the Kalfresh plant. He emailed Mr Proud that Kalfresh had budgeted about $16,000 per month for electrical costs to run its plant, but was currently paying about $12,000 per month. Mr Proud said in his oral evidence that he forwarded this email on to Mr Tana. Mr Tana was not asked about his being sent the email, nor was he recalled to deny Mr Proud's suggestion. 135 I am satisfied that Mr Proud did not tell Mr Tana that he (or North East -Equity) would be spending less on electricity than he (or it) currently was. I find that Mr Proud simply told Mr Tana that Kalfresh was spending less for electricity on its new plant than it had budgeted to spend. I find that Mr Tana did not ask anyone about the electricity consumption of the proposed plant before he entered into the contract with Proud Machinery. 136 I am not therefore satisfied that Proud Nominees or Mr Proud made any representation or contractual promise that the new plant would utilise electric power more efficiently than the existing one at Wattleup, or that North East Equity would save money on its power costs. I am not satisfied that Mr Tana relied on anything communicated by Proud Nominees or Mr Proud in relation to the new plant's power or electricity consumption, usage or costs as a factor in his decision to enter into the contract or install the new plant. By the words 'at idle' Mr Proud conveyed that the Gillenkirch machines could pack at a faster rate. So much was conveyed in the letter 30 September 2002. Could it be done? Did he answer you at all? --- He had no hesitation in saying that he'll [look] at it, it should be able to be done, he didn't specifically say that I could do it on the spot, no. --- Yes, he did, both verbally and in writing. --- Capacity was never discussed . I suppose it would be fair to say that I assumed that anything that's given to me as a piece of equipment, or as a line, would not be given to me on the basis that it's --- pardon my French --- but flogged to death and run at 100 per cent. --- He used the words verbally to me, yes he did. --- To the best of my recollection some time in late '01. --- Wrong, I take that back, late '02. --- Before the contract was entered. It did not elicit a response in terms of the alleged representation. Mr Tana's evidence that capacity 'was never discussed' in the passage cited above is revealing. Unsurprisingly, Mr Tana was not cross-examined on this evidence. That very figure was one of those provided in the letter of 30 September 2002 which formed part of the contract. 141 I am not satisfied that any representation was made that the new plant would comfortably handle a capacity of 150 tonnes per day packed out in cartons and in doing so would be operating at 'idle'. 11. It was common ground that if that happened, the amount capable of being packed by the new plant per hour would be reduced by 1.2 tonnes to 17.55 tonnes per hour. The 1.2 tonnes was the capacity of the handline referred to in the letter of 30 September 2002. North East Equity alleged, in its statement of claim, that Mr Proud represented to Mr Tana orally that this would be the consequence of the deletion of the handline from the proposed design of the new plant. However, in cross-examination Mr Tana agreed that he had unilaterally decided to remove the handline and announced his decision to Mr Proud in about February 2003, a fact corroborated by Mr Webster. 12. Earlier, Mr Proud had worked with Mr North to provide the refrigeration system for the Kalfresh plant. Then, Mr North had been responsible for the design of both the refrigeration system of the Kalfresh plant and its control software. The Kalfresh plant also had nine cooling tanks. Mr North thought Kalfresh processed about four to six product groups. However, the cooling tanks in that plant were located inside an insulated room maintained at about 12deg. to 15deg.C by air conditioning. 144 Mr North was aware, at the time he was asked to provide a quotation for the Wattleup plant, that between 20 and 25 tonnes per hour would be discharged by the system of nine cooling tanks system. He travelled to Wattleup to discuss the job in order to prepare a quotation. By 27 September 2002 Mr North had the then current drawing on which he had to provide a quote. He initially suggested to Mr Webster locating the chilling tanks in the insulated juicing shed at the Wattleup site. He thought that commonsense suggested that, in the middle of summer, an insulated shed would be far cooler than a tin shed. But, Mr Webster told him that that was too hard to do, logistically. Mr North recalled seeing provision for insulation in the main shed in one drawing, but that did not proceed. 145 Ultimately, Mr North designed the refrigeration components for the Wattleup site based on an ambient temperature of 38deg.C and no insulation in the shed. He said (and I accept) that it was industry practice to design refrigeration systems based on average and not extreme temperature so that there would be occasions on which the ambient temperature of 38deg.C would be exceeded and then the refrigeration equipment might not be able to operate at the desired capacity. Mr North designed the Wattleup system to deliver sufficient chilled water at 1deg.-2deg.C from the compensation tank into the chilling tanks. He understood, from discussions with Mr Proud, that control logic software for the system would be provided by Bruynooghe. 13. Moreover, each representation was calculated to, and I find did, induce Mr Tana to decide, on behalf of North East Equity to proceed to enter into the contract. There was no serious dispute that North East Equity relied on any representations which would be found. By entering into a contract to define their legal relationship, North East Equity and Proud Machinery selected an agreed expression of the promises that one was making to the other in relation to the new plant. The standard of performance of the new plant was a matter of considerable significance in the contractual relationship. 147 Mr Tana claimed that he wanted matters to be documented because he alleged that Mr Proud had been unreliable in the past. I do not accept Mr Tana's evidence in that regard. Moreover, the only matters that Mr Tana had documented were his handwritten note, the typed letters from Proud Nominees and other documents which were part of the contract. I find that Mr Tana would not have signed the contractual documents unless he was satisfied that they correctly expressed the standard of performance that he had agreed, with Mr Proud, would be required of the new plant. 148 It is appropriate to analyse whether or not the breaches of contract alleged have been established before turning to the breaches of any of the representations which remain distinct from the contractual terms. 14. This involved removing much of the previous plant with the exception of those components which were to be used in the new line (including the tipping hopper, initial grading conveyor tables and the brush washers, together with the existing Newtec and Gillenkirch weighing and packing equipment that were retained). Mr Proud was present together with Proud Machinery staff. A number of the key personnel from various suppliers attended to install the new plant. Mr North was present working on the refrigeration aspects. Mr Gillenkirch arrived together with Mr Manteca just after work started in late February 2003 to install the Gillenkirch packers. An electrician from Bruynooghe, Karl van der Vermuelen together with a mechanic and a welder were also there. Later, another staff member from Bruynooghe arrived. The carrots had been pre-washed at the farms but were not graded for size or selected for quality. Different soil and weather conditions produced different quality carrots. Some crates were introduced immediately into the line. Other crates were stored in the cool rooms over night and pre-chilled before they were introduced into the line. The first section of the line retained the equipment that previously had been at the Wattleup plant, namely two wet hoppers into which the crates were tipped by forklifts. Normally two crates were tipped by the forklift into the wet hoppers at once, delivering between about 800 to 900 kg of carrots (depending on whatever weight of carrots was in the crates). The wet hoppers fed the carrots onto roller grass removers and then onto a conveyor system to two elevators which conveyed the carrots onto two pre-inspection tables. At those tables operators removed stones and reject (i.e. broken, misshaped, cracked or green) carrots to prevent them from being fed into the next stage, being the brush polishers. The carrots then proceeded into Wyma brush polishers where they were polished. Water was sprayed onto the carrots as they ascended on small protrusions on the elevators. Those machines could grade the carrots into six streams of diameter sizes namely: waste, small, small/medium, medium, large and extra large. The capacity of the diameter graders was not affected by the quality of the carrots. Their speed could be adjusted by an inverter. The waste removed by the graders was delivered into crates or bins. The extra large carrots were delivered to a tank. The four length graders were capable of grading the carrots into three lengths. Those graders could be adjusted to select different lengths. As noted above, in a joint report the three experts stated that the sizing of carrots by the length graders was not always correctly done. They agreed that consistent sizing to the same length was not possible because of the natural variations in the shapes of the carrots. And, they also agreed that the contractual documents did not indicate or specify any quality requirements for the length sizing by these graders. During 2003, North East Equity caused the length graders to be used only as conveyors, without permitting carrots to be sized by length. Each size of carrot could be placed in one or more of the chiller tanks where they were held prior to being moved onto conveyors for packing. Because the carrots were heavier than water they sank to the bottom of the chiller tanks. The chiller tanks were about 9.5 m long, 1 m wide and 2 m high. On the southern side of the tanks was a refrigeration tank housing refrigeration coils supplied by Mr North's company. The refrigeration coils chilled water delivered from a filter located on the top of the refrigeration tank. The water was then returned to the water compensation tank on the western side of the tank system. That tank contained submersible water pumps which pumped the chilled water into the chiller tanks. The submersible pumps were controlled by an inverter. The submersible pumps delivered sufficient chilled water to chill the carrots in response to a signal from a temperature sensor located in the chiller tank. In each of the chiller tanks there was an air blower, a submersible pump and temperature sensors. The air blower had two functions. First, during the filling cycle it spread the carrots over the length of the tank as it was being filled. Thus, as the experts explained in their joint evidence, the carrots did not accumulate in a mound immediately under the end of the conveyor from which they were delivered into the tank. However, the air blower used air at the ambient temperature in the shed and thus that air had the effect of warming the chilled water through which it passed. The operator of the chiller tanks used the air blower to lift the carrots from the floor of the tank to the water's surface in order to remove them to be packed. All those functions of the chiller tanks and associated equipment could be controlled manually or automatically by the operator manning the touch screen. After the carrots were removed from the tanks, the pumps were activated to deliver chilled water back into the tanks by a signal from an ultrasonic sensor located above the exit conveyor. Additionally, the two tanks furthest to the south in the shed received small, and small/medium carrots from the graders. The packing sections were fed by five distribution belts or conveyors. First, the prepack line was fed by a belt which ran from the two southern tanks. That belt conveyed carrots to a grading table positioned immediately before the Newtec multi-head weighers that packed the prepacked bags. A second belt delivered carrots to one of the pairs of dual inspection tables which fed two Newtec multi-head weighers that operated with two Gillenkirch automatic carton fillers. (This belt could also be reversed to deliver carrots to the area where the handline was to have been built. ) A third belt delivered carrots to the other pair of dual inspection tables feeding the Newtec/Gillenkirch weighing and packing machines. A fourth belt delivered carrots to a single inspection table feeding a single Newtec multi-head weighing machine that operated with a single Gillenkirch automatic carton filler. (This was machine No 4. ) A fifth belt delivered carrots in bulk (i.e not packaged) directly into the wooden delivery crates for transport to customers such as Woolworths. Cartons on the prepack section of the line had to be filled manually and were then placed on a conveyor for delivery to one of the two stacking robots. The other Newtec weighing machines could be set to weigh carrots appropriately for deposit into either 10 kg or 20 kg cartons which were packed by the Gillenkirch packing machines. Operators positioned manually the empty cartons on infeed conveyors which fed the Gillenkirch automatic filling stations. After the cartons had been automatically filled by one of the other filling stations they were also placed on a conveyor and delivered to one of the two robots. Before the cartons reached the robots, an operator had to supervise the carton taper (or strapping process) and the vibration station. The robots were programmed to lift and stack the full cartons onto pallets. When a button on the screen was touched, that brought up another window or page which allowed the adjustment of settings, conveyor speeds and the like. It was possible to access and view particular parts and components of the production line in order to control them. Each machine could be turned on or off and its operation could be adjusted by touching the page on the screen that related to that machine. It was possible to control the graders, chilling tanks and packing processes through the use of the touch screen. The screen thus gave the operator control over all aspects of the machinery used in the operation of the new line. And, the operator could use the control provided by the touch screen either manually to direct the particular task, or automatically to change the operation of an individual component or a number of components on the line. 152 Bruynooghe's representatives had decided to install the touch screen, which controlled the operation of the new plant, including the graders, chilling tanks, exit conveyors and packing operations in the main office at the Wattleup packing shed. The windows in that office looked out towards the tank system over the length graders. But that location of the touch screen was some distance away from the tanks. The cable originally supplied by Bruynooghe connecting the touch screen to various components in the line was not long enough to locate the touch screen in a position overlooking the tanks, so Mr Vermuelen located it in the office instead. Later, after a number of complaints, the touch screen was moved from the office to a position on a platform which overlooked the tanks themselves. 153 The installation was completed on 5 March 2003. However, on 6 March 2003 North East Equity staff began to encounter a number of problems when trying to operate the new plant. Mr Webster sent a fax to Mr Proud shortly after midday identifying 12 issues, including the need to train staff fully on the new system. He required Mr Vermuelen and any other people with expertise in the operation of the new machinery to remain at Wattleup to train staff. 154 One of Proud Machinery's employees, Adam Hunter, was present during the installation process. He was a qualified electrician. He thought the new line ran quite well the first time it was used although, in his view, a number of slight adjustments needed to be made. He was trained by Mr Vermuelen in the operation of the tank system, including the touch screen. Mr Hunter said in evidence that any child who was competent in using a computer game would be able to understand how to use the touch screen (i.e. the various functions it could perform). 155 In addition, he said (and I accept) that the operator of the touch screen had to engage in a skilled 'juggling exercise'. This involved appreciating the amounts of carrots being graded, their graded volumes, the number accumulated in the nine chilling tanks and how long they should be left there to cool the carrots, discharging chilled carrots to the packing machines and '... then moving on to filling another tank and repeating the process over and over'. And that's what I mean by juggling. --- Yes. --- No. --- No. Before that, the operator had to walk to the tanks, assess the position and then return to the touch screen or speak to other staff who could report on this issue. Ms Mirosevich was the manager of the Wattleup plant. She controlled the labour force. The touch screen training took about half a day. Mr Vermuelen went through each page on the touch screen and described the functions of each block on the screen itself. 157 Mr Hunter said that Mr Webster had no difficulty picking up how to operate the touch screen. Mr Hunter acted in a role of interpreting for Ms Mirosevich during the training. Mr Vermuelen spoke with an accent. Ms Mirosevich spoke with a thick Croatian accent. Mr Hunter sought to explain to her in English, a second time, what Mr Vermuelen had said. However, Ms Mirosevich appeared to Mr Hunter to be confused during her training, and to have had little comprehension of how to use the touch screen at the end of the training period. He also concluded that Ms Mirosevich had no knowledge of mechanical maintenance. I accept Mr Hunter's evidence that Ms Mirosevich was involved in the process of training, as described by Mr Hunter. I reject Ms Mirosevich's evidence that she simply stood at the back of the room during the training session. 158 Moreover, by this time, Ms Mirosevich had already spent a week in Belgium at the Bruynooghe factory and other locations. Mr Tana had sent her there in early 2003 to learn how to operate the new equipment. 159 Mr Tana knew that Ms Mirosevich had had no computer training or, indeed, any management training. Yet, he chose her to be trained at Bruynooghe's factory. She said, and I find, that Mr Tana promised her that she would be the '... princess in the shed' as a reward for her previous hard work. 160 Ms Mirosevich had no capacity to deal with computers or computerised equipment. Even at the time of the hearing she did not know how to operate a computer and was not then interested to learn. Although she denied being afraid of technology, she had no wish or desire to learn how to use a computer or the internet prior to her retirement. Her attitude was, as she told me: 'I have operators to use the touch screen, my job is not to use the touch screen'. However, this was the crucial and focal point of the operation of the new plant. --- Stop and start, give the carrots to the line. That's all that what I learn. --- No. how to turn the machines on and off and to 'divert [the carrots] to the belt' using the touch screen. However, I am satisfied that proper attempts were made at the Bruynooghe factory to train Ms Mirosevich on how to use the touch screen and to operate equipment similar to that which was to be installed at Wattleup, so as to achieve all of their technical capacities. I do not accept her evidence that she spent a week at the Bruynooghe factory and other factories in Belgium without, as she asserted, being shown and trained how to operate the technically complicated aspects of the plant. She had been chosen by Mr Tana to be in charge of the new line. I do not accept that Bruynooghe did not attempt to instruct her fully as to how to operate both the touch screen and the type of equipment which was to be installed at Wattleup. 162 After she returned from Belgium, Ms Mirosevich did not train, or require training for, any of her staff in the operation of the new line or the touch screen at any time. Unfortunately, that was because she did not acquire any relevant understanding of the importance of those matters. I'm operation. I'm production . I train people. For machinery, John Webster will train how to operate machinery. But since 2004, Mr Webster hasn't been there. There hasn't been any training, has there? --- I have still many signed people operating machine what they were there before John Webster left. She complained that Mr Webster had said that he was too busy to teach her how to run the system. However, in cross-examination she claimed that, at some time after early March 2003, she learnt from Mr Webster some of the capacity of the touch screen. She also said that she asked the electrician, Hin Tan, who took over some of Mr Webster's responsibilities after he left, to teach her how to adjust the system manually, and that Mr Webster and Mr Proud had refused to help her do this. I find that Ms Mirosevich was conscious of her failure to learn how to operate the new line, and sought to blame others for that. Apart from her seeking help from Mr Tan, I do not accept that evidence. 164 Ms Mirosevich's incompetence in understanding how the touch screen and other parts of the plant operated and could be controlled by the computer equipment, led to constant manual adjustments of the different items. That resulted in the machinery not working as it should have. And, the operation of the new line lacked the overall intelligent control which a competent controller would have brought to the system. This was evident when a test was conducted on 17 or 18 November 2003, with which I will deal below. The various representatives of the manufacturers were present on that occasion and recalibrated all their machinery to operate as it had been specified. The plant then performed in a generally satisfactory manner (making allowances for the performance of the flume elevators, and the intralock convertors). 165 Overall, I did not find Ms Mirosevich to be a reliable witness. I do not intend by saying this to criticise Ms Mirosevich personally, or to suggest that she was dishonest. Rather, she was concerned that she should not be blamed for any problems North East Equity experienced from the operation of the new line. It was not her fault that she had been given a task that was beyond her. She did not appreciate her own incompetence to be in charge of the operation of the new plant. This led her to rationalise in her own mind that she had no part in any shortcomings in identifying requirements of North East Equity for the design of the new plant or the deficiencies in its operation. 166 Because of her inability to understand the importance and significance of the touch screen to the overall operation of the new line, Ms Mirosevich was unable to convey to Mr Tana, and he did not himself appreciate, the need to have a competent person running the operations who could use properly the touch screen. It was vital that there be someone who actually understood how to operate the machinery and who could use that knowledge to conceptualise the appropriate inputs into the touch screen so that the plant would operate efficiently and usefully to grade and process the volumes of carrots available at any particular time. 167 Mr Tana described himself as computer illiterate. He did not have any understanding of the need to employ in the plant a person who could operate the computer and its touch screen competently. He, too, did not understand the significance of the touch screen or the need for constant monitoring of the various parts of the new plant to inform decisions about the use of the touch screen to control the processing operations. Instead of employing someone else who had that technical competence, Mr Tana relied on Ms Mirosevich in an area where both of them were out of their depth because of their inability to work with computers or to understand the changes in management skills needed to operate the new line as compared to the old one. It is hardly surprising, then, that when the equipment was installed and the Bruynooghe and other technicians left, the operation of the plant became less than satisfactory. He said that he had been doing basically the same things in his job at the Sumich plant at Wattleup since 1980 with the exception of about eighteen months, when he left to run his own business, but later returned. Mr Correia had said that his basic function was to check the carrots before they went to the packing line to determine their temperature and quality so as to see how they should be graded for packing and to oversee the rest of the operation. That was also substantively the function that he performed prior to the introduction of the new line. 169 I formed the view that Mr Correia was basically an honest person. But, he was not always reliable as a witness. He was defensive about his role in giving evidence because he had not been able to absorb how to run the complex new plant. Because he was responsible to Ms Mirosevich, he did what she told him. Mr Correia denied that he was resistant to change or to doing things differently, particularly in adjusting to the introduction of the automated plant. However, I am satisfied that he found it very difficult to adjust to the different way in which the new line operated. 170 Mr Correia was aware that Ms Mirosevich had gone to Belgium to be trained just before the new line began operating, but he received no training at all from her. Although he recalled being present with Mr Vermeulen and Mr Webster when the plant was being commissioned, Mr Correia did not recall any occasion when Mr Vermeulen taught him and Ms Mirosevich how to operate the touch screen and other aspects of the Bruynooghe equipment. Mr Webster had also been trained by the Gillenkirch personnel on how to operate its equipment when the new plant was being commissioned. 171 Mr Webster said that no one had been designated as the operator of the touch screen when it was installed. He volunteered to run the system for a week, provided that he had some assistance from the production staff. Mr Webster said that Mr Correia provided him with this assistance, and he trained Mr Correia, who then became the focus of running the system. Mr Correia said that he had been trained to operate the chilling tanks by Mr Webster for a couple of days. He claimed that Mr Webster did not train him on all of the touch screen's operations. I accept Mr Webster's evidence and prefer it to Mr Correia's. 172 Tony Schubring had first attended the Wattleup plant when he was still working at Kalfresh. This was probably during 2004. He was then the floor manager of Kalfresh plant responsible for managing the operations of its plant and equipment in the packing shed. Mr Schubring's principal responsibility at this time was to monitor Kalfresh's plant's output from its nine Bruynooghe chilling tanks together with that plant's polishing and grading of carrots. He later attended at the Wattleup plant in early 2006 when he was employed by one of Mr Proud's companies. 173 Mr Schubring observed that Mr Correia never seemed to be present at the touch screen. Mr Correia understood that a supervisor in his position had to control the flow of carrots through the line, and do so by using the touch screen. He disagreed with Mr Schubring's advice to him that the operator should be at the touch screen all the time. Mr Correia knew that he could make adjustments to the operation of the machinery controlled by the touch screen. However, he did so only when he saw the need to make them. His approach was to be reactive to problems after they occurred and not proactive by seeking to avoid them. Mr Correia was only at the touch screen when he thought there was something to do there. He claimed that he was there for about 70 percent of the time, but I have no confidence that that estimate is correct. 174 Mr Correia said that he only calibrated the equipment on the line when he thought there was a problem. He claimed that he had never been told to do so on a daily basis. Initially, he had to ring Mr Vermeulen in Belgium to ask him how to do that task. He also did what he was told in keeping records, and Mr Proud's complex schedule was made up largely from the records Mr Correia had kept. Mr Correia's resistance both to learning how to operate the new equipment (including the touch screen) and changing his routine was demonstrated in early 2006 when Mr Schubring again came to Wattleup. Mr Correia did not spend much time with Mr Schubring even though he appreciated that the purpose of Mr Schubring's visit was to help North East Equity's personnel to operate the machinery properly. 175 Mr Schubring told him that the pumps should not be run continuously to remove carrots from the tanks, as Mr Correia had been doing up to then. And, he told Mr Correia that the air blowers in the chilling tanks should be turned off once the tank was full. That was because the air was pumped into the tanks at ambient or higher temperatures and therefore heated the chilled water. Indeed, Mr North took measurements in about 2004, recording that, when pumped into the tanks, the air had a temperature of up to 65deg.C. At such a temperature the air would transfer its heat to the cooler water causing it to heat up (as well as increasing the costs of power consumption, first, for chilling and, secondly, for unnecessary air pumping). Mr Correia said no-one had told him that before, but I accept Mr Webster's evidence that in early 2003 he had told Mr Correia the same thing. I do not accept Mr Correia's evidence. I prefer Mr Schubring and Mr Webster's evidence where it conflicts with Mr Correia's. And, I accept Mr Schubring's evidence about his observations of the operations and personnel on his visits to Wattleup. The consequence of this inappropriate use of the pumps was that it affected the ability of the chilling tanks to cool carrots to a core temperature of 5deg.C or less, and slowed production. In my opinion this was a cause of carrots being packed with a core temperature more than 5deg.C. 15. It would have been a simple matter to have measured that weight, but neither side did this objectively. Neither Mr Tana nor Mr Proud was a reliable witness on this matter. 177 Each changed his evidence to adopt the other's position when they understood the purport of Mr Proud's schedule. Both men were dealing with matters at a level of generality. By the time of the litigation each was defensive of his own position and argumentative about it. I am not satisfied that either retained a reliable recollection of the detail of their discussions and considerations in 2002. The contemporaneous written material, the objective matrix of mutually known facts and commonsense, are, in general, a better guide for reaching findings of what was said or conveyed between Mr Tana and Mr Proud. Nonetheless, I have also used the less sure guide of impression in arriving at my conclusions about their evidence generally. 178 In his first witness statement Mr Proud had said that the weight of the carrots in those bins was 410 kg. On the other hand, Mr Tana, in his initial witness statement had said that the carrots in the bins weighed approximately 450 kg. Mr Proud used this latter figure as the hypothesis on which his schedule was based. The hypothesis involved deducting the weight of the rejected carrots from the posited 450 kg weight of carrots in the tipped bins. In his evidence in chief, Mr Tana said that he wished to amend the figure of 450 kg to between 400-425 kg. He did this to demonstrate that Mr Proud's analysis was incorrect. He agreed in cross-examination that as soon as he saw that Mr Proud's schedule had a heading indicating that the weight of the carrots in the bins was 450 kg, he realised that it could have the effect of undermining his case that the new plant could not produce over a 140 tonnes of packed carrots per day (leaving aside any production from the handline). This also went to the claim for economic loss based on a loss of sales. Mr Tana agreed that, by the time he made his first witness statement, he had used the crates or bins in the business for a long time and had many years of experience with them. Ms Mirosevich had said that the bins contained 410 kg of carrots. 179 An objective means of determining which weight was correct appeared in a letter that Mr Proud wrote on 23 July 2003 to Mr Tana about a test done on 15 July 2003 and Ms Mirosevich's notes of the test. In the table below I have calculated the weight of carrots in the bins based on Ms Mirosevich's notes of this test. These recorded that 372 bins were tipped into the wet hoppers. Ms Mirosevich noted that 39 bins were filled with rejects from the grading tables located before the brush washers and a further 20 bins of rejects (including waste) were filled from the grading tables at the weighing and packing machines. Thus a total of 313 bins were processed, resulting in a recorded pack out of 126,684 kg, or 404.74 kg per bin. This pack out included 18.64 tonnes of Class 2 and 18.08 tonnes of 10 kg cartons. Using 404.74 kg per bin, the 59 bins of rejects (23.9 tonnes) amounted to about 15.9% of those delivered and the carrots originally in the 372 bins weighed about 150.5 tonnes. on his calculation the 59 waste bins each had a quantity of carrots which weighed on average 432.2 kg). However, I do not consider Mr Proud's calculation to be reliable because he gave no explanation in his letter of how he arrived at this weight for the waste. Although the witnesses sometimes used the word 'rejects' generally as synonymous for 'waste', in fact there was a commercial distinction between the terms. Rejects were carrots which, in general, had a commercial value and were in fact sold by North East Equity for non-retail purposes such as juicing or use in commercial manufacturing. On the other hand, 'waste' was material that had no value and was, in effect, 'rubbish'. 181 I find the carrots in the bins weighed between 400 and 410 kg, but on average 405 kg. There may have been seasonal and other factors, such as the variety of carrot, which affected the weight. When the negotiations occurred in 2002, Mr Tana, his staff, and Mr Proud all understood and proceeded on the basis that the carrots in the bins weighed about 410 kg. 16. He said that, as far as possible, he aimed to avoid growing any carrots that could not be processed, packed and sold. He said that carrot production was always very dependent on sales expectation and packing capability. Mr Tana personally decided the growing and planting program of each of North East Equity's carrot farms. Initially it operated a 700 acre farm at Guilderton, some distance north of Perth. That farm supplied 60% to 70% of carrots processed at Wattleup by 2002. In addition, a number of other farms owned or operated by North East Equity or Mr Tana, as well as by independent farmers, supplied carrots to Wattleup for packaging. 183 In around 2001 or 2002, North East Equity purchased a farm at Lancelin of about 4,500 acres about 180 km north of Wattleup. Mr Tana then had the long term aim of expanding his operations. At this time, a North East Equity's sales and net profit from its vegetable business were significantly increasing. Carrot production from the Wattleup plant was the primary source of that increase. However, the purchase coincided with what turned out to be the peak in the local export market for carrots. 184 Mr Tana worked with North East Equity's farm manager to determine carrot plantings at the farms to meet production targets in time for harvest. Carrots could be grown on the farms throughout the year. The farm manager used a computer program for planting and growing carrots. In summer, carrots took about 16 weeks to grow, whereas in winter they took between 20 and 26 weeks. Certain varieties of carrots were faster growing than others. Mr Tana would write down the amount of carrots that he wished to have grown and the time in which he required them to be ready for delivery to the Wattleup plant for processing. This involved planning for up to half a year before the carrots were ready to be harvested. Thus, if carrots were planted in the beginning of winter, he would expect those carrots to come to market about 20 to 26 weeks later, depending on exactly when in the seasonal cycle they were planted. 185 The computer program worked by indicating that, if carrots were planted at a particular time, they would be ready for harvest at a fixed time thereafter. Mr Tana gave his farm manager the production targets he wished for each of the 52 weeks of the year by indicating the times at which he wished to have specific quantities of carrots ready for sale. The program would then work backwards to calculate the time at which those carrots should be planted. 186 Thus, by March 2003 or beforehand, Mr Tana had already given directions for planting of carrots that would be harvested 4-6 months afterwards. In other words, Mr Tana had assessed the likely market months in advance of when the carrots arrived at the Wattleup plant for processing. In this way he decided and pre-planned the quantity of carrots which the plant would process many months before the carrots were delivered for packing. This planning and its associated time scale for the later harvest is significant in assessing Mr Tana's evidence that, but for its claimed problems with the new line, North East Equity would have produced more carrots, and profits from their sales, and thus it suffered economic loss. 17. These difficulties had commenced at least by the time the new plant was installed. Mr Tana said that there were a number of diseases at the Guilderton farm which resulted in carrots which were not consistently of good enough quality to meet the standard of Class 1, although he said that some good carrots were still produced there. 188 Moreover, there were other difficulties with the Guilderton farm. Mr Tana explained the decision to close it down was made because it was an aged farm, run down and the soil had been pushed too hard. He said: 'We needed to relocate. ' Hence, I infer that this was an important factor in the decision to purchase the Lancelin farm. Another factor was, of course, the opportunity it presented as a much larger farm to expand North East Equity's carrot production. In my opinion the quality problems with the Guilderton farm continued, even if the diseases were addressed, up to the time that it ceased production in June 2005. 189 Coincidentally, when North East Equity sought to use the resource of the Lancelin farm, it experienced carrot blight. Mr Tana said that the blight afflicted the crop there during 2004 and 2005. The problems with both farms appear to have been evident in terms of their effect on the operation of the new line. North East Equity's expert accountant, Martin Langridge, concluded that in the period between May 2003 and June 2005 the volume of carrots packed showed a downward trend. Significantly the radical drops in May 2003 and 2005 as against the corresponding figures for 2002 and 2004 would appear to reflect the difficulties at the farms. The figure for May 2003 of about 1 million kg fewer carrots packed than for the preceding year could not have been related to any problem with the new line since Mr Tana would have caused those carrots to have planted in January 2003, well before the line was installed. Likewise, the figures for June and August 2003 reflect production problems. 191 Significantly, the figures for September, October and November 2003 show similar volumes packed at the peak time for sales, as in the previous year. Yet, the evidence summarised in Mr Proud's schedule in those three months of 2003 showed that the overall reject rate was very high. And, about 70% of all carrots which arrived at the grading tables immediately before the weighing and packing machines at that time were Class 2. Hence, I infer that Mr Tana had caused more carrots to be grown than in the previous year's corresponding period, but what was harvested was of an inferior quality. 192 Mr Langridge prepared a chart which showed the weighted average price per kilogram for export sales was about 80cents per kg in mid-2003 but fell to about 70cents per kg in late 2003. By mid-2004 the price was between about 67cents and 69cents per kg rising to stay around 72cents per kg from late 2004 to mid-2005. It is not necessary to make a precise finding about these prices. It suffices that the chart showed that the returns from export sales had substantially reduced after mid-2003 from what they had been before. 193 Mr Langridge also analysed North East Equity's sales figures for the 2004 and 2005 financial years. He used actual data from its financial records to calculate export sales and some local sales. He hypothesised that some local sales were rejects. He prepared calculations (excluding assumed rejects) of average local sales prices per kilogram for the 2004 and 2005 financial years of 48.64cents and 43.36cents. He did not have data for May and June 2003 local sales. Thus, both local and export average sales prices per kilogram fell over the period. (I will return to this memorandum later in these reasons. ) In evidence, which I accept, Mr Webster explained that the quality of the carrot to which he was referring was that the more carrots that had to be graded out, the longer the process of production became, and that was a major issue to him. Mr Webster said that he meant that there were more rejects and Class 2 carrots being taken out than ought to have been the case, had they been of a Class 1 quality, when the process would have been a lot easier. 195 Mr Proud, in his written evidence, stated that in 2003 and early 2004 the proportion of Class 2 carrots that he observed '... was far too high. It was up to 70%'. I do not accept that evidence in relation to the period after the new line was installed. 196 During most of 2003, the quality of produce delivered to Wattleup for processing was very different and of a significantly lesser quality to that of a year earlier. On 3 November 2003 Mr Tana wrote to Mr Proud saying that all carrots that day had been processed as Class 2 '... because your system has no flexibility to take out 30% Class 1'. Of course, the system was not intended to remove Class 1 carrots, nor was it supposed to process so many low quality carrots. As Mr Tana said in evidence, he was '... not in the business to sell grade 2s' (i.e. Class 2). 197 The specifications and negotiations for the new plant in 2002 had nominated a maximum of 18% rejects for removal. Mr Tana and North East Equity did not specify or suggest in 2002 that 30% of the produce be capable of being removed, let alone that percentage after removal of rejects. The negotiations and the contract contemplated that Class 1 carrots would be packed while Class 2 and some rejects would be removed at the grading tables immediately before the weighing and packing machines. The 18.75 or 17.55 tonnes per operating hour at final pack out that was the subject of negotiations in 2002 referred to Class 1 carrots that had been processed from an input of 22.8 tonnes, the balance being class 2 and rejects (including waste). 198 The facsimile transmission of Proud Machinery's letter of 18 October 2002, which formed part of the contract, was accompanied with drawings. One of those drawings depicted a table 3 m long and 1.75 m wide, with six persons grading, three on either side. In the middle of conveyor belts running the length of the tables were six chutes for either waste or Class 2 carrots. The grading personnel threw carrots into the appropriate chute. The final design of the tables was changed by reducing the number of chutes from six to five. Although North East Equity did not plead any case involving the particular configuration of these grading tables, it complained that, as installed, they were only capable of fitting two persons, rather than three, on each side. Hence it contended the tables could not meet the requirement of being able to remove 18% rejects. However, I accept Mr Proud's evidence that he had observed three people grading on each side of the tables on his visits and that the tables could fit that number of persons. 199 But, in any event, Proud Machinery had submitted drawings of the tables for North East Equity's consideration and approval before proceeding to install them. North East Equity knew how close together individuals performing grading work could and should be placed. And it knew how quickly the actual Newtec and Gillenkirch weighing and packing machines in the old line operated and how fast individuals grading had to work to keep up with those machines. Mr Tana and Mr Webster, at least, had been looking at proposed designs and commenting on dimensions during the months leading up to and after the contract. Indeed on 3 September 2002 Mr Tana wrote a fax to Mr Webster of his '... initial thoughts on layout'. He wrote: 'Where will we fit 2-3 persons levelling carrots after [Gillenkirch]?'. This showed that he was conscious of how many people needed to be accommodated at various parts of the line. 200 The three production experts concluded that the plant was capable of removing about 25% of the carrots presented at the final grading tables (including rejects). Mr Tana's complaints by November 2003 were based on the aberrant nature of the carrots being grown by the farms. Those carrots were of much lower quality than either party had contemplated in the negotiations in 2002. 201 However, I am satisfied that most of the carrots produced at this time, in the order of 70%, were of a class or grade 2 standard. The diseases and other problems at Guilderton did not affect the volume of carrots produced, so that quantities stipulated in Mr Tana's growing schedule were still delivered for processing at Wattleup. However, these factors did affect the quality of what was produced. 202 I am not satisfied that the size or capacity of the grading tables, as installed immediately prior to the weighing and packing machines, caused any breach of contract or departure from a representation by Proud Machinery or Mr Proud. I am not satisfied that those tables were not adequate to enable a sufficient and appropriate amount of rejects and Class 2 carrots to be removed. I find that the tables, as designed and installed, were approved by North East Equity as appropriate for the grading work it required to be done on them before their design was finalised. More grading came to be done at these tables in 2003 and afterwards due to the significant deterioration in the quality of the carrots as delivered from the farms. Mr Tana initially claimed this lasted only for about 3 months. In cross-examination he volunteered that it had lasted from late 2004 to December 2005, when he said 'it had virtually vanished'. Tellingly he said: '... only our records would be able to reveal the exact figures'. No such records were put into evidence, although Mr Tana said they were at the Lancelin farm. In 2005, North East Equity was growing carrots at Lancelin on 1,200 of its 4,300 acres. The blight affected the leaves of the carrots, which resulted in them not growing as large as normal. I reject that evidence. At that time, Mr Tana had planned to phase out production from the Guilderton farm entirely. He knew that there were production problems at both farms. I do not believe that Mr Tana reduced planting or production. To the contrary, he sought to maximise production so that North East Equity could harvest a crop that was of as great a quantity and as good a quality as possible to send to market. 205 Moreover, a decision to cut or not increase carrot production at the farms during 2003 and afterwards because of claimed difficulties with the new line is improbable. First, any decision had to be made four to six months before harvest and delivery to the new line for processing. Secondly, in the context of production-related problems being experienced at the Guilderton and Lancelin farms, I do not accept that Mr Tana was doing anything except seeking to obtain the maximum crop possible. Thirdly, any difficulty in the operating of the new line was likely to be addressed during the four to six months intervening period. Fourthly, the quality problems meant that North East Equity was only bringing to market a composite grade of, at best, about 30% of its harvest as Class 1. Fifthly, North East Equity adduced no contemporaneous records or other evidence beyond Mr Tana's self-serving assertions of planting decisions or demand forecasts that could corroborate this claim. The impacts of market forces on carrot prices, crop quality and sales, strongly told against a suggestion that North East Equity would have produced any more carrots than it actually did. In addition, work was necessary to prepare more acreage on the Lancelin farm to grow carrots and to insulate those acres, if possible, from being affected by blight. 206 By 2005, Mr Tana said that he was in the process of switching the focus of his horticultural operations, including the production of carrots through (among others) North East Equity, from almost 100% export to about 50% export with the rest diverted to the local market in both Western Australia and the eastern states. No doubt, this plan resulted from the impact that competition from China and the appreciation of the Australian dollar had had on North East Equity's exports. Mr Tana said that he perceived China as the major source of competition for the export market for carrots. This was another instance leading to my overall impression that I should be cautious about accepting Mr Tana's uncorroborated evidence or its accuracy. 208 Mr Tana asserted that the problems at the Guilderton farm lasted between 6-12 months after March 2003. North East Equity produced no records to support Mr Tana's assertions as to when production difficulties began and ceased at either Guilderton or Lancelin. The only evidence of their duration was Mr Tana's uncorroborated assertions, which I do not accept fully explained these problems. In a number of instances in his evidence, Mr Tana exaggerated substantially difficulties or problems, which he claimed North East Equity had, for the purposes of improving its case. I am not prepared to accept his uncorroborated assertions or to draw inferences favourable to North East Equity's case based on them. 209 As at November 2003 Mr Tana's contemporaneous correspondence demonstrated (and I find) that the production problems at Guilderton had resulted in as much as 70% of the carrots delivered regularly for processing were Class 2. This was combined with the small amount of Class 1 carrots to make a 'composite' grade at this time. The decision to process this composite grade had nothing to do with any defect in the operation of the new line at any time. I am comfortably satisfied that the problems with the Guilderton farm were far from being resolved in late 2003. Indeed, I am not satisfied that those quality problems were ever resolved at any time prior to that farm's closure in June 2005. I am not satisfied that the quality of produce from the Guilderton farm was ever restored to a Class 1 standard. He estimated that, based on Australian Bureau of Statistics figures, in the period between 2001 and 2003 North East Equity was producing approximately 50% of the fresh produce supplied to the export market from Western Australia. The figures related to fruit and vegetables in general, not just carrots. He said that carrots comprised about 95% of North East Equity's total fresh produce sales. I am satisfied that Mr Tana was well aware, when he gave that evidence, that this was not the true position at all. 212 Next, Mr Tana asserted in his written evidence that since 2003 there had not been a noticeable impact on North East Equity's business due to currency fluctuation, in particular the appreciation of the Australian dollar against major currencies used to pay for exports in the markets to which it was selling. However, Mr Langridge's report showed that the weighted average price per kilogram received in Australian dollars by North East Equity fell from approximately 81cents at the end of July 2003 down to 71cents at the end of October 2003, falling as low as 67cents in the middle of 2004. 213 Mr Tana had said that during the period between January 2003 to June 2004 the carrot market was not good because of, first, competition from China and, secondly, a spike in the exchange rate for the Australian dollar. He explained the spike was in the Australian dollar appreciating against the US dollar. 214 During the period between 1998-1999 and 2004-2005 carrot exports from Australia rose from about 50,000 tonnes, worth $30 million in 1998-1999, to a peak just short of 70,000 tonnes, worth a little over $40 million in 2001-2002. Exports fell back in terms of volume to about 65,000 in 2002-2003 but increased in value to about $42.5 million. However, in 2003-2004 there were falls in volume to about 52,000 tonnes and revenue to about $36 million. The decline continued in 2004-2005 to about 50,000 tonnes and about $34 million in revenue. These figures appeared in the 2005 annual report of the Department of Agriculture of Western Australia. The report noted that Western Australia produced 88% of Australia's carrot exports. It remarked that there had been reduced export returns for Australia during the above period and that there was then a continued expansion of vegetable exports from China which was causing rationalisation in production here. 215 Frank Chew was North East Equity's export or marketing manager from 1998 until he ceased employment in early 2007. During that period he ultimately also became the general manager of operations at Wattleup but North East Equity gave no explanation why he was not called to give evidence. I infer that his evidence would not have assisted North East Equity's case. 216 Gary Kift had been North East Equity's company secretary since 1989 and was its financial controller. Mr Kift was a professional accountant. He prepared North East Equity's tax returns and after they were finalised by its tax agents he signed a number of them in his capacity as public officer. Mr Kift explained that the profit and loss statements in North East Equity's tax returns for the financial years 2000 to 2006 contained the following total results for its vegetable business which I have summarised in the table below. He explained, as did Mr Tana, that the accounts in other sections recorded results from various other activities of North East Equity apart from the vegetable business. 217 North East Equity led no evidence to explain or break down the sources or amounts of its actual income or expenses in any of these years relating to carrot sales or its carrot business. Neither of the expert accountants, Mr Langridge and Mr Holmes, examined this data in the tax returns to segregate which parts of the figures related solely to carrot production. Mr Holmes reported that he was not able to access North East Equity's data to extract this information. Mr Langridge pointed out that the sales figures (total, export and local) shown in the tax return data did not disclose the volume of sales or the exact proportion which related to sales of carrots. He was not sure that the figures were able to be useful in that form. However, Mr Tana said about 95% of North East Equity's fresh produce sales were carrots. 218 Indeed, Mr Langridge said in his first report that he had examined monthly profit and loss statements for the carrot shed operations of North East Equity for the period May 2003 to June 2005. His figures for the financial years 2004 and 2005 were very different to those in the tax returns, and I have included those in the table. 219 I find that the substantial part of North East Equity's business was its dealings in carrots, with only minor contributions of not more than 5% to 10% from other vegetable dealings. Based on Mr Tana's and Mr Kift's evidence concerning the results of North East Equity's vegetable business, its carrot business contributed 90% to 95% of the total sales income gross profit and net operating profit in the tax returns. 221 The decline in sales and profit from 2001/2002 to 2002/2003 was marked. It occurred during eight months that were unaffected by the new line, which only began operating in March 2003. And the decline continued in the subsequent years because of the quality and production problems at North East Equity's farms and the significant deterioration in the export market from competition and the appreciating Australian dollar. Although those figures are not solely to do with the carrot business, I find that the significant downward movements after 2002/2003 were caused substantively by the above factors. Its export market was in Japan, Taiwan, Hong Kong, sometimes the Philippines, South East Asia and sometimes across to the United Kingdom. At this time Mr Tana (late 2001) began speaking with Mr Proud about the possibility of installing the new plant and equipment. I find that Mr Tana had a very positive view of the market at this time based on the success of his company's export sales. However, the market changed in 2003, after the new line had been installed. 223 The impacts of competition from Chinese carrots with the appreciating Australian dollar continued well past mid-2004. But by August 2003, Mr Tana recognised that the carrot market was '... going through a very tough period ... with China carrots flooding into all Asia ports'. Mr Tana, said in a newspaper interview at that time, that he planned to have an additional packing operation at Lancelin. 225 On 18 December 2003, Mr Tana wrote to Mr Proud asserting that North East Equity had missed the opportunity to maximise the volume of carrots from August to November '... due to the continual problems experience[d] with the line and other factors'. 226 The claim that the new line affected the volume of carrots was simply false. Mr Tana did not reduce his plantings or the amount he always intended would be delivered to the Wattleup plant for processing. The only impacts on production at the farm and output at the plant were caused by the difficulties experienced at the farms and the changes in the market. Mr Tana sought to make Proud Machinery, Mr Proud and the new line his scapegoats for the commercial difficulties he was experiencing in his business from factors for which they had no responsibility. I accept that there were several sources of justified irritations and some shortcomings in the way the new line operated and that some of Mr Tana's sense of grievance was fairly directed. But the problems with North East Equity's farms and export markets meant that its investment in the new plant was not the commercial success that Mr Tana had wanted; not because of any substantive deficiency in the performance new line, but because the market price had come down, competition had increased and the quality and volume of farm production of its carrots had deteriorated very significantly. 227 Mr Langridge was the expert forensic accountant engaged by North East Equity to quantify its claim for economic loss. 228 The experts agreed that they offered no opinion about the reasonableness of those assumptions. First, the quality and quantity of the carrots produced in 2003-2005 were severely affected by the matters which I have discussed above. There were up to 70% Class 2 carrots produced because of the production difficulties of the Guilderton farm leading to its ultimate closure in 2005. The blight affected the produce from the Lancelin farm. There was no evidence to support Mr Tana's assertions that the farms could or would have produced more carrots and that some unspecific sales opportunities were lost. I do not accept those assertions. Secondly, it is immediately apparent that the assumed reject rate of 10% was quite different from the known facts. Given the falsification of the assumptions, there is no basis upon which the model constructed by Mr Langridge can be of assistance. That is not a reflection on him. The assumptions that he was asked to make had no semblance to the reality of North East Equity's actual position. As North East Equity's final written submissions recognised the first, second and fourth of those assumptions were supported only by Mr Tana's assertions, as was much of the third. 229 And, the competition from Chinese carrots had caused what Mr Tana had said in April 2005 was 'a major, major correction' in the Australian carrot growing industry (T 86). This correction was reflected in the substantial decline in North East Equity's sales revenues and net profit between 2002-2003 and 2005-2006. 230 North East Equity claimed about $4.85 million damages as its economic loss during the period from 1 May 2003 to 7 July 2005 based on the above assumptions which it gave to Mr Langridge. I am not satisfied that there was a sufficient basis to render the above assumptions given to Mr Langridge reasonable. Indeed, in my opinion, on the evidence, they were without foundation. 231 I have accepted that, in some respects, the new line fell short of its warranted or represented performance. For the reasons I give below in assessing damages, these matters were not substantial or of a kind which had any substantive adverse impact on the actual operation of the new line. But I do not accept that these matters caused any economic loss to North East Equity or the loss of any chance to earn more profit than it in fact did. 232 I am not satisfied that North East Equity lost any sales at all or any market opportunity to sell any more carrots than it actually produced and sold. Nor am I satisfied that North East Equity was financially worse off because of any deficiency in the operation of the new line. 18. He sent these lists to Proud Machinery. Mr Tana also made numerous oral and written complaints to Proud Machinery and Mr Proud. Many of the problems were teething problems which were addressed promptly and resolved, however a number of the problems were of a more fundamental nature. 234 By 18 March 2003 Mr Tana was expressing considerable concern to Mr Proud that a number of 'disasters' existed with the operation of the new line. Mr Proud was also upset, at that stage, about the way the line was operating. He arranged for Mr Gillenkirch to fly urgently from Canada via Germany to Perth to arrive on 21 March 2003. Mr Proud also sought assistance from Bruynooghe in relocating the touch screen. He said that he was working towards resolving the then difficulties in his letter of the same date. 235 There were problems with the equipment as supplied. Thus in his letter to Bruynooghe of 18 March 2003, Mr Proud stated that he was '... personally totally disappointed and frustrated with the amount of problems and rework that we have been left to deal with on our own'. 236 I am satisfied that the new line was not fully operational within 10 business days of 7 March 2003. Thus, North East Equity was entitled to retain the $50,000 maximum sum of liquidated damages provided in the contract. This person is in the "driving seat" and will be the only person to make any changes to the buffer tanks. In my view, this was a fundamental problem in North East Equity's organisation and contributed significantly to the difficulties that were experienced. 19. He reported on the major issues North East Equity then had with Proud Machinery, and considered the position, particularly if it ceased to do business with Proud Machinery. One issue was the relocation of the touch screen from the office to the position above the chilling tanks. Mr Webster also noted that, while mechanical damage to the carrots had been '... significantly reduced, the farms are still a problem'. That referred to damage occurring to carrots during the harvesting and delivery process and resulting in considerable quantities of already damaged carrots being fed into the line for processing. The other major issue is of course whether we can maintain a consistent packout tonnage over the 8-hour period; (problems are below) that affect it. Consistent feed from tanks i.e. an efficient operator driving the system. too many changeovers of variety cartons --- too much time lost. Seems ludicrous that we run 5 & 6, 7 & 8 flat out, No. 4 sitting there doing nothing, that's around 20 Tonnes over 8 hours. I think its [sic] to reduce labour costs, someone must have done the calculation! The first problem was the significant change in quality of the carrots delivered to Wattleup for processing. This referred to problems then being experienced with the farms supplying the plant, particularly Guilderton. As I have found, about 70% of carrots supplied at this time were Class 2. In addition, Mr Webster identified the problems with North East Equity's management of the new line as his second, third and fourth concerns. In cross-examination, Mr Tana was unable to answer Mr Webster's question about why machine No 4 was not used, other than by asserting that it was used, and he was unable to specify how or when it was used. I accept the accuracy of Mr Webster's contemporaneous observations including his observation that one of the Newtec/Gillenkirch packing stations (machine No 4) was rarely used. 240 The ability for the plant to process carrots into differently graded sizes at an even rate of output depended upon there being some consistency in the size of carrots. If eight different streams would be graded at 17.55 tonnes per hour on average between the eight streams, it would be necessary to have an input of about two tonnes of each of the eight grades of carrots, after allowing for rejects. The evidence, however, established that there were certain predominant sizes of carrots, mainly medium and small/medium ones. 20. The letter is notable. First, Mr Tana made no complaint about the split shift operation commencing at 6.00am which he described in this letter. I infer that this was because it was always his understanding that the new line, which he and Mr Proud discussed in 2002, would operate with a split shift, as Mr Webster's memorandum of 1 August 2002 had indicated. In addition, he said another 15% of the carrots removed at the latter grading tables were Class 2. In the 12 September letter Mr Tana asserted that he had assumed '... a 10% reject rate which for us is normal (sometimes it does go as high as 25% but [this is] abnormal)'. 243 Fourthly, Mr Tana identified the six sizes which were being packed as prepack short, small, small/medium, medium, large short and large. He sought to rely on a distinction between 'rejects' and 'waste', saying that 'rejects' were 'not waste in total'. However, he also acknowledged that 'rejects is a combination of waste and rejects'. In the discussions Mr Tana had with Mr Proud, and as used generally in the evidence, I am satisfied that the expression 'rejects' included waste. This is because neither rejected carrots nor unusable waste were intended to be packed at the end of the line. North East Equity did have other uses for some of the rejected material. But what happened to it after it had been removed from the line was of no concern in the present proceedings. 245 Mr Tana acknowledged that North East Equity kept no record of the weight of rejects. In evidence in chief he claimed that the specification of 18% rejects for the performance of the new line was to be measured only in respect of the carrots that had passed through the brush washers. This would have meant that the commencing tonnage for measuring the ultimate pack out rate consisted of carrots that had already been culled at the initial grading table. 246 However, despite all his asserted dissatisfaction with the performance of the new line, Mr Tana had never caused any measurement to be taken of the amount or weight of carrots which entered the brush washers (i.e. after the chilling of rejects and waste at the initial grading tables). That is, he had never obtained a measurement of the initial tonnage in order to make good his claim that the new line was deficient in meeting the specified 18.75 or 17.55 tonnes per hour final pack out. --- In the context of the line, yes, sir. --- There is a distinction sir, but no numerical distinction. --- Not at all. --- We do on a daily basis by knowing how many bins come through, thereabouts, and it was always two to one: two before the line and one approximately during the line . --- They're not formal documents as I said. --- I recall - I do recall Mira on certain days taking that measurement upon my request. Whether they're recorded or not she would tell me at the end of the day so many came here, so many came there and on average it always averaged between two to one if not three to one . Moreover, the measure of 8% and 2% rejects, referred to in Mr Tana' s 12 September letter is four to one. I have no confidence in Mr Tana's evidence as to the general performance of the line. I am satisfied that Mr Tana was conscious of a significant deterioration in the quality of the produce delivered for processing to the Wattleup plant from early 2003. This was because of the production difficulties which led him to decide to close the Guilderton farm in June 2005. As a result, significantly more rejects, waste and Class 2 carrots were delivered and had to be removed or processed after the new line was installed than before. I am satisfied that from about March 2003 and thereafter the quality of carrots grown had substantively deteriorated and that substantially more than 18% rejects were included in the carrots delivered from the farm for processing at Wattleup. 248 Indeed, Mr Harris, North East Equity's expert, assessed the line, between August and October 2005, after the Guilderton farm had closed. He had been asked to assume that the final grading tables had to be capable of removing 18% rejects and 20% Class 2 carrots: i.e. 38% of all carrots processed through the line up to that point. That assumption did not reflect any pleaded contractual term or representation. However, if 18% rejects were presented at the last grading tables, then applying one of Mr Tana's varying ratios would suggest that 2, 3 or 4 times that quantity of rejects had been removed at the grading tables prior to the brush washers. Thus, about 146 tonnes had emerged from the brush washers, of which approximately 26 tonnes (18% of 146) were classified as rejects at the final grading tables (assuming little or no waste had been segregated by the diameter or length graders). There was no evidence about how much waste was removed by these machines. 250 As the above table demonstrates, if one of Mr Tana's ratios were correct, then 52 or 78 or 104 tonnes must have been removed as rejects at the initial grading tables prior to the brush washers. Even if the ratio of rejects were two to one, then 78 tonnes (the final 26 tonnes and an initial cull of 52 tonnes) or 39% out of 198 tonnes delivered were rejects. If it were four to one, 52% of the total carrots delivered were rejects. (If three to one, the total proportion rejected would be 46% or 104 tonnes. ) And the task of removing so many rejects at the initial grading tables would involve substantial work and time. That is, there would have been more people working for a longer period at the initial grading tables which would have increased both labour costs and the time of the shifts, regardless of how efficiently the new plant operated. That would have negated one of Mr Tana's principal reasons for the investment. These considerations reinforce my findings that, first, the efficient economic operation of the new line was substantially affected by the substantive deterioration in quality of carrots delivered from the farms from about March 2003 and, secondly, the specification of 18% rejects was in respect of the whole line (i.e. including the initial grading tables). 251 In making the second finding, I have not overlooked Mr Proud's evidence, which North East Equity relied on as supporting its case, in relation to the starting point for measuring the 18% rejects. In his written evidence, Mr Proud referred on three separate occasions to the agreed initial tonnage (182 tonnes per 8 hour working shift or 22.75 tonnes per operating hour) being fed into the new line commencing after the brush washers. In cross-examination Mr Proud said that this was wrong. I do not consider that Mr Proud was always reliable in his evidence. On this point, the contemporaneous documents are a surer guide to what the parties agreed and discussed than their recollections four or five years later. Those recollections have been coloured by the subsequent history of the dispute and the desires of both witnesses to justify in their own minds, what they thought they had done. Their evidence was prone to being assertive and unreliable: see too Watson 49 NSWLR at 318-319. 252 While North East Equity was entitled to rely on these statements by Mr Proud as admissions against interest, I do not consider them to be reliable. They made no commercial sense, since neither party measured the weight at that point, or had any objective means of calculating this. The new equipment had to work with what was to be retained, including the initial part of the plant. A mix of production targets was discussed in 2002. The key inputs were the initial quantity of carrots delivered and the pack out tonnage per hour. As I have found above, it made no sense for the parties to measure or consider the production of the new equipment in isolation. Ultimately, in 2002 Mr Tana agreed with Mr Proud that Proud Machinery would provide new equipment to be combined with some old for the plant, working as a whole, which could pack out 18.75 tonnes per operating hour (or 17.55 tonnes without the handline) with a maximum of 18% total rejects. The new equipment, obviously, had to have the capacity to operate in a way which enabled the final pack out rate to be achieved. But, as Mr Webster' s 1 August 2002 memorandum showed, the overall capacity of the line, consisting of both the old and new equipment, was what mattered. The new equipment could not process more than the amount of carrots fed into it from the old system's brush washers. I do not accept Mr Proud's written evidence on the starting point for measuring the 18% rejects. 253 In any event, I must approach the identification of the terms and the construction of the agreement objectively, rather than from the subjective points of view of the parties. For the reasons I have given, I am satisfied --- based on the mutually known facts, the evidence of discussions and contemporaneous written material --- that the parties agreed that the 18% rejects related to the processing operation as a whole, commencing from the point where the carrots were tipped into the wet hoppers. And, given the nature of the negotiations and the parties here, it is appropriate to assess whether any representation complained of was made by Proud Machinery or Mr Proud on the same basis. 254 North East Equity specified that the system be able to grade the carrots into eight different sizes. But North East Equity never informed Proud that any particular quantity or quality of each size of carrot was to be processed through the plant. It would have been obvious to Mr Tana that significant variations in the quantity and quality of differently sized carrots would impact the production capacity and efficiency of the plant. There were five packing machines, but only three sizes could be packed simultaneously. This was because North East Equity had specified that there be only three conveyors from the chilling tanks to deliver carrots to three grading tables. Two of those tables served two weighing and packing machines each and one table served only one set of weighing and packing machines. The prepack line would allow a further size to be packed. 255 I am satisfied from Mr Tana's handwritten facsimile of 14 September 2003 that he and Mr Proud discussed the 12 September letter the next day. Mr Proud made many handwritten annotations on his copy of the 12 September letter which I infer he used as his basis of discussion with Mr Tana. For example, Mr Proud noted his response to a complaint Mr Tana had made about a build up of mounds of carrots where they were dropped into the chilling tanks by the conveyor from the length graders. Mr Tana had asserted that if more than five or six tonnes were in a tank, the carrots could not be moved by water pressure from their entry point. He complained that this led to carrots spilling into adjoining tanks which could undo the earlier grading. Mr Proud wrote a note that the tanks could be completely filled and the operator had to adjust the timer on the air pumps to spread the carrots evenly. Mr Gillenkirch's evidence confirmed that this was how the system should have been operated. 256 Mr Tana's comments about the tanks revealed that his staff were not monitoring any build up of carrots in the chilling tanks, nor were they adjusting settings or the operation of the equipment as and when needed. That is, as I find, North East Equity was not operating the equipment properly. 21. He proposed that they meet on 17 November 2003 commencing at 6.00am at Mandogolup (Wattleup) where they would inspect the operation of the plant. Mr Tana provided an agenda in the letter for three subsequent meetings that day at North East Equity's offices at Balcatta starting at 10.00am. The Balcatta offices were north of Perth, quite some distance from the Wattleup plant which was to the south of Perth. The first meeting proposed would be between Mr Tana and Mr Proud alone. At the second, Mr Tana proposed that they would be joined by Ms Mirosevich and Mr Webster, and at the third, the Bruynooghe representative and Messrs Gillenkirch and North would also be present. This suggestion followed many months of complaints by North East Equity and Mr Tana to, principally, Proud Machinery and Mr Proud. 258 Ultimately, Mr Vermeulen came from Belgium to represent Bruynooghe. The evidence is unclear as to whether the test of the plant and the meetings took place on 17 or 18 November 2003, although both parties agreed that by 18 November at the latest, a test and a meeting had occurred. Mr Tana created handwritten notes dated 18 November 2003 recording the results of a meeting with himself, Mr Proud, Mr Gillenkirch, Mr Webster, Ms Mirosevich, Mr Vermeulen, Mr North and Mr Hunter (of Proud Machinery). These were the only contemporaneous record of that meeting. I am a satisfied that a meeting took place with those persons on 18 November. I find that meetings and a test took place over the two days, 17 and 18 November, with the final discussion occurring as recorded in Mr Tana's notes on 18 November. Other than the issue of the assumed initial weight of 450 kg per bin and the associated calculations, there was no dispute as to the accuracy of the information in Mr Proud's schedule. 260 On 17 November 2003 North East Equity's records showed that 453 bins were tipped into the wet hoppers at the commencement of the line, resulting in approximately 131 tonnes of packed cartons. That meant that 183.5 tonnes (at 405 kg per bin, as I have found) were tipped into the wet hoppers resulting in 52.5 tonnes or 29% rejects. Mr Proud's schedule recorded that there were problems with a motor relay which tripped out nine times for one of the dual weighing packing machine stations, a robot was unable to cope with the weight of cartons, a flume was blocked with carrots, resulting in10 minutes stoppage time, the carton sizes had to be changed because the robot was unable to stack all the different cartons, and one of the gates for delivering carrots lost a nut clamp. 261 The same records showed (assuming 405 kg per bin) that on 18 November, 386 bins (or 156.33 tonnes) were tipped into the wet hoppers, resulting in a total production pack out of 132 tonnes with 24.33 tonnes, or 15.6% rejects. Mr Proud's schedule also recorded that a brush washer broke down around 3.15pm. It noted that the motor relay, this time, tripped out five times, a water spray pipe on an output belt was splashing water, the flumes blocked with a 20 minute stoppage of the line, and fresh carrots were processed after lunch but were too hot to pack because the temperature of the water in the chilling tanks was too high. 4deg.-7deg. 12.00 [noon] 3deg.-4deg. 3deg.-6deg. 4deg.-6deg. Tuesday 18 November 2003 am - 3deg.-4deg. 3deg.-4deg. 12.00 [noon] 6deg.-12deg. 6deg.-10deg. 5deg.-8deg. pm 5deg.-6deg. 5deg.-7deg. 4deg.-6deg. 263 On the day of the test, each of the suppliers (Messrs Gillenkirch, Vermeulen and North) had adjusted their machinery to the settings which they regarded as appropriate to test the capacity and functioning of the line. However, by this time, North East Equity had modified the operation of the length graders so that they no longer did any grading and they simply conveyed carrots to the chilling tanks. Thus, only five different grades of girth were processed in the test and there capable of being was no separate automatic grading for length. 264 Mr Tana made some handwritten notes of processing which commenced with 453 bins being tipped into the brush washers. This figure accords with the records for 17 November 2003. Both Mr Tana and Mr Proud recalled that, on the day of the test, production stopped early. In his witness statement, Mr Proud asserted that the meetings took place on 17 November and a productivity test of the line took place the next day. He confirmed this in his evidence. 265 It is difficult to determine from any contemporaneous record whether the test occurred on 17 or 18 November. It would have taken some time for those attending the meeting to make their way to Balcatta. Both Mr Tana and Mr Proud agreed that that production finished earlier than usual on the day of the test. Significantly less bins were processed on 18 November. No witness said that any stoppage had occurred on the day of the test due to carrot temperatures being too high. And, Mr Tana's contemporaneous notes do not suggest that this was an issue in the meeting. It would have been an obvious and immediate source of discussion (and vociferous complaint by Mr Tana) if production had stopped while the test was proceeding, particularly if the chilling system were not functioning. Indeed, Mr North said that he did not recall a lot of discussion about the chilling tanks at the time of the test. And, on 19 November he sent a fax to Mr Tana noting that he had changed the computer program to control the times when the refrigeration plant automatically began and ceased operation. Mr North indicated that this might alter the cost of power. 266 And, although the ultimate packed production was similar on both days, the quantity of rejects was substantially greater on 17 November. In addition, during the hearing, both parties focused their examination of the evidence principally upon 18 November as being the day of the test. The contemporaneous records show that, on each day, the sizing crew stopped work at 5.10pm. That may be because they were employed and thus paid up to that time, even though the work had ceased earlier. 267 Mr Gillenkirch said that the test was on 18 November and stopped after about 6 hours because there were no more carrots from the farm. He said a meeting took place in Mr Tana's office after the test on 18 November. I accept Mr Gillenkirch's evidence generally, although for reasons I explain below, I am not sure that he is correct about the day of the test. He was an impressive witness. Mr North also said that the meeting occurred on the same day as the test. 268 Mr Tana said that on the test day only a composite of Class 1 and 2 carrots was graded and packed, rather than the two classes being packed separately. He asserted that this 'composite' was 'Class 1 on paper'. He claimed that North East Equity was selling, as Class 1, a composite grade of carrots that included Class 2 carrots and gave evidence that '... I suppose we could fudge a little bit in marketing'. I understood him to suggest by that answer that he was prepared to deceive his customers as to the quality of carrot which he was selling to them. Mr Proud also said that a composite class went through that day. About 20.6 tonnes of Class 2 carrots were packed in 20 kg cartons (15.6% of the final pack out of the five weighing and packing machines). In addition, about 10 tonnes were packed in the prepack line. Those records made a clear distinction between Class 1 and Class 2 carrots. Earlier in his evidence Mr Tana had acknowledged that those records actually identified several brands as Class 2 and others as Class 1. Mr Tana's preparedness to 'fudge' did not reflect favourably on his integrity or reliability. I find that any difficulties in quality were not due to deficiencies with the new plant and equipment, but rather, were caused by Mr Tana's farms, for example, the high level of rejects on 17 November showed. 270 As I have found, the production difficulties that North East Equity was experiencing in 2003 resulted in a significant deterioration in the quality of the carrots delivered for processing at Wattleup. When Mr Tana and Mr Proud referred to the 'composite' class on the test day, I find they were referring to the very substantial proportion of carrots --- in the order of about 70% of the total carrots delivered (as I have found) --- presented at the final grading tables which were actually Class 2 standard, but were processed as if they were Class 1. And, Mr Tana said that November was a peak period for North East Equity to process packed carrots, so it is safe to infer that the quantity delivered for processing on 17 and 18 November was planned four to six months beforehand to meet peak demand. 271 Mr Gillenkirch said that he observed that both Class 1 and Class 2 carrots were run through the production lines and Class 2 carrots were graded out at the grading tables near the packing machines. Mr Gillenkirch was principally concerned, at the time, to observe how his equipment performed, rather than to assess precisely the quality of the produce as graded. No doubt, as part of Mr Tana's 'fudge', the better-looking Class 2 carrots were packed into the Class 1 cartons. But, I consider Mr Gillenkirch to be most likely to be reliable about how his own equipment was operated. I accept his evidence, and I prefer it to Mr Tana's and Mr Proud's evidence, to the extent they may differ as to the classes of carrots packed on the day of the test. 272 The three experts agreed that the Gillenkirch carton fillers could pack between 240 and 300 kg cartons of 20 kg each per hour (i.e. between 4.8 and 6 tonnes per hour) and between 280 and 340 kg cartons of 10 kg each per hour (i.e. between 2.8 and 3.4 tonnes per hour). Likewise if one packing machine were packing the 10 kg cartons it also would have taken about 51/2 hours to pack the 15.7 tonnes. 274 Mr Tana accepted that the test showed that the capacity of the Newtec/Gillenkirch packing machines was satisfactory. But in evidence he asserted that there was no grading apart from removing objects and that all carrots were pre-chilled. That was not correct. At least 236 of the 386 bins processed on 18 November had been left outside the cool rooms or had been processed fresh on delivery from the farms, according to Mr Correia's contemporaneous notes i.e. over 60% of the carrots processed on 18 November were processed at ambient temperature, and had not been pre-chilled. There is little evidence as to the pre-chilling, if any, on 17 November, and I infer that a similar amount of farm fresh carrots were processed then. 275 I am satisfied that Mr Tana's acceptance that the Gillenkirch machines performed to their capacity demonstrated that they packed at least at the rates identified by the experts and thus, the time for the packing operation would have been no more than about 51/2 to 6 hours. That of course, leaves out of account the time required to process the carrots up to the time of packing. If the packing operation commenced at about 9.00am, it would have been completed around 3.00pm and have left time for the meetings to occur later on 17 or 18 November. I am satisfied that all the carrots available for processing on the day of the test were processed and packed by about 3.00pm that day, even though the crew may have been paid for a full shift (i.e. to stay until 5.10pm) to clean up or perform other duties. However, I have some doubt that the test occurred on 18 November, or if it did, that the meeting occurred after the end of the day's production if the contemporaneous records of problems with the chilling tank temperatures were correct. 276 A production stoppage for 35 minutes because the carrots emerging from the chilling tanks were too hot would have been a very significant issue in the meeting, considering North East Equity's complaint that the new line did not work. Instead, the meeting proceeded without any suggestion that a significant incident had occurred while they were all there. It is likely that those attending the meeting left on 18 November before this incident occurred, and, they had seen the whole of the previous day's production. Moreover, it is likely that the temperature problem was caused by an operator error or some other obvious (to those present) cause which was not inherent in the new line. While I accept that the meeting which Mr Tana noted occurred on 18 November, I am uncertain whether the test occurred on the previous day, or on the same day, but those attending left for Balcatta before the stoppage. In the end, it is not necessary to make a finding choosing between 17 and 18 November as the day of the test. This is because, on whichever day it was, the test had proceeded without any significant problem concerning the chilling of the carrots up to when the attendees left for Balcatta. 277 During the course of each day (17 and 18 November), the plant had packed a total of just more than 130 tonnes. On 18 November about 10 tonnes had been packed by the prepack line and the rest by the new line. The reason that less than 140 tonnes (or 17.55 tonnes in an 8 hour shift) were processed was that some time after 1.00pm there were no more carrots available to feed into the wet hopper at the commencement of the line. 278 One consequence of the test was that whatever weight the attendees believed the bins contained, it was clear to everyone present that the line could process, at least 17.55 tonnes per hour at final pack out. The packing operation, using the split shift had taken less than six hours to pack out about 130 tonnes. And, on 18 November with 405 kg in the bins, then there were about 15.6% rejects in total. 279 Mr Tana recorded in his handwritten notes of the meeting of 18 November 2003 that it was agreed that the final 'grading stations need [an] output of net 3 ton[nes per] hour allowing for up to 30% [Class] 2 & rejects'. In other words, first, Class 1 carrots were being graded separately from Class 2 and, secondly, if 18% rejects were to be removed at this point then only 12% Class 2 carrots could be graded there. The Class 2 carrots were commercially more valuable than rejects. It would have been more important to allow for these to be graded than rejects. The note reinforces the implausibility that all the 18% rejects were ever contemplated to come out at the final grading tables. And at a rate of three tonnes net per hour, the five weighing and packing machines would process 15 tonnes of Class 1 per hour and in addition Class 2 and rejects. Yet Mr Tana asserted that the purpose of the November 2003 test was to assess the box packing section of the line and that all other parts of the line were compromised to ensure that the maximum amount of carrots were fed to the box packing machines. I reject this evidence. If that were the case, there would have been no need for Mr Vermeulen, as a representative of Bruynooghe, or for Mr North to have been present. They could not have contributed to the simple question of whether the Newtec and Gillenkirch machines were capable of processing 17.55 tonnes per hour. Moreover, that assertion was inconsistent with Mr Tana's conduct immediately after the test during the meeting between him and Messrs Proud, Gillenkirch, Webster, Vermeulen, North and Hunter. 281 The test was performed to ascertain whether the new line, as a whole, would perform in accordance with the contractual specifications, and had the capacity to process 17.55 tonnes per hour at final pack out (being the reduced output after the removal of the handline). 282 By November 2003 both Mr Tana and Mr Proud had had their fill of one another. There had been constant negotiations, complaints and attendances at the Wattleup plant over the proceeding months. I find that the purpose of the test on 17 or 18 November 2003 was to assess the overall operation of the plant to see whether, in substance, it met the contractual or represented requirements, after making allowances for the fact that the length graders were no longer being operated, and the number of classes graded thus had reduced from eight to five. Mr Tana confirmed to Mr Proud that he was satisfied with the day's production. Mr Tana said that if four problems were fixed then he would accept the installation of the new plant and would pay Proud Machinery the $50,000 that had been withheld. The four problems were the flume elevators, the operation of the interlock conveyor belts, the overloading of elevators leading to the packing stations, the provision of Gillenkirch manuals and Bruynooghe software. Although he used the word 'software' in his evidence I am satisfied that his contemporaneous handwritten note accurately recorded that Bruynooghe was to provide a CD-rom of the programs for the systems. Mr Tana's difficulty with computers led him to be confused in describing what this issue was, although later by early March 2004, he wanted to have the ability to change the software. I accept Mr Proud's evidence that he did not agree to provide software. 284 Mr Tana's handwritten notes recorded a number of other matters. At the meeting he required that the problems with the flume elevators be addressed. The two flumes were supplied with water by a tank with submersible pumps. The flumes were located after the wet hopper and initial grading tables and fed the width or girth graders. Sometime after the new line had been installed, North East Equity had caused chilled water to be fed into the flume pumps to commence the process of cooling the carrots. The water flowed down two moveable chutes containing the flume elevators. The water washed over or rinsed the carrots as they moved up the flume elevators. 285 The flume elevators carried the carrots on metal cleats or shelves. Initially, the cleats had sharp edges which chipped or damaged many carrots and quite a few fell off them onto the floor. Mr Webster and others made some adjustments to the cleats which improved their efficiency and reduced the number of sharp edges. 286 Mr Proud said that the pumps for the flumes were blocking because loose weed and root hair got into them after carrots were transferred from the initial grading tables onto the flumes. Mr Vermeulen said he would speak with Bruynooghe's Mr Parrein about the flumes. Shortly afterwards, Bruynooghe recommended to Mr Proud that two new pumps should be used to replace the existing ones. Proud Machinery installed the new pumps and some filters but they proved insufficient and the problems persisted. 287 Mr Tana's second requirement was for the intralock conveyor belts to be fixed. These linked the chilling tanks and the next grading stations. Mr Proud agreed to arrange the installation of invertors on the intralocks. The inverters controlled the speed of the conveyors. Soon afterwards, that work was done and this problem was resolved. I am satisfied that the new plant, as originally supplied, had been deficient until this rectification was undertaken. Thirdly, the motors in some of the elevators were overloading causing some elevators to trip out, and that problem needed to be rectified. 288 Fourthly, Mr Tana wanted operating manuals for the Gillenkirch equipment. Mr Proud and Mr Gillenkirch arranged for that to occur and this problem was resolved. Also, Mr Tana wanted Proud Machinery or Bruynooghe to provide North East Equity with a CD-rom with the program for the Bruynooghe equipment. Proud Machinery caused a copy of the program for the Bruynooghe equipment to be provided to North East Equity although it did not provide the password needed to give access to it. In its letter of 16 May 2004 Proud Machinery asserted that it would provide the password when all claims and issues had been attended to. That step did not occur. In my opinion the non-provision of that password was not a breach of any contract or representation made by Proud Machinery or Mr Proud. I am not satisfied that the failure to provide the password was a failure by Proud Machinery to adhere to a pleaded contractual term or representation. 289 Mr Tana's notes of the meeting of 18 November also recorded that Mr Webster was to address the issues of communication between the grading operators and the overall control of the plant. Additionally, the notes recorded that Ms Mirosevich was to attend to improving management control. North East Equity's personnel were also to institute a cleaning schedule for the various parts of the equipment that accumulated debris which might affect their efficient operation of the plant. 290 Mr Gillenkirch gave unchallenged evidence, which I accept, that during the meeting of 18 November 2003 Mr Tana did a calculation of the costs savings North East Equity had made with the new line. He said that his production costs had decreased from $1.20 per carton to between 86cents and 90cents per carton. Obviously, savings of that magnitude were significant and beneficial for North East Equity. I am satisfied that in this important meeting Mr Tana did not overstate the saving North East Equity had made in its production costs. 291 In counsel's final address, North East Equity adopted the saving of 30cents per carton, at the bottom of Mr Tana's range, to argue a recalculation for its latest economic loss claim at $1.3 million. It submitted that the annual labour savings were $586,500 (using 1.955 million cartons). If 86cents were the new cost per carton, the saving was $6,647,000. These figures demonstrate that the new line was far from being a financial or business catastrophe for North East Equity. 292 Mr North said that Mr Gillenkirch had said at the meeting held on 18 November 2003, or in a discussion with Mr North, Mr Proud and Mr Vermeulen immediately afterwards that he, Mr Gillenkirch, would not do any of the things which Mr Tana requested. Mr Gillenkirch denied having said that. As Mr Gillenkirch said, his attitude was that if he agreed with someone to make something, he stood behind the promise. He was not willing to risk his and his company's commercial representation by not following up promises made in business. I accept Mr Gillenkirch's evidence. 293 Mr Gillenkirch said that the problem with the flumes was that the pumps were blocking with leaves and debris from the brush washers and polishers. He said that Bruynooghe was being asked by Mr Tana at the meeting to fix these blockages. It may be that Mr North mistook something that Mr Vermeulen had said for something said by Mr Gillenkirch. Bruynooghe did not agree to fix without payment any equipment that it had originally provided. Mr North was giving a recollection of a meeting or discussion over four years beforehand at which persons with different accents were present. He made no contemporaneous note and was not involved in the subject matter. I think it likely that he was confused as to who made the statement even though he was not cross-examined about this matter. 294 On 19 November 2003, Mr Tana wrote another letter of complaint to Mr Proud copying it to Mr Gillenkirch, Bruynooghe and Mr North. He stated that on the previous day they had had '... a productive day albeit expensive for me, given the concessions I made'. He said that they identified two critical areas that had to be addressed quickly and others that needed to be addressed but were not as critical. The critical areas were the Gillenkirch feed (namely the intralock and inverter problem) and the flume elevators. He was complaining that a flume had blocked, causing carrots to spill onto the floor. 295 I find that at a meeting later on 18 November with only Mr Proud and Mr Gillenkirch, Mr Tana proposed that if the identified four items (namely problems with the flume elevators, the intralock converters, the motors tripping out and the provision of the Gillenkirch manuals and the Bruynooghe CD-rom) were rectified, he would accept the plant as then installed, and pay to Proud Machinery the $50,000 he had retained as liquidated damages. Mr Proud agreed to attend to these matters. In addition, Mr Tana agreed that he would pay Gillenkirch another €10,000 for two cross-belts to process the Class 2 carrots. I find that Mr Tana was prepared to arrive at this agreement on 18 November because the four matters that he required to be rectified were the only substantive problems with the operation of the new line in accordance with what he believed Proud Machinery and Mr Proud had contracted (or promised or represented) would be achieved. While he considered that he had made some compromises, he did so, no doubt, based on his belief that the new line had given the Wattleup plant significant efficiencies and savings, including on labour costs. 296 However, the flume elevators problem was not fixed and this agreement was not completed. No settlement of the dispute occurred. 298 Although no ultimate resolution of the difficulties occurred, I am satisfied that the substantive points regarded by Mr Tana as necessary to resolve North East Equity's complaints about the capacity and operation of the new line in November 2003, were in substance, the four set out above. The problems with the intralock conveyors and elevators to the packing machines were addressed, and the manuals and software were supplied (absent the password). However, the flume elevators continued to be problematic. 299 Mr Proud accepted that the flumes had not operated satisfactorily since their installation, as he wrote to Mr Tana on 6 January 2004. Mr Vermeulen had agreed to discuss what could be done with his head office in the 18 November meeting. Their first proposed solution, the substitution of the pumps and new filters, did not work. Subsequently, Mr Tana corresponded directly with Bruynooghe. It ultimately designed a new elevator system which would cost €51,000 plus freight, to provide and Proud Machinery offered to install it at no cost. Mr Tana, understandably, was not prepared to pay that sum. Bruynooghe were not prepared to supply the equipment without charge, and Mr Proud was not prepared to bear the cost. Thus, the flume elevators were not rectified. 300 But, in the end, the flumes did not operate satisfactorily particularly because the new pumps also kept blocking. The original flumes were not reasonably fit to meet the standard of operation required of them by the contractual warranty and the representation of efficiency, which equipment of that kind ought to have had when installed. 301 Matters dragged on but never resolved. Later in 2 March 2004 Mr Tana wrote to Mr Proud following their discussion earlier that day. He said that North East Equity wanted to obtain the ability to alter Bruynooghe's software and Mr Tana claimed that this was part of the contract with Proud Machinery. I have found that there was no such contractual term or representation. Mr Tana also raised an issue concerning the refrigeration system in that letter. This has the effect of mixing 1deg.C water with 7-10deg.C water giving a 4-5deg.C plus water temperature. Until our issues are resolved we will not instruct Gary to make any changes as it would prejudice our position. ' (emphasis added). Importantly, there was no evidence that any issue about the operation of the chilling tanks, or their ability to ensure that carrots would be packed at 5deg.C or less, was raised at the time of the test or in the meeting of 18 November. And this matter was not referred to in Mr Tana's handwritten notes of the meeting even though Mr North was present. I am not satisfied that the refrigeration system did not operate in accordance with its contractual and represented capacity. 303 No complaint about the refrigeration was made or addressed during the test and meetings on 17 and 18 November 2003 when all the suppliers were present to ensure correction operation of the new line. As I have noted, while the contemporaneous records show that a refrigeration problem occurred on 18 November, causing processing to stop, this did not result in the meeting dealing with any issue arising from any stoppage. I infer that this was because its cause was an operator-related, not inherent, problem. 22. These recorded the issues on which they agreed and disagreed in their individual reports. They identified three areas of disagreement among them. First, what was meant by 'working day' and 'operating hour'. Secondly, whether it was necessary that the temperature of every carrot had to be 5deg.C or less before it could be packed and whether the new line was reasonably fit for that purpose. And thirdly, at what point were the 18% rejects to be removed. 305 Those matters can be resolved, in part, by construing the contract. As is frequently, the principal area of disagreement among the experts arose because of differences in the assumptions that each of them had been asked to make. The '8 hour working day' measurement in Mr Proud's letter of 29 July 2002 had been changed in the later contractual letters, initially to 18.75 tonnes, and, then when the handline was removed, to 17.55 tonnes per operating hour. Mr Harris was asked by North East Equity to assume that 'an 8 hour working day' was one in which all processing and packing machinery was manned and operated continuously. He used the 8 hours as a fixed period for the whole operation and applied this assumption to assessing capacity per operating hour. During the concurrent evidence, as I have noted above, Mr Harris explained that a split shift was normal in the food industry. 307 Mr Gillenkirch opined that the measurement of capacity had to be while the plant was actually operating. That meant one would exclude the start-up, shut down and cleaning procedures of the plant, which would be outside the time needed to measure its capacity to produce a particular tonnage in an operating hour. In my opinion, that is a commonsense and correct view to take. Thus, the pack out rate per hour, under normal operating conditions, had to be calculated based on when the plant actually operated. This did not include time spent preparing it and closing it down. It did not matter to North East Equity whether a split or continuous shift was used, so long as the overall labour used for the production of the tonnage worked so as to produce the agreed tonnage in an overall operating hour. 308 Mr Gillenkirch explained that the essential feature of North East Equity's system was its ability to accumulate carrots while they were cooled in the chilling hoppers. If one started packing too early, there would be insufficient supply to keep up the production rate. 309 The experts agreed that the first section of the line (which they identified as including the washing, polishing, diameter and length grading sections) had the capacity to deliver between about 23 and 24 tonnes per hour into the chilling tanks. They did not consider Mr Webster's view (in his 1 August 2002 memorandum) that the brush washers could process 'a good polished carrot' at 15 tonnes per hour. Messrs Gillenkirch and Manteca had said in their joint report that the capacity of the receiving and polishing section of the line was between 20 and 24 tonnes per hour depending on the quality and condition of the carrots. 310 The two views are not inconsistent. As I have found, Mr Tana and Mr Proud discussed in 2002 the effect on quality if the brush washers were operated at or towards their full capacity. Mr Webster was concerned with quality being lost if the brush washers operated faster than at 15 tonnes per hour. Both he and Mr Tana were aware that the brush washers could be operated at a higher rate but that this would result in the carrots having a lesser quality. The experts were discussing the actual capacity of this equipment, to operate at a given rate per hour, not the preferable rate at which it should be operated. 311 Before preparing the joint reports Mr Harris had concluded that, if the plant were operated continuously in one concurrent shift of 8 hours, its maximum capacity (if run at 100% efficiency) was about 71 tonnes per hour. If the shift were increased to 10 hours (at 100% efficiency) he said the maximum capacity was 89 tonnes. He said that normally such plants would run at about 70-80% efficiency, rather than the 100% he had assumed in his calculations. Mr Harris visited the plant between in August and October 2005 on four separate occasions. (2) If eight product groups were produced simultaneously, then nine chilling tanks were not enough to enable processing to continue uninterrupted over a sustained processing run. (3) The packing combinations limited flexibility. Mr Harris took the view that, ultimately, with the plant configured as he saw it, normal production of eight products could be expected to be 60-70 tonnes pack out in 10 hours. 313 In expressing those key limiting factors, Mr Harris had assumed that the final grading tables had to have the capacity to remove 18% waste. I have found that that was not the contractual requirement, and that the waste could (and ordinarily would) be removed as early in the line as possible. And Mr Harris prepared his report on the assumption that 20% of the gross feed to the grading tables immediately before the packing machines would consist of Class 2, with a further 18% rejects. Again, I am not satisfied that the parties agreed or negotiated on the basis that 38% of the carrots conveyed to those grading tables would be removed there from what was to be packed. 314 In their joint report, the three experts agreed that the installed maximum capacity of the grading tables, prior to the weighing and packing machines, was between 4-5 tonnes per hour per table for large carrots, 4 tonnes per hour for medium carrots and 3-4 tonnes per hour for small carrots. They therefore agreed that the total maximum capacity of the five inspection tables before the weighing and packing machines was between 20-25 tonnes per hour if they were all operating at a maximum capacity on large carrots. It follows that, if all five tables were operating on maximum capacity on a maximum of three classes of carrots at any one time, they could pack between 15 and 25 tonnes per hour as Mr Proud's letter of 30 September 2002 stated. That was because North East Equity had specified that there would be only three conveyors from the chilling tanks to the weighing and packing machines. 315 The packing section of the line thus had the capacity to pack 17.55 tonnes per hour. Of course, if only small carrots were fed into it, it would only pack 15 tonnes per hour. This was also stated in the 30 September 2002 letter. But the contract did not require it to pack any particular size at this rate. Commonsense and the mutually known facts meant that both parties were aware that the carrots delivered for packing would not be of an homogenous size or quality. Thus in specifying capacities the parties were providing for an average or typical situation but not for every possible permutation. 316 The experts agreed that the capacity of the final grading tables was sufficient to remove no more than 25% of the total carrots delivered to those tables as either Class 2, waste or rejects. They said that this could be done with three people present at those tables. They agreed that up to 20% Class 2 carrots would be removed at this point. The experts also agreed that the flow of production (i.e. carrots) at grading tables was affected by the number of people at the particular tables, the variety and quality of carrots, and the different sizes of carrots that could occur during daily production. They noted that there was no information in the written contractual documents as to the acceptable quality of carrots that could be packed. They agreed that a packing line such as that installed at Wattleup, should be assessed by calculating its average capacity over the whole line as being approximately 80% of the individual capacities at each packing machine. 317 Importantly, they agreed that the management of production was important and could be a key point for the efficiency of the plant. They also agreed that the quality of the packing machines, the adjustment of the settings, the management of the line and the quality of the carrots affected the efficiency of the line. He had assumed that the chilled water had a temperature of 2deg.C. He estimated that the time required to chill carrots introduced into the line at 28deg.C to less than 5deg.C, was 30 minutes for small/medium carrots and 45 minutes for large carrots. His view was that it was necessary to hold all the carrots in the chilling tanks for 30 minutes after the last one had entered, before any discharge to the packing stations could commence. Mr Gillenkirch said that for the carrots in classes with smaller volumes, once about 2 hours worth of supply had accumulated in the chilling tanks, packing from those tanks could begin while they still received further carrots of the same size from the graders. 319 During the concurrent evidence, Mr Harris qualified his view that 45 minutes was an appropriate time. He said that it could be 40 minutes and his own trials with larger carrots came out to approximately 38-40 minutes. His experiment did not measure the actual processing operation at the Wattleup plant on any day on which he was present. He had constructed a predictive model which established a relationship between the temperature of the carrot before it went into the water, and the time that it would take to cool to 5deg.C. The model had a mathematical curve that showed that the nearer the temperature was to 5deg.C, the harder it was progressively to reduce that temperature further. He said that the model showed that if the ambient temperature were reduced from 28deg.C to 20deg.C, it took about 5 minutes less time to cool the carrot to 5deg.C. 320 Mr Gillenkirch said that the times in which carrots would chill had to be based on their diameter, not their length. He asked Mr Harris whether he could agree with that, but Mr Harris said he did not have enough information to answer. Mr Harris said he could not be predictive between lengths and could only speak about weight and temperatures. However, he thought Mr Gillenkirch was putting to him a reasonable assumption. 321 Mr Harris worked on the premise that the 5deg.C was a quality parameter. Based on Mr Stammers' measurements, he said that it was possible for a carrot to go from one end of the chilling tank to the other and exit in about 5 minutes. Mr Stammers had been instructed by Mr Gillenkirch to make observations and record results on a visit to the Wattleup line in September 2006 for the purpose of assisting in the preparation of his expert evidence. Mr Stammers was a fitter and turner by trade. He had performed a test using a marked carrot. He dropped it four times into chilling tank No 5 where the length grader deposited closest to the exit point. The length graders deposited carrots closer to the exit to the packing conveyors on tank No 5 than for any other tank. The tank was being emptied at the time and the marked carrot took between 3.5 and 5.5 minutes to leave the tank. Mr Stammers also observed that some large carrots had been in a chilling tank for 30 minutes but their temperature was 6-7deg.C. Mr Harris had not measured final temperature at pack out although he did measure some temperatures of carrots actually in the tanks. 322 Mr Gillenkirch said that the last carrot that came into one of the chilling tanks from the graders would not be the first carrot to be pumped out when that tank was being emptied to the packing conveyors. None of the experts had actually measured whether the carrots on the Wattleup line, if processed in a continuous fashion (i.e. put into a chilling tank which was at the same time being emptied onto the packing conveyor) emerged onto the conveyor at 5deg.C or less. Mr Harris worked on the assumption that it was possible for the carrots, after being deposited from the length graders, to pass through the chilling tank onto the exit conveyors before they had been chilled to 5deg.C. 323 Mr Manteca explained that after the carrots were dropped into the chilling tanks from the length graders, air was bubbled into the tanks to prevent the carrots accumulating into a mound and to disperse them inside the tanks. Chilled water was pumped into the tanks in order to keep the temperature even. In agreeing with Mr Harris, Mr Manteca said that it was possible that, once the gates opened to the packing conveyors, a new carrot could enter a chilling tank from the length graders and could move easily from the entry point to the exit point in less time than was needed to cool it down. Mr Gillenkirch then explained that carrots in the lower volume sizes would be accumulating over the course of at least two hours. He said that if there were 5,000 kg in a tank, then (after Mr Harris had corrected him) the risk that the last carrot in the tank would be the first out was one in about 30,000. He said that most carrot packing houses in Europe worked in the way the Wattleup plant did. Even if the tank were 50-60% full, he thought the risk was very low, although theoretically possible, that a carrot would emerge from the chilling tanks before its core temperature had cooled to 5deg.C or less. 324 I accept Mr Gillenkirch's evidence that the risk was relatively low that, after a considerable period of accumulation of the lower volume sizes, a carrot recently introduced into a chilling tank would come out before it had chilled to 5deg.C. This risk was more likely to occur in the tank in which Mr Stammers did his experiment, but that did not make the new line, as a whole, deficient. That tank could be managed so as to minimise the risk. None of the experts measured whether this in fact was occurring in the operation of North East Equity's plant. However, Mr Gillenkirch's experience with the ordinary operation of such plants satisfied me that, in terms of fitness for purpose, the system was reasonably capable of processing carrots at 5deg.C or less, even if there were a small risk that a few carrots in the smaller volume sizes might slip through without having been chilled to 5deg.C. Overall, such a risk was unlikely to affect the quality of the out turn in any material way. 23. He was not sure whether it had been part of the original Sumich equipment, or if he had bought it. He said this machine operated differently to the Bruynooghe ones. It used a sliding motion to move the carrots. The Bruynooghe length graders moved the carrots down a corrugated surface by vibration causing them to bounce. As I have found above, he was aware from his visit to Belgium in August 2002 of how the Bruynooghe equipment as proposed for Wattleup, including length graders, operated. 326 Mr Proud asserted in his witness statement that length graders were inherently inaccurate. Mr Harris corresponded with Mr Parrein of Bruynooghe after they had undertaken a joint inspection of the new line in late October 2005. Their conclusion that the shape of the carrots impeded consistent grading would have been apparent to Mr Tana on his visit to Belgium when he saw a system in operation similar to that described in Proud Machinery's letter of 29 July. That is, the length graders supplied to North East Equity worked as well as one could expect given that the carrots had different shapes, girths and sizes. 328 The experts agreed that length graders as a class could not consistently size carrots to the same length because of the shape of carrots. They also agreed that the contractual documents did not provide any information or specification for the quality requirements of the length graders. Mr Tana knew that some carrots he grew (Nantes/Stefano) were more tubular than conical, while others (Sakata/Mojo) were more conical. 329 I have approached Mr Tana's evidence with caution for the reasons I have given above. He was a skilled and astute businessman. He examined business propositions with care. I am satisfied that Mr Tana was aware of the nature and practical operation of the length sizers that Proud Machinery suggested before deciding to enter into the contract. I am not satisfied that he was misled. 330 Mr Gillenkirch said that the length sizing machines were of a standard acceptable in the industry at the time they were supplied. I accept that evidence. 24. For example, Mr Tana examined them to understand how many times carrots would drop as they were conveyed to the point of packing. He did this to consider the potential for damage due to the drops. He told Mr Webster to check with Ms Mirosevich if more than three varieties would be packed at any one time and to get her to confirm that what was proposed was acceptable. 332 Mr Tana appreciated, before the contract was entered into, that in addition to carrots sent onto the prepack line, only three conveyors would carry graded carrots to the weighing and packing machines at any one time. Thus, at most only four particular graded sizes could be packed simultaneously. Mr Harris identified an assumption that there were eight product groups and that all eight were to be simultaneously graded, one each into one of the nine chilling tanks. He also assumed, for one scenario he considered, that the premium product group comprised 40% of the total product mix. 333 Mr Harris noted that there was no reference to product mix in the contract. And there is no evidence that any particular product mix was provided or identified by North East Equity to Proud Machinery or Mr Proud prior to the contract. However, the contractual and represented requirement was that the line would have the ability to sort and grade carrots into eight distinct streams of length and size. A reasonable person in the position of the parties would have understood that the pack out rate would be related to the quantity and variety of sizes of carrots delivered for processing and the selection of sizing by North East Equity. If, for example, there were only one tonne of carrots of a particular size in a delivery of, say, 150 tonnes, then reserving a chilling tank for that small quantity would affect the rate at which the balance of the 150 tonnes would be graded and processed. It would take all day to process the one tonne into its designated chilling tank. That would obviously reduce the efficiency of the whole process. And, if there were two or three similar small quantities of particular sizes, each using its own chilling tank, the impact on reducing the rate of processing would be greater. 334 The ability of the new line to achieve particular results was dependent not only on the machinery supplied but also upon the nature of what was delivered by it for processing. North East Equity specified which tanks it wished to receive what types of carrots in its fax of 14 October 2002. It had changed that specification slightly from the version attached to Proud Machinery's letter of 8 October 2002 by adding to chilling tank No 1 the capacity to receive premium medium size carrots, as well as 500 gm small carrots for the prepack line. It did not seek advice from or inform Mr Proud or Proud Machinery about that selection. The selection was made by Ms Mirosevich, Mr Chew and Mr Webster for North East Equity using design drawings for the new line, including the position of the tanks in relation to the graders. 335 It was obvious, as a matter of commonsense, that if the input of carrots to the new line did not accumulate enough carrots in the tanks to keep a constant flow from three tanks once the packing operation began, then, the maximum daily output would be affected. Thus, originally, tank numbers 1 and 2 had been designated solely to supply the prepack line, but North East Equity altered the specification to allow tank No 1 to be used to increase the number of tanks which could supply the three main packing lines. 336 Likewise, if North East Equity packed 10 kg cartons, then the ultimate hourly pack out rate would be significantly less than if it packed 20 kg cartons. This again was common knowledge of the parties and commonsense. The handling for 10 kg cartons was twice that required for the 20 kg ones to pack the same quantity of carrots. First, North East Equity employees had to assemble cartons, whether 10 kg or 20 kg, for use by the Gillenkirch packing machines. The weighing, packing and strapping machines and the stacking robots had to perform twice as many actions if 10 kg cartons were used. The smaller cartons required double the number of actions in the operation of the parts of new line where they were used. Mr Proud's letter of 30 September 2002 used 20 kg cartons as examples of how the tonnage per operating hour could be achieved. 337 The new plant had a number of centrally important features. First, there were nine tanks, one for each stream of graded carrots, with one spare. And, there were three conveyors to the five packing machines. Thus, the contents of only three tanks could be processed at any one time. Secondly, if there was not a relatively consistent mix of the eight different sizes in the supply of carrots fed into the commencement of the line, the operator of the plant would need to make adjustments in the production process to ensure continuity of supply to the weighing and packing machines. Thus, if North East Equity decided to process less than eight different sizes, more than one tank could be used to chill certain sizes. 338 It was up to North East Equity to determine the mix of sizes of carrots it fed into the new line. Thus, as a matter of commonsense, when Mr Tana and Mr Proud discussed the capacity of the new plant to process a number of tonnes per hour, each must have had understood that consistency of the size and quality carrots introduced at the commencement of the production process, affected the capacity of the plant to pack out particular numbers of carrots. And, a reasonable person in their position would have understood this. If the carrots were predominantly, as appeared to have been the case, small and small/medium, eight different lengths and grades would accumulate in the tanks at significantly differing rates. That would require the person controlling the production process to have a keen eye on how quickly the receiving tanks were filling up. Once more than one tank was full (there being a spare tank) it would be necessary to stop the input of the line so as to clear up to three of the full tanks by commencing the packing process. Thus, the selection of the sizes of carrots to be processed, using the girth and length graders would have a critical impact on how output would occur. 339 It was obvious to the parties, at the time of the contract, that Proud Machinery and Mr Proud had no control over the sizes of the carrots grown on the farms and delivered for processing. That input, and the selection of the grades for processing, were critical inputs beyond the control of Proud Machinery and Mr Proud. Both parties must have understood this at the time of the negotiations. The capacity or ability of the plant to grade and process carrots at a particular rate per hour was one thing. However, I do not think either party understood that what each of Proud Machinery and Mr Proud was being asked to do was to guarantee that, whatever the variety or combination of inputs in carrot size or length, there would or could be a minimum constancy of output. 340 There were only three conveyors to the five packing machines. Thus, only three tanks could be emptied at any one time. North East Equity had specified that there be only three tanks emptied to the three sets of grading tables in addition to the prepack line. The operation of the conveyors depended on what carrots were ready for processing from the chilling tanks. What went into the chilling tanks depended upon what had been delivered from the farms. If the produce delivered were relatively homogenous so that the chilling tanks would accumulate produce at a constant rate, then one might be able to infer that a constant output would be delivered. But, if the input from the farms were significantly varied, so that, say 50% of the carrots to be processed were of one kind and the rest were distributed unevenly over the other seven different possible grades, then it would be obvious that the rate of production per hour at the packing machines would be affected. The predominant carrots would fill up the one or two tanks to which they could be sent at a far quicker rate than the other seven varieties which would occupy the remaining seven chilling tanks. 341 This reinforces the commonsense of Mr Webster's memorandum to Mr Tana of 1 August 2002, that it would be necessary to build up, in a split shift, a supply in the chilling tanks before the packing side of the line began operation. And this was also reflected in North East Equity's change to the specifications for tank No 1 in the fax of 14 October 2002. 342 North East Equity conflated the different capacities of the plant into a cognate specification. Thus, it claimed that Proud Machinery contracted to, or represented that it would, supply a plant which not only could perform each of the separate functions but could do all of them together, in effect, in any combination. This conflation was reflected in the instructions and assumptions which it gave to Mr Harris. I am of opinion that the conflation is unwarranted and does not reflect accurately what the parties discussed in 2002 or the terms of the contract and representations. 25. And, the terms to which they agreed provide a sound basis on which to assess what representations were conveyed by Proud Machinery and Mr Proud, on which North East Equity relied. 344 Where experienced business people have concluded an agreement, that contract will normally provide a very good starting point, and often an equally good finish, in ascertaining what terms and representations were made which caused the parties to proceed as they did. That is the approach I consider to appropriate here, having considered all of the evidence. In other words, I am satisfied that North East Equity, through Mr Tana, proceeded in its relationship with Proud Machinery, and Mr Proud, as if there were a contract on foot between them and that Mr Tana understood that its terms were, in effect representations; as did Proud Machinery and Mr Proud. 26. In analysing whether the new line, as installed, conformed with the purposes and terms referred to in [66](a)-(e) above, I have had regard to the implication that the new line would be reasonably fit for those purposes ( Helicopter Sales 132 CLR at 4, 6, 8, 15: see [64]-[66] above). The new line had that capacity. And, by operating a split shift, the new line had the capacity to achieve a pack out in excess of 150 or, later (after the handline was deleted), 140.4 tonnes in eight working hours. I am not satisfied that the new line was not reasonably fit for the purpose of having the ability to sort and grade carrots into eight different streams of length and size. I am satisfied that the hydro cooling tanks conformed with representation (ii). As Mr Tana admitted in the meeting of 18 November 2003, labour costs per carton had reduced by 25% or more. I am not satisfied that this was incorrect, misleading or deceptive. In any event there were no records of waste or damage to carrots so as to enable any finding to be made as to the position before or after the new line was installed. And, the quality of carrots delivered for processing after the new line was installed was very different from, and worse than, their earlier quality. North East Equity has not established that this representation was not met. 27. DID NORTH EAST EQUITY HAVE TITLE TO SUE FOR DAMAGES FOR BREACH OF CONTRACT? North East Equity had entered a master lease agreement with the bank in August 2002. The master lease agreement contemplated that in the future North East Equity would seek to lease goods from the bank and set out the general terms which would apply once goods were nominated and acquired by North East Equity. On 19 November 2002 the bank and North East Equity sent to Proud Machinery a 'novation notice to and acknowledgment from supplier'. 349 Proud Machinery executed its acknowledgment and agreement to the terms in the notice on 3 December 2002 and recorded that it agreed to the terms of the novated contract. Subsequently on 16 December 2002 North East Equity and the bank executed a construction purchase and lease agreement for the new line. This recited that North East Equity had entered into a contract with Proud Machinery for the construction of the new line, and the contract (presumably meaning the notice signed by Proud Machinery on 3 December 2002) provided for title to the new line to pass progressively upon payment by the bank. 350 North East Equity argued that the assignment to the bank of the new line '... and all of its rights in relation to the [new line]' was not an assignment of its rights under the contract between it and Proud Machinery. 351 The right to sue for breach of the contract to supply work and materials (and equally, for the sale of goods) because the new line did not meet the standard set by contractual terms must be a right 'in relation to' the new line. It would be a very odd result if the bank, as the owner of the new line, could not sue Proud Machinery under this assignment for breach of the contract to sell or supply the work and materials, if, for example, the new line as installed, was incapable of packing even one carrot. 352 North East Equity argued that the assignment was only of its interest and proprietary rights in the new line. But it did not suggest why the rights which the assignment gave the bank were limited to ones arising outside of the contract between North East Equity and Proud Machinery. The contract was then executory and had not been breached in late 2002. In Torkington [1902] 2 KB at 431-432 the Divisional Court held that an assignment of the benefit of an executory contract, of which there was no breach at the time, was validly made under the analogue of s 20. Their Lordships held that the right to sue for damages for a later breach by the obligor could be exercised directly by the assignee without suing in the assignor's name: Torkington [1902] 2 KB at 432. 355 As a matter of ordinary English, the assignment by North East Equity of 'all of its rights in relation to' the new line was plenary. The expression 'in relation to' is of wide and general import (cp its width when used in a statute: Fountain v Alexander (1982) 150 CLR 615 at 629 per Mason J). It may also be used to describe the right of action itself, when considered as part of the property of the person entitled to sue. A right to sue for a sum of money is a chose in action, and it is a proprietary right. 357 Next, North East Equity relied on cl 1.15(g) of the construction purchase and lease agreement it entered into with the bank on 16 December 2002. That provided that North East Equity, at its own expense, would take any action required by the bank '... in order to enforce performance of the contract by the supplier or to protect our interest in the goods'. North East Equity argued that this contemplated that it would retain its rights under the contract including the right to sue for breach. I reject that argument. 358 First, the assignment occurred and Proud Machinery became party to the notice some 13 days before the construction purchase and lease agreement was made. The latter agreement cannot affect the construction of the earlier notice which had an additional party, Proud Machinery. 359 Secondly, in any event cl 1.15(g) was consistent with the plenary construction of the earlier assignment. It provided for North East Equity, as assignor, to make its name available, were that necessary, to enforce performance of the contract. That would only be where rights had not been passed to the bank by the earlier assignment. Since the bank was paying for the purchase and installation of the new line, it is not apparent, as a matter of commercial commonsense why it would leave causes of action for breach of contract by the vendor in the hands of the bank's customer. The bank would be conscious of the risk to it of its customer (North East Equity) becoming insolvent. If that occurred, the bank would have purchased, and would own the new line, but could only prove in its customer's insolvency for the damages needed to bring the new line into conformity with the contract. That would work commercial inconvenience and is not a commercially sensible construction in absence of clear words: Zhu v Treasurer of NSW [2004] HCA 56 ; (2004) 218 CLR 530 at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. 360 Thirdly, cl 1.15(g) protected the interests of the bank where, for some legal or other reason, it could not sue (e.g. in respect of a claim for unliquidated damages which accrued before the assignment). Fourthly, the protection of the bank's interest in the goods referred to in cl 1.15(g) is not a right of North East Equity 'in relation to' the new line as contemplated in the notice; it is a distinct right of the bank. 361 North East Equity also argued that the assignment was of a bare right to damages. It was not; the assignment was of a legal chose in action for the reasons I have given. 362 In Beaton v Moore Acceptance Corporation Pty Ltd [1959] HCA 59 ; (1959) 104 CLR 107 , Dixon CJ, Taylor and Windeyer JJ considered a case involving a purchaser who had entered into a contract with a vendor for the sale of goods, being a bulldozer. Before that contract was completed, the purchaser entered into a hire purchase contract with a financier, and the financier in turn entered into a contract with the original vendor to acquire the bulldozer from it so as to make it available to the purchaser. The bulldozer was defective when delivered to the purchaser. Dixon CJ, Taylor and Windeyer JJ said that the purchaser's claim against the original vendor was for breach of a contract '... which, by common consent, was superseded by the hire purchase agreement in question and which, therefore, was never carried into effect': Beaton 104 CLR at 118; see too Hellyer Drilling Co v MacDonald Hamilton & Co Pty Ltd (1983) 51 ALR 177 at 181 per Fitzgerald J. 363 North East Equity relied on TC Industrial Plant Pty Ltd v Robert's Queensland Pty Ltd [1963] HCA 57 ; (1963) 180 CLR 130 where a purchaser under a hire purchase agreement was held to be entitled to recover damages for breach of contract against both the vendor of the equipment and the financier who let it on hire purchase. However, the reason for this was that such a right was expressly created by s 7A(1) of the Hire-purchase Agreement Acts 1933-1946 (Qld): see TC Industrial 180 CLR at 136 where the relevant section is set out. 364 Rights to sue for the tort of negligent misrepresentation ( Poulton v The Commonwealth (1953) 89 CLR 540 at 602 per Williams, Webb and Kitto JJ) and for loss or damage under s 82 of the Trade Practices Act in respect of a contravention of s 52 are not assignable: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 ; (2006) 236 ALR 720 at 732-734 [51] - [57] per myself; BHP Coal Pty Ltd v O & K Orenstein & Koppel AG [2008] QSC 141 at [76] per McMurdo J. Those rights remained with North East Equity. 365 The assignment was made as a contract. Each of North East Equity and Proud Machinery agreed with the bank in December 2002 that all North East Equity's rights in relation to the new line would be either assigned by it to, or taken as being enforceable directly by, the bank. Under that agreement, North East Equity's contractual rights against Proud Machinery passed to the bank in accordance with, or were superseded by, the terms of the notice executed by Proud Machinery on 3 December 2002: Beaton 104 CLR at 118. Accordingly, I am of opinion that North East Equity had no title to sue Proud Machinery for breach of contract. 28. I have found that Proud Machinery and Mr Proud did not design the new line. 367 Nonetheless the contract contained an implied promise that Proud Machinery would exercise reasonable care and skill in the performance of its services, including the selection of goods or work and materials that were reasonably fit for the purposes for which North East Equity had (expressly or by implication) indicated they were required: Astley v Austrust Ltd [1999] HCA 6 ; (1999) 197 CLR 1 at 21-22 [46] - [47] per Gleeson CJ, McHugh, Gummow and Hayne JJ; Helicopter Sales [1974] HCA 32 ; 132 CLR 1. 368 In the relationship between North East Equity and Proud Machinery, that implied promise was parallel and concurrent with a co-extensive duty in tort on the part of Proud Machinery and Mr Proud to exercise the same reasonable skill and care: Astley 197 CLR at 23 [46]-[48] per Gleeson CJ, McHugh, Gummow and Hayne JJ. 369 The pleading of Proud Machinery's and Mr Proud's alleged negligence and the way in which North East Equity argued this claim reflected, in substance, its complaints of failures in the design, procurement and installation of the new line, which gave rise to the shortcomings in its operation as installed. The duty of care in this matter arose because and in the context of the contractual relationship. Proud Machinery had parallel and concurrent obligations in tort and contract to exercise reasonable care and skill in performing professional tasks owed to North East Equity under the contract. Mr Proud had a parallel and congruent obligation in tort: Astley 197 CLR at 23 [48]. There is no circumstance pleaded in the present case which would justify extending those obligations in tort beyond a parallel and concurrent liability of Proud Machinery and Mr Proud, co-extensive with the contractual obligations of Proud Machinery to exercise reasonable skill and care. 370 The contract was negotiated at arms length between two experienced and capable business people, Mr Tana and Mr Proud. Its express and implied terms reflected the commercial relationship agreed on by the parties for the procurement and installation of the new line. That relationship is a commonplace in commerce; a vendor who is the distributor of plant and equipment and a purchaser who, after negotiating with the vendor, agrees on terms for the purchase and installation of the equipment. The common law and statutory obligations (such as in Part V of the Trade Practices Act and the Sales of Goods Act ) which govern such a relationship do not need extension or modification on the facts of this matter or merely because one party was unhappy, after the event, with the result arrived at by the performance of the contract. 371 On the basis of my findings in respect of the contractual terms and representations, the claim in negligence, must also fail. 29. I have also found that, in substance, North East Equity has not established that the new line failed to operate in accordance with the pleaded contractual terms and representations, or that Proud Machinery and Mr Proud breached the duties of care they owed. There are still some subsidiary matters which I will address below. I am of opinion that, as Mr Proud admitted, the problem with the flumes was never remedied. Bruynooghe quoted €51,000 plus freight to replace them with a system that Mr Tana would have accepted, if he had not had to pay for this, as he explained in his letter to Mr Proud of 8 January 2004. This price provides a reliable measure of the quantum of damages required to put North East Equity in the position that it would have been in, had the flume elevators not been defective. True it is that the original flume elevators worked, albeit not as well as they should have, and were retained. Mr Tana gave evidence that North East Equity's packaging operations were to be conducted from the Lancelin farm pack house from late October 2007, with the exception of the prepack line of 10 kg cartons for small/medium carrots. 374 The problems with the flume elevators caused them to stop sometimes, which held up production for brief periods. On other occasions, carrots fell off the flume elevators, particularly in the first few months. These occasions caused disruption and irritation to North East Equity. There was no precise evidence of how long or how often these delays occurred, but I am satisfied that they were more than trivial. North East Equity, however, did not prove that it had to pay staff overtime or otherwise suffered financial loss on any particular occasion because of delays caused by the flume elevators. There is no evidence that, even though production was interrupted, it was not completed during ordinary working hours. 375 Moreover, while Mr Tana no doubt was annoyed by being asked to pay for the replacement flumes, had he done so by early 2004, when it was clear that Proud Machinery and Bruynooghe would not, this problem would have been resolved. I am not persuaded that it was reasonable for North East Equity not to have replaced them by June 2004 if there were production difficulties of any substance caused by the flume elevators: Burns v MAN Automotive (Aust) Pty Ltd [1986] HCA 81 ; (1986) 161 CLR 653 at 658 per Gibbs CJ, at 668 per Wilson, Deane and Dawson JJ, at 673-674 per Brennan J. Accordingly, I am of opinion that the general damages for this problem should be awarded only for the period to June 2004 when the new flumes should have been installed, had a decision to replace them been made within a reasonable time. 376 It was not reasonably foreseeable, at the time the contract was entered into, that North East Equity would continue to operate a defective flume system which disrupted its business by affecting the orderly and efficient operation of the new line. Any damage it suffered beyond the time when what needed to be done became clear and that Proud Machinery would not replace the flume elevators, was not within the reasonable contemplation of the parties as flowing from the breach: Burns 161 CLR at 668 per Wilson, Deane and Dawson JJ. 377 I am of opinion that the cost of replacing the flume elevators was €51,000. There is no evidence of the freight or installation costs but, doing the best I can from reviewing the general costs of installing the new line I consider that an allowance of €9,000 should be made, making a total of €60,000. These were the defective flume elevators and the original location of the touch screen in the office, rather than above the tanks where it was moved later in 2003 at no cost to North East Equity. The task of making an assessment of any loss is more difficult because of the deficiencies I have found in North East Equity's management, or lack of it, of the new line. 379 Doing the best I can, it is likely that, on occasion, some extra labour and operating expenses were incurred due to the deficiencies of the flume elevators and the initial location of the touch screen in the office. No attempt to quantify such losses by evidence was made. I am of opinion that it is appropriate to find that $10,000 would compensate North East Equity for any unnecessary increase in its operating costs during the periods in which the touch screen remained in its original location and up to June 2004 when the new flumes should have been installed. I am not satisfied that any substantial or greater loss was incurred. 380 However, North East Equity did not appear to make any separate claim for damages based on the deficiencies in, and disruption caused by, the flume elevators. The expert production evidence did not suggest that these machines caused any delay or inefficiency which related to the pleaded misrepresentations and negligence. I consider that this sum of €60,000 can be some evidence of the amount by which the new line as installed was worth less than its cost, but I will need to hear the parties as to whether I can allow North East Equity to recover damages in this sum on its pleaded case and in light of my overall findings. 382 There was no evidence of any loss of sales or other economic loss suffered by North East Equity, including any claim relating to carrots being packed at a core temperature greater than 5deg.C. If I were wrong in my finding that no breach has been established of the contractual terms and representations that the core temperature of carrots would not exceed 5deg.C, then the question of quantification of North East Equity's damages for this breach would arise. 383 The situation has some similarity to assessing damages where building work is defective. Recently, Finkelstein and Gordon JJ said that, speaking generally in cases of work done or not done, or damage caused to property in breach of contract, there are two bases for assessing damages: first, the cost of reinstatement, or secondly, the diminution of the value of the property due to the breach. They held that the correct measure is '... whatever is reasonable for the wronged party to recover': Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (2008) 166 FCR 494 at 503 [29]. "Reasonableness", in that context, can be seen to be what the owner could require having regard to the terms of the contract and the nature of the departure from them in the performance proffered by the other party. That is, of course, a factual enquiry. On the hypothesis that I ought to have found that the new line was defective because it did not always pack out carrots with a core temperature of 5deg.C or less, such an event had no pecuniary consequence. And, the carrots were still packed chilled but perhaps not as low as exactly 5deg.C or less. The performance offered by the new line as installed was not productive of any relevant determent to North East Equity. It saw no need to reinstate, supplement or replace the refrigeration system. And it suffered no commercial detriment as a result. I am of opinion that North East Equity has not established that the cost of bringing the new line into conformity with the contractual term or representation relating to the 5deg.C requirement would be reasonable to award as damages: see Bowen Investments 166 FCR at 503 [29], 522 [93]. It argued that it would not have entered into the contract and subsequent lease agreement with the bank, had it not acted in reliance on Proud Machinery's and Mr Proud's misleading representations, or if they had not been negligent. North East Equity's methodology used a number of approximations in claiming that it had suffered a loss of $1,300,000. In the calculations below, I have attempted to remove those approximations so that the result, using North East Equity's methodology, can be compared with other calculations, which I explain below. (Negative values are in parenthesis) Exact calculation North East Equity's approximation in its submissions (a) Total cost to North East Equity of new line (Based on North East Equity making all lease payments to the bank for 5 years to 30 May 2008. This figure was agreed by the parties. ) $ (4,328,230) $ (4,328,230) (b) Add the current value of the new line (Based on Mr Gregson's evidence that at May 2007 the new line had an auction value of between $640,000 to $960,000. ) $ 960,000 $ 1,000,000 (c) Add North East Equity's savings on labour costs: • based on a period of 4 years; • assuming savings per carton reduced by 30cents to 90cents per carton for 1,955,000 cartons p.a. (based on Mr Langridge's analysis that 23,000,000 kg p.a. were produced); • 0.30 x 1,955,000 = $586,500 p.a. labour savings; • subtract from this figure additional power costs of $89,700 p.a. that North East Equity claimed were incurred; • net saving of $586,500 - $89,700 = $496,800 p.a. (approximated by North East Equity to a net saving of $500,000 p.a. ), or a total net saving of $1,987,200 (approximately $2 million) over 4 years. The new line had been retained beyond the 4 year period and there was no evidence that North East Equity intended to bring the lease to an end before the expiry of the 5 year term. In that situation, I consider that credit should be given for the savings over the whole 5 year term of the lease not for only 4 years. I have rejected the claim that any representation was made to the effect that North East Equity's power costs would be less if the new line were acquired. 387 Accordingly, that amount should be excluded from the calculation leaving, on North East Equity's basis for its claim a net saving of $586,500 p.a. or $2,932,500 for 5 (not 4) years resulting in a net loss, on this hypothesis of $435,500. However, I find that the saving was not less than 34cents per carton (that is the labour costs per carton of the new line were at the lower end of Mr Tana's range, namely 86cents each). Using the same packing rate, that produces a saving of $664,700 p.a. or $3,323,500 for the 5 years. This would result in a loss of $44,730 on the above assumptions, as set out in the table below. (a) Total cost to North East Equity of new line $ (4,328,230) (b) Add the current value of the new line $ 960,000 (c) Add back savings on labour costs • based on a period of 5 years; • assuming savings per carton reduced by 34cents to 86cents per carton, using same packing rate as above; • 0.34 x 1,955,000 = $664,700 p.a. In assessing what Mr Tana (as the controlling mind of North East Equity) would have done, it is important to exclude from consideration the subsequent impacts of the fall in the market and the production problems with the farms. Mr Tana was optimistic in 2002 that demand for carrots would increase, so that the labour savings he expected would have been greater, the more carrots were processed. A reasonable business person in the position of Mr Tana and, I infer he too, would have replaced the inefficient old plant with the more efficient new line which gave the actual savings referred to above with the prospect of even greater ones in light of the expectation of greater demand and the significant reduction in future labour costs: Gull v Saunders & Stuart [1913] HCA 55 ; (1913) 17 CLR 82 at 89 per Barton ACJ, Gavan Duffy and Rich JJ approving British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways of London Co Ltd [1912] AC 673: cf at 689-691 per Viscount Haldane LC esp at 691 where the Lord Chancellor referred to replacing obsolete machines with up to date ones. 389 There is a further difficulty with North East Equity's analysis because it relied, as the value of the new line, on the figure of $960,000 given by Jonathan Gregson. Mr Gregson had no formal qualifications as a valuer, but was a very experienced auctioneer. He had no experience in selling equipment of the kind in new line, other than selling other equipment belonging to North East Equity. First, Mr Gregson gave that figure in respect of the new line as at May 2007, not at the time of its acquisition or installation four years earlier. The figure affords no proper basis on which to compare the amount paid in early 2003 with the true value at that time of what was acquired: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 at 656-659 [34]-[40] per Gleeson CJ, McHugh, Gummow, Kirby and Heydon JJ. Secondly, Mr Gregson was not able to offer an opinion in his expert report on the new line's value when it was acquired, saying only that this assessment was 'difficult'. He had tried to enquire of Mr Proud and Bruynooghe about a value which he could consider for his report, but desisted after he learned of their involvement in the proceedings. Nor did another equipment dealer of whom he enquired give him any assistance in placing a value on the new line. 390 Here, the subsequent fall in the carrot market may have been an independent or extrinsic cause affecting Mr Gregson's perception in 2007 of what the new line might then realise at auction based on his experience with selling North East Equity's equipment subsequent to early 2003: HTW Valuers 217 CLR at 659 [40]. If the market for carrots were higher, rather than lower, a processing plant offering substantial savings in labour costs would be likely to be more attractive to potential purchasers. Instead, by 2007 the market falls had driven some of North East Equity's competitors out of business. 391 This analysis shows that, even if North East Equity had proved that Proud Machinery and/or Mr Proud had contravened ss 52 and or 53 (c) of the Trade Practices Act and/or been negligent in one, or even all, of the respects it had alleged, it would not have established that the contravention(s) or breach(es) of duty had caused it to suffer any loss or damage. This is because, first, there is no evidence that the new line, as installed, was worth less than was paid for it (except, perhaps the €60,000 I have found it would have cost to replace the flume elevators and $10,000 for the disruption caused) and, secondly, even if it were, that difference was greater than the savings North East Equity achieved by operating the new line. 392 I do not accept that Mr Gregson's appraisal of the auction price realisable for the new line in May 2007 provides any reasonable basis on which to arrive at its value in March 2003 when it was brand new. A willing but not anxious purchaser, and a willing but not anxious vendor, would agree on a different and substantially higher price for brand new plant and equipment than for plant and equipment which had been used to process about four years worth of production at the levels shown on the evidence. The wear and tear of four years' use would create a substantial difference between the value when new (even if it were less than the price paid to Proud Machinery) and the value of the plant and equipment as seen by Mr Gregson. ) $ 1,500,000 (c) Add back North East Equity's savings on labour costs: • based on a period of 5 years; • assuming savings per carton reduced by 34cents to 86cents per carton, resulting in labour savings of $664,700 p.a. as shown above; • subtract from this figure additional power costs of $89,700 p.a. that North East Equity claimed were incurred; • net saving of $664,700 - $89,700 = $575,000 p.a. So, this last calculation understates the net benefit which North East Equity would have obtained, notwithstanding the assumption that it had proved all of its claims of misrepresentations and breaches of duty under the Trade Practices Act and in tort. The fact that North East Equity chose to move most of its packing operations in October 2007 from Wattleup is not relevant to the application of the methodology suggested by it, since it has claimed the cost of leasing up until May 2008. Had it continued to use the new line, it would not have been worse off. Its decision to change its operations should be viewed in the same way that the decision to buy new turbines in British Westinghouse [1912] AC at 691 was viewed; namely, that the decision to centre operations at Lancelin was commercially sensible and would enable North East Equity to eliminate unnecessary road transport costs, including for transport of rejects and waste. 395 I am not satisfied that North East Equity has established what the new line was, in fact, worth in the condition in which it was installed. Thus, I am not satisfied that it has suffered any loss in receiving something worth less than what it agreed to pay, or what the bank actually paid, for it, other than in the limited respects that I have found (for the flume elevators and disruption). As I have understood the pleadings, these aspects were not the subject of any claim. 30. I will allow the parties to consider these reasons and address the question of the final orders which ought to be made. I certify that the preceding three hundred and ninety-six (396) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | classification of contract for supply and installation of plant and equipment to improve carrot processing plant whether properly classified as contract for sale of goods, or contract to do work and supply materials ascertainment of proper law of contract implied condition that what was to be supplied would be reasonably fit for purposes required and indicated by buyer, who was relying on seller's skill or judgment identification of contractual terms and representations consideration of pre-contractual negotiations identification of oral and written contractual terms made in course of negotiations and correspondence assignment master lease agreement entered into between buyer and bank buyer assigned all its contractual rights to bank "in relation to" plant, when supplied and installed by seller whether right to sue seller for breach of contract between buyer and seller was right assigned to bank whether assignment was of bare right to damages or of legal chose in action trade practices act 1974 (cth) consumer protection misleading or deceptive conduct or false representations whether representations made during pre-contractual negotiations or in contract whether representations continued to time of contract formation whether representations false implied promise that seller would exercise reasonable care and skill in performance of its services implied promise was concurrent with co-extensive duty in tort on seller's part to exercise reasonable care and skill reliance damages whether, even if claims for misrepresentations and/or negligence had succeeded, buyer proved causation of loss or damage " in relation to " contracts contracts contract trade and commerce torts damages words and phrases |
On that day the delegate made a request to Switzerland under the Mutual Assistance in Criminal Matters Act 1987 (Cth) ("the Mutual Assistance Act") and the Treaty between Australia and Switzerland on Mutual Assistance in Criminal Matters done at Berne in Switzerland on 25 November 1991 ("the Treaty"). The request sought the assistance of Swiss authorities in obtaining business records from Strachans SA, an accountancy services firm based in Geneva, and from Corner Banca SA, which is a private banking institution based in Lugano. The request advised the Swiss authorities that the records were required for "the investigation into, and possible prosecution of" certain named individuals, including the first applicant ("Mr Dunn") in this proceeding, whom, it was said was suspected of tax fraud and conspiracy offences against the laws of the Commonwealth. The second applicant was also named in the document as trustee for a unit trust which was "beneficially owned by [the first applicant]". The applicants seek various forms of relief under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act ") and s 39B of the Judiciary Act 1903 (Cth) ("the Judiciary Act "), which, if granted, would have the practical effect of rendering nugatory the Attorney-General's attempts to obtain the documents sought in the request. 2 The respondents, by notice of objection to competency, objected that much of the conduct of the respondents in respect of which relief was sought under the ADJR Act could not be impugned under that Act because the proceeding was commenced out of time and because the conduct did not involve "decisions" or "conduct" to which the ADJR Act applies. I need not rule on these objections because it was accepted that the Court had jurisdiction to entertain parts of the application under s 39B of the Judiciary Act subject to its discretionary power to refuse relief because of delay in commencing the proceeding. 3 The evidence was substantially in documentary form. Two affidavits sworn by the applicants' solicitor Mr David Shaw were read. These affidavits dealt with uncontentious matters and exhibited a large number of relevant documents. Mr Shaw was not cross-examined. Mr Outram and Ms Jackson were cross-examined. The other deponents were not. The Commonwealth Attorney-General's delegate who had signed the mutual assistance request, Mr Craig Harris, appeared pursuant to a subpoena and was cross-examined by senior counsel for the applicant. On 10 February 2005 a senior officer employed by the ACC (Mr Kevin Considine) forwarded certain information to an officer (Mr David Adsett) designated by the Commonwealth Director of Public Prosecutions ("the DPP") to deal with Operation Wickenby matters. The investigator also provided the DPP with a draft mutual assistance request. The draft request alleged that Mr Dunn may have committed offences against Commonwealth laws. 5 On 14 February 2005 an officer in the DPP's office (Ms Sara Cronan) wrote to the Attorney-General's Department. She passed on the information obtained from the ACC investigator and enclosed a draft mutual assistance request to Switzerland. It was alleged that Mr Dunn had understated his income for the 2002, 2003 and 2004 income tax years whilst remitting large sums to overseas bank accounts. The DPP asked the Attorney-General to make "requests for assistance in a criminal investigation to Switzerland". It was said that the material sought "will assist in an investigation into a major tax fraud in Australia". The DPP asked that "the request should be made on behalf of the DPP, and the ACC. It was determined that a mutual assistance request should be made to the Swiss authorities under the Mutual Assistance Act. A "REQUEST FOR ASSISTANCE IN A CRIMINAL MATTER" was prepared. It was signed by Mr Craig Harris, a delegate of the Attorney-General, on 16 March 2005. It was a lengthy document containing 154 paragraphs and eight attachments. In all it consisted of 46 pages. Much of the material in it did not relate to either of the applicants. It will, therefore, only be necessary to refer to some parts of the document. 7 The prefatory words of the request identified it as "a request by Australia for assistance in a criminal matter, made under the Treaty between Australia and Switzerland on Mutual Assistance in Criminal Matters done at Berne on 25 November 1991. As already noted, the Swiss authorities were advised that the business records were "required for the investigation into, and possible prosecution of" a number of individuals including Mr Dunn. The material may also be used in possible action by Australian authorities against these suspects to recover proceeds of crime. Please provide the material in a form that is admissible in Australian courts. It was alleged that Dunn had introduced clients to Strachans which had, in turn, supplied the clients with company and trust structures. Dunn was said to have been involved in an income dissipation arrangement which used a chain of trust distributions. Entities associated with Dunn that participate in the arrangements usually receive trust distributions from client entities which are paid to Dunn in the form of fully franked dividends. For the 2002, 2003 and 2004 income tax years he has only returned income of A$30,000 while being able to remit millions of dollars to overseas bank accounts. The ACC believe that the transactions described above are fraudulent and have been devised and actioned by Dunn [and certain other individuals] for the sole purpose of defrauding the Commonwealth of Australia by declaring less income than the actual income made. This supports the belief of ACC investigators that Egglishaw through Strachans, provides more than administration, accounting and banking services, but is a willing participant in facilitating criminal activity. The ACC suspect that Dunn has used Egglishaw's and Strachans' services to commit criminal acts, such as obtaining financial advantage by deception, defrauding the Commonwealth of Australia and money laundering. These offences included defrauding the Commonwealth (s 29D of the Crimes Act 1914 (Cth)), obtaining financial advantage from a Commonwealth entity by deception (s 134.2 of the Criminal Code Act 1995 (Cth)), conspiracy to commit the offences created by s 29D and s 134.2 (s 11.5 (1) of the Criminal Code Act 1995 (Cth)) and money laundering (s 81 of the Proceeds of Crime Act 1987 (Cth) and s 400.4 of the Criminal Code Act 1995 (Cth)) (paragraphs 122-129). The Swiss authorities were asked to execute search warrants to obtain relevant documents from Strachans and Corner Banca. They were asked to "return the requested material to the Australian Central Office for Mutual Assistance in Criminal Matters" (paragraph 146). The address of the office (within the Attorney-General's Department) was provided. It was foreshadowed that "[d]epending upon the nature of the material obtained pursuant to this request, the Australian authorities may wish to make a supplementary request for assistance" (paragraph 154). 8 The request for assistance was forwarded to an officer of the Federal Office of Justice in Berne under cover of a letter dated 17 March 2005. That letter was on the letterhead of the Criminal Justice Division of the Commonwealth Attorney-General's Department and was signed by a Ms Lani Gibbins who was identified as a legal officer. Ms Gibbins was not a delegate of the Attorney-General under the Mutual Assistance Act. The letter sought urgent mutual assistance in the matter of "Operation Wickenby". 9 The Swiss Federal Office of Justice responded to the request by letter dated 18 May 2005 addressed to Mrs Gibbins. The letter was written by Mr Nicolas Bottinelli. The Examining Magistrate has carefully examined this request and is (sic) the view that it could be executed only partially in its actual state. The request does not fulfil some of the requirements of Swiss law in order to grant the requested assistance. It was incorporated in a draft letter on ACC letterhead dated 25 May 2005. The cheque was banked at the National Westminster Bank in London by Phillip De Figueiredo. Based on evidence held by the ACC, we believe that Strachans created a false invoice for a film script to allow the payment to falsely appear in the accounts of Dunn's company as a payment for the purchase of a film script. Strachans has assisted in the creation of false documentation to support the fraudulent deception of the ATO. I note that the Magistrate will have the final decision on this matter but I would be very grateful for your comments. I look forward to hearing your comments in the morning. It comprised a covering letter from Ms Gibbins to Mr Bottinelli to which was attached a revised version of Mr Hellings's draft letter. It will be convenient, at times, in these reasons to refer to those documents collectively as "the May letter". In your facsimile you sought clarification of the request in light of the requirements of Swiss domestic law regarding fiscal matters. Attached is a letter from the Australian Crime Commission which clarifies the request. This letter has been drafted in consultation with the Commonwealth Director of Public Prosecutions and the Australian Central Authority, the Attorney-General's Department. It is dated 26 May 2005. The cheque was banked at the National Westminster Bank in London by Phillip De Figueiredo. On 4 February 2003, Dunn and Philip Egglishaw meet in Perth, Australia. A file note of the meeting produced by Egglishaw shows that he sent an instruction to his staff to obtain some more Consolidated Artists letterheads as they needed to sell another script. He also states in the note a copy from the last letter to Dunn regarding the sale of a script. The file note and the payment indicate that the fraudulent behaviour, in paying for a non existent script, took place. Strachans assisted in the creation of false documentation to support the fraudulent deception of the ATO. On 10 October 2005 Mr Bottinelli wrote to Ms Gibbins seeking, relevantly, "more details about the modus operandi used by [those allegedly involved in criminal activity] to defraud the Commonwealth". The Attorney-General's response was provided under cover of a letter, dated 7 December 2005, from Ms Jane Christie, a senior legal officer in the department, to Ms Isabella Fumagalli in the Swiss Federal Office of Justice. Like Ms Gibbins, Ms Christie was not a delegate of the Attorney-General for the purposes of the Mutual Assistance Act. It was signed by Mr Kevin Considine the National Team Leader of Operation Wickenby within the ACC. It was directed to the attention of Mr Bottinelli. It sets out details of the current status of this investigation, answers your queries and seeks your assistance in expediting current proceedings in Switzerland relating to Operation Wickenby. These proceedings relate to documents seized by your office from Strachans SA on 9 & 10 June 2005 in response to a mutual assistance request from the Australian Government. Attached to the letter was a document headed "STATUS OF CRIMINAL INVESTIGATIONS". The 15 November 2005 letter and the attachment thereto will be referred to subsequently as "the November letter". It is suspected that Strachans created a false invoice for a non existent film script allegedly sold to Dunn or one of his companies to substantiate the payment and the tax deduction. There follows some lengthy passages which it is necessary to set out because the applicants contend that they contain a new request under the Mutual Assistance Act and new allegations against Mr Dunn. Analysis of documentary material seized from Dunn's business premises shows that he has falsely represented in his accounts payments that he has received from Strachans-related entity, Ambassador Finance (which had been held by Strachans for his benefit) as a loan by Ambassador Finance to his own company. In addition to this false representation, Dunn also falsely claimed interest expenses on the fictitious 'loan'" ("the alleged new request"). Dunn in turn paid the majority of funds (less Dunn's fees) to an entity controlled by Strachans on behalf of Pollock. In April 1998 Dunn flew to Jersey and met with Phillip Egglishaw, where he paid Egglishaw a cheque for AU$4.75 million, being AU$3million for Pollock and AU$1.75 million for Dunn. By adopting this method of payment, Dunn and Pollock were able to avoid the scrutiny of Australia's law enforcement agencies. The ACC has information that suggests these funds were used to acquire shares in a company, MACGROVE INVESTMENTS LIMITED (MACGROVE). The ACC believes that this is a fictitious transaction as the funds are believed to have been immediately moved out of MACGROVE and paid into the Pollock and Dunn associated STRACHANS entities. Pollock's accountant who is believed to have knowledge of these transactions and investments has not retained any documentation and expressed concerns about them. These funds appear to have been fraudulently represented as an investment by an independent offshore entity in the newly created Australian unit trust. Further evidence has been obtained confirming that the arrangement between CROSSLINE and Bartlett and Sayers is a charade designed to conceal their involvement with the company from Australian authorities. The copies provided to the ATO did not show the indorsement to Crossline, dated 26 October 2001, and no mention of Crossline was made by Dunn during the meetings. Additional promissory notes were issued on 26 October 2001 which were also indorsed to CROSSLINE and copies of these notes were not provided to the ATO. The ACC has information that suggests that CROSSLINE was not in existence until sometime after 26 October 2001" ("the first new allegation"). The ACC also has information that suggest (sic) the legal advisors for Barminco also have expressed grave concerns regarding the illegality of the arrangement that Bartlett and Sayers have entered with Dunn and CROSSLINE" ("the second new allegation" ). It is believed that this transaction is fictitious and that these funds of which AU$3 million is Pollocks (sic), was split between Pollock and Dunn and moved to their own STRACHANS associated entities. " ("the third new allegation"). Analysis of the accounting records seized from Dunn's business office shows that it would appear that the fictitious film scripts and the AU$4.75 million purchase of shares in MACGROVE have been used to create false entries in his accounting records. Dunn has claimed a 100% write off of the AU$4.75 million investment in shares and it is expected that Dunn may also write off the investments in the scripts to create further capital losses. It is anticipated that these losses will be applied against future taxable capital gains. The use of these false documents is likely to have resulted in the underpayment of millions of dollars of income tax. On 7 December 2005, I sent you correspondence attaching a letter dated 15 November 2005 from the Australian Crime Commission (ACC). The ACC letter and its accompanying document "Status of Criminal Investigations" (the Summary), provided a summary of the progress of its investigation. This correspondence was in response to the verbal request from the Examining Magistrate, Mr Dumartheray, in June 2005 and your letter dated 10 October 2005. At page 17 of the Summary, the ACC provided information about its investigation into the alleged sale of two non-existent film scripts to Mr Gregory Dunn (Dunn) or Misty Mountain Pty Ltd, by Consolidated Artists, a Strachans SA in-house company. Subsequent to the preparation of the Summary, the Attorney-General's Department has received a letter and documents from Dunn and Misty Mountain Pty Ltd's (Misty) legal representatives Shaw & Associates, regarding this additional information. Following examination of the documents provided by Dunn and Misty's legal representatives the ACC now provides the following information. Entries have been made in the accounting records of Misty Mountain Pty Ltd recording the purchase of two allegedly non-existent film scripts from Consolidated Artists for $100,000 and $330,000. Other entries record the write-off of the value of those assets to nil. Within the Summary and other documents provided by Australia, it has been said Dunn had claimed tax deductions in respect of funds made payable to Consolidated Artists, a Strachans in-house company. We wish to advise that no income tax deduction has yet been claimed in respect of the payments of $100,000 and $330,000 to Consolidated Artists. However, Dunn's legal representatives have advised that the sum of $430,000 is recorded in the 2003 accounts of Misty Mountain Pty Ltd as a capital loss on write-off of Capital Assets. The ACC believes that this write-off may be used in the future for taxation purposes. If Dunn purports to sell the alleged non-existent scripts or if the write-off value is confirmed by the declaration of a liquidator, the write off could be utilised against taxable capital gains. The ACC continues to suspect that the payments of $100,000 and $330,000 made to Consolidated Artists were for the purpose of concealing the transfer of funds to accounts offshore for the benefit of Dunn, by representing the transfer as payments for the alleged non-existent film scripts, with the intention of deceiving the Australian authorities. Because no satisfactory explanation has been offered by Dunn as to why he, or associated entities, have purchased at least two allegedly non-existent film scripts from Strachans SA, the ACC has advised that it is continuing with its investigation. " The consequence is said to be that the request is "invalid". It "should be set aside or quashed. " The grounds on which relief is sought are numerous. • The request misstated a number of important facts. • The involvement of the DPP in the making of the request was unlawful. • The involvement of the ACC in the making of the mutual assistance request was also unlawful. 18 The applicants accept that Mr Harris was a duly appointed delegate for these purposes and that he signed the request dated 16 March 2005. • The request was expressly stated to have been made both "on behalf of" and "at the instance of" the DPP and the ACC. • The subsequent correspondence emanating from Australia on 26 May 2005, 15 November 2005, 7 December 2005 and 2 June 2006 formed part of the request but was not made or sent only by the Attorney-General or a delegate of the Attorney-General. An additional and alternative submission was made in argument. It was that each of the letters sent from Australia after 16 March 2005 constituted a new request because each contained fresh allegations. 19 The Mutual Assistance Act provides for requests to be made by Australia for assistance relating to criminal matters. The requests may be made of a foreign country with which Australia has entered into a mutual assistance treaty. That assistance may take various forms. It may be for the taking of evidence (s 12(1)), the search for and seizure of documents (s 14) or the foreign country authorising the attendance of nominated persons at a criminal hearing in Australia (s 16(1)). Such requests for assistance may only be made by the Attorney-General or his delegate. Such requests cannot be made by other Australian authorities, such as police forces, to their counterparts in other countries. This may, however, be done if the form of assistance sought is not one comprehended by the Mutual Assistance Act: see s 6. 20 It was common ground that the form of assistance sought in the instrument signed by the delegate was assistance of the kind comprehended by s 14 of the Mutual Assistance Act, namely that the Swiss authorities authorise searches and seizures under warrant of documents in the possession of Strachans SA and Corner Banca SA in Switzerland. That assistance was sought in and by the document entitled "REQUEST FOR ASSISTANCE IN A CRIMINAL MATTER" signed by Mr Harris, as delegate of the Attorney-General, on 16 March 2005. In my view it was the only request made to Switzerland under the Mutual Assistance Act for present purposes. 21 The letter, signed by Ms Gibbins and dated 17 March 2005 was not a request for assistance under the Mutual Assistance Act. As it said it "enclosed" such a request. The request itself was made by the delegate of the Attorney-General. 22 Ms Gibbins' letter did state that the request was "made on behalf of" the DPP and the ACC. The request itself was stated to have been made "at the instance of" the DPP and the ACC. The "at the instance of" formulation probably accords most closely with the factual position. Nothing, however, turns on the accuracy or otherwise of either of these statements. When read with s 40, s 10(1) of the Mutual Assistance Act requires that a request for assistance must be "made" by the Attorney-General or his or her delegate. If the Attorney-General makes the request the requirement imposed by s 10(1) will have been satisfied. It matters not that the request was made at the instance of one or more statutory authorities or on behalf of such authorities. It is to be expected that bodies such as the DPP and the ACC will, from time to time request that the Attorney-General makes requests under the Mutual Assistance Act to assist them in investigating criminal matters. The Attorney-General does not undertake criminal investigations so it is hardly likely that he or she would do other than act on behalf of entities which do so. But it is the Attorney-General who acts by making the application. The request signed by the Attorney-General's delegate on 16 March 2005 is specifically said to have been made by the delegate. 23 The various documents sent from Australia to the Swiss authorities in the wake of the request did not form part of the request. This correspondence, as it stated, was responsive to Mr Bottinelli's facsimile letter of 18 May 2005 in which he sought clarification of various aspects of the request and sought additional information. • The November Letter: The 15 November 2005 letter from Mr Considine to Mr Bottinelli was sent in response to Mr Botinelli's letter of 10 October 2005 and to a verbal request from the Examining Magistrate, made in June 2005. • The letter from Ms Christie to Ms Fumagalli dated 7 December 2005 was simply a covering letter under which the 15 November 2005 letter was forwarded to the Swiss authorities. • The letter from Mr Christie to Mr Bottinelli dated 2 June 2006 was sent to clarify and correct "information previously provided in relation to the ... request. This is of no moment because none of the letters or attached documents constituted a request for assistance under the Mutual Assistance Act. That request was made when the document entitled: "Request for Assistance in a Criminal Matter", signed by the Attorney-General's delegate on 16 March 2005, was sent to the Swiss authorities. What followed was correspondence which dealt with various aspects of the request but no new request was made. These misdescriptions, it was contended, gave rise to contraventions of s 14 of the Mutual Assistance Act and Article 7 of the Treaty. As developed in argument their substantial complaint was that the request for assistance and the subsequent correspondence were beset by sundry errors such that Australia had failed to satisfy its obligations under the Act and the Treaty. The shortcomings ranged from omission of material facts and the making of vague and unsubstantiated allegations to the making of false allegations. It will be necessary to return to these alleged shortcomings in greater detail later in these reasons. It will, however, be convenient, first to refer to the relevant provisions of the legislation and the Treaty. • A "criminal matter" is defined to include "a criminal matter relating to revenue (including taxation and customs duties)". • A "serious offence" is defined to mean an "offence" for which the prescribed penalty is death or imprisonment for not less than 12 months. • The word "offence" is defined to include an offence against a law relating to taxation or other revenue matters. 26 By s 7(2) of the Mutual Assistance Act provision is made for the making of regulations identifying foreign countries to which the Act applies. By s 7(2), the regulations may also make the application of the Act subject to any mutual assistance treaty which has been entered into between Australia and the other country. 28 Article 1.1 of the Treaty records that Australia and Switzerland have agreed to "grant to each other assistance in investigations or proceedings in respect of offences the punishment of which falls or would fall within the jurisdiction of the judicial authorities of the Requesting State". By Article 1.2(d) such assistance extends to the execution of requests for the search for and seizure of documents. 29 Article 2 prescribes grounds upon which the Requested State might refuse a request for assistance. One of these grounds, provided for in Article 2.1(b) is that "the request concerns a fiscal offence. It deals with what are described as "compulsory measures" which may include searches and seizures under warrant. Assistance involving compulsory measures may be refused where the assistance sought relates to acts or omissions which, if committed in similar circumstances in the Requested State, would not be punishable under the laws of that State. Paragraph 1 of this Article does not apply where the assistance requested is directed to establishing the innocence of a person. The Contracting Parties shall each appoint a Central Office for the purpose of this Treaty. Until the relevant Contracting Party designates another authority, the Central Office of Australia shall be the Attorney-General's Department in Canberra and the Central Office for Switzerland shall be the Federal Office for Police Matters of the Federal Department of Justice and Police in Berne. Requests for assistance shall be made through the Central Offices, each of which shall arrange for the prompt carrying out of such requests by the appropriate competent authorities in the Requested State. The Central Offices may communicate directly with each other. If the Requested State considers that the information contained in the request is not sufficient in accordance with this Treaty to enable the request to be dealt with, the State may request that additional information be furnished. The applicants point to the requirement in Article 7 of the Treaty that a request must disclose "a description of the essential acts or omissions alleged or sought to be ascertained. " They contend that, by reason of the alleged errors in the request, there were no "reasonable grounds to believe that a thing relevant to the proceeding or investigation may be located in a foreign country" as required by s 14 of the Mutual Assistance Act. 34 The applicants identify what they assert are fresh allegations against them in the part of the May letter which was signed by Mr Hellings of the ACC and sent to Mr Bottinelli in response to his letter dated 18 May 2005. The relevant passages from the ACC letter are set out above at [11]. The applicants draw attention to "a significant number of additional references to such matters as false documents, misleading documents, false instructions, fraudulent behaviour ... and false income tax deduction" which they say had not earlier been made in correspondence with the Swiss authorities. 35 The applicants further complained that the November letter signed by Mr Considine which was sent to the Swiss authorities under cover of a letter from the Attorney-General's Department dated 7 December 2005 contained three new allegations. Those allegations are identified in the quoted passages above at [12]. Attention was also drawn to the ACC's stated anticipation that Mr Dunn might seek, in future, to offset falsely claimed capital losses against capital gains. It was further said that the November letter improperly incorporated legally privileged material, namely advice which a former legal advisor to the applicants had given to the effect that certain arrangements made by the applicants were illegal. There was also a general complaint in the pleadings that the validity of the mutual assistance request was also undermined because of a failure to "disclose the investigating role of the ATO". This, it was said, gave rise to "an abuse of power" on the part of the respondents. There was a further submission, which was not pressed at trial, that the documents disclosed information about the applicants in breach of the Privacy Act 1988 (Cth). It was, therefore, necessary for an "investigation relating to a criminal matter" to be underway before a valid request for assistance of the Swiss authorities could be made under s 14 of the Mutual Assistance Act. The word "investigation" is not defined in the Act. Section 3 does, however, define a "criminal investigation" to mean "an investigation into an offence (whether the offence is believed to have been committed, to be being committed or to be likely to be committed). " The use of the phrase "investigation relating to a criminal matter" in s 14(1) comprehends a wider range of activities than those falling within the defined concept of a "criminal investigation". An investigation "relating to" a criminal matter has the potential to apply to a far broader range of activities: cf Oceanic Life Ltd v Chief Commissioner of Stamp Duties (NSW) [1999] NSWCA 416 ; (1999) 168 ALR 211 at 224-225 and the cases there referred to. It is not necessary, for present purposes, to determine the extent of the differences. This is because the evidence clearly establishes that the mutual assistance request was made to assist in the conduct of a criminal investigation known as Operation Wickenby. The evidence was given by Mr Outram, the ACC Executive Director, Operational Strategies. He deposed (and I accept) that Operation Wickenby began as a result of information contained in documentary material obtained after the execution of a search warrant in February 2004 on a hotel room occupied by Mr Phillip Egglishaw. That material suggested that a significant number of Australians had committed criminal offences involving taxation fraud. From July 2004 the ACC and the Australian Taxation Office ("the ATO") examined the material to determine which matters should be the subject of criminal investigation by the ACC and which matters should be the subject of civil investigation by the ATO. The ensuing criminal investigation conducted by the ACC was known as "Operation Wickenby". The civil investigations conducted by the ATO did not form part of Operation Wickenby. Operation Wickenby was conducted by the ACC pursuant to the Australia Crime Commission Authorisation and Determination (Money Laundering and Tax Fraud) Determination 2003. It involved the investigation of whether certain individuals had committed offences against Commonwealth criminal laws. Operation Wickenby is to be distinguished from Project Wickenby which was the title assigned to the separate investigations being overseen by the ATO. The request did contain references to a number of offences against Australian criminal law which it was alleged Mr Dunn had committed. The Treaty does not require the Requesting State to provide evidence that particular offences against its laws have been committed. As already noted, all that is required is that there be in existence a bona fide investigation which is designed to determine whether or not such offences have been committed. " The request for mutual assistance which was sent to the Swiss authorities under cover of Ms Gibbins' 17 March 2005 letter, contained a good deal of information which suggested that material relevant to the investigation might be found in Switzerland. This information was largely derived from documents found on the personal computer of Mr Phillip Egglishaw and from responses by him to questions asked during a hearing conducted by the ACC. Strachans SA was based in Geneva. Mr Egglishaw was one of the principals of Strachans SA. He resides in Geneva. The Swiss Central Office was advised that "Australian authorities are investigating a number of Australian residents for using companies, trusts and bank accounts administered by Strachans S.A., an accounting services firm in Switzerland, to disguise their involvement in tax fraud schemes and money laundering" (paragraph 7). The Swiss authorities were also advised that the ACC believed that services provided by Strachans SA enabled Australian residents to obtain access to their funds "from anywhere in the world by the use of debit or credit cards linked to bank accounts opened and operated for them by Strachans outside Australia, including at Corner Banca, SA in Lugarno, Switzerland" (paragraph 9(c)). 41 The possibility of there being documents in Switzerland which were relevant to the investigation was considered by Mr Outram. His evidence was that, having received advice from those who had examined the material seized from Mr Egglishaw, he believed that Strachans SA, which had offices in Geneva, established personalised schemes for their clients to minimise or avoid paying tax. He believed that it was likely that information relating to these matters would be found in Strachans SA offices in Switzerland. He expected that information to include communications between Strachans SA and their promoters, the identities of beneficial owners of trusts operated by Strachans SA and information linking the accounts and trusts operated by Strachans SA, the promoters and the persons under investigation in Australia. 42 The phrase "reasonable grounds to believe" (or variants of it) has a well understood and well settled meaning. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of mind may, depending on the circumstances, leave something to surmise or conjecture. The words are to be given their ordinary meaning. What is needed is a sufficient factual basis supporting the relevant belief. 44 In the present case the Australian investigators were seized of a good deal of information which pointed to the strong possibility that documents, relevant to their investigation, were likely to be found in the premises occupied by Strachans SA and Corner Banca in Switzerland. The information obtained from Mr Egglishaw pointed to the existence of schemes which involved Strachans SA administering trusts on behalf of Australian residents and the facilitation of the repatriation of funds to those residents by use of automated teller machines. Their accounts were held with banks such as Corner Banca. Both of these transactions were referred to in the document entitled "Status of Criminal Investigations" which formed part of the November letter which was sent to Mr Bottinelli: see above at [12]. The applicants submit that the Attorney-General was under an obligation, when making the mutual assistance request, to disclose these matters to the Swiss authorities. This was because he was "under an obligation of disclosure in relation to all material facts. " This obligation is said to arise from the Treaty. In particular, reliance was placed on the requirement, in Article 7.1(b), that requests for assistance shall include "a description of the essential acts or omissions alleged or sought to be ascertained" by the Requesting State. It was submitted that one of the purposes of this requirement was to enable the Swiss authorities to make a judgment as to whether or not to refuse the request for the reasons mentioned in Article 2.1(b) and Article 3.1 of the Treaty. Both provisions allow Requested States, in their discretion, to refuse assistance where the request, respectively, concerns a fiscal offence or involves compulsory measures and the assistance sought relates to acts or omissions which, if committed in similar circumstances in the Requested State, would not be punishable under the laws of that State. 46 It is to be noted at the outset that the two omissions which are identified in the preceding paragraph were matters of detail which might have assisted the applicant had they been charged with false deduction claims in income tax returns. The mutual assistance request did not allege that false claims had been made in relation to these payments. They were not relied on for the purposes for the request for assistance. They appear to have come to the attention of investigators after the request was made and were drawn to the attention of Swiss authorities in the progress report on the investigation which was prepared over six months later. 47 There are, in addition, other obstacles in the path of the applicants' argument. The first is that the Treaty does not form part of Australian domestic law and, therefore, save in an immaterial respect, does not impose binding obligations on the Attorney-General: see Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 286-7, 304 and 315. 48 Relevantly, s 7(2) of the Mutual Assistance Act provides that regulations may provide that the Act applies to a foreign country subject to any mutual assistance Treaty between that country and Australia. By s 7(3) of the Act it is provided that, if regulations have been made in accordance with s 7(2), then "this Act applies subject to the limitations, conditions, exceptions or qualifications that are necessary to give effect to the treaty in relation to that country. " Regulation 4(1) of the Regulations provides that the Act applies to Switzerland "subject to such limitations, conditions, exceptions or qualifications as are necessary to give effect to the Treaty...." These provisions do not have the effect of incorporating the Treaty into Australian domestic law: see Bollag v Attorney-General (Cth) (1997) 79 FCR 198 at 214-6. As the respondents submit, in the absence of inconsistency between the Mutual Assistance Act and the Treaty, the Act applies and the Treaty does not. 49 In any event, no general obligation of disclosure of "all material facts" is to be found in the Treaty. The relevant obligation, imposed by Article 7.1(b), extends no further than a requirement to describe essential acts or omissions which are alleged or which it is anticipated the investigation may ascertain. This information is to be provided to assist the Requested State to make a judgment about how it should respond to the request. This includes consideration of the questions of whether Article 2.1(b) or Article 3.1 apply and, if so, whether assistance should be refused on discretionary grounds: see Kennedy v Australian Securities and Investments Commission [2005] FCAFC 32 ; (2005) 142 FCR 343 at 365. The request for assistance identified with sufficient precision the facts which gave rise to the offences which it was then suspected had been committed. The potentially relevant provisions creating criminal offences were also referred to. This information was sufficient to alert the Swiss authorities to the possibility that the fiscal offences provisions might be engaged. As a result, they directed a series of questions to their Australian counterparts seeking further information about the allegations being made against the applicants and others. Sufficient information was, in my opinion, provided in the request to satisfy Australia's obligations under Article 7.1(b) of the Treaty. 50 The omission of any reference to what was said to be "the investigating role of the ATO" from the mutual assistance request was not a matter placed at the forefront of the applicants' case. As I understood the argument it was that, had reference been made to the ATO, it would have been clearer to the Swiss authorities that fiscal issues may have been involved and that they may have been more inclined to exercise their powers under Article 2.1(b) or Article 3.1 of the Treaty. I do not accept these submissions. The ATO was not conducting the criminal investigation which led to the making of the request. A clear separation of functions had been arranged under which the ATO was confined to civil aspects of the investigations. It may well have been misleading, in a request, made under the Mutual Assistance Act, to have implied or suggested that the ATO was engaged in the criminal investigation. In any event, as already noted, the Swiss authorities understood that the request dealt with fiscal offences. Failure to mention the ATO did not cause them to overlook this point. 51 It is also to be borne in mind that the discretionary considerations comprehended by Article 2.1(b) and Article 3.1 include matters arising under the domestic law of the Requested State which might not be known to or anticipated by the State making the request. It is, of course, open to the Requested State (as occurred here) to seek further information from the Requesting State should this be necessary in order for an informed decision to be made on the request. It is also to be remembered that the Requested State might, in its discretion, determine to respond to the request notwithstanding the fact that the request is one which might properly be refused under those provisions. 52 It may also be the case, as the respondents argued, that the fact that scope exists for the Requested State to seek elaboration of a request for assistance before making a decision as to whether or not comply, renders the request immune from successful attack unless it be established that the pleaded omissions had occurred by reason of fraud or bad faith: cf Lego Australia Pty Ltd v Paraggio [1994] FCA 1286 ; (1994) 52 FCR 542 at 555-556; Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 at 400. It is not, however necessary to determine whether this line of authority has application to requests for assistance made under the Mutual Assistance Act. The ACC also has information that suggest (sic) the legal advisors for Barminco also have expressed grave concerns regarding the illegality of the arrangement that Bartlett and Sayers have entered with Dunn and CROSSLINE. The applicants suggest that the ACC became aware of the substance of Ms Saint's opinion when she disclosed it in the course of an examination of her by an ACC examiner Mr Tim Sage in September 2005. Ms Saint gave Mr Sage a 31 page version of the opinion. Mr Dunn's solicitor, who was also present at the examination, provided a facsimile copy of a different version of the opinion which ran to 21 pages. The uncontradicted evidence of Ms Phillips, Ms Buttsworth and Mr Woodwood, establishes that the opinions were placed in a sealed envelope by Mr Sage and that nobody had access to the opinions until 15 December 2005, well after the November letter had been sent. The respondents submit that the information which is recorded in the first sentence of the statement was obtained from a letter that Ms Saint wrote to Mr Dunn on or about 1 September 2003. In that letter Ms Saint gave Mr Dunn some reasons for her decision to terminate her employment. Whilst she refers to certain "arrangements" which had caused her to lose sleep and become extremely stressed she does not refer to a particular arrangement; nor does she do more than imply that she had given advice relating to it. There is no reference in the letter to the matters contained in the second sentence of the statement relating to Messrs Bartlett and Sayers and CROSSLINE. No evidence was given by the author of the November letter. I am, therefore, unable to determine whether the statement was made in reliance on Ms Saint's letter or whether it reveals legally privileged material. No attempt has been made to establish that the opinion provided by Ms Saint was, in fact privileged. No determination to this effect has been made. I note that Mr Sage considered that the claim was dubious given that Ms Saint did not, at relevant times, hold a practicing certificate and that she was an employee of Misty Mountain. 54 Even if the statement was partly based on an opinion which was subject to a claim of privilege or was, in fact, privileged it does not follow that the November letter, or that part of it, was in some way rendered "invalid". The applicants did not advance argument as to why this should be so. Operation Wickenby, as has already been noted, was conducted by the ACC under the Australian Crime Commission Authorisation Act and Determination (Money Laundering and Tax Fraud) Determination 2003 . It involved an investigation directed to determining whether or not certain named individuals had committed offences against Commonwealth criminal laws. Following the execution of the search warrant on Mr Egglishaw's hotel room in February 2004, ACC investigators formed the view that it was likely that documents relating to the investigation would be found on premises occupied by Strachans SA and Corner Banca in Switzerland. The ACC investigators were aware that, in order to obtain such documents, it would be necessary for a mutual assistance request to be made to the Swiss authorities. The investigators were also aware that, pursuant to a Memorandum of Understanding between the DPP and the Attorney-General's Department, which had been made in 1997 ("the Memorandum of Understanding"), it was provided that the DPP had the primary responsibility for the drafting of mutual assistance requests made by Commonwealth agencies. The DPP was to perform a quality assurance role to ensure that any material obtained pursuant to a request was provided in a form that would be admissible in an Australian court in the course of a criminal prosecution or proceedings for the recovery of the proceeds of crime. The prosecution of such proceedings fell within the statutory responsibility of the DPP. 56 Under the Memorandum of Understanding it was also the role of the DPP to determine whether Australian authorities were undertaking the investigation of serious criminal matters such as to justify a request for mutual assistance from a foreign country and to advise the Attorney-General's Department as to whether a request should be made. The DPP appointed Mr Adsett, a senior officer, as its Operation Wickenby Co-ordinator. That officer was, from time to time consulted by the ACC to clarify whether evidentiary material which had been collected suggested that particular criminal offences may have been committed. 57 It was in accordance with these arrangements, that in February 2005, the ACC forwarded information to the DPP which alleged that Mr Dunn and others may have committed offences against Commonwealth laws and provided a draft mutual assistance request. That draft was settled by an officer in the DPP's office. Later in February 2005, Ms Cronan passed on the information obtained from the ACC investigator to the Attorney-General's Department. She provided a copy of the draft mutual assistance request and asked the Attorney-General to make the request for mutual assistance. She asked that the request should be made on behalf of the DPP and the ACC. This was done. 58 When the mutual assistance request was made in March 2005 it was said to have been made at the instance of the Office of the Commonwealth DPP and the ACC. 59 The applicants, in their written submissions, contended that the DPP "had no proper function to perform in relation to the mutual assistance request and that the involvement of the DPP in the mutual assistance request (and the subsequent letters) rendered it invalid. " As developed in oral argument the issue was framed in terms of power. It was said that the DPP lacked power to do any of the acts which he had performed in relation to Operation Wickenby and that its participation in the making of the request caused it to be "invalid". 60 The Office of the DPP is established by s 5 of the Director of Public Prosecutions Act 1983 (Cth) ("the DPP Act "). The functions of the DPP include the carrying on of prosecutions for offences against Commonwealth law: see s 6(1)(a) -(e) of the DPP Act Section 6(2) of the DPP Act provides that, in addition to the function identified in s 6(1) , the functions of the DPP include functions conferred on him or her under any other Commonwealth law (paragraph (a)) or "such other functions as are prescribed" (paragraph (b)). Section 6(1)(n) of the DPP Act is significant for present purposes. It provides that it is a function of the DPP "to do anything incidental or conducive to the performance of any of the functions referred to in paragraphs (a) to (mb) and in subsection (2). In Director of Public Prosecutions v Australian Broadcasting Corporation (1987) 7 NSWLR 588 the NSW Court of Appeal held that s 6(1)(n) of the DPP Act conferred a special power on the DPP: see at 597. A similar approach to the construction of s 6(1)(n) of the DPP Act was adopted by a Full Court of this Court in Health Insurance Commission v Freeman (1998) 88 FCR 544 (" Freeman "). Whilst rejecting the notion that s 6(1)(n) empowered the DPP to give legal advice on request to Commonwealth authorities merely because they happened to be investigating the commission of offences under Commonwealth law, it held that such advice might be given in certain circumstances. Contrary to the view held within the DPP's office, the DPP is not empowered under the DPP Act to give legal advice, if and when sought, to any Commonwealth authority merely because it is investigating the possible commission of offences under Commonwealth law. Before the precondition in s 6(1)(n) is met there must be some nexus between the investigation being conducted by the authority and a statutory function of the DPP. The nexus must be something more than a mere theoretical possibility that the DPP might institute, carry on or take over a prosecution at some future date. The facts of the particular case or the nature of the alleged offence must, at the very least, establish that the possibility of the DPP becoming involved in a prosecutorial function is a real one. A course of conduct of past referrals of similar matters to the DPP or evidence of an intention to refer the particular matter to the DPP for prosecution may suffice. Ultimately, each case will depend on its own facts. ... For example, it would clearly be "conducive" for the better fulfilment of the prosecutorial functions of the DPP, for advice to be given to an investigative agency to ensure evidential material being gathered by it for the purpose of a prosecution which it is intended to be carried on by the DPP, is being gathered lawfully. They are also correct in contending that the DPP was not free to provide advice for the benefit of the ACC merely because the ACC was conducting an investigation into conduct by individuals which may contravene Commonwealth criminal law. The question for determination is, however, whether the various activities of the DPP, which were undertaken in the course of Operation Wickenby, were conducive to the performance of one or more of the prosecutorial functions of the DPP. In my view they were. 63 The ACC's investigation into the conduct of the applicants and others caused it to suspect that they had committed offences under Commonwealth criminal law. Specific offences were identified. The ACC determined that it was likely that documentary evidence which might assist in establishing whether or not offences had been committed was likely to be found in Switzerland. At this point the ACC placed the information, which it had by then obtained in the course of its investigation, in the hands of the DPP. Advice was sought as to whether the evidence suggested the possibility that serious criminal offences had been committed by the applicants and, if so, the terms in which an application for mutual assistance could be made to the Swiss authorities. One aspect of that request was that any documentary material seized in Switzerland should be made available to the Australian authorities in a form which would be admissible in an Australian criminal court. At all relevant times it was reasonably anticipated by the ACC that the DPP would be responsible for prosecuting any charges laid as a result of its investigation. These considerations, in my opinion, establish the necessary nexus between the investigation being conducted by the ACC and the prosecutorial function of the DPP. As a result the DPP was empowered, by s 6(1)(n) of the DPP Act to act as he did. 64 An additional source of power is to be found by a reading of s 6(1)(n) with s 6(2)(b) of the DPP Act . In Freeman Merkel J observed (at 566) that "[i]f it is regarded as desirable that the DPP have a general entitlement to give legal advice to Commonwealth authorities investigating the commission of offences under Commonwealth law, then that is a matter for Parliament. " The DPP Act had, since its inception, contained s 6(2)(b) which empowered the executive, by regulation, to confer additional functions on the DPP. The power was not exercised, so as to confer power on the DPP to give general advice, until after the decision in Freeman was handed down. By regulation 3(1)(f) and (g) of the Director of Public Prosecutions Regulations 1984 (as amended by the Director of Public Prosecutions Amendment Regulations 1998 (No 1) which commenced on 22 December 1998) it was provided that it was a function of the DPP to provide legal advice to Commonwealth, State or Territory authorities "whether or not the advice is for the purposes of a particular investigation. " It was plainly incidental and conducive to the performance of this function that the advice proffered by the DPP to the ACC and the Attorney-General's Department was given. 65 I note in conclusion that no argument was developed by the applicants to explain how and why, if the DPP had acted ultra vires, his involvement with the making of the request by the delegate of the Attorney-General, would render that request "invalid". 67 The respondents contend that each of these communications occurred lawfully pursuant to either s 59(7) or 59 (9) of the Australian Crime Commission Act 2002 (Cth) ("the ACC Act "). 68 The ACC is established by s 7(1) of the ACC Act . It consists of the CEO, examiners and the members of the staff of the ACC. The functions of the ACC, provided for in s 7A of the Act, include the dissemination of criminal information, the investigation of conduct rendered criminal by Commonwealth laws and reporting on the outcomes of its investigations. Section 51 of the ACC Act makes it an offence for any member of the staff of the ACC to divulge or communicate to any other person any information acquired by him or her in the performance of his or her duties otherwise than in connection with the performance of those duties under a relevant Act. One relevant Act is the ACC Act itself: see s 51(4). It was common ground that Mr Considine (the author of the February communication and the November letter) and Mr Hellings (the author of the second part of the May letter) were members of the staff of the ACC but were not delegates of the CEO for the purpose of the exercise of the CEO's powers under s 59(7) or 59 (9) of the ACC Act . Such a delegation was however held by Mr Outram who was an SES level officer. • Due to the strategic importance of Operation Wickenby to the ACC, he personally spent a "significant amount of [his] time" on Operation Wickenby. • He was personally aware that it was proposed to send the information, contained in the February communication and the May and November letters, to the recipients prior to those letters being sent. • In each case, he had formed the view that it was appropriate, desirable and relevant to the functions or activities of the DPP and the Attorney-General's Department that the provision of the information to those agencies should occur for the purpose of facilitating the making of the mutual assistance request or furnishing the Swiss authorities with information which they had requested following the making of the request. 70 The applicants contend that the information contained in the February communication to the DPP did not relate to the functions of the DPP and that the CEO did not and could not have formed the view that it was appropriate to give that information to the DPP. They further contend that the information contained in the May and November letters did not relate to the functions of Switzerland and the CEO did not and could not have formed the view that it was appropriate to give the information to the Swiss authorities. The applicants also contend that it was not the function of the ACC to send any of the letters. 71 The applicants' submissions are founded, in part at least, on certain misstatements of fact. The May letter and the November letter were both sent to the Attorney-General's Department with the intention that the information contained in them would be forwarded to the Swiss authorities. It was a matter for the Attorney-General's Department to determine whether the letters would be forwarded to the Swiss authorities. It was necessary for the information to be forwarded to the Attorney-General's Department because it was the Central Office through which, in accordance with Article 6 of the Treaty, communications relating to a mutual assistance request were to be channelled. 72 The DPP was a "law enforcement agency" for the purposes of s 59(7) of the Act. In AA Pty Ltd v Australian Crime Commission [2005] FCA 1178 at [19] Finkelstein J held that a Director of Public Prosecutions or an Attorney-General were persons who had general responsibility for the enforcement of the laws of the Commonwealth and were, therefore, law enforcement agencies for the purposes of s 59(7) of the ACC Act . Although his decision was overturned on other grounds by a Full Court (see Australian Crime Commission v AA Pty Ltd [2006] FCAFC 30 ; (2006) 149 FCR 540) , this aspect of his Honour's reasons remained undisturbed. Indeed, the Full Court took a wider view of the term "law enforcement agency" than Finkelstein J had done. 73 The Attorney-General's Department is plainly a Department of State of the Commonwealth for the purposes of s 59(9)(a) of the DPP Act . The May and November letters were directed to this department. One of the functions of the department was to act as a Central Office in accordance with Article 6 of the Treaty. 74 Before information held by the ACC could be sent to another agency the CEO or his delegate must first form the opinion that such a communication was "appropriate" (s 59(7)) or "desirable" (s 59(9)). In each case Mr Outram formed the necessary opinion prior to the letter being sent. He was not, however, the author of any of the letters; nor did he forward any of the letters to the recipients. This was done, in each case, by a member of the staff of the ACC who was not a delegate of the CEO for the purposes of s 59(7) or 59(9) of the DPP Act . For this reason, the applicants contend, each of the communications was unlawful. I do not accept this submission. 75 The issue which arises is whether a delegate is required personally to perform each and every act which it is necessary to perform to exercise the delegated power. Various decisions of high authority suggest that the answer to this question, in any given case, will depend on a range of considerations. The considerations include the exigencies attaching to the exercise of the power, whether or not the delegate has the capacity to exercise the power on each and every occasion it is likely to be exercised, the potential for the exercise of the power to impinge on the rights of others and the status of the agent: see Secretary, Department of Social Security v Alvaro [1994] FCA 1124 ; (1994) 50 FCR 213 at 222-5. A delegate may be able to act through the agency of subordinates in performing some or all of the incidents of the exercise of delegated power. 76 In O'Reilly v Commissioners of the State Bank of Victoria [1983] HCA 47 ; (1982) 153 CLR 1 the High Court was called upon to determine the validity of certain notices given under the Income Tax Assessment Act 1936 (Cth). The Commissioner of Taxation had power to give the notices and he had delegated that power to Deputy Commissioners. Notices were given which bore a facsimile of the signature of a Deputy Commissioner which was stamped on the notices by the Chief Investigation Officer who had been authorised, by the Deputy Commissioner, to do so. The majority held that the notices were valid. Gibbs CJ (with whom Murphy J agreed) considered (at 12-13) that the Deputy Commissioner's delegated powers could be exercised through "a properly authorized officer". The Chief Investigation Officer was properly authorised notwithstanding the fact that the Deputy Commissioner had no personal knowledge that the officer intended to issue the particular notices. Wilson J (at 30-31) held that delegated power could be exercised through servants or agents. Mason J, in a dissenting judgment, was prepared to countenance the performance of ministerial acts by an agent of a delegate. But, having regard to the statutory provisions here, I do not think that the Commissioner can appoint an agent to act on his behalf in exercising a statutory discretion or a statutory power which involves the formation of an opinion, except perhaps on the footing that the Commissioner retains to himself the substantial exercise of discretion or the substantial formation of the opinion, or the exercise of substantial control over the exercise of the discretion or the formation of the opinion, leaving to the agent the ministerial act of communicating the decision or issuing the notice. 77 The power conferred, by ss 59(7) and 59(9) on the CEO of the ACC or his delegate, Mr Outram, was conferred to facilitate departures from the general rule that information in the possession of the ACC should not be disseminated outside that body. The exercise of the power was conditional on the forming of value judgments as to the appropriateness or desirability or such dissemination. Information could only be communicated to a limited number of agencies. The significance which the legislature attached to the formation of the value judgments is indicated by the fact that, in each case, the judgment was to be formed by the CEO or a delegate drawn from the senior ranks (SES level) of the ACC. There was no evidence to suggest that the occasion for the exercise of power under s 59(7) or 59(9) was so frequent as to give rise to an assumption that the legislature could not have expected the CEO or a delegate personally to exercise the power. The exercise of the power had no direct effect on the rights of third parties but might, indirectly, have such an affect if the agency to whom the information was provided acted on it to the detriment of the third party. 78 These considerations suggest that the CEO or his delegate could not authorise other ACC officers to exercise the powers conferred by s 59(7) and s 59(9). Had Mr Outram purported to authorise Mr Considine or Mr Hellings to form the value judgments which lie at the heart of these statutory discretions, I would have been disposed to hold that the relevant disclosures had been made ultra vires. That is not, however, what occurred. 79 Mr Outram formed the necessary opinions upon which the exercise of the statutory discretions, provided for in ss 59(7) and 59(9), depended. He approved the sending of each of the letters. The acts of Mr Considine and Mr Hellings in composing, signing and sending the letters were, in my opinion, ministerial acts which they performed at the behest of and under the supervision of Mr Outram. No contravention of s 59(7) or s 59(9) the ACC Act occurred in relation to the forwarding of the letters to the DPP and the Attorney-General's Department. 80 Even had I formed a contrary view on the question of whether the three letters had been sent conformably with the requirements of the ACC Act , I would not have concluded that the legal efficacy of the mutual assistance request was thereby affected. Only the February communication predated the making of the request. The request was based on information supplied by the ACC but it was made by the delegate of the Attorney-General. There was no reason to suppose that the information had been provided by the ACC other than in good faith. There is nothing in the evidence to suggest that the material was not believed by the ACC to constitute a fair summary of the results of its investigation to that point. The fact that the ACC may have acted in contravention of Australian domestic law in making the communication to the DPP who, in turn, passed it onto the Attorney-General's Department does not, on the evidence, provide a legal basis for the conclusion that the request was invalid. This conclusion makes it unnecessary to deal with the respondents' contention that relief should be denied by reason of the applicants' delay in making the application. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | application for request for assistance in a criminal matter to be declared invalid, set aside or quashed whether the request lawfully made whether the request was made by the attorney general (cth) or the attorney general's delegate whether the maker of a request is under an obligation to disclose all material facts whether alleged factual defects in the request rendered the request invalid whether reasonable grounds to believe the preconditions for making the request were satisfied whether inclusion of allegedly privileged material rendered the request invalid whether the involvement of the director of public prosecutions rendered the request unlawful whether the involvement of the australian crime commission rendered the request unlawful application dismissed "investigation relating to a criminal matter" "reasonable grounds to believe" administrative law words & phrases |
This case has its ultimate origin in such service, more particularly in operational service performed between July and October 2006 in the Middle East Area of Operations (MEAO), principally in Iraq, by the Applicant, Corporal T L Millar (CPL Millar), an enlisted member of the Australian Army, in the course of the Australian Defence Force operation known as OPERATION CATALYST 2. The more immediate origin of the case lies in a value judgement later made by a senior officer of the Australian Army, a Brigadier, following that service, to confirm a decision taken by a more junior officer, a Major, to discharge CPL Millar from the Army because of satisfaction that she was not suited to be an enlisted member of the Army. The following is a chronology of the relevant, formal decisions. On 4 April 2008 CPL Millar sought the referral to the Chief of Army, pursuant to reg 76 of the Defence Regulations 1952 (Cth) (the Defence Regulations) made under the Defence Act 1903 (Cth), of a complaint she had made on 11 September 2007 to the commanding officer of her unit, 10 Force Support Battalion (10 FSB), pursuant to reg 75 of the Defence Regulations, seeking redress in respect of a grievance with a decision taken on 4 August 2007 by a delegate of the Chief of Army within the Soldier Career Management Agency (SCMA) to discharge her from the Australian Army pursuant to reg 87(1)(e) and reg 87(4) of the Defence (Personnel) Regulations 2002 (Cth). Upon such a referral, reg 77 of the Defence Regulations charged the Chief of Army with the investigation without delay of the referred complaint and the notification of the results of that investigation to CPL Millar, again without delay. Following its investigation, CPL Millar's complaint came before the first respondent, Brigadier M D Bornholt, AM (BRIG Bornholt), Director General, Army Operations and a delegate of the Chief of Army for the purposes of reg 77 of the Defence Regulations. BRIG Bornholt determined on 6 February 2009 that the complaint by which she sought redress of her grievance should not be upheld and notified her accordingly. BRIG Bornholt also directed SCMA to proceed with discharge action as soon as administratively possible. As a result, the Second Respondent, Major M Wilkinson (MAJ Wilkinson), a delegate of the Chief of Army within SCMA, came to fix 6 March 2009 as the date for CPL Millar's discharge. (2) A complaint shall be in writing. MAJ Wilkinson's decision is but a sequel to that of BRIG Bornholt. It gives it administrative effect. Though that has the result that MAJ Wilkinson is a necessary party, the fate of CPL Millar's challenge to the decision taken by BRIG Bornholt will determine the fate of her challenge to MAJ Wilkinson's decision. It will later be necessary to elaborate further on the administrative law error grounds which CPL Millar presses. For the present it is enough to note that there are two essential elements to the challenge which she now makes to BRIG Bornholt's decision. The first is said to be a denial of procedural fairness constituted by a failure to afford her an opportunity to be heard on various subjects; the second is that the decision was unreasonable. It is necessary to appreciate that CPL Millar has not sought the judicial review of the anterior decision to terminate her service as a member of the Army but rather of the later decision in respect of her referred redress of grievance complaint. An understanding of the nature and origins of the power exercised by BRIG Bornholt is an essential prerequisite to determining whether there is any substance in the grounds of review. At one stage it was submitted on behalf of the respondent Commonwealth military officers, seemingly on instructions given to their solicitor by the Defence Department, that BRIG Bornholt's power on investigating the complaint was limited to making recommendations to the officer (another delegate of the Chief of Army holding the rank of Major) who had determined to discharge CPL Millar from the Army or to MAJ Wilkinson. Even when pressed further in the course of oral argument, there was, in the end, no clear view expressed on behalf of the Commonwealth as to the nature of the power. In fairness, I should add that it is not evident from the detailed reasons for his decision which BRIG Bornholt furnished to CPL Millar, of which more later, that he shared either a limited conception of, or uncertainty in relation to, the power entrusted to him by the Chief of Army by delegation. As to the notion of BRIG Bornholt's power being limited to the making of a recommendation to MAJ Wilkinson (or any other officer holding a delegation to terminate service for that matter), each officer, it is true, was a delegate of the Chief of Army, but the powers they were respectively exercising were different and separate, although not unrelated. The impressionistic incongruity, evident from the Army's rank structure (q.v. reg 4 and Sch 1 to the Defence (Personnel) Regulations ), in the notion that a Brigadier would ever make a recommendation to a Major gives one pause for thought about the Commonwealth's submission. On further examination, that impressionistic incongruity is but a reflection of the plenary nature of the power exercisable on the merits by the Chief of Army or an officer to whom the chief of Army may permissibly delegate that power in relation to a referred complaint in respect of a redress of grievance. Like the power to terminate the service of an officer or an enlisted member, the power exercisable in respect of a referred redress of grievance complaint is in modern form statutory and found in the Defence Regulations but, to borrow language employed by Sir Own Dixon in describing the former in Commonwealth v Welsh [1947] HCA 14 ; (1947) 74 CLR 245 at 268, it is no new subject. Though, for the purposes of the present case (Part XV was further amended on 1 May 2008 by the Defence Force Amendment Regulations 2008 (No 1), SLI 68 of 2008 in ways not presently material), they find contemporary expression in reg 75, 76 and 77 within Part XV of the Defence Regulations, when CPL Millar made a complaint to her commanding officer seeking redress of a grievance and then sought the subsequent referral of that complaint to the professional head of the Australian Army she was invoking rights the origins of which are ancient and deeply rooted in our constitutional heritage. As will be seen, it is also no coincidence that the Governor-General in Council by (at the time) reg 81(1)(b) of the Defence Regulations, prescribed Brigadier to be the minimum rank to be held by an officer to whom the Chief of Army may delegate the power to determine a referred redress of grievance complaint. Knowledge of legal history, of the relationship between the Sovereign, the Parliament and the Armed Forces, of the rank structure and chain of command within the Army and of the responsibilities in respect of subordinates assumed by those who hold the Queen's commission in the Defence Force is essential to an appreciation of the nature of the power exercisable on the referral of a complaint seeking a redress of grievance; all the more so because the language of reg 77 is compressed. That regulation assumes that its reader will either have that knowledge or at least make an effort to obtain it. In Australian military law, the predecessor of reg 75, 76 and 77 of the Defence Regulations is to be found in the former reg 194 of the Australian Military Regulations 1927 (AMR --- numbered as Order 289 in the Australian Military Regulations and Orders and Orders --- AMR&O). At the time, the scheme of the Defence Act , as found in the former s 55, was that, while on active service, members of the Australian Army were subject to the Army Act 1881 (UK) (Army Act 1881) insofar as that Act was not inconsistent with the Defence Act or not modified or adapted by subordinate legislation. The Army Act 1881 by s 42 and s 43 made the following provision for "redress of wrongs" by officers and soldiers (i.e. If any soldier thinks himself wronged in any matter by an officer other than his captain, or by any soldier, he may complain thereof to his captain, and if he think himself wronged by his captain, either in respect of his complaint not being redressed or in respect of any other matter, he may complain thereof to his commanding officer, and if he thinks himself wronged by his commanding officer, either in respect of his complaint not being redressed or in respect of any other matter, he may complain thereof to such officer, being either a general officer or Brigadier or an air officer as may be prescribed or, in the case of a soldier serving in India, to such officer as the Commander-in-Chief of the Forces in India with the approval of the Governor General of India in Council may appoint; and every officer to whom a complaint is made in pursuance of this section shall cause such complaint to be inquired into, and shall, if on inquiry he is satisfied of the justice of the complaint so made, take such steps as may be necessary for giving full redress to the complainant in respect of the matter complained of. Regard to the preamble to the Army Act 1881 informs one that its purpose was to consolidate the Army Discipline and Regulation Act 1879 (UK) and subsequent Acts which had amended that Act. The Army Discipline and Regulation Act 1879 in turn replaced annual Mutiny Acts of the British and before then English Parliaments for the governance of discipline within the Army which may be traced back to the original Mutiny Act 1689 (Eng) . The circumstances prevailing at the time of the passage of the Mutiny Act 1689 were singular. The " Glorious Revolution " had just occurred. King James II of England (King James VII of Scotland) had fled his kingdoms but was actively plotting his return with the assistance of the French. Parliament had adjudged that he had abdicated the Throne and offered it jointly to his elder daughter, Princess Mary and her husband, Prince William of Orange. The Army had been purged of supporters of the former King. It was necessary to provide for its governance. In his authoritative work, " The Military Forces of the Crown" (1869), Mr C M Clode, Barrister at law and legal advisor at the War Office, offers (at pp 84-85) the following account of what transpired and its enduring relevance: It was under these circumstances that the Statesman of that period had to consider the course they should adopt in regard to a Standing Army. To disband it altogether was impossible, for the late King was seeking aid from France to recover his lost throne, and war of some kind was inevitable. The people had experienced the evil of two systems, - of an Army of Plebeians exclusively under the Parliament, and of an Army of Cavaliers exclusively under the Crown; and therefore the problem which presented itself was, - how, without risking a divided allegiance, the Army could be placed equably between the Crown and Parliament, that the interest of the one should not so prevail as to disturb the influence of the other. Now this object was to be attained --- not by destroying, but by strengthening the existing departments or powers of the Crown , and, at the same time, by adding to the legitimate functions of Parliament . By placing the pay of the Army under the control of Parliament, or more especially of the House of Commons; and By granting to the Crown statutory powers for the Government and discipline of the Army. Other statutory guarantees against the encroachments of the power of the Crown and of the Standing Army were added... but the greatest security was and still is to be found in the Constitutional doctrine developed at the Revolution, which made every Minister of the Crown personally responsible to Parliament for his own conduct, and for the acts of the Crown taken upon his advice. This agency of governing the kingdom by responsible ministers applies to the Army as well as to the civil Government, although for many years some few Politicians and many Soldiers were ready to contend that the Crown, without the intervention of any responsible minister, might use the Army for any purpose, and govern and command it in any matter that the will of the sovereign, for the time being, should direct. There is no good function, as will be seen, for any such theory. The Army, as part, or rather as the instrument of the State, must be under the ordinary rule of law, whether as applied to the prerogatives of the Crown or obedience to the civil magistrate. Regicide in respect of King Charles I and the republican ideal had, in the mid-seventeenth century, culminated not in parliamentary democracy but in the military dictatorship of Lord Protector Cromwell backed by the New Model Army. In turn, the rights there enshrined underpinned the basis upon which the Act of Settlement 1701 (Eng) made provision for a succession to the Throne which obtains to this day both in relation to the United Kingdom, Australia and other constitutional monarchies within the Commonwealth of Nations. These statutes represented a recognition born of bitter experience with alternatives that the checks and balances on absolute power offered by a constitutional monarchy provided the best assurance of individual freedom under the rule of law. In modern times, Article 9 of the Bill of Rights, which provides "That the freedom of speech and debates or proceedings in parliament ought not to be impeached or questioned in any court or place out of parliament" and which underpins the law of parliamentary privilege, is the most frequently encountered provision of that statute. Two other provisions of the Bill of Rights, Articles 5 and 6, are of present relevance: That it is the right of the subjects to petition the King, and all commitments and prosecutions for such petitioning are illegal. That the raising or keeping a standing army within the kingdom in time of peace, unless it be with consent of parliament, is against law. Parliamentary control over the Army's existence as declared by Article 6 of the Bill of Rights was achieved by limiting the duration of the original Mutiny Act 1689 to seven months (12 April to 10 November 1689). Its enactment at the same time as the Bill of Rights 1689 was no coincidence. There was to be no repetition of the New Model Army. Thereafter, until more permanent provision was made in 1879, the parliamentary control declared by the Bill of Rights was maintained by annual passage of the Mutiny Act which relevantly provided for a temporally limited continuance standing army and for its discipline. As Mr Clode explains (supra at p 146), early Mutiny Acts made express provision only for the discipline of the Army within the Realm, consigning provision for the discipline of the Army when on service abroad to Articles of War made in the exercise of Prerogative power. Though these were issued in the name of the Sovereign, they were promulgated by the Minister responsible for the War Office who was, in turn, responsible to Parliament. Gradually, the Mutiny Acts came to have a wider application. Even though Articles of War continued to be promulgated in the manner just described, they were reissued annually in conformity with statutory provisions made in each successive Mutiny Act (Clode, supra, at p 144). Guidance as to the content of the Articles of War as they stood at the time when more permanent provision was made in 1879 for the discipline of the Army is offered in another of Mr Clode's authoritative works, The Administration of Justice under Military and Martial Law (2 nd ed, 1874), which enjoyed contemporary official approval pursuant to British Army General Orders. If a non-commissioned officer or soldier shall think himself wronged [in any matter affecting his pay or clothing] by his captain, or other officer commanding the troop or company to which he belongs, he is to complain thereof to the commanding officer of the regiment, who is hereby required to summon a regimental court of inquiry for the purpose of determining whether such complaint is just; - from the decision of which court of inquiry either party may, if he think himself still aggrieved, appeal to the general court martial; - [and such court shall hear and determine the merits of the appeal, and after determining the same, and after allowing the appellant to show cause to the contrary, by himself, and by witnesses, if any, may either confirm the appeal or dismiss it without more, or may, if it shall think fit, pronounce such appeal groundless and vexatious, and may thereupon sentence such appellant to such punishment as a general court-martial is competent to award: - Provided that no stoppage of pay in respect of barrack damage duly assessed by a court of inquiry shall give any non-commissioned officer or soldier a right of appeal to a general or other court martial. A further footnote discloses that the parenthetical reference in Article 13 to "pay or clothing" was inserted by amendment in 1856. The right of an officer, through the chain of command and ultimately via the War Office, to seek "redress" from the Sovereign in respect of a wrong or grievance and a corresponding right of a soldier to such the like redress from his commander, who would hold the Sovereign's commission, found, at the times material to the present case, its contemporary exposition and adaptation to suit the circumstances of the command and control of the Australian Defence Force in reg 75, 76 and 77 of the Defence Regulations. The right of redress is an exact military law derivative of the right to petition the King declared by Article 5 of the Bill of Rights. The latter, in turn, was but a reassertion of a right the existence of which may be traced back at least to Article 61 of Magna Carta 1215 (Eng). The right of petition formed the basis in earlier times of the equity jurisdiction of the Lord Chancellor and of civil proceedings against the Crown by "petition of right". The existence of a right of redress, of a right to have the complaint referred to the highest levels of command and of the obligation of an officer promptly to deal with the complaint either when initially made or on referral serve to temper the arbitrary, uncaring, ignorant or unjust exercise of authority within the Army. They are of fundamental importance to command and control and discipline within the Army. They ameliorate the duty of those in the Army to obey the lawful commands of their superiors under pain of prosecution and, if convicted, sentencing for mutiny. Under the Mutiny Acts, the latter offence was a capital crime. Though that penalty does not attend the offence of mutiny in Australian military law, the maximum punishment for the offence is serious enough --- imprisonment either for 10 years or for life, depending on the circumstances in which it is committed: see s 20 Defence Force Discipline Act 1982 (Cth). Our constitutional heritage from the Bill of Rights and the original Mutiny Act finds contemporary expression in other ways in relation to the Australian Army. Though s 68 of the Commonwealth Constitution vests the command in chief of the naval and military forces of the Commonwealth in the Governor-General as the Queen's representative, the authority for the existence of the Army is statutory, not the prerogative: see s 30 and s 31 of the Defence Act , enacted pursuant to s 51(vi) of the Commonwealth Constitution . Further, though the Governor-General has the command in chief, that command, in accordance with convention, is exercised on the advice of a Minister responsible to Parliament. That convention was recognised in the 19 th century by Mr Clode at item 6 in the passage quoted above. Some provisions of the Constitution refer to 'the Governor-General in Council' --- which section 63 stipulates is to be construed as the Governor-General acting with the advice of the Federal Executive Council: but other provisions refer simply to 'the Governor-General'. The distinction is significant. Section 68 states that 'The Command in chief of the naval and military forces of the Commonwealth is vested in the Governor-General as The Queen's representative' --- not in the Governor-General in Council. It follows that orders by the Governor-General to the Defence Force, including calling it out, are given by virtue of the authority of command in chief. That does not mean that His Excellency may act without ministerial advice. He must act on the advice of a responsible minister; but not necessarily by an Order-in-Council after a meeting of the Executive Council. In this fashion, it can be seen that the redress complaints of officers and soldiers respectively are in modern times able finally to be decided by those officers to whom the Governor-General as commander in chief has, with parliamentary authority, respectively appointed to be the professional heads of the Australian Defence Force and the Australian Army. The importance of the redress of grievance system at the times when CPL Millar made her complaint and then sought its referral was underscored by the penalisation by reg 80 of the Defence Regulations of conduct directed to dissuading a member from making a complaint, seeking its referral, conducting inquiries in respect of a complaint or taking any other action under Part XV. In the present context, it was not only CPL Millar who enjoyed that protection but also BRIG Bornholt. If he, for example, were to be victimised on the basis of the decision he made those engaging in that conduct, no matter what their rank or appointment, would commit an offence. Apart from in Australia, a right of redress exists to this day as part of the military law of the United Kingdom --- s 334 of the Armed Forces Act 2006 (UK) and of other constitutional monarchies within the Commonwealth: see, as to Canada, s 29 of the National Defence Act 1985 (Can) and Queen's Regulations and Orders for the Canadian Forces, Ch 7 and, as to New Zealand, s 49 of the Defence Act 1990 (NZ). The purpose and provenance of these provisions are identical to those of Australia. In our Army and in the armies of each of these countries the right of redress gives formal recognition to an ethos that is sought to be instilled into officer cadets at their military colleges, academies and other officer cadet training units with respect to the obligation for fair treatment and concern for the welfare of subordinates that the holder of a Queen's commission assumes in respect of those under his or her command. The honour, welfare and comfort of the men you command come next. Your own ease, comfort and safety come last, always and every time. There are other, informal means, well known within the military, by which a commander's attention may be drawn to matters pertaining to the "honour, welfare and comfort" of those under his or her command. Within the Army it is a particular responsibility of a Regimental Sergeant Major (RSM) in an infantry battalion (or the equivalent office holder in other units major or minor), who is the senior soldier in the unit, to provide advice to the commanding officer on that subject. In turn, at formation level headquarters (i.e. Brigade and above) a formation RSM provides the like advice to a formation commander. It is that role which explains the existence of the appointment of a Regimental Sergeant Major of the Army, the senior soldier's appointment in the Army, whose task is to provide just such advice to the Army's professional head, the Chief of Army. The reason why the Defence Regulations, like others before them, reserve at least to the rank of Brigadier (or equivalent in the other arms of the Australian Defence Force) the exercise of power in respect of a referred redress complaint arises from the nature of the power and the need to ensure that its exercise conforms with the chain of command within the Army. The system for redress of grievances is not intended to be subversive of the Army's chain of command. Thus the initial complaint is made under reg 75 of the Defence Regulations to a commanding officer, who will, if permanently appointed, invariably hold the rank of Lieutenant Colonel in a major unit or of Major in a minor unit. By reserving the exercise of the power under reg 77 of deciding referred redress complaints at least to an officer of the rank of Brigadier the Governor-General in Council has reserved the exercise of that power to a formation commander rank level, i.e. to a rank the holder of which usually exercises command over a number of major and minor units. In this fashion, the redress system conforms with and buttresses the chain of command within the Army. Once this constitutional law heritage and its adaptation to the command and control of the Australian Army are understood, it can readily be seen that it is antithetical to that heritage and that command and control that the power which the Chief of Army or a delegate may lawfully exercise upon the investigation of a referred redress complaint is limited to the making of a "recommendation" in respect of an earlier decision to, in this instance, terminate the service of a soldier. Neither, in light of these matters, is there cause for any uncertainty about the nature of the power. Where it lies within the power of the Chief of Army or subordinate officer to make a decision or to issue an order that has given rise to the complaint, it lies within the power of the Chief of Army or a delegate upon the investigation of a referred redress complaint to vacate that earlier decision or to countermand that order. The power is truly plenary. Though the occasion for the exercise in this case of the power to review on referral a referred redress of grievance complaint was the exercise of a power to terminate a member's Army service, the ability to seek redress and later referral extends over the entirety of relationships between superior and subordinate within the Army. That has the necessary consequence that underlying circumstances and the nature of the decision under review will necessarily influence the manner and formality of the exercise of power in respect of a referred redress complaint. What does not change is the nature of the review power. The Chief of Army or a delegate considering the redress complaint on referral is fully empowered to consider afresh and on the merits the subject matter of the complaint, to reach his or her own decision in respect of it and to modify or countermand any decision which has given rise to a complaint which is upheld. That is not to say that Chief of Army or the delegate is obliged to interfere with the decision being reviewed. The obligation is to investigate the complaint and to reach a view as to what ought to be the result of that investigation. The Chief of Army or delegate might, for example, reach a conclusion that the decision under investigation, while not unreasonable, was not one which he or she personally would have made. In that circumstance, the Chief of Army or the delegate has a choice, guided by considerations of command and control as well as welfare of the complainant, as to whether or not to interfere with the decision of which complaint has been made. Yet another outcome might, for example, be that the complaint ought to be upheld, any order giving rise to it countermanded and the author of that order being subject to disciplinary action or counselling. Such is the plenary nature of the power exercisable on the merits by the Chief of Army or a delegate on a referred redress complaint that this Court might decide, as a matter of discretion rather than jurisdiction, summarily to dismiss the application of a member of the Army who has chosen to seek judicial review of a termination of service decision rather than seek redress under the Defence Regulations. That, I note, was one of the bases upon which a Queen's Bench Divisional Court refused to grant prerogative relief to an officer in such a position in R v The Army Council; ex parte Ravenscroft [1917] 2 KB 504. Insofar as there are also suggestions (at 508 per Viscount Reading CJ, at 512 per Ridley J and at 513 per Avory J) in that case that a court would not interfere with the dismissal of an officer because that was a matter of military discipline, the case is inconsistent with, for example, Welsh's Case , supra, here and not good law. The latter aspect of the case is perhaps explicable on the basis that, at the time, officers served at the pleasure of the Crown with the basis for their dismissal being the Prerogative rather than, as in Australia, statutory. That distinguishing feature does not though affect the authority of that case insofar as it recognises that the plenary nature of the right of redress may provide a basis for discretionary refusal of a prerogative writ. For completeness, I should note that, though reference is made by the Full Court in Martincevic v Commonwealth [2007] FCAFC 164 ; (2007) 164 FCR 45 to a redress of grievance investigation, it did not prove necessary in that case for the Full Court to explore the nature of the power able to be exercised by the Chief of Army upon the referral of a redress complaint. Rather, that case highlighted that the existence and outcome of a subsisting redress investigation before the making of a discharge decision may constitute (and in the circumstances of that case was held to constitute) a relevant consideration for the purposes of the making of that discharge decision. It does not follow from the lack of understanding of the nature of the power evident in the Commonwealth's submissions that CPL Millar must succeed in her judicial review application. To determine that it is first necessary to relate in more detail the factual background which gave rise to CPL Millar's initial redress complaint, its later referral and this judicial review application. It is also necessary to set out why BRIG Bornholt came to confirm the decision to terminate her service with the Army. BRIG Bornholt's reasons are comprehensive. It would do that officer less than justice not to set them out in full but so to do in the main body of the judgement would, in my opinion, detract from its continuity and ready comprehensibility. I therefore annex the full text of BRIG Bornholt's reasons and highlight pertinent features in the main body of the judgement. Before CPL Millar deployed to Iraq as part of Operation CATALYST 2 she undertook pre-deployment training at Randwick Barracks in Sydney from 27 June 2006 for a period of one month. During that time, CPL Millar maintained a good rapport with most, but not all, of the members attending this pre-deployment training course. The unit in which CPL Millar was to serve in the Middle East was a joint force unit, i.e. its members were drawn from each arm of the Defence Force. Prior to her deployment, CPL Millar encountered significant problems with Leading Seaman Hillier, Royal Australian Navy. She worked closely with LSSN Hillier during her pre-deployment training and whilst deployed to the MEAO. In Iraq CPL Millar and LSSN Hillier had a number of interpersonal clashes while on duty, to the extent that a meeting involving, Flight Lieutenant Walker, the Company Quarter Master Sergeant (CQ), Warrant Officer Class 2 Onus, LSSN Hillier and CPL Millar was convened. At this meeting, LSSN Hillier and CPL Millar agreed to resolve their differences. It is apparent that this meeting did not have the desired outcome, as CPL Millar and LSSN Hillier had a number of subsequent confrontations involving the former's view of CPL Millar's management of subordinates. CPL Millar conversed repeatedly with her CQ, WO2 Onus, in an attempt to resolve her differences with LSSN Hillier. WO2 Onus and CPL Millar had a heated argument, in which CPL Millar claimed that WO2 Onus said: "I'm sick of you" and directed her to get out of her sight. CPL Millar spoke to FLTLEUT Walker about other conflict resolution options in relation to LSSN Hillier. At an "O-Group" (orders group) that same evening CPL Millar was told: "if you have an equity issue on operations, right or wrong, you would get sent home and it would be investigated there". In her affidavit CPL Millar stated that she felt let down by her chain of command and by her unit with respect to her relationship with LSSN Hillier. While still stationed in the MEAO she approached the Padre assigned to her unit concerning the issue, who advised her to contact the psychologist deployed to the MEAO to get assistance with conflict management strategies. On 4 October 2006 CPL Millar telephoned that psychologist, Major D R Hadfield, to discuss conflict management strategies. CPL Millar was selected to go on the first rotation of ROCCL ("relief out of country leave") and was due to leave Baghdad on 11 October 2006 to fly to Amsterdam. On 5 October 2006 FLTLEUT Walker spoke with MAJ Hadfield and raised concerns with respect to CPL Millar's suitability to remain on deployment. On 6 October 2006, the OC-Force Level Logistic Asset-Kuwait referred CPL Millar for psychological assessment regarding her emotional state and her suitability to remain on deployment and in the Defence Force. This assessment was conducted by MAJ Hadfield on 8 October 2006. MAJ Hadfield concluded that: On 11 October 2006, in anticipation of the CPL Millar's return to 10 FSB, the Commanding Officer (CO) of that unit referred her to Psychology Support Services-Northern Queensland for assessment for suitability to remain a member of the Defence Force. CPL Millar landed in Australia late on 12 October 2006. She was met by her unit's Operations Officer and its Squadron Quarter Master Sergeant, who drove her to her residence. The following morning, 13 October 2006, at 7:30am, she was advised of and later attended an initial assessment appointment with Dr Richard Green, an Army Reserve psychiatrist. CPL Millar had requested that this appointment be rescheduled, owing to the draining nature of the return flight home from the MEAO. Dr Green met with CPL Millar at 10:00am that morning. She again requested that their interview be deferred for a few days, owing to her suffering from jet lag. The interview was rescheduled for 25 October 2006. Following her appointment with Dr Green, CPL Millar attended upon her unit's Regimental Aid Post (RAP). There, she saw 10 FSB's Regimental Medical Officer (RMO), Dr Mitra, who diagnosed stress, anxiety and jetlag, and prescribed the drug Zanax for nine days. CPL Millar was given a medical certificate for 10 days' sick leave. Whilst on sick leave, CPL Millar referred herself to the Vietnam Veterans' Counselling Service (VVCS) for assistance with respect to ongoing anxiety. There, she attended upon a psychologist recommended by the Counselling Service, who provided her with relaxation therapy. On 25 October 2006 she again visited the RMO, who extended her sick leave by 5 days. On this same day CPL Millar again met with Dr Green. She requested a second opinion with respect to MAJ Hadfield's decision to recommend her return to Australia. She was referred to CAPT J. Brown (CAPT Brown) of Psychology Support Services-Northern Queensland. The appellant met with CAPT Brown on 30 October 2006 and on 15 November 2006. At the consultation on 30 October 2006, CAPT Brown informed her that she was being assessed as to her suitability to remain in the Defence Force. CPL Millar asked CAPT Brown whether the purpose of the appointment was to obtain the second opinion which she had requested from Dr Green. During this interview, CPL Millar advised CAPT Brown that she would be pursuing an equity complaint in relation to events that had occurred whilst in theatre. CAPT Brown advised the appellant that the assessment would be delayed for three months until CPL Millar returned to work. On 15 November 2006, CPL Millar attended the further appointment with CAPT Brown. In the course of that appointment CPL Millar advised CAPT Brown that she would not be pursuing the equity complaint. Additionally, she informed CAPT Brown of her Zanax prescription, of her then unforeseeable return to duty in the near future and of her self-referral to VVCS. On 30 January 2007, 10 FSB issued CPL Millar with a Termination Notice citing reg 87(1)(e) of the Defence (Personnel) Regulations , 'Not suited to be an enlisted member of the Defence Force', as the proposed reason for discharge. CPL Millar acknowledged receipt of this notice. She submitted a response to it on 15 March 2007. On 20 April 2007, the CO 10 FSB advised CPL Millar that he did not uphold her request to be retained in the Defence Force and subsequently recommended to SCMA that CPL Millar not be retained. The formal termination decision and redress complaint already noted then followed. CPL Millar's response to the termination notice and to the initial disposal of her complaint for redress of grievance relied upon opinions in respect of her by a psychologist in private practice, a Mr Robert Zemaitis. Mr Zemaitis furnished two reports: one dated 7 March 2009, the other dated 3 September 2007. The former was considered by the Delegate of the Chief of Army who made the decision to terminate her service; the latter was obtained prior to CPL Millar's seeking the referral of her redress complaint to the Chief of Army. Mr Zemaitis' opinion was that CPL Millar was not "suffering from any current levels of psychology systems" and that she was "quite capable of continuing to serve at her current posting". Contrary views were expressed concerning CPL Millar's suitability for continued military service, especially having regard to a need to undertake operational service, by MAJ Hadfield and CAPT Brown. CAPT Brown furnished two reports in respect of CPL Millar, one dated 8 November 2006, the other 15 November 2006. The former seems to have been a precursor to and overtaken by the latter. It is CAPT Brown's report of 15 November 2006 which contains findings that proved influential in relation to BRIG Bornholt's ultimate disposal of CPL Millar's referred to redress complaint. In her report of 15 November 2006, CAPT Brown's opinion was that "this member presents with a persuasive history of interpersonal difficulties within the workplace and personality issues ... the attention to this member is likely to result in ongoing workplace conflict and extensive use of military resources". It was common ground as between CPL Millar and the Respondents that BRIG Bornholt was obliged to afford her procedural fairness in deciding her referred redress complaint. As it happens, there is contemporary English intermediate appellate authority which would support such a conclusion in the particular context of the consideration of a referred redress of grievance complaint, in that case one arising from an allegation of racial discrimination by a member of the British Army: R v Army Board of the Defence Council; Ex parte Anderson [1992] 1 QB 169. In what has become a seminal Australian exposition on the subject of procedural fairness, Mason J, in Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 at 585, remarked of the expression that it "conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case". It is not difficult to see how, in the context of operational service in times of a large scale deployment of the Australian Army, the content of a procedural fairness obligation in respect of a redress complaint either as initially made or on referral may in some cases be very limited indeed. In the present case, though the occasion for the initiation of termination procedures arose from incidents on operational service, the decision making process occurred in more benign circumstances in Australia. There is nothing in the circumstances which would suggest that any attenuated procedural fairness obligation attended BRIG Bornholt's consideration of the referred redress complaint. Thus, the assumption of the parties that the making of a decision by him was attended with a procedural fairness obligation which included the affording of a fair opportunity to CPL Millar to know the case made against her and to contradict it is correct. I accept therefore that he was obliged to afford CPL Millar procedural fairness in determining that referred redress complaint. The nature of that obligation though, as Mason J observed, depends on the circumstances of the particular case. In this case, CPL Millar had already been the recipient of a Termination Notice which set out the basis upon which it was proposed to terminate her service in the Army. Only after that notice and an opportunity to respond had been given was the decision to terminate her service made by a delegate of the Chief of Army. In turn, before BRIG Bornholt became involved, CPL Millar had already sought redress from her CO and had the benefit of a reasoned decision as to why her complaint was not upheld. In light of those processes and their outcomes, it is clear that CPL Millar was well aware by then that the reason why a decision had been made to terminate her service on the basis of unsuitability and why her initial grievance was not upheld was a view, supported by the opinion of the Army psychologist CAPT Brown in her report of 15 November 2006 in particular, that, considering her behaviour on operational service in Iraq against the background of her service as a whole, there was a risk that under stress her performance would not be satisfactory. In seeking to have the Chief of Army overturn the termination decision on the review of her grievance complaint she furnished a further report from Mr Zemaitis along with character references from military associates and superiors. Upon referral and as required by Defence Instruction (General) PERS 34-1 Redress of Grievance --- Tri-Service Procedures made under the Defence Act, a report in respect of the referred complaint was prepared for the Chief of Army's (or delegate's) consideration by the Complaints Resolution Agency within the Headquarters of the Australian Defence Force. It is the report of that agency which came before BRIG Bornholt and which he came to adopt. In adopting that report, its suggested outcome and the reasons as his own BRIG Bornholt adopted a report in which the case advanced by CPL Millar was thoroughly rehearsed and commented upon, as was the process that had led up to the decision to terminate her service and the initial rejection of her redress complaint. No new consideration personal to CPL Millar was introduced by the staff who compiled the report for Brig Bornholt. Neither did he do this of his own motion. The grant of an entry permit is a matter of discretion. Indeed, the cancellation of a temporary entry permit is expressed to be a matter of absolute discretion (s.7(1)) . In the ordinary course of granting or refusing entry permits there is no occasion for the principles of natural justice to be called into play. The applicant is entitled to support his application by such information and material as he thinks appropriate and he cannot complain if the authorities reject his application because they do not accept, without further notice to him, what he puts forward. But if in fact the decision-maker intends to reject the application by reference to some consideration personal to the applicant on the basis of information obtained from another source which has not been dealt with by the applicant in his application there may be a case for saying that procedural fairness requires that he be given an opportunity of responding to the matter ( In re H.K. (An Infant) (1967) 2 QB 617). If the application is for a further temporary entry permit and it is made in circumstances which are relevantly similar to those in which the earlier permit was granted, the applicant may have a legitimate expectation that the further entry permit will be granted or will not be refused in the absence of an opportunity to deal with the grounds on which it is to be refused. And if the refusal is to be attended by the making of a deportation order, the case for holding that procedural fairness requires that such an opportunity be given is unquestionably stronger. 40. In this respect recent decisions illustrate the importance which the law attaches to the need to bring to a person's attention the critical issue or factor on which the administrative decision is likely to turn so that he may have an opportunity of dealing with it. FAI is one illustration. Cole v. Cunningham (1983) 49 ALR 123 , is another, as are Reg. v. Gaming Board for Great Britain; Ex parte Benaim and Khaida (1970) 2 QB 417, at p 431; and Daganayasi v. Minister of Immigration (1980) 2 NZLR 130 . As a senior officer he was able, as would have been the Chief of Army of Army himself, to require staff to prepare a report on the subject. In that regard, the procedure envisaged by the Defence Instruction (General) is not inconsistent with the Defence Regulations in relation to the investigation of a referred redress complaint. Whether he interfered with the termination decision was a matter for the exercise of discretion after investigation. Given the particular way in which the investigation was conducted, effectively on the papers, there was no need to give CPL Millar any further opportunity to be heard before making a decision. At the very latest, the fullness of the case she had to meet, both in terms of expert opinion and underlying reports and service history had been exposed to her in the disposal by her CO of her redress complaint. BRIG Bornholt decided not to uphold her redress complaint not on the basis of new information personal to her obtained from another source and not exposed already to her but on the basis of existing materials. In these circumstances, and contrary to the submission advanced on her behalf, he was not obliged again to revert to her and to offer her an opportunity to comment upon the reasons he proposed to adopt in declining to uphold her redress application. Rather, as is evident from the passage quoted, she, "cannot complain if the authorities reject [her] application because they do not accept, without further notice to [her], what [she] puts forward". I therefore reject the submission that BRIG Bornholt denied CPL Millar procedural fairness in making his decision. A further submission was made that CPL Millar had not been afforded an opportunity to comment upon an assessment made of her by her Squadron Sergeant Major which was taken into account by CAPT Brown in her report. However, as the Respondents demonstrated in their written submissions, by the time that CPL Millar sought the referral of her redress complaint she had had two opportunities to comment upon this assessment, of which she had taken advantage; once in the course of showing cause why her service ought not be terminated and again in the seeking of the referral of her redress complaint. There is no substance in this aspect of her procedural fairness challenge. Neither, when it is recalled that it is the referral decision which is under review is there any substance in her assertion that she was denied an opportunity to comment upon comments made by the Army's Psychological Support Service North Queensland on the subject of her suitability. Those comments were limited to a concurrence with the views already expressed by CAPT Brown and were exposed to CPL Millar in the results of the "Quick Assessment" which was made of her initial redress complaint. An examination of his reasons discloses that BRIG Bornholt approached his task in two particular ways. On the one hand, he examined whether the procedures adopted to date had been appropriate and whether the decisions reached were reasonably open; on the other and in any event he reached his own opinion on the whole of the evidence before him, which included the further evidence provided by CPL Millar in seeking the referral of her redress complaint, as to whether she was, in terms of reg 87(1)(e) of the Defence (Personnel) Regulations , suited to be an enlisted member. This, with respect, was an appropriate procedure to adopt. If, for example, BRIG Bornholt had detected a procedural flaw in the termination process he would have been perfectly entitled, on the strength of that finding alone, to countermand the termination order. What followed from such a result would then have been a matter for the exercise of a further command discretion. He may have ordered that the termination consideration be commenced afresh by another delegate or he may have chosen just to leave the termination order countermanded. As it happens, he found no procedural flaw; nor did he consider that the views reached in respect of the termination were not reasonably open. Appropriately though, especially given that CPL Millar had presented fresh evidence in support of her referral request, BRIG Bornholt went on to reach his own decision on the merits as a result of the investigation conducted on his behalf by staff. This evidences an appreciation by him of the plenary nature of the power entrusted to him. He was perfectly entitled to reach his own opinion as to CPL Millar's suitability to be an enlisted member. This indeed is what she wanted him to do. As it happens, BRIG Bornholt's opinion was that CPL Millar was not suited to be an enlisted member. It was submitted that this was an unreasonable opinion. That submission in effect amounted to an appeal that decisive weight ought to have been given to the opinions of Mr Zemaitis. It was also submitted that it was erroneous to conclude that Mr Zemaitis had not had access to CPL Millar's full psychological file. Each of these submissions was sought to be controverted by the Respondents, each on the basis that the conclusion was reasonably open. It is a feature of reg 87(4) of the Defence (Personnel) Regulations , noted by the Full Court in Martincevic [2007] FCAFC 164 ; (2007) 164 FCR 45 at 54, [44] , that, once the Chief of Army (or a delegate) forms the opinion described in that sub-regulation, the service of the member concerned must be terminated. One aspect of that opinion is whether the decision-maker is "satisfied" in terms of reg 87(1)(e) that the member is not suited to be an enlisted member. These features of reg 87 mean that it is one of those provisions where "some fact or event [is] condition upon the existence of which the jurisdiction of a court or tribunal shall depend": R v Federal Court of Australia; ex parte Pilkington ACI (Operations) Pty Ltd [1978] HCA 60 ; (1978) 142 CLR 113 at 125. In this instance, the "fact or event" upon which the jurisdiction of the Chief of Army to terminate the service of a member depends is a state of subjective satisfaction, an opinion. In Bankstown Municipal Council v Fripp [1919] HCA 41 ; (1919) 26 CLR 385 at 403, Isaacs and Rich JJ observed of provisions of this type that they are employed with the object of preventing litigation on matters of jurisdictional fact. The feature just mentioned does not mean that statutory powers the exercise of which is dependent upon the engendering or achievement of a state of "satisfaction" in relation to an event or fact are unexaminable on judicial review either at common law or under the Administrative Decisions (Judicial Review) Act , as was explained by Brennan CJ, Toohey, McHugh and Gummow JJ in a survey of pertinent authority in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 275-277. Paragraph 5(1)(f) of the Administrative Decisions (Judicial Review) Act would permit the setting aside of BRIG Bornholt's decision in the event that it "involved an error of law". CPL Millar's referred redress complaint relevantly pressed a case that he should countermand the termination decision because he ought on the whole of the material not form an opinion in terms of reg 87(4) and 87(1)(e) of the Defence Personnel Regulations. Moreover, a person affected will obtain relief from the courts if he can show that the authority has misdirected itself in law or that it has failed to consider matters that it was required to consider or has taken irrelevant matters into account. Even if none of these things can be established, the courts will interfere if the decision reached by the authority appears so unreasonable that no reasonable authority could properly have arrived at it. However, where the matter of which the authority is required to be satisfied is a matter of opinion or policy or taste it may be very difficult to show that it has erred in one of these ways, or that its decision could not reasonably have been reached. It may be otherwise if the evidence which establishes or denies, or, with other matters, goes to establish or to deny, that the necessary criterion has been met was all one way. The relation to the Crown of members of the armed forces is no new subject; the rules of the common law define it. The regulations are not to be read in disregard of those rules and of the long tradition to which they have contributed. At common law neither commission nor enlistment in the services does or can amount to a contract with the Crown and neither officer nor man obtains any legal right against the Crown to pay, deferred pay, half pay, pension or emolument. 'All engagements between those in the military service of the Crown and the Crown are voluntary only on the part of the Crown, and give no occasion for an action in respect of any alleged contract:' per Lord Esher M.R. in Dunn v. The Queen: see Macdonald v. Steele; Gibson v. East India Co.; R. v. Secretary of State for War; Leaman v. The King: Lucas v. Lucas. (footnote references omitted). At common law, the relationship between the Crown and a soldier may be terminated without notice and for any reason, no reason or a mistaken reason: The Commonwealth v Welsh [1947] HCA 14 ; (1947) 74 CLR 245 , at 257-258 per Latham CJ, McTiernan J agreeing; at 262 per Rich J, at 274 per Williams J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 105 per Brennan J. In a passage later cited with approval by Dawson J in Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 120, Windeyer J, observed in Marks v The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549 , at 564 that, in Australia, the position of the Crown in relation to the Defence Force depended not upon the prerogative but rather upon statute such that the inquiry was whether the relevant statute law modified or abrogated the common law position. Hence the significance of Sir Owen Dixon's observation as to the manner of construing the provisions now found in reg 87 of the Defence (Personnel) Regulations . This observation of Sir Owen Dixon has subsequently been cited with approval both in the High Court ( Marks v The Commonwealth [1964] HCA 45 ; (1964) 111 CLR 549 , at 573 per Windeyer J; Coutts v The Commonwealth [1985] HCA 40 ; (1984-1985) 157 CLR 91 , at 98 per Wilson J, Brennan J agreeing).and in this Court ( Bowthorpe v Minister for Defence (1986) 17 IR 192, at 195 per Neaves J; Bromet v Oddie ((2002) 78 ALD 320, at 331 per Finn J). In a sense, the Defence (Personnel) Regulations do significantly modify the common law, for the provision they make for termination of the service of an enlisted member of the Defence Force exhausts, rather than supplements, the common law: see reg 87(5), Defence (Personnel) Regulations . However, once it is appreciated that the giving of a prior "show cause" notice is not compulsory (In reg 87(2), which provides for the giving of a "termination notice", the word "may", rather than "must" is used, connoting, in context, and especially having regard to the contingencies that might arise making the step either impractical or even impossible, that the giving of such a notice is not compulsory) and that a Service Chief such as the Chief of Army may terminate the service of an enlisted member for reasons as ephemeral as that which formed the basis of CPL Millar's termination or that " the retention of the enlisted member is not in the interest of Australia ; or the Defence Force; or the Chief's Service" (reg 87(1)(g), Defence (Personnel) Regulations ), the heritage of the common law remains evident. Where the evidence is not all one way, and that is emphatically the situation in the present case, this heritage and that the subject matter for "satisfaction" is one of opinion or policy or taste counsel a principled restraint on a court conducting judicial review lest the appearance be given that, in respect of this aspect of the making of value judgements in relation to the Defence Force, command has impermissibly passed from those to whom that task has been consigned by the Governor-General under parliamentary authority to the Judiciary. These same sentiments are evident in judgements of the Federal Court of Canada with respect to the judicial review of decisions relating to the disposition of grievances in the Canadian Forces. In Armstrong v Canada (Attorney General) [2006] F.C.J. No. The purpose of the specific provisions, in relation to this matter, is the efficient resolution of grievances or disputes. The issue in this case is not polycentric. Rather, it is of a private or personal nature. Some deference is appropriate in view of the fact that the final decision lies with the Chief of the Defence Staff (CDS), or an officer delegated by him. [35] The expertise of the decision-maker militates in favour of deference. The CDS, the most senior officer in the CF, is charged with control and administration of the CF. The NDA mandates that all orders and instructions to the CF, to carry out the directions of the Governor in Council or the Minister, are to be issued through the CDS. It is to be expected that the CDS, or his delegate, will be conversant with all facets of the military context, unlike the court. This factor indicates a high level of deference. No. 546; 2007 FCA 157 and has since been cited with approval in relation to another judicial review proceeding arising out of the Canadian Forces grievance resolution provisions: Leading Seaman D.M. Morphy v Canada (Attorney General) [2008] F.C.J. No. 242; 2008 FC 190 at [63]. The observation Layden-Stevenson J made has like application for like reasons in the present case in relation to whether CPL Millar is suitable to be an enlisted member. In the circumstances of this case, the person to be "satisfied" or not on this subject was a senior military officer, not a judicial officer. Deference is called for in relation to the value judgement made by that military officer. 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. There is nothing inherently illogical or unreasonable about the opinion as to CPL Millar's suitability to which BRIG Bornholt came. Twice before she had been considered for discharge on the basis of unsuitability but a choice had been made as between competing assessments not to discharge her. As a result of her performance on operational service two psychologists, MAJ Hadfield (provisionally) and CAPT Brown formed the opinion that CPL Millar was not suited to be a soldier. Assisted by their opinions and looking at the whole of her service history, BRIG Bornholt was entitled to form the opinion he did as to her unsuitability. In so doing, he was entitled to and self evidently did take into account the views of Mr Zemaitis. It is just that he chose not to accept the latter's views. BRIG Bornholt was also entitled to form a view, based on a comparison of the reports of the Army psychologists and Mr Zemaitis prepared for him by staff and adopted by him that one reason for the differing views may have been that Mr Zemaitis did not have access to CPL Millar's full psychological file. There is nothing on the face of BRIG Bornholt's reasons which suggests that CPL Millar's complaint has received anything other than sympathetic, dispassionate consideration by a senior officer. Indeed, the question of whether CPL Millar was suited to be a member of Defence Force has received elaborate consideration. Subject to affording her procedural fairness, and to any intrusions mandated by Defence Instructions, it would have been possible to form an opinion as to her lack of suitability even without the benefit of psychologists reports, based on reports from her unit as to her performance on operational service. For these reasons, the challenge to BRIG Borholt's decision must fail. As no separate grounds of challenge were advanced in respect of MAJ Wilkinson's decision, which was wholly consequential upon that of BRIG Bornholt, the challenge to his decision must also fail. The time which that officer fixed for CPL Millar's discharge has now passed. The stay in respect of her discharge will expire upon the determination of the judicial review application. It will be for the Chief of Army or a delegate to fix such fresh discharge date as that officer may be advised. The application is dismissed. I shall hear the parties as to costs. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Having regarding to the report of that review, your submissions and other supporting documentation, I have determined, on behalf of the Chief of Army (CA), that your redress should not be upheld. The reasons for my decision are set out below. I note that as part of your Statement of Reasons (SOR) for retention, your ROG and your referral to CA, you stated that your Termination Notice (TN) advised that the reason for your proposed termination was that you were 'medically unfit'. However, this is incorrect in that your termination is proposed pursuant to D(P)R 87(1)(e) "not suited to be an enlisted member of the Defence Force". Accordingly, your circumstances have been reviewed with this in mind. Defence Instruction (Army) Personnel (DI(A) PERS) 116-5 --- Separation of Regular Army Soldiers, Army Reserve Soldiers and Soldier on Full-Time Service --- Policy and Procedures particulars the Army specific procedures and management of soldier voluntary discharges, transfers from ARA to the Reserves, transfer from ARA to other services, automatic separations, involuntary separations and medical separations. In particular, Part Four of this instruction details the requirements when a Commanding Officer (CO) considers that a soldier's unsatisfactory service may be due to psychological reasons. In your case, I note your discharge process has accorded with these instructions. You refuted the assessment made by CAPT Brown that you were not suitable for retention and contended that CAPT Brown's report and opinions were premised upon an insufficient assessment of your suitability for retention; relied upon inadequate and inaccurate information; and failed to take account of the events that occurred in the Middle East Area of Operations that precipitated your involuntary return to Australia (RTA). To support your contention, you argued that you had served for more than 12 years during which time you had undertaken and completed all necessary courses enabling you to be promoted to Corporal. While this is acknowledged, it is not this aspect of your service that is under review rather it is whether you are psychologically suitable for service in the Australian Defence Force. You also referred to two previous occasions when you had successfully challenged your termination on psychological grounds. In so doing, you argued that the opinion expressed by CAPT Brown was similar to those of two previous psychologists who had determined that you were unsuitable for continued service in that CAPT Brown's report was without foundation or failed to properly assess your suitability. In particular, you criticised CAPT Brown for not referring to the two "supportive" assessments (from other psychologists who supported your retention at the time albeit without access to your complete psychological file) and explaining why your current circumstances now differed and thus justified your discharge. It is acknowledged that CAPT Brown did not specifically refer to either of these two "supportive" assessments in her report of 15 November 2006. Rather her assessment did not focus on isolated incidents but it encapsulated your entire psychological history and thus she was able to determine that 'this member presents with a pervasive history of interpersonal difficulties within the workplace and personality issues ... [and that] the retention of this member is likely to result in ongoing workplace conflict and extensive use of military resources' . As such, CAPT Brown determined that you were permanently unsuitable for future deployments or retention. I note, however, that the two independent psychological reports provided by Mr Zemaitis (commissioned by you in support of your retention) similarly make no mention of the two previous psychological reports that assessed you as unsuitable for continued service. Rather he relied solely upon the two contrary reports that supported your retention; copies which were provided to Mr Zemaitis by you. You argued that the view expressed by your Squadron Sergeant Major (SSM) to CAPT Brown was contrary to those expressed in your several character references. On 15 November 2006, CAPT Brown contacted your SSM regarding your return to work. His opinion was also sought regarding your performance. He advised that you were experiencing interpersonal difficulties with a Private (PTE) and a CPL there were likely to resolve with the posting of the PTE at the end of the year. He also provided other qualifying remarks about your performance. While it is acknowledged that his remarks are contrary to those expressed in your references, this is not unexpected given that character references generally emphasise the positive attributes of the member. Nevertheless, this does not mean that the SSM's remarks should be disregarded because they provide a contrary view particularly given that his remarks were a further illustration of your history of an inability to maintain effective workplace relationships and were current at the time that CAPT Brown prepared her report. You submitted two independent psychological assessment reports as a consequence of having been assessed by Mr Zemaitis, a consultant psychologist to the ADF and compared the assessment process undertaken with CAPT Brown with that conducted by Mr Zemaitis. While CAPT Brown relied largely on your recorded psychological history and her discussions with you, Mr Zemaitis relied on your self-reports and the utilisation of two well accepted personality tests. Thus you appeared to infer that Mr Zemaitis' tests were more stringent and greater weight should therefore be given to his conclusion that you should continue to serve in the Australian Regular Army (ARA). While it is acknowledged that, on paper, Mr Zemaitis appears to have conducted a more thorough one-on-one psychological assessment of you than CAPT Brown, it is unclear as to whether he was provided with your 'complete psych file' and thus your entire psychological history upon which to formulate his diagnosis. As such, it would appear that Mr Zemaitis may have relied heavily on your self-report, the documentation you provided and the two personality tests he conducted to support his findings. In this regard, it is notable that both Mr Zemaitis' reports repudiated those provided by MAJ Hadfield and CAPT Brown and in some part appeared to reflect opposite character attributes and assessments. In particular, I noted some discrepancies with Mr Zemaitis' report, that he had access to your complete psychological history, may not have arisen or his observations may have been reported differently. Mr Zemaitis advised that you stated 'that it was never explained to her by the Army psychologists the purpose of the interview' , however, CAPT Brown's report noted that you advised 'that she was unaware that she was being assessed for suitability for retention' . This would suggest that CAPT Brown had informed you of the purpose during your first interview on 30 October 2006. Mr Zemaitis advised that you had indicated that generally you had never been asked to explain your situation in Iraq, however, MAJ Hadfield's notes indicated that your situation had been discussed in some detail. Mr Zemaitis noted some of your characteristics as being 'resilient and adaptive in the face of most stressors' , and 'seldom feels frustrated, irritable, and angry at others ... able to cope well with stress'. He also noted that 'she has performed quite positively particularly in the past 7 years of her military service' . While these conclusions are clearly inconsistent with your psychological history, Mr Zemaitis' report makes no attempt to explain these differences. Accordingly, it is concluded that Mr Zemaitis either did not have access to your complete psychology file as you claimed, that he failed to recognise discrepancies between the two accounts, or that he disregarded the significance of the discrepancies identified. Therefore, I consider that Mr Zemaitis' reports should be viewed with these caveats in mind. You argued that your RTA was a consequence of a 'one-off' workplace disagreement with a peer and that CAPT Brown had failed to give due regard to these circumstances when assessing you. However, your psychological file indicates that you have a history of interpersonal relationship difficulties with your earliest referral in 1996 (about 18 months after joining the ARA). In this regard, MAJ Hadfield noted that, 'when confronted with a list of previous clashes, she stated that she was simply unlucky to have come across one person in each new environment that had it in for her' and, as such, you saw his recommendation 'as stemming from an isolated 1-on-1 battle with a more popular adversary rather than a continuation of a pattern with her as a common factor'. Thus, you continued to see your problems as being external to yourself. Similarly, CAPT Brown's assessment also took account of your circumstances in Iraq since the issue was raised during your discussions at your first interview on 30 October 2006. CAPT Brown's review of your entire psychological file also enabled her to determine that you had a 'pervasive history of interpersonal difficulties within the workplace and personality issues' . Accordingly, it is considered that this aspect of your ROG cannot be sustained. You argued that the SCMA decision-maker gave insufficient weighting to the content of Mr Zemaitis' report preferring to rely on the reports and opinions provided by MAJ Hadfield and CAPT Brown. As part of the SOR of the TSD, the decision-maker advised that high weight had been afforded to the reports of MAJ Hadfield and CAPT Brown and salient points from each report were noted in the SOR. Similarly, your response to the TN (which included Mr Zemaitis' report) was afforded very high weight. However, the decision-maker determined that Mr Zemaitis' report should not be given precedence over the other two reports since 'these two reports were conducted specifically to assess suitability for service on deployment, and continued service in the ADF and not generic personality/psychological assessments' . This was a conclusion open to the decision-maker to reach after having taken into account each report. You provided a supplementary report from Mr Zemaitis following your receipt of the SOR for the TSD advising that his experience in assessing ADF personnel was extensive and lengthy and that his testing regime was not "generic". Accordingly, you argued that his opinion should be preferred to that 'of a far less experienced and junior psychologist who failed to carry out the proper testing necessary to form a proper opinion as to my suitability' . It is acknowledged that the methodologies used to asses you by CAPT Brown and Mr Zemaitis were different. However, CAPT Brown's course of action is supported given that she advised that your inability or unwillingness to participate cooperatively in the retention assessment process was likely to produce invalid results (your psychological file also provided ample support for this view). Importantly, CAPT Brown was able to access your entire psychological file when formulating her opinion while some doubt exists as to whether Mr Zemaitis had similar access. Nevertheless, you appear to have placed great store in Mr Zemaitis' opinion that you were not suffering from a psychological or psychiatric disorder and therefore considers you were suitable for retention in the ADF. However, DI(A) PERS 159-1 --- PULHEEMS Employment Standards advises that many people are temperamentally unsuited to Army life and that this unsuitability may not be directly related to psychotic condition. In such cases, they will not become effective soldiers and should be recommended for administrative discharge. In this regard, some personality traits, attitudes, values, and the like exist that would make assimilation into the military problematic, including those mentioned by the psychologists and psychiatrists you have seen throughout your career to date. Thus, your reliance upon the lack of a formal diagnosis as a defence against discharge is not supported. You provided several character references as part of your response to the TN and your ROG arguing that they supported your retention thus contradicting CAPT Brown's recommendation that should be given great weight. The decision-maker noted that your character references enclosed with your response to your TN were supportive of your performance and retention. However, it was also noted that the references were provided by personnel from your previous chain of command and supportive elements in Baghdad. As such, the decision-maker considered that these reports need to be weighted against the absence of support from your current chain of command and the non-recommendation for retention from your CO. Furthermore, I have also weighted these character references against the determination of your CO that you should RTA early. You have provided two additional character references as part of your ROG' both are supportive of you and your retention. These are acknowledged. However, your psychological file indicates that you have the capacity to maintain appropriate standards of workplace behaviour for a period of time. Similarly, you have a long history of interpersonal difficulties, alleged harassment and equity-type complaints with evidence to suggest that these behaviours are more likely to manifest in situations where you are under pressure or are feeling stressed, for example where your everyday stress coping mechanisms become overwhelmed. In this regard, with the current operational tempo and general conditions of service, these stress-free periods may remain the exception rather than the rule for the foreseeable future. Further, I consider that your propensity to externalise blame, and your associated unwillingness or inability to adopt change strategies recommended by psychology and others, suggests that you may continue to experience these problems. You submitted a copy of your most recent Soldier Performance Appraisal Report (PAR) contending that it confirmed your suitability for continued service in the ADF. However, since this PAR was incomplete, a completed PAR was provided by SCMA. It indicated that you were performing at a satisfactory level across each of the performance dimensions. Nevertheless, as previously noted, you are capable of maintaining appropriate standards of workplace behaviour for a period of time and it is when you are under pressure or feeling stressed that your adverse behaviours are more likely to appear. Accordingly, I have taken these aspects into consideration when reviewing your PAR. You argued that the decision-maker had taken into account an irrelevant consideration by referring to your assessment of non-deployability to East Timor in 2002 which you contended had been overturned by the "supportive" report written by Ms Detering to support your retention in the ARA at that time. As part of the SOR for the TSD, the decision-maker afforded very high weight to the inherent service requirements (DI(A) PERS36-3 --- Inherent requirements of service in the ADF refers) and considered that you were incapable of meeting these requirements. This conclusion appears to have been drawn from MAJ Hadfield's report where he recommended that you were not suitable to remain on deployment and also noted a previous recommendation of non-deployability in 2002 (ie to East Timor). While you have referred to Ms Detering's report, this was not available to either MAJ Hadfield or the decision-maker since you did not provide a copy until 8 November 2006. In any event, having now received this report, it did not specifically address your deployability rather it could not account for another psychologist's findings regarding your psychological condition and supported your continued service. In any event, your level of deployability is a matter for the Army rather than an assessment given by a civilian psychologist. As such, it is not considered that the decision-maker considered irrelevant material. As part of your CO's response to your ROG, you were provided a copy of the Initial Review Advice by the Directorate of Complaint Resolution (CR). Subsequently, you contended that your CO had failed to consider Mr Zemaitis' supplementary report and provide reasons as to why his opinion that supported your retention was not preferred to those of the two Army psychologists. Thus, given CR's concerns regarding the CO's proposed course of action, you argued that 'a fair minded observer appraised of the matter might entertain a reasonable apprehension [of bias] that my unit had already made up its mind to reject my redress of grievance regardless of the merit of the matters raised by me. In these circumstances I submit that the decision is wrong at law' . The CR document is not usually provided to the complainant except through a Freedom of Information (FOI) application. Nevertheless, the advice provided by CR related to the CO's proposed course of action; that is, she was waiting for legal advice from CR, determining that a formal investigation was not required, and that your ROG was not upheld. Given the latter statement, and based on the information available to CR at that time, CR considered that all relevant material may not have been considered before that decision and advised CO 10 FSB to obtain a SOR from the decision-maker if it was considered that there was insufficient evidence to support the termination decision. Subsequently, the CO was then required to determine whether the ROG had merit according to the guidelines provided by CR. Accordingly, on 14 November 2007, CO 10 FSB sought a SOR from SCMA, and the TSD was provided to you on 12 February 2008. As such, and notwithstanding your contention of bias (based on CR's initial advice), it is considered that CO 10 FSB was able to demonstrate her impartiality by her preparedness to seek further information from SCMA prior to making a decision on the ROG. While CR initially held some doubts about the appropriateness of CO 10 FSB's proposed course of action regarding your ROG, these were resolved with the actions taken subsequent to CR's advice. Accordingly, it is not considered that a contention of bias (whether real or apprehended) can be sustained. As part of your CO's response to your ROG, you were provided with a copy of the Quick Assessment (QA) conducted on 17 September 2007. This indicated that (former) CO 10 FSB had sought the expert opinion of the Officer Commanding Psychology Support Service --- Northern Queensland (OC PSS-NQ) prior to responding to your SOR for retention. Subsequently, you argued that you had been denied natural justice since you had not had opportunity to comment on the expert advice provided to your former CO by the senior psychologist PSS-NQ as part of the ROG process. The QA report is not normally provided to the complainant unless requested under a FOI application. However, in regards to the expert advice, you were first advised by (former) CO 10 FSB on 20 April 2007, as part of his response to your SOR for retention, that he had sought advice from the OC PSS-NQ prior to making his recommendation to SCMA on your retention since he did not have expertise on psychological behaviours and assessments. On 26 April 2007, you acknowledged receipt of (former) CO 10 FSB's response to your SOR and indicated that you had read and understood the contents; this included the advice that your CO had sought expert opinion. I note that no request for, or challenge to, the advice was made by you at that time. Nevertheless, it is considered that the advice sought from OC PSS-NQ was provided to (former) CO 10 FSB for his consideration prior to making a recommendation to SCMA in regard to your retention or otherwise. As such, OC PSS-NQ's advice was not provided to, or considered by the original decision-maker prior to him determining that you should be discharged. As such, and given there was no new adverse material provided by (former) CO 10 FSB in his recommendation to SCMA, it is considered that there has not been a breach of procedural fairness. Pursuant to D(P)R 87(1)(e), a member's service may be terminated if that member is not suited to be an enlisted member of the Defence Force. In this regard, SO2 SEPARATIONS is an authorised delegate of CA and is therefore able to make determinations regarding the suitability of a member for retention in the Defence Force. Given your TN and its supporting evidence, it is considered reasonable for SO2 SEPARATIONS to have determined that you should be discharged. In reaching this decision, SO2 SEPARATIONS had given due consideration to the merits of your case and to your submissions, and it was in accordance with the policy provisions and the principles of natural justice. Furthermore, there were no procedural irregularities that would require the decision to discharge you to be overturned. Accordingly, I have advised SCMA to initiate discharge action as soon as administratively possible. If you have a complainant about the administrative processes associated with my decision, or the handling of your ROG, or if you consider that the process has been too slow, you can request the Defence Force Ombudsman (DFO) to investigate the matter. A brochure explaining the role of the DFO is enclosed. If you decide to pursue this option, you should contact the DFO personally, informing your OC in writing of your actions. | referral to delegate of chief of army of redress of grievance complaint in respect of termination of service in the australian army judicial review of delegate's decision whether denial of procedural fairness whether decision unreasonable no procedural unfairness decision not unreasonable members of the defence force referral to delegate of chief of army of redress of grievance complaint in respect of termination of service in the australian army nature of power exercisable by chief of army or delegate plenary nature of power crown relationship between the crown, parliament and the australian defence force role of redress of grievance system with respect to that relationship and discipline, command and control within the defence force administrative law defence and war constitutional law |
Telstra terminated the applicant's employment as a Bid Manager on 19 August 2005. The current application to this Court forms part of a series of disputes between the applicant and Telstra arising out of the termination of the applicant's employment and the events leading to that termination. 2 The applicant, who is unrepresented, seeks leave to appeal from a judgment given by Driver FM on 2 August 2007: Perananthasivam v Telstra Corporation Ltd [2007] FMCA 1261 (' Judgment No 1 '). In that judgment, his Honour dismissed an application by the applicant to remove Deacons, a firm of solicitors, from representing Telstra in proceedings pending before the Federal Magistrates Court. 3 Although there is only one application for leave to appeal formally before me, it is clear from the applicant's written submissions that he also seeks leave to appeal from two other judgments given by the learned Magistrate. The second of the three judgments was also given on 2 August 2007: Perananthasivam v Telstra Corporation Ltd (No 2) [2007] FMCA 1274 (' Judgment No 2 '). 4 The third of the three judgments was delivered on 10 August 2007: Perananthasivam v Telstra Corporation Ltd (No 3) [2007] FMCA 1378 (' Judgment No 3 '). In that judgment, his Honour ordered the applicant to pay Telstra's costs and disbursements of the summary dismissal application, fixed in the amount of $10,000. He was appointed as a Bid Manager in 1999. (ii). The applicant claimed that he had been the victim of bullying at Telstra over a period of time. (iii) On 9 February 2004, the applicant met with two Telstra managers. The applicant claimed that, at this meeting, he was subjected to abusive and offensive language. In consequence, so he claimed, he became distressed and was immediately forced to take sick leave. He remained on sick leave until 3 May 2004. (iv) In March 2004 the applicant was diagnosed as having an ' adjustment disorder with mixed anxiety and depressed mood acute '. He lodged a worker's compensation claim with Telstra on 16 March 2004. The claim attributed his disorder to the events of 9 February 2004. (v) At some time in March 2004, Telstra engaged a firm of solicitors, Deacons, to conduct what was described as an ' independent investigation ' into the incident of 9 February 2004. You will be notified of the outcome of our investigation as soon as possible'. The report found that the Telstra managers, in substance, had used the words attributed to them by the applicant, there being only minor inconsistencies between the applicant's account and that of the managers. However, it also found that the words were used in the context of a meeting at which the managers believed the applicant to be acting inappropriately. (vii) On 2 July 2004, Telstra rejected the applicant's worker's compensation claim. The claim was reconsidered, but again rejected on 19 August 2004. (viii) In or about July 2004, Telstra requested the applicant to participate in a performance improvement program (' PIP '). He declined to do so, expressing the view that the PIP was a device for squeezing out employees. The application was heard by the AIRC from 28 February 2005 to 2 March 2005. At the hearing, the applicant represented himself. Telstra was represented by counsel, who was instructed by Ms Woodward of Deacons. A total of six witnesses, including the applicant, gave sworn evidence and a large number of exhibits was tendered as evidence in the proceedings. (xi) The AIRC handed down its decision on 15 June 2005. It found that the termination of the applicant's employment was not harsh, unjust or unreasonable. The AIRC noted that the applicant had objected to Deacons appearing for Telstra on the ground that the authors of the report might have gained privileged information about him in the course of investigating the incident that had occurred on 9 February 2004. The AIRC ruled that no privileged information had been obtained and that it had not been improper for Deacons to represent Telstra. (xii) On 29 August 2005, the Full Bench of the AIRC refused the applicant leave to appeal from the decision dismissing his claim against Telstra. (xiii) The applicant applied to the Administrative Appeals Tribunal (' AAT ') for review of the decision to deny him worker's compensation benefits. The hearing took place in December 2005 and April 2006. The applicant was unrepresented in these proceedings. Telstra was represented, but not by Deacons. (xiv) The AAT handed down its decision on 1 June 2006. The AAT noted that it had not been in dispute that on 9 February 2004 the Telstra managers had used the language attributed to them by the applicant. The AAT also found that the applicant had suffered an ' injury ' as a consequence of the incident on that day, in that he suffered an adjustment disorder with mixed anxiety and ' depressed mood acute ' as diagnosed by the treating psychiatrist. The AAT further found that the applicant became incapacitated for work as a consequence of the incident and was entitled to compensation for incapacity during the period 9 February 2004 until 3 May 2004, when he returned to work with Telstra. (xiv) On 5 October 2006, the applicant made a complaint to the Human Rights and Equal Opportunity Commission (' HREOC ') on the ground that he had been subjected to discrimination by Telstra by reason of a disability. (xv) On 21 March 2007, HREOC advised the applicant that it had terminated his complaint pursuant to s 46PH(1)(b) of the Human Rights and Equal Opportunities Commission Act 1986 (Cth) (' HREOC Act ') on the ground that the complaint had been lodged more than twelve months after the alleged unlawful discrimination had taken place. HREOC also noted that the applicant had withdrawn allegations of victimisation that he had made in the original complaint. (xvi) On 18 April 2007, the applicant filed an application in the Federal Court seeking relief in respect of unlawful discrimination by Telstra against him. (xvii) The proceedings were transferred to the Federal Magistrates Court by order of Buchanan J, on 18 May 2007. (xviii) Telstra filed an application in the Federal Magistrates Court on 26 June 2007, seeking an order pursuant to r 13.10 of the Federal Magistrates Court Rules 2001 (' FMCR '), dismissing the application. Telstra claimed that the application disclosed no reasonable cause of action, was frivolous or vexatious or was an abuse of the process of the Court. (xix) On 25 July 2007, the applicant filed an application in the Federal Magistrates Court seeking an order, among others, removing Deacons from representing Telstra in the proceedings. (xx) The Federal Magistrate delivered judgments on the application by Telstra and the applicant respectively, on 2 August 2007. His Honour delivered a further judgment on costs on 10 August 2007. 7 Section 5 of the DD Act is headed ' Disability discrimination '. His Honour noted that the applicant's essential complaint was that Deacons had conducted the investigation relating to the incident that occurred on 9 February 2004. He also noted that Deacons had acted for Telstra in the AIRC proceedings, but not in relation to the applicant's worker's compensation claim determined by the AAT. 11 His Honour found that at no stage had Deacons acted for the applicant. There was therefore no basis for restraining Deacons from acting on behalf of Telstra by reason of any breach of a fiduciary duty owed by Deacons to the applicant. His Honour also found that the applicant had not presented any documents to Deacons in connection with the investigation that had continued to be confidential. Because Deacons had been engaged by Telstra to inquire and report to it, the investigation was not independent in any sense that has significance to me. What was probably meant was that the solicitors would interview relevant persons and draw factual conclusions themselves and that that task would not be undertaken by Telstra management. In the event, a report was prepared which set out the allegations and the response to the allegations and made factual findings. No recommendations appear in the report. The report, while being made to Telstra, was disclosed to the applicant'. The solicitors were, on behalf of Telstra, simply finding facts and reporting them. The interests of the administration of justice [do not] require those solicitors to be restrained from acting for their client in this subsequent proceeding which has only a remote link to that inquiry and report'. He ordered the applicant to pay Telstra's costs of the application in the sum of $5,000. He pointed out that there is an overlap between unlawful dismissal proceedings under the WR Act and a discrimination claim brought pursuant to the HREOC Act . The applicant had elected not to bring any claim for unlawful dismissal before the AIRC. Instead, he had made a claim of unlawful discrimination to HREOC, which had decided to terminate that claim. 17 His Honour accepted that the mere fact that the applicant's earlier claim of unfair dismissal had been rejected did not bar him from bringing proceedings based on alleged disability discrimination contrary to the DD Act . In his view, the real question was whether the proceedings were an abuse of process, or were to be regarded as frivolous or vexatious, on the ground that they amounted in substance to a re-agitation of the issues already considered and resolved in the earlier proceedings. 18 In order to answer that question, his Honour considered it necessary to examine the decision of the AIRC. The AIRC found that there had been a valid reason for the applicant's dismissal from his employment. It also found that there had been no unfairness in the performance review process or in the termination itself. In substance, the applicant is seeking to take advantage of the favourable worker's compensation decision he achieved in the AAT to re-visit the findings of the AIRC. His cause is not assisted by the terms of his complaint to HREOC and of his application to the Court, the voluminous material he has so far filed ... which traverses issues that could not conceivably be relevant to a claim of disability discrimination and the manner in which he has conducted his case thus far'. In other words, the applicant is merely asserting a coincidence between the fact of the disability and the termination which was undoubtedly based upon poor performance. Thus expressed, it is hard to view this as anything other than an attempt to re-litigate the fairness of his termination'. The applicant was presumably asserting that his poor performance in his employment was a consequence of his disability so that the termination of his employment was by reason of his disability. The course of argument had revealed that the applicant's real complaint about disability discrimination related to the PIP, to which he was subjected in July 2004. The applicant had stated in argument that this was a claim of indirect disability discrimination, in that he could not participate in that PIP because of the disability he had suffered as the result of the incident on 9 February 2004. His Honour thought that this claim was arguable. In effect, the applicant wished to assert that Telstra had breached s 15(2)(d) of the DD Act , in that he was subjected to a detriment by being required to participate in and comply with the PIP notwithstanding his disability. In all other respects, his Honour considered that the application was no more than a re-agitation of the applicant's claims before the AIRC and the AAT and that he should not be permitted to pursue his claim. The generality of the applicant's complaint to HREOC and his application to the Court and the voluminous, extravagant and at times embarrassing material he has submitted in support of the application has clouded the real issue and created a strong sense that the applicant was merely using the Court as a grandstand in order to re-agitate his concern about the previous proceedings'. As I have noted, his Honour quantified costs on a party and party basis at $10,000. This is so in the case of the order refusing the application to remove Deacons as Telstra's legal representatives because the order does not finally determine the rights of the parties. The order would not of itself prevent the applicant from making another claim for the same relief in the proceedings, even though the application might have little prospects of success: Bienstein v Bienstein [2003] HCA 7 ; (2003) 195 ALR 225, at 230 [25], per curiam . The order striking out, in part, the application to the Federal Magistrates Court is also interlocutory in character: Rana v University of South Australia [2004] FCA 559 ; (2004) 136 FCR 344, at 345-346 [6]-[15], per Lander J. 24 The Federal Court has jurisdiction to hear and determine appeals from the Federal Magistrates Court exercising original jurisdiction under a law of the Commonwealth: Federal Court of Australia Act 1976 (Cth) (' Federal Court Act '), s 24(1)(d). Since the orders in the present case were interlocutory, leave of the Federal Court is required: Federal Court Act , s 24(1A). 25 In determining whether leave should be granted, the Court applies two inter-related principles: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397, at 398-399, per curiam ; Bienstein v Bienstein [2003] HCA 7 ; 195 ALR 225, at 231 [29], per curiam . The first is whether, in all the circumstances, the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court. The second is whether substantial injustice would result if leave were refused, supposing the decision to be wrong. An assessment of the merits of that application must start with an understanding of the effect of the orders made by the Federal Magistrate. This is not an entirely straightforward task in the absence of pleadings, or indeed any other document clearly outlining the applicant's case. 27 The proceedings were commenced in the Federal Court and subsequently transferred to the Federal Magistrates Court. an order declaring that [Telstra] has committed unlawful discrimination against the [a]pplicant and directing [Telstra] not to repeat or continue such unlawful discrimination. failing to provide the Applicant, as a person suffering a disability with an environment free of bullying and in which the applicant could feel safe and that it failed to ensure its management was properly trained and supervised so that incidents of bullying did not recur'. The particulars (if this is the proper description) comprised 14 paragraphs. By requiring the [a]pplicant to undergo the normal [PIP] process at the time he suffered a disability, including because [his] injury would be aggravated by the process'. Perhaps for this reason, a substantial amount of hearing time was apparently spent in the Federal Magistrates Court attempting to ascertain the precise nature of the applicant's case. Without implying any criticism of the Federal Magistrate, who was faced with a very difficult task, this endeavour does not seem to have been entirely successful, although his Honour did say that the applicant's real complaint centred on the requirement that he participate in the PIP. I also asked what aspects of the applicant's case, if any, are foreclosed by the terms of order 2. 34 Mr Shields indicated that he had some difficulty in answering the question, although he said that the order was clearly intended to prevent the applicant raising any claim connected with the so-called independent investigation carried out by Deacons. He did not dissent from the proposition that the orders do not foreclose the applicant from claiming that Telstra's requirement that he participate in the PIP in July 2004 involved unlawful disability discrimination. Nor did Mr Shields dissent from the proposition that the applicant is free to contend that Telstra's conduct leading up to the imposition of the PIP requirement failed to pay regard to the applicant's disability and therefore amounted to disability discrimination. Mr Shields also accepted, as I understood him, that the applicant is free to claim that, insofar as Telstra's termination of his employment resulted from his refusal to participate in the PIP, the dismissal itself involved unlawful disability discrimination. (I should add that it appears to be the case that the applicant's employment was terminated on the ground that he had refused the instructions of management to participate in the PIP, although the applicant seemed to suggest that his employment was terminated because he failed to achieve the required improvement in standards. The only qualification he attached to this proposition was that, although the applicant is free to adduce evidence of allegedly discriminatory conduct by Telstra during the period 3 May 2004 to 19 August 2004, he cannot claim relief by reason of that conduct, except insofar as it related to the imposition of the requirement that the applicant participate in the PIP. 37 I asked the applicant to identify any aspect of the case he wishes to pursue that, in the light of Telstra's understanding of his Honour's orders as explained by Mr Shields, the orders do not permit him to pursue. The applicant did not identify any such aspect of his case. Indeed I did not understand the applicant to say that he wishes to claim any relief in respect of any discriminatory conduct by Telstra during the period 3 May 2004 to 19 August 2004, except to the extent that the conduct related to the imposition of the PIP requirement. This is not to say that the applicant did not assert before the Federal Magistrate that his case was more wide-ranging than now appears to be the case. 38 In these circumstances, it seems to me that the applicant will not suffer substantial injustice if leave to appeal from Judgment No 2 is refused. The reason is that the orders made by the Federal Magistrate do not prevent the applicant, in substance, pursuing the case he wishes to make. It is perhaps unfortunate that this conclusion did not emerge clearly in the proceedings before the Federal Magistrates Court, although it seems likely that any lack of clarity was attributable, in large measure, to the way in which the applicant presented his case. Be that as it may, the position became tolerably clear on the hearing of the application for leave to appeal. 39 Thus far, I have approached the application for leave to appeal from Judgment No 2 without addressing the arguments the applicant wishes to canvass, should leave to appeal be granted. His outline of submissions identifies a large number of such arguments. Some are not easy to follow and others plainly lack merit. 40 One argument that perhaps is not so readily dismissed is the applicant's contention that the Federal Magistrate erred in characterising his disability discrimination claims as an abuse of process, in that his Honour failed to give sufficient weight to the fact that the issues considered by the AIRC were not the same as those the applicant now seeks to ventilate in the Federal Magistrates Court. However, in my view it is not necessary to evaluate the merits of this argument for the purposes of disposing of the leave application in relation to Judgment No 2. Even if the argument is plausible, it would not change my view. The applicant will not suffer substantial injustice by being denied the opportunity to put the argument on appeal, since the orders do not prevent him from putting the case he wishes to advance in the Federal Magistrates Court. It is also appropriate to take into account the fact that if the applicant ultimately fails in the Federal Magistrates Court proceedings, he has available to him an appeal as of right from the final orders made in those proceedings. The applicant was interviewed by the solicitors and he subsequently signed a statement setting out his version of the events of 9 February 2004. (Emphasis added. In my view, Telstra's decision to engage Deacons in both roles --- and, for that matter, Deacons' decision to accept both roles --- was not particularly sensitive to the position in which the applicant found himself. The sensitivity or otherwise of the decision is, however, not the issue that I must address. 43 Nothing the applicant has said in support of his application casts doubt on the principles stated and applied by the Federal Magistrate. There is no reason to doubt his Honour's finding that no solicitor-client relationship existed between the applicant and Deacons. There is also no reason to doubt his Honour's conclusion that Deacons did not acquire any confidential information by reason of its role as an investigator. As the applicant's written statement shows, there is nothing to indicate that he communicated information to the solicitors that otherwise would have been confidential. In substance, he recounted his version of the events that occurred on 9 February 2004. He had previously complained of those events to Telstra and set out his account of what occurred. His Honour accepted that the description of the investigation as ' independent ' was ' probably unfortunate ' and ' may have [led] the applicant to a misapprehension of the investigation process '. Nonetheless, his Honour did not think that the interests of justice required the solicitors to be restrained from acting for Telstra. 45 In my view, the applicant has an arguable case that, having regard to the real prospect that he had been misled by the description of the investigation as ' independent ' (as the Federal Magistrate appears to have found), his Honour should have concluded that the interests of justice justified the Court restraining the solicitors from acting in the proceedings against the applicant. However, I am not satisfied that substantial injustice would be caused to the applicant if leave to appeal is refused. There is no plausible suggestion that the solicitors acquired any information adverse to the applicant in consequence of the investigation, let alone any confidential information. It is true that the authors of the report did not accept that the managers had actually intimidated the applicant at the meeting of 9 February 2004 and that they did accept that managers believed that the applicant had acted inappropriately. But the applicant's allegations were not found to lack credibility. On the contrary, the report in substance adopted his account of what the participants said at the meeting. It is difficult to conceive that the interview the solicitors conducted with the applicant in March 2004 would give Telstra a significant advantage in the current Federal Magistrates Court proceedings, whether in relation to cross-examination of the applicant or otherwise. 46 In the absence of any demonstrable injustice to the applicant, I do not think it is appropriate to grant leave to appeal from the Federal Magistrate's refusal to restrain Deacons from acting in the proceedings. As I have noted, if the applicant fails in the proceedings, he will have an appeal as of right. Should the applicant exercise that right, he will have the opportunity to argue, if he wishes, that Telstra obtained an inappropriate forensic advantage by having Deacons as its legal representatives in the proceedings in the Federal Magistrates Court. He may have an argument that the Federal Magistrate's discretion on costs miscarried so far as the costs of the summary dismissal application are concerned. A contention perhaps may be open that his Honour did not take into account (as now appears to be the case) that the striking out of part of the applicant's case does not prevent him from pursuing the substance of the disability discrimination case he wishes to present to the Federal Magistrates Court. On the other hand, his Honour attributed to the applicant responsibility for the lack of clarity in his case and the consequent waste of court time spent in trying to ascertain the precise nature of that case. 48 In view of the dismissal of the applications for leave to appeal against the substantive orders in Judgments No 1 and No 2, I do not think it appropriate to grant leave to appeal solely against the costs order made by the Federal Magistrate in relation to the summary dismissal application. If the applicant ultimately fails in the proceedings, he will be entitled to appeal as of right. Such an appeal may provide the applicant with the opportunity to challenge the Federal Magistrate's order that he pay Telstra's costs of the summary dismissal application. As I have remarked, I am not without some sympathy for the applicant. Nonetheless, I see no basis on which costs should not follow the event. The applicant therefore must pay Telstra's costs of the application for leave to appeal. I certify that the preceding forty-nine (49) numbered Paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | federal magistrates court strikes out part of disability discrimination claim and refuses to remove solicitors from acting for respondent whether applicant would suffer substantial injustice if leave to appeal were refused leave to appeal |
He was working as a waterside worker for Patrick Stevedores at Port Botany. As a result of his employment he was a member of the Stevedoring Employees' Retirement Fund ('SERF') and had been since 31 March 1982. 2 On 12 May 2001 he fell at work. He landed on his buttocks. He sustained a back injury, described as an L5-S1 disc bulge. He has not worked since. 3 His injury has caused him considerable pain and restriction of movement. His worker's compensation claim, resulting from the accident, was settled for a lump sum payment of $500,000. As part of the settlement he resigned his position on 2 December 2002. 4 On 4 April 2003 he lodged a claim with the Trustee of SERF. He claimed a Total and Permanent Disablement benefit ('TPD benefit'). Payment of the benefit arises under Rule 17 of the Rules of SERF which will be set out to in due course. 5 It is common ground in this appeal that the relevant version of Rule 17 appears in Rules dated 7 April 2003, and that it applied from 29 August 2002. In accordance with Rule 17 , medical reports were supplied by medical practitioners selected by Mr Gilberg and by medical practitioners appointed by SERF. Mr Gilberg's medical practitioners certified that each of the elements necessary for a TPD benefit was satisfied. The SERF medical practitioners agreed in all but one respect. None of the three appointed by SERF agreed that Mr Gilberg could not work in the future. 6 The Trustee, in accordance with Rule 17 , appointed an additional medical practitioner to resolve the difference of medical opinion. The additional medical practitioner also did not agree that Mr Gilberg could not ever work again. 7 As a result the Trustee declined Mr Gilberg's claim. It was subsequently asked to, and did, review its decision but confirmed it on 5 April 2004. 8 On 28 January 2005 Mr Gilberg lodged a complaint under s 14 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) ('the Act') to the Superannuation Complaints Tribunal ('the Tribunal') constituted under the Act. 9 Under the Act the Tribunal was obliged to review the Trustee's decision. For that purpose it is taken to have all the powers, obligations and discretions that are conferred on the Trustee (s 37(1)(a)). The ground upon which it may intervene is that the decision is unfair or unreasonable (s 37(4)). It must not do anything, however, that would be contrary to the governing rules of the relevant fund (s 37(5)). 10 After an examination of all the papers, and written submissions by the parties, the Tribunal upheld the complaint. It ordered that a TPD benefit be paid to Mr Gilberg. 11 The appeal to this Court arises under s 46 of the Act. That section provides for an appeal on a question of law. Leaving aside initially the proviso in Rule 17(d) , it appears to make entitlement to a TPD benefit conditional upon satisfaction of the matters set out in Rule 17(a) , (b) and (c), as well as a determination by the Trustee under Rule 17(d) that the member is entitled to a benefit under the Rule and also satisfaction of the conditions stated in Rule 17(e). Failure to satisfy any of the stated conditions would, on this construction, have the result that the entitlement did not arise. 15 On this construction the requirements of Rule 17(c) were not satisfied. None of the medical practitioners appointed by the Trustee under Rule 17(c) stated the view required to be stated by Rule 17(c)(ii)(B). 16 However that is not how the Rule is applied in practice and clearly not how it is intended to operate. The proviso contained in Rule 17(d) presupposes 'a division of medical opinion expressed in the medical reports referred to in paragraph (b) and (c)' . To give this proviso some work to do, and a satisfactory meaning, Rule 17(c) must be read to accommodate the possibility that the medical practitioners appointed by the Trustee do not find an applicant for a benefit to be totally and permanently disabled. 17 In such a circumstance the Trustee is obliged to appoint an additional medical practitioner and is directed to 'base its determination solely on the medical opinion of the additional medical practitioner so appointed' . 18 It is clear that this is intended to provide a method of resolving a disagreement between the reports referred to in Rule 17(b) and (c) as to whether an applicant is totally and permanently disabled. In the context of the present case the division of medical opinion to be resolved was whether Mr Gilberg remains 'unable ever to work again in a job for which the Member is qualified by education, training or experience' . A Directors Resolution was required to accept the rule change. That appears to have been accomplished by the adoption of a Trust Deed incorporating the new rule at Meeting No 94 of the Directors. The Rules issued on 7 April 2003 include the new Rule 17 which came into effect on and from 29 August 2002 and, accordingly, applied when Mr Gilberg's employment ceased. Further emphasis is added by the introduction in (c)(ii)(A) of 'permanently' . 24 These particular complexities, however, do not bear upon the issue which arises in the present appeal and, them having been noted, they may be put to one side. 25 The other differences between the old and new Rule 17, which bear on the present matter, lie in the redrafting of Rule 17(c) to state explicitly the matters for medical opinion and the restriction in Rule 17(d) to the appointment of 'an additional medical practitioner' rather than 'one or more additional medical practitioners' . It may be that one advantage of the new restriction to a single additional medical practitioner is that it avoids the need to resolve any difference of opinion between or amongst the additional medical practitioners who might have been appointed under the old rule. 26 There is a further issue which arises from the amendment to Rule 17(d). The parties had different submissions to offer about the words (which appear in both versions of Rule 17(d) 'the Trustee shall appoint (at the election of the Trustee) ...' in the context of the new rule. The applicant contended that this was intended to give the Trustee a discretion as to which additional medical practitioner to appoint. The respondent contended, on the other hand, that the words were intended to give the Trustee a discretion whether or not to appoint a medical practitioner at all. With respect, neither construction appears to me to be correct. 27 The words '(at the election of the Trustee)' made perfect sense when the Trustee had a discretion whether to appoint one or more than one additional medical practitioner. The same words in the new Rule 17(d) are confusing and, in my view, having regard to the amendment to Rule 17(d) to restrict any additional medical practitioner to only one, they are otiose. 28 Each of the alternative constructions offered by the parties appears to me to strain the language unreasonably. 29 The discretion as to which medical practitioner is to be appointed, and by whom chosen, does not require the use of the words '(at the election of the Trustee)' . Those words do not appear, for example, in Rule 17(c) and are, in my view, not necessary for the purpose suggested by the applicant. Accordingly the applicant's construction should not be accepted. 30 On the other hand the Rule does not give a discretion whether or not to appoint an additional medical practitioner. I agree with counsel for the applicant that it is clear from the language of Rule 17(d) that there is no discretion whether or not to appoint an additional medical practitioner. The respondent's construction should therefore not be accepted. 31 The conclusion that the Trustee did not have a discretion whether or not to appoint an additional medical practitioner raises a substantial obstacle for the respondent's case. 33 It is accepted that Rule 17(b) also was satisfied. Mr Gilberg put the Trustee in possession of reports from at least two medical practitioners that certified that he was incapable of performing his duties and would be unable ever to work again in a job for which he was qualified. 34 In conformity with Rule 17(c) the Trustee sought reports from medical practitioners selected by it. It appointed three such persons. Under Rule 17(c) only two need be appointed but there is no barrier to the appointment of others. If any two had stated that all conditions were satisfied Mr Gilberg would have been entitled to a TPD benefit without the necessity to appoint an additional medical practitioner under Rule 17(d). However, none of them was prepared to certify to this effect. 35 No disagreement arose about the matters referred to in Rule 17(c)(i) or (ii)(A). It was universally accepted that Mr Gilberg's employment ceased solely for the reason that he was permanently incapable of performing his duties as a waterside worker, and he remains permanently incapable of performing his duties as a waterside worker. The area of professional disagreement was whether Mr Gilberg would ever be able to work again in a job for which he is qualified by education, training or experience. 36 The Directors of the Trustee dealt with Mr Gilberg's claim for a TPD benefit at meetings held on 20 June 2003 (the first Directors' meeting) and 1 October 2003 (the second Directors' meeting). 37 At the first Directors' meeting the Directors noted that Mr Gilberg's claim satisfied Rule 17(a), (b) and (e). 38 They noted the appointments of three medical practitioners under Rule 17(c) --- Drs I Howe-Scott [sic], G Hall and J Walsh. They further noted that 'the reports prepared by these practitioners met the conditions of Rule 17(c)' but went on to note that 'there was a conflict of medical evidence and therefore it was unanimously agreed to defer further consideration of this claim and to appoint an additional medical practitioner under Rule 17(d)' . The Directors recorded that they would 'base their determination solely on the medical opinion of the additional medical practitioner so appointed' as, in my view, Rule 17(d) requires. 39 The first medical practitioner referred to by the Directors was 'Dr I Howe-Scott'. This appears to be an error. The medical practitioner is Dr Inglis Howe Synnott. His report is dated 7 May 2003. Dr Synnott is a consultant psychiatrist. He was not satisfied, from a psychiatric point of view, that Mr Gilberg was incapable of performing his duties or that he would be 'unable ever to work again in a job for which the member is qualified by education, training or experience' . He emphasised that he had concentrated solely on the psychiatric perspective and was not addressing other considerations of a medical nature. 40 The second medical practitioner referred to by the Directors was Dr Graham Hall, an occupational and consultant physician. His report is dated 12 May 2003. Dr Hall regarded Mr Gilberg as unfit for work at that time, permanently unfit to perform the full duties of his original employment and, at the time that his employment was terminated, permanently incapable of fulfilling the full duties of his position. However he did not consider him totally and permanently unfit for all types of work. His specific comments were:- 'Whilst at present he remains unfit for work I do not consider him totally and permanently unfit for all types of work' and 'He is not unable ever to work again in any job for which he is qualified by education, training or experience. With continued treatment and perhaps some retraining or work experience it should be possible for him to return to the workforce. He does however, lack motivation. It does not really matter for present purposes. The important matter is that Dr Hall did not provide the necessary certificate that Mr Gilberg was 'unable ever to work again' and therefore Mr Gilberg did not, through this report, make any progress towards satisfying the condition in Rule 17(c) that two medical practitioners appointed by the Trustee also provide support for each element of his TPD benefit claim. 42 The third medical practitioner referred to by the Directors was Dr John Kingsley-Walsh, a consultant orthopaedic surgeon. His report is dated 7 May 2003. In particular, none thought the requirement of Rule 17(c)(ii)(B) was satisfied. 44 It was in these circumstances that the matter was referred to Dr Christopher Oates under Rule 17(d). 45 At the second Directors' meeting the Directors considered a report from Dr Oates dated 13 September 2003 and as a result agreed that Mr Gilberg's claim should be declined. 46 Dr Oates prepared two reports, the first dated 13 September 2003 and the second dated 8 October 2003. It is to the first report only that the Directors refer in their meeting on 1 October 2003, rejecting Mr Gilberg's claim. The occasion for the preparation of the second report was that Dr Oates was asked by the Trustee to consider further material supplied by Mr Gilberg. His further consideration did not affect the conclusions in his first report. 47 Dr Oates said, in the first report to which the Directors referred, that 'Mr Gilberg is incapable of performing his normal duties as a stevedore'. However he did not believe that the other conditions were satisfied. He would be eminently suitable for a semi-skilled or less skilled very light occupation in the field of clerical, service provision or security work, for example, as an office messenger, door attendant at a club, office building security desk attendant or security monitoring control room work. Dr Oates was the medical practitioner appointed for that purpose. Furthermore, insofar as the Trustee must base its decision upon medical opinion as to that issue, it must base it on the opinion of the additional medical practitioner so appointed and no other medical opinion. In my view that is the plain meaning of the language used in Rule 17(d). 52 Dr Oates' opinion is clearly a 'medical opinion' about the relevant issues, in particular the issues raised by Rule 17(c)(ii)(B). His opinion on these matters is consistent with the opinions of the three medical practitioners whose reports were sought by the Trustee for the purposes of Rule 17(c), Drs Synnott, Hall and Walsh. It is contrary to the opinions expressed by the medical practitioners upon whom Mr Gilberg relied. Rule 17 required the Trustee to base its determination solely on Dr Oates' medical opinion. No occasion arose for weighing the totality of medical opinion. The Trustee in my view was correct to conclude that Mr Gilberg had no entitlement to a TPD benefit because the conditions for such an entitlement stipulated by Rule 17 had not been satisfied. The reason for this approach appears to be that they were the rules in force at the time that Mr Gilberg last worked --- i.e. 12 May 2001. Why the date of injury, or last working day, was chosen in lieu of the date of cessation of employment is not made clear. SERF advised the Tribunal on 15 February 2005 that, in its view, the relevant Trust Deed was that dated 7 April 2003. This contained the new Rule 17. The parties are agreed (and were never at issue) that these were the correct rules to use. 54 The new Rule 17 clearly applies to Mr Gilberg's circumstances because his employment was terminated after 29 August 2002. The Tribunal's error in this respect is an error of law. It provides a foundation for the appeal. However the error did not, in my view, have any effect upon the approach which the Tribunal took, its reasoning or its ultimate decision. If this were the only error of law identified it would provide no basis to interfere with the Tribunal's decision. 55 As I read the Tribunal's decision there were, for the purpose of my consideration of this appeal, three important aspects to its reasoning. 56 First, it took the view that the Trustee was obliged not to base its determination solely on Dr Oates' medical opinion. Secondly, it decided that, in any event, Dr Oates' medical opinion should not be accepted. 59 I regret to say that, in my view, the Tribunal made errors of law at each stage of the process. It appeared to feel that the Trustee had abdicated a responsibility to make an independent decision on Mr Gilberg's claim. A trustee cannot delegate its decision-making power to a third party. It is the function of the Trustee to reach a decision. The Trustee's position was dictated by the provisions of Rule 17 itself. Section 37 of the Act directs that the Tribunal must not do anything, on reviewing the decision of a trustee, that would be contrary to the governing rules of the fund concerned. It may not proceed upon a criticism of the trustee which arises simply from observance of the terms of the Trust Deed: see Retail Employees Superannuation Pty Ltd v Crocker (2001) 48 ATR 359 per Allsop J at [28] and [32]; see also Hornsby v Military Superannuation and Benefits Board of Trustees No 1 [2003] FCA 54 ; (2003) 126 FCR 484 per Mansfield J at [17] and Cameron v Board of Trustees of the State Public Sector Superannuation Scheme [2003] FCAFC 214 ; (2003) 130 FCR 122 at [43] . 64 Moreover, the underlying premise, that the Trustee had impermissibly surrendered its discretion, is unsustainable. I agree with the conclusion of Merkel J in Seafarers' Retirement Fund Pty Ltd v Oppenhuis [1999] FCA 1683 ; (1999) 94 FCR 594 at [25] . Rule 17 in this case, as his Honour observed of the rule before him, prescribes: 'a condition for an entitlement and does not authorise any person to "direct" the trustee as to the manner in which it is to exercise its powers under the Trust Deed'. The Trustee did not misconstrue its powers or misapply the provisions of Rule 17. 67 The Tribunal analysed Dr Oates' reports in detail. It made a series of comparisons between Dr Oates' observations and those made by the other medical practitioners whose reports were before the Trustee, chiefly those supporting Mr Gilberg's claim. There was also some criticism of the reports of medical practitioners who had been appointed by the Trustee under Rule 17(c). 68 Counsel for the respondent urged upon me that the Tribunal had done no more than base its decision solely upon Dr Oates' report in accordance with Rule 17(d) but in my view that is an unduly narrow reading of the Tribunal's decision and the reasons which it reveals. It is clear that the Tribunal, in rejecting Dr Oates' opinion, did not do so solely by reference to the contents of his report but, rather, by reference to, and preference for, the opinions of only some of the other medical practitioners. 69 On the basis of its own assessment of the medical evidence the Tribunal set the decision of the Trustee aside and substituted a decision that Mr Gilberg was totally and permanently disabled and entitled to a TPD benefit. 70 In my view this approach to the medical issues was misconceived. The Rules did not entrust to the Trustee the task of forming an independent medical opinion. The Tribunal could stand in no different position. 71 There was one particular area of criticism of Dr Oates which warrants further attention. Dr Oates thought Mr Gilberg lacked motivation. He was not the only medical practitioner to say so. Dr Hall also held that view. This suggests to me that he is trying to manipulate the outcome of my assessment. That latter view is the view reached by Dr CO. That view is not the view of the majority of the reporting doctors, nor is it a view sustainable by reference to the memo written by the Complainant to Dr CO . The Trustee, acting fairly and reasonably, would in light of the prevailing evidence experience difficulty in accepting Dr CO's conclusion on this point as being arrived at objectively, as it is not an opinion reached after a careful enough assessment of the evidence and is not in accordance with the weight of the evidence . 76 Dr Oates was not the only medical practitioner to find that Mr Gilberg was not 'unable ever to work again ...' He was the fourth. The Tribunal's ultimate determination necessarily involves a rejection of each of those opinions. The rejection by the Tribunal of each medical opinion obtained by the Trustee and a finding of entitlement to a TPD benefit solely upon the basis of the Rule 17(b) reports provided for Mr Gilberg were contrary to the requirements of Rule 17. if the medical opinion was directed to the wrong issue. In such a case the Rule 17(d) process might remain incomplete and require completion by that medical practitioner or another. Had there been a proper basis to reject Dr Oates medical opinion (although in my view none has been shown) it would have been necessary to remit the matter to the Trustee so that Rule 17(d) could be followed. 78 The Tribunal thus made a further error of law when it decided to announce its own decision rather than return the matter to the Trustee. 80 The approach which the Tribunal took to this issue undoes the scheme set up by Rule 17 for resolving divisions of medical opinion. In circumstances where Rule 17(b) had been satisfied, the question of entitlement was to be resolved on the basis of properly obtained confirmatory medical opinion, either in accordance with Rule 17(c) or, if necessary, in accordance with Rule 17(d). The mechanism established by the Trust Deed could not be disregarded. Had there been a satisfactory basis upon which to reject Dr Oates' medical opinion as one which was not provided in accordance with Rule 17(d) then a further medical opinion would be necessary in order to deal with the 'division of medical opinion expressed in the medical reports referred to in paragraph (b) and in (c)' . No occasion arose for any attempt to take a different path. The basic error is the proposition that Dr Oates' reports were not, and did not contain, a 'medical opinion'. The opinion related to a matter which was required to be addressed under Rule 17(d). Furthermore, as is clear from the matters canvassed earlier in these Reasons for Judgment, in my view the Trustee did not make an error in its approach to Rule 17 by relying on Dr Oates' report of 13 September 2003 or by basing its determination solely upon the medical opinion disclosed by that report. 83 Had the contention, that Dr Oates' report did not contain the relevant medical opinion, been sound that would not permit a decision based on the other reports, much less a preference for one group over the other. The proper conclusion would be that the provisions of Rule 17(d) remained to be obeyed. In that case the proper course would have been to remit the matter to the Trustee for further action. As I have indicated, that was not necessary in this case. The Trustee made no error. 84 I reject the grounds in the Notice of Contention as adequate to provide alternative support for the decision of the Tribunal. 86 I have considered whether I should remit the matter to the Tribunal to be decided in accordance with these Reasons for Judgment but can see no useful purpose to be served by so ordering. It is clear to me that the errors of law which the Tribunal has made led it to wrongly set aside the decision of the Trustee. If those errors had not been made there is no basis upon which the decision of the Trustee could, or should, have been disturbed. In the circumstances the appropriate order to make is that the decision of the Trustee be restored. 87 At the conclusion of the hearing counsel for the applicant informed me that, in the event the appeal succeeded, no costs were sought. Accordingly, each party will bear its own costs. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | rejection of application by trustee application to superannuation complaints tribunal rejection of medical opinion by tribunal error of law tribunal and trustee bound by rules of fund. application for permanent disablement benefit |
The original list of documents over which privilege is claimed is attached to the affidavit of Mr Lloyd of 5 April 2007. As originally framed, the claim covered 37 documents, but the claims in respect of documents 1, 35, 36 and 37 are no longer pressed. In his second affidavit of 25 May 2007, Mr Lloyd attached a schedule which described in a general way the documents in relation to which the privilege is claimed. The documents relate to the period from 14 June 2006 to 22 December 2006. 2 The claims for privilege in this case are to be determined by common law principles, and not pursuant to the provisions of the Evidence Act 1995 (Cth), because the Notice to Produce has not been issued for the purpose of adducing the documents into evidence: see Esso Australia Resources Ltd v Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 at 59-63 (per Gleeson CJ, Gaudron and Gummow JJ). 3 The evidentiary basis for the claim of privilege in respect of each particular document has been set out in detailed evidence in the form of three affidavits sworn by the solicitor for Allphones, Mr Lloyd. There has been no cross-examination on those affidavits. Beginning in early 2006, Hoy raised a number of issues and complaints with Allphones concerning questions as to exclusive territory; the loss of the original franchise agreement by Allphones; the execution of a new tax invoice agreement; the payment of money as a contribution to the original fit-out of the premises; and calculations as to payment to Hoy of a commission on sales and connections of mobile telephones and other goods. During the period of March to August 2006, efforts were made to resolve these issues and complaints. The present litigation was commenced on 1 September 2006. 5 In May 2006, Allphones became aware of facts which it says indicated that Hoy may have been engaging in fraudulent conduct, namely manually unbundling mobile telephones to a particular mobile telephone network provider, selling the unbundled phones at a higher price and failing to disclose this conduct and the difference in price to the purchasers of the telephones, the network providers or Allphones. Allphones sought legal advice in relation to the dispute in mid-June 2006 and, after consultation with its legal advisers, obtained statements from various persons in relation to the suspected fraudulent conduct. 6 On 28 August 2006, Allphones served Hoy with a notice of its intention to terminate the franchise agreement. As a result, on 1 September 2006, Hoy began the present proceedings, seeking orders restraining Allphones from terminating the franchise agreement. He then made a preliminary assessment and determined that each document was subject to legal professional privilege. As mentioned above, the claim of privilege is no longer maintained in respect of four documents, namely 1, 35, 36 and 37. On 30 January 2007, three more documents were produced to the Court in answer to category 6 of the Notice to Produce, each of which were said to be privileged. In his affidavit of 5 April 2007, Mr Lloyd refers to each document in dispute and gives a concise description as to its nature, date of creation and the basis on which privilege is claimed. 9 In his affidavit of 25 May 2007, Mr Lloyd gives specific evidence concerning the relationship between Allphones and Bartier Perry as its legal advisers. This evidence specifically addresses how each of the documents in question came into existence. The affidavit also states that, prior to June 2006, Allphones was an existing client of Bartier Perry and that on 14 June 2006 Mr Rook, a partner of that firm, had a telephone conversation with that National Franchise Manager of Allphones in which he was informed of its dispute with Hoy. Shortly after this conversation, the firm was retained by Allphones to provide legal advice on an ongoing basis in relation to the dispute, and in an email dated 14 June 2006 there is an express reference to 'potential franchisee litigation'. In addition to this, Mr Lloyd later refers to information given to him by other partners of the firm, namely Mr Berner and Mr Creais, giving further particulars as to the creation of the documents in question. 10 It is clear from the foregoing that Mr Lloyd made detailed inquiries of Messrs Rook, Berner and Creais, together with officers of Allphones, including its Chief Executive Officer, National Franchise Manager, New South Wales State Manager, Chief Financial Officer and employees, prior to making the claim for legal professional privilege. He was satisfied, on the evidence from those inquiries, that the reason each of the documents was brought into existence was for the dominant purpose of seeking legal advice or assistance or for use in reasonably anticipated litigation. 11 A further aspect of the background to these proceedings is the aborted attempt to mediate the dispute and the correspondence between the parties which ensued. Mr Birch, the solicitor for Hoy, swore an affidavit on 5 October 2006, in which he deposes that he was instructed in early March 2006 to act for Hoy in its disputes with Allphones. After attempting to contact Allphones directly, Mr Birch on 20 April 2006 requested the Office of the Mediation Advisor to appoint a mediator, which was duly done on 27 April 2006. Allphones resisted the mediation. It sent an email to the mediator on 4 May 2006 in effect denying there was a dispute, and later confirmed that it would not attend a mediation conference. On 22 May 2006, Mr Birch wrote to Allphones raising matters for consideration, and this was followed by further correspondence in which the possibility of terminating the existing franchise agreement and executing a new agreement was raised. On 6 July 2006, Allphones requested a meeting. On 22 August 2006 a meeting took place at which Mrs Hoy, Mr Birch, Mr Harkin, the National Franchise Manager of Allphones, and Mr Llevski, NSW State Manager for Allphones, attended. In the course of that meeting, Mr Harkin referred to the allegation that Hoy had been engaging in fraudulent conduct, and stated that Allphones had obtained statements and affidavits from various people to support the allegations. Mr Harkin also stated that, under clause 9 of the franchise agreement, Allphones was entitled terminate that agreement without issuing notice. Despite this assertion by Mr Harkin, Allphones served Hoy on 28 August 2006 with a notice of its intention to terminate the franchise agreement. On 1 September 2006, Hoy commenced these proceedings. The claim is that, while the documents may have been prepared also for other subsidiary commercial purposes, those other purposes were subservient to the purpose of obtaining legal advice, assistance or use in litigation. That latter purpose is claimed to have been 'dominant' in the sense that it was the most influential or paramount purpose. 13 Hoy submits that Allphones, as the party asserting the claim of privilege, bears the onus of proof of the elements of the privilege. To this end, it relies on the comments of Spigelman CJ in Sydney Airports Corp Ltd v Singapore Airlines [2005] NSWCA 47 at [3] . Hoy also argues that it is not sufficient to discharge this onus for the party claiming privilege simply to depose an affidavit making conclusory assertions as to the purpose for which the documents were brought into existence together with a statement about the category of legal professional privilege which applies. To this end, it relies on the decision of the Full Court in Kennedy v Wallace [2004] FCAFC 337 ; (2004) 142 FCR 185 at [12] - [16] (per Black CJ and Emmett J) and [144]-[145] (per Allsop J). Hoy submits that Allphones has not discharged its onus because Mr Lloyd's affidavits are insufficient and because, after having regard to non-privileged correspondence between the parties, it is clear that the dominant purpose for the creation of the documents was a commercial one. It argues that the documents were created in the course of an ongoing business relationship between the parties, rather than for the dominant purpose of legal assistance or obtaining material for use in legal proceedings. 14 Hoy further submits that it is a fair inference that an important purpose for most of the communications was the formulation of a commercial strategy or the taking of steps in the future management of the franchise relationship. If this inference were correct, the documents would go far beyond the scope of communication which was merely for the dominant purpose of legal advice. Although legal advice may have been contemplated or involved, Hoy contends that Allphones has not shown, nor should it be inferred, that the communications were made for the dominant purpose of obtaining legal advice or assistance in litigation. Hoy submits the evidence indicates that the communication was for the purpose of dealing with the dispute by progressing through dispute resolution procedures required by the franchise agreement, which requires the parties to resolve disputes commercially in order to enhance their future business relationship. In short, it is highly improbable, having regard to the context, history and evidence in the matter, that the communications were made for the dominant purpose of contemplated legal proceedings because such proceedings could not properly be contemplated before commercial decisions, strategies and dispute resolution procedures had been conducted, agreed upon or dismissed. The documents for which privilege is claimed are said to be within the latter category. 15 The evidence of Mr Lloyd has also been attacked in submissions by Hoy on the ground that it simply expresses the views of the lawyers involved and does not discharge the onus of proof as to the purpose of the creation of the documents. For example, Hoy says there is no witness from Allphones to give evidence of primary thought processes as to why the communications came into existence. Consequently, there is no clear paramountcy of purpose, it is said, which establishes that the documents were created in the course of giving or seeking legal advice or assistance. Contrary to the position of Mr Lloyd, Hoy argues that the communications were created for non-privileged purposes, namely preparing material for procedural meetings between the parties, investigating and preparing material for comment or response from Hoy, or investigating facts to formulate a business or commercial strategy. 16 The time at which the question of legal professional privilege falls to be determined is when the document is brought into existence. The question as to whether privilege will attach to a document is usually determined by considering the purpose which the creator of the record had in mind when it was brought into existence. The best evidence would normally be evidence given directly by the person creating the document as to the purpose of its creation, provided his or her evidence is specific, not inconsistent with the contents of the document and not weakened by cross-examination. However, matters such as the factual context and the contents of the document are also relevant in determining the question of privilege. Evidence based on information and belief can be given as to purpose of a document's creation by someone who did not create it, provided that he or she specifies the source of that information and belief. In many cases it may well be impractical to expect that the author or originator of every document should swear an affidavit. 17 In circumstances where parties to a dispute are taking steps to resolve the dispute through discussions, meetings and/or procedures required by an agreement, it will not necessarily be the case that the 'dominant purpose' of records created during that period of consultation is other than the purpose of obtaining legal advice or assistance. Where there is a legal retainer in existence during a period when the disputed documents came into existence, it is prima facie reasonable to conclude that a party is seeking legal advice and guidance. The mere fact that parties are communicating with respect to such dispute resolution procedures does not mean that litigation is not reasonably anticipated during that period. A party may well, quite reasonably, contemplate such litigation, and thus continue taking steps to obtain material for use in the event that negotiations break down. Often legal guidance may be necessary as to how the proceedings are to be carried out. Such a situation is not, of itself, inconsistent with the creation of documents for the dominant purpose of legal advice or assistance. In many cases parties will, for the sake of attempting to maintain a valuable business relationship, seek to negotiate a resolution to a dispute and work towards a modus vivendi , while at the same time contemplating and preparing for litigation. 18 In this case the thrust of Hoy's submission is that, on the available evidence, the dominant purpose of the documents is not to seek legal assistance but rather to work out an overall strategy to determine the ongoing commercial relationship of the parties. The reality is that parties to a dispute may have dual purposes, in which the seeking of legal advice remains the dominant purpose. Indeed, the notion that there may well be other purposes, such as managerial or commercial objectives, which account for the existence of a record is inherent in the 'dominant purpose' test itself: see Three Rivers District Council v Bank of England (No 6) [2005] A.C. 610 at 650 (per Lord Scott of Foscote). 19 In considering whether a particular document is privileged, it is helpful to consider the documents as a whole and have regard to the whole stream of communications passing between the parties, rather than to examine each document in isolation. This is because, by standing back and looking at the overall course of communication across a period of time, a picture may emerge which characterises the nature and purpose of each individual communication more clearly. Such an approach enables a decision to be made more confidently as to whether a specific document is privileged. In this case, the overall course of communication, when considered in its factual context together with the contents and form of the documents and the specific evidence provided by Mr Lloyd as to the provenance of the documents, is sufficient to persuade me that the dominant purpose for the creation of each of the documents presently in dispute was to obtain legal advice or assistance or to be used in anticipated litigation. Accordingly, I am of the view that each of the communications is privileged. In particular, I do not accept the submission that the steps taken towards the dispute resolution procedure provided for in the franchise agreement is sufficient to displace the strong, detailed and specific evidence supporting the claim for privilege, especially when considered in light of Allphone's retainer of Bartier Perry on 14 June 2006 and the commencement of litigation on 1 September 2006 by Hoy. 21 The letter in question is from Mr Donnellan, Chief Executive Officer of Allphones, to Mr Birch. Your client will be given an opportunity to respond to those matters and failure to do so will result in immediate termination of its franchise agreement, based on the advice of our lawyers. ' (Emphasis added. 23 In my opinion, the reference to a position which is 'based on' legal advice does not, in the circumstances of this case, amount to a sufficient disclosure of that legal advice as to amount to a waiver of privilege. Neither the conclusion, nor the gist, nor even any of the content of the legal advice is referred to or disclosed. All that is disclosed is that Allphones has obtained advice and has considered it as part of a basis for making a decision as to its future course of action. The passage is consistent with Allphones having made an independent decision after reading the advice. Moreover, I do not consider that the use of a generalised reference to an extant piece of legal advice constitutes a use of that advice in such a way as to make it unfair or unreasonable not to disclose the full contents of that advice. I am of the view that no privilege which vests in any of the communications in dispute has been waived by disclosure. Hoy argues that Allphones has impliedly waived privilege as to a number of the documents because, by electing to continue to require the performance of the franchise agreement from Hoy and by electing to pursue contractual and statutory dispute resolution procedures, Allphones has affirmed the agreement and waived its right to terminate. This, it is said, puts in issue Allphones' state of mind, and thus impliedly waives privilege. Hoy also argues that by purporting to reserve its right of termination Allphones acted in bad faith and with the real purpose of negotiating more favourable terms in its franchise agreement with Hoy. Again, it is said, Allphones has put in issue its state of mind and thereby impliedly waived privilege. Hoy also submits that the implied waiver of privilege is also supported by that fact that Allphones has alleged fraudulent conduct against Hoy as a basis for termination of the franchise agreement. 25 To support its contention, Hoy refers to the decision in Goldberg v Ng [1995] HCA 39 ; (1995) 185 CLR 83, where Deane, Dawson and Gaudron JJ observed at 96 that in cases of implied waiver of legal professional privilege the question is whether fairness requires that the privilege should cease: see also Attorney-General (NT) v Maurice [1986] HCA 80 ; (1986) 161 CLR 475 at 481 and 488 (per Gibbs CJ and Mason and Brennan JJ). The principle of implied waiver was expressed and applied by this Court in Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341, where the Full Court at 354-356 decided that if a party makes an assertion as part of its case that puts the contents of otherwise privileged material in issue, or necessarily opens an inquiry into an issue which gives rise to an inconsistency between maintaining the privilege claim and making the assertion, the privilege is waived by implication: see also Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1; Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347. 26 The difficulty in Hoy's submissions is that, in the present case, the issue of election is not raised by Allphones but by Hoy itself in section K of its Statement of Claim. Allphones, in paragraph 44 of its Further Amended Defence, simply denies the allegation. Similarly, the allegation of bad faith is an issue raised by Hoy and denied by Allphones. In any event, it seems to me that the allegation of fraud puts in issue the state of mind of Hoy and not that of Allphones, and consequently it cannot be unfair or inconsistent for Allphones to retain its privilege with respect to records relating to its own state of mind. ' (Emphasis added. It is not implicit in the denial of an allegation of bad faith that Allphones must in fairness make available otherwise privileged material relating to its state of mind simply because the other party has made the allegation. The position may be altered if Allphones were to positively assert and put in issue its state of mind by, for example, claiming that it had no reason to believe a certain matter existed or raising an issue of undue influence. But that is not this case. Such an allegation is the converse of this case, because Hoy, and not Allphones, has raised the issue. 28 Nor does the reasoning in Thomason v Campbelltown Municipal Council (1939) 39 SR (NSW) 347 assist Hoy. In that case, the plaintiff was asserting a right to claim damages under a statute. The statutory context made it implicit in making the claim that the plaintiff had not effectively exercised an alternative right, and thus access to the plaintiff's material was necessary to challenge this implicit assertion. That is not the present case. 29 For the above reasons, I do not consider there has been an implied waiver of legal professional privilege in this case. The statement was in the form of a standard witness a statement, apparently drawn up by the solicitors on instructions. It related to inquiries made in relation to the purchase of an unbundled mobile telephone from an Allphones store. 31 On 15 August 2006, another draft statement was sent by Bartier Perry to a Mr Shepherd for his consideration. The covering letter was marked 'Private & Confidential'. The statement relates to the observations and statements made at Allphones' store concerning 'unlocked phones'. 32 These documents were created and sent to Messrs Quarmby and Shepherd after Allphones retained Bartier Perry to give legal advice and assistance and shortly before the notice of its intention to terminate the franchise agreement was sent on 28 August 2006 and legal proceedings were commenced by Hoy on 1 September 2006. 33 Having examined the statements themselves, and taking into account the times at which they were created, I am satisfied that they were created for the dominant purpose of obtaining legal assistance or for use in litigation which was reasonably anticipated. 34 The challenge to the privilege claim in respect of these two statements and related communications therefore fails. The application for production is dismissed and, because the respondent has succeeded in substance, the applicant is to pay the respondent's costs of the application for production. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | legal professional privilege communications created for both legal and commercial purposes whether legal purpose was dominant purpose whether evidence of purpose can be provided by someone other than the creator of the communication assessment of range of documents as a whole to assist assessment of individual documents whether agreement to pursue other dispute mechanisms displaces privilege waiver of privilege by disclosure whether gist or conclusion of communication disclosed implied waiver whether fairness dictates that privilege has been impliedly waived. evidence |
2 The motion is supported by affidavits of Jessica Jie Si Choong and Gene Carlton Lilly each sworn on 12 June 2007. 3 It is convenient for ease of exegesis and consistency to summarise my earlier reasons for granting interim interlocutory injunctive relief against the Banks. Each performance guarantee is in the same terms, Clough having agreed under cl 3.3.1 of the Construction Contract between it and ONGC dated 6 January 2005 to furnish a performance bank guarantee in the pro-forma terms contained in Appendix-II of Annexure-A. In fact the pro-forma for the performance guarantee is set out in Appendix-III. I set out below the operative terms of the performance guarantee granted by the Commonwealth Bank of Australia. It is in substantially the same terms as the pro-forma instrument. Apart from the name of the relevant bank it is in the same terms as those granted by the other two Banks. Any such demand made by Company on the Bank by serving a written notice shall be conclusive and binding, without any proof, on the Bank as regards the amount due and payable, notwithstanding any dispute(s) pending before any Court, Tribunal, Arbitrator or any other authority and/or any other matter or things whatsoever, as liability under these presents being absolute and unequivocal. We agree that the guarantee herein contained shall be irrevocable. This guarantee shall not be determined, discharged or affected by the liquidation, winding up, dissolution or insolvency of the Contractor and shall remain valid, binding and operative against the Bank. Company shall have the unqualified option to operate this Bank Guarantee to recover Liquidated Damages as leviable under the Contract. It requires each of the respondent Banks to pay immediately on receipt of first demand in writing by ONGC the stipulated amount "... on breach of contract by contractor ...". I do not suggest, by this, that any of the terms of the Construction Contract have been incorporated into the performance guarantees. 6 The affidavit of Mr Malcolm Rutter sworn 15 June 2007 provides a very detailed account of the background to the Construction Contract and what has occurred since its execution. I have set out the relevant factual background as exposed in that affidavit in my reasons of 7 June 2007 when I, amongst other things, restrained ONGC from taking any further step to demand or to obtain payment or renewing or claiming to renew a demand for payment from any of the respondent Banks under the respective performance guarantees: Clough Engineering Ltd v Oil & Natural Gas Corporation Ltd [2007] FCA 881 [8]-[23]. It is accordingly not necessary for me to repeat that background detail here. Mr Rutter has variously deposed in his affidavit to the effect that Clough is not in any way in default under the Construction Contract. The Banks do not, understandably, attempt to contradict this. ONGC has not appeared in this application. 7 It is fundamental to Clough's arguments that it is not relevantly in breach of the Construction Contract nor are there any other contractual bases such as to entitle ONGC to make a demand upon the Banks under the respective performance guarantees. It is contended alternatively that if it is in breach then ONGC has contributed to this in the sense that to the extent that Clough has not met any of its obligations, this has been directly caused by ONGC's failure to perform its obligations. In other words Clough's obligations are dependent upon ONGC's performance. 8 Clough says that it has, at all material times, been ready willing and able to comply with its obligations, subject to ONGC's timely performance of its inter-dependent obligations. Clough says that, otherwise, it has completed the work required of it. However, on the evidence of Mr Rutter, ONGC has been in breach of a number of its obligations, including failing to effect necessary well-completion at the deep water field, as well as meeting invoiced payments from Clough in the order of US$7 million. 9 I said in those reasons that it was arguably unconscionable within the meaning of s 51AA of the Trade Practices Act 1976 (Cth) ('the Act') for ONGC to threaten to call, or to call, on the performance guarantees, to take advantage of the Banks' propensity to pay, despite, arguably there being no right to call on the performance guarantees. Clough also says that, ONGC is in breach of an implied negative stipulation in the Construction Contract to the effect that it will not, except where Clough is in such breach, call on the performance guarantees or any of them. See Anaconda Operations Pty Ltd v Fluor Daniel Pty Ltd [1999] VSCA 214 at [8] . 10 Clough continues to contend that it would be unconscionable for ONGC to exercise or purport to exercise its apparent legal rights. See also Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315, [40], [58]. (c) Equity may relieve against one party's insistence upon rights in circumstances which make that harsh or oppressive. ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301. I do not accept the submission made by the Banks that such notice is insufficient to invoke any of the provisions under s 80 of the Act. As matters stand presently they are on notice from Clough that ONGC has no legal entitlement to call on the performance guarantees. It is not mere assertion. It is supported by detailed affidavit evidence. It is in the nature of applications for interim and interlocutory relief that these proceed upon a provisional view of the facts. 12 Section 80 of the Act confers both jurisdiction and power in the Court to restrain each of them in the way ordered. Alternatively power to do so is available pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth). 13 By s 80 of the Act the Court may grant an injunction in such terms as it determines to be appropriate, relevantly in this case, where, on the application of Clough it is satisfied that the Banks intend, unless restrained, to pay under the guarantees, and are thereby proposing to engage in conduct that constitutes or would constitute aiding or abetting ONGC to contravene s 51AA under Part IVA of the Act, or would, thereby, be directly or indirectly knowingly concerned in or party to the contravention. See ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 266 per Gummow J. 14 Section 80(2) enables the Court, where, in its opinion, it is desirable to do so, to grant an interim injunction pending determination of an application under s 80(1): ACCC v CG Berbatis Holdings Pty Ltd [2003] HCA 18 ; (2003) 197 ALR 153; ACCC v Samton Holdings Pty Ltd [2002] FCA 62 ; (2002) 117 FCR 301. This section confers a judicial discretion of the widest kind upon the Court: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 185-187 per Bowen CJ. At a general level what is said on behalf of the Banks as to the well established independence or autonomy of irrevocable letters of credit, is uncontroversial. A standby letter of credit is a letter of credit which performs the function of providing security against the danger that a party to a contract will fail to perform it: Bachmann Pty Ltd v BHP Power New Zealand Ltd [1998] VSCA 40 ; [1999] 1 VR 420 at 428 [26] . The purpose of a standby letter of credit is "to provide the beneficiary with an unfettered, immediate remedy upon the triggering event on the letter of credit, pending resolution of any dispute on the underlying contract": Ideas Plus Investments Ltd v NAB Ltd (2006) 32 WAR 467 at 478 [34]. A standby letter of credit is not simply a mere method of payment but creates a direct liability upon the banker independent of the underlying contract; Ideas Plus at 477, 497, [33], [99], Bachmann at 429-430 [28]-[29]. The contractual promise between the banker and the beneficiary is unaffected by the terms of any underlying contract between the beneficiary and the applicant for the letter of credit. However the applicant for the letter of credit might be able to apply to prevent the beneficiary from claiming against the banker due to the terms of an underlying contract: Bachmann at 429-430 [28]-[29]. These principles apply equally to the performance guarantees the subject of this application. 17 The Banks submit that the only traditional exception where a banker may be enjoined, is where the beneficiary is fraudulently attempting to draw down the letter of credit. That is because of the Court's special jurisdiction to prevent fraud, which is wider than the jurisdiction to prevent the beneficiary breaching the underlying contract with the applicant for a letter of credit: Bolivinter Oil SA v Chase Manhattan Bank NA [1984] 1 Lloyd's Rep 251 at 254, Deutsche Ruckversicherung AG v Wallbrook Insurance Co Ltd [1995] 1 WLR 1017 at 1029-1030, Ideas Plus at 496 [93]. There is no allegation of fraud here and so, the Banks submit, no injunction should be granted against them. The Banks nonetheless rightly, in my opinion, accept that another basis upon which the Banks might be enjoined is by reason of it being allegedly unconscionable, contrary to s 51AA of the Act, for ONGC to exercise its contractual rights in the underlying construction contract and draw upon the performance guarantees although any such restraint would be ancillary to Clough's claim against ONGC. 18 The Banks make no submission on the question whether there is a serious question to be tried as to any unconscionable conduct under s 51AA of the Act between ONGC and Clough. However it is said on their behalf that even if ONGC had engaged in such conduct the appropriate order would be to require ONGC to countermand or withdraw the previous demands which it has made on the performance guarantees rather than to enjoin the Banks. In Bachmann the appellant agreed to design, manufacture, supply and commission steel manufacturing equipment for the respondent. A clause in the Supply Contract required the supplier to provide security for the performance of its obligations, which it did by an irrevocable standby letter of credit in favour of the purchaser. The letter of credit required the purchaser to provide the bank with a statement that the supplier had failed to comply with the contract and a sight draft, which the bank undertook to honour. Such a contractual promise is efficacious, not in the sense, of when the security is constituted by the obligation of a third person, that the third person can rely by way of defence as against the security holder on a term of the underlying contract, to which he was not a party, but in the sense that relief can be afforded to the person who procured the security in an action brought against the security holder on the promise contained in the underlying contract. No principle or rule of law would deny that a promise forming part of the underlying contract is in this sense efficacious, and the cases recognise this. One can for brevity speak of a contractual qualification upon the owner's powers in relation to the security where the underlying agreement between the owner and the contractor or supplier contains a term which restricts the exercise of those powers in some way. It was conceded that the clause referred to constituted a contractual qualification on the purchaser's powers in relation to the security. This is to be contrasted with earlier Australian cases where the initial question was whether the underlying contract on its proper construction qualified the security holder's powers to claim under the security. The only point in the appeal as his Honour put it was as to the content of the qualification. Those authorities range from requiring no more than a claimed entitlement which is not specious or fanciful: Hughes Bros Pty Ltd v Telede Pty Ltd (1989) 7 BCL 210 to requiring that the holder of the security establish, whether by litigation or arbitration, an actual entitlement to payment of the moneys: Mitsui Kensetsu Corporation Australia Pty Ltd v State of South Australia (unreported Qld Supreme Court, 9 August 1990 per Byrne J). The certificate by the NAB issued to HSBC certifying in effect that the conditions of the letter of credit had been met was only a representation of such a bona fide belief and perhaps that there were reasonable grounds for such a belief. [55]-[57], [105] See also Fletcher Construction Australia Limited v Varnsdorf Pty Ltd [1998] 3 VR 812. Steytler P with whom McLure JA agreed held that the basis for the payment made by HSBC pursuant to its independent obligation by it to NAB under the letter of credit was the provision by NAB of a certificate in the required terms. It was, his Honour found, the presentation of that certificate, not the truth of the facts certified, which conditioned HSBC's obligation to pay. 27 In Olex Focas Pty Ltd v Skodaexport Co Ltd , sub-contractors provided unconditional bank guarantees to the head contractor known as mobilisation guarantees. Additionally they provided performance bonds again by way of bank guarantees to the head contractor. All the guarantees contained unconditional undertakings by the bank to pay the head contractor on demand. The contracts made between the sub-contractors and the head-contractor were variously expressed to be subject to the laws of India or Switzerland. The contracts also contained an arbitration clause requiring disputes to be arbitrated in Paris. 28 Disputes arose between the sub-contractors and the head-contractor. The sub-contractors claimed that they had performed all their obligations under the contract. The head-contractor denied this. The head-contractor then called up the full amount of the guarantees. The sub-contractors sought interlocutory injunctions requiring the head-contractor to countermand the demands made upon the bank, restraining the head-contractor from making any further demand under any of the guarantees and restraining the bank from making any payment pursuant to any of the guarantees. 29 The mobilisation and bank guarantees all contained irrevocable undertakings on the part of the bank "to pay the buyer at site forthwith on first demand and in writing without protest or demur or proof or satisfaction and without reference to the seller any and all amounts demanded from us by the buyer", subject to an aggregate limit. 30 The bank further agreed that: it wasn't necessary for the buyer to proceed against the seller before proceeding against the bank and that the guarantee would be enforceable against the bank as principal debtor notwithstanding the existence of any security; the liability of the bank to the buyer under the undertaking would remain in full force and effect notwithstanding the existence of any difference or dispute between the seller and the buyer, the seller and the bank and/or the bank and the buyer or otherwise howsoever ... to the effect that notwithstanding the existence of such difference, dispute or instruction, the bank shall remain liable to make payment to the buyer in terms of the guarantee. 31 The Court declined to grant injunctions under the general law, they not having established a clear case of fraud by the head-contractor in making demand under the guarantees and that the bank was aware of any such fraud at the time of the post payment. There was accordingly no serious question to be tried in that respect. In so finding the Court applied Wood Hall Ltd v The Pipeline Authority [1979] HCA 21 ; (1979) 141 CLR 443. 32 However, the Court held that there were serious questions to be tried whether the parties were engaged in trade and commerce between Australia and a place outside Australia, for the purposes of s 6(2) of the Act, and whether the head-contractor had acted unconscionably, and in contravention of s 51AA of the Act, by making demand under the mobilisation guarantees, in the sense that it had insisted on strict legal rights in circumstances which made that harsh or oppressive or caused hardship. Accordingly, the sub-contractors were entitled to injunctions in respect of the mobilisation guarantees: ( Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537; Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489 referred to). Batt J in so finding held that the effect of the Act, applying as it did to international trade and commerce, was to work a substantial inroad into the well-established common law autonomy of letters of credit and performance bonds and other bank guarantees. In that case the bank which operated in Victoria, had made a submitting appearance only. 33 In Wood Hall Ltd v The Pipeline Authority a condition in a contract for the construction of a pipeline required the contractor to provide a cash security or, alternatively, a bank guarantee as security for the contractors due and faithful performance of the work. This was in the nature of a performance guarantee. Another condition entitled the owner to retain 10% of the progress payments due to the contractor until the work had been performed and accepted in accordance with the contract. The owner, at the contractor's request, agreed to accept a bank guarantee in lieu of the monies retained. This was a so-called retention guarantee. By each of the guarantees the bank unconditionally undertook to pay the owner on demand any sum up to the limit specified in each guarantee. When the work was almost complete, the owner demanded payment from the bank under the guarantee. The contactor sought declarations and orders the purpose of which was to restrain the bank from making payment to the Authority under four instruments described on their face as bank guarantees given by the bank to the Pipeline Authority. The Court there held that the owner was entitled to demand and be paid the amount of the performance guarantee whether or not there had been a want of due and faithful performance of the work, and the monies so paid must be held by him as security for the contractors due and faithful performance of the work. 34 Gibbs J, having regard to the proper construction of the performance guarantee, said that to hold that the Banks should not pay on receiving a demand, but should be bound to inquire into the rights of the Authority and the contractor under a contract to which the bank was not a party would be to depart from the ordinary meaning of the undertaking that the Bank is to pay on demand. (p 451) However, Stephen J observed that, if the construction contract itself had contained some qualification upon the Authority's power to make a demand under a performance guarantee, the position in relation to the grant of such an injunction might well have been different (p 459). Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 at 550-551 made observations to like effect. The first, noted in passing by Gibbs J in the Wood Hall case (at 451) and recognised as well by Young J in Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1986) 2 BCL 366, 370, is that the Court will enjoin the party in whose favour the bond has been given from acting fraudulently. The second exception, recently recognised by the Victorian Supreme Court in Olex Focas Pty Ltd v Skodaexport Co Ltd, [1997] ATPR (Digest) [46-163], is that the Court will intervene to restrain the party for whose benefit the bond was given from acting unconscionably for the purposes of s 51AA of the Trade Practices Act 1974 (Cth). A line of cases has recognised that whilst the Court will not restrain the issuer of the bond from acting on the unqualified promise to honour it, if the party in whose favour the bond has been given has made a contract promising not to call upon the bond, breach of that contractual promise may be enjoined on normal principles relating to the enforcement by injunction of negative stipulations in contracts. 37 In addition to its submissions concerning the Construction Contract Clough also contends that the performance guarantees are expressly by their terms triggered only "on breach of contract by" Clough. It is said accordingly that the performance guarantees are not 'unconditional' enabling the Banks to ignore the position as between Clough and ONGC. Any suggestion that notices under the performance guarantees are 'conclusive and binding', and had effect notwithstanding any dispute pending in any court and that the bank's liability is 'absolute and unequivocal' is, it is submitted, to miss the threshold point. They are only conclusive it is said if they are properly called and absent there being a breach of contract they have not been so called. Clough contends that there is a serious question to be tried whether in fact they have been properly called. 39 Such is the case here. Clough says that it is not and has not been in breach of the Construction Contract and that no other contractual basis exists as a matter of fact to entitle ONGC to call up the performance guarantees. Alternatively it says that if any breach exists that has been occasioned by ONGC's own breaches of contract. ONGC has not appeared. Accordingly the facts deposed to are presently uncontradicted. The Banks do not contradict that evidence nor could they. I am required to consider the application on the basis of the evidence as it stands before me. 40 As I have mentioned, Batt J was not persuaded, on the evidence before him in Olex Focas , that there was a serious issue to be tried that the head-contractor was acting unconscionably for the purposes of s 51AA of the Act in calling up the performance guarantee. His Honour came to the opposite conclusion on the evidence before him in respect to the mobilisation/procurement guarantees. This was because his Honour considered that the calling up the whole amount secured by this category of guarantees, when the greater part had already been paid, was "according to ordinary human standards, quite against conscience" and accordingly, unconscionable within the terms of the Act. 41 This conclusion was reached although the contractor was, in calling up these guarantees, acting according to his strict legal entitlement: Stern v McArthur [1988] HCA 51 ; (1988) 165 CLR 489. See also: ACCC v CG Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2 ; (2000) 96 FCR 491 at 498 adopted with approval in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 76 ALJR 1 Gummow and Hayne JJ. 42 Clough says that it is not in breach and accordingly the triggering event has not occurred. ONGC is not, on that basis, acting according to any legal entitlement. It is acting without any legal entitlement. In my opinion, judging the matter as I must, on the evidence before me, I consider this to be unconscionable, within the meaning of s 51AA of the Act. 43 I remain satisfied that there is a serious issue to be tried as to whether ONGC has acted unconscionably in contravention of s 51AA of the Act in calling on or threatening to call on the performance guarantees despite there being no legal right, on its part, to do so. As Austin J said in Boral Formwork v Action Makers (2003) ATPR 41-953 at [14] when referring relevantly to s 51AA of the Act: "The principle of autonomy, applicable to a standby letter of credit, cannot override the Statute" . I am also satisfied that, upon the same factual matrix, there is a serious issue to be tried whether ONGC is in breach if the negative stipulation conditioning the right to call up the performance guarantees. 44 These findings warrant the continuation of the injunctive orders as against ONGC, and subject to consideration of the balance of convenience, ancillary injunctive orders as against the Banks. 45 In these circumstance it is not necessary for me presently to enter upon the question of the construction of the performance guarantees and in particular whether, as between the Banks and ONGC the obligation to pay under a call is conditioned by 'breach of contract' by Clough, and if so, just what is required to be done by way of notice, or proof, or otherwise, in order for that condition to be satisfied. See also Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) [1978] HCA 45 ; (1978) 141 CLR 335 at 351 and Wood Hall Ltd v Pipeline Authority [1979] HCA 21 ; (1979) 141 CLR 443 at 454. It points also to the fact that there is no suggestion that ONGC would be unable to repay any amount owing. Accordingly damages from ONGC, it is said, would be an adequate remedy. Should an Anti-Suit Injunction be Issued? 49 The balance of submissions by the Banks relating to the subject matter of an anti-suit injunction are all based upon the proposition that an anti-suit injunction has in fact issued and raises questions as to whether such an injunction would be recognised by Indian courts, suggesting that they might not be and that if any injunction were to be granted it should be framed so as to prevent the Banks being placed in a contradictory position if an Indian court does not give effect to any anti-suit injunction for example, by expressly conditioning its operation upon Indian courts actually giving effect to any anti-suit injunction granted against ONGC. The Banks submit that this is an important factor on the balance of convenience and point to the case of Olex Focas Pty Ltd v Skodaexport Co Ltd where Batt J refused an injunction against either the beneficiary or the bank to prevent payment on performance bonds based on claims of unconscionable conduct contrary to s 51AA of the Act. This, it is contended, gives rise to an unquantifiable difficulty, which means that an undertaking as to damages, by Clough, may well be insufficient to protect the position of the Banks. I found that damages would not be an adequate remedy for Clough on the evidence then before me. 53 In so finding I relied upon the affidavit of Richard Francis Simons sworn 28 May 2007 who proposed that if ONGC were to call on the performance guarantees this would have a material and long term adverse effect on Clough's business. [8] He went on to explain the effect this would have upon Clough's debt facilities and available cash, its reputation and its ability to obtain other performance guarantees. It will be helpful, for present purposes, to refer to these matters in detail. He says that, accordingly, if the performance guarantees are called this would crystallise significant additional debt obligations for Clough. In that event, Clough would not have sufficient available debt facilities to fund the encashment of the performance guarantees. This he says would reasonably be expected to lead to the Banks requiring Clough to reimburse them for the funds paid out by them under the performance guarantees which would place Clough under considerable strain in respect of its cash flow. In particular, he says, it would prevent Clough from continuing to make capital investments to continue its growth and that presently it is planning the investment of several tens of millions of dollars over the course of the next 12 months to expand its capacity in its fixed asset base. Such planned expansion could not proceed if ONGC called upon the performance guarantees and Clough were required to reimburse the Banks. He refers to a project presently being undertaken by Clough namely a substantial refurbishment and upgrade of its vessel the 'Java Constructor'. This capital expenditure program has a cost of US$45 million and is being funded through a new debt facility to be provided by the Royal Bank of Scotland plc. Negotiations for the new debt facility are well advanced and credit approval has been obtained with expected finalisation of documentation by approximately mid June 2007. Additionally Clough is also in the course of finalising negotiations for the acquisition of a new vessel; again those are expected to be concluded by approximately mid June 2007. The acquisition is to be funded by a new debt facility of US$72 million to be arranged by Caterpillar Marine Financial Services. Credit approval for that has been obtained and is expected to be finalised by about end of June 2007. 55 He says that if ONGC calls upon the performance guarantees it is highly likely that the new debt facilities to which I have referred will be jeopardised with each financial institution being concerned about the impact on Clough's cash flow from having to fund the calling of the performance guarantees by ONGC which is likely to lead to the withdrawal of the current offers of finance. Mr Simons deposes that in his view the probability of such an outcome is very high and should that occur Clough will be unable to pursue both of the vessel projects. He then says that absent the capacity expansion program Clough is at significant risk of its competitive position being severely eroded. It would not he said be able to respond to the changing requirements of Clough's clients which were the catalyst for the new capital investments. 56 The adverse cash flow impact of funding the performance guarantees would cause Clough to undertake a significant cost cutting and retrenchment program to be able to generate sufficient cash to reimburse the Banks. Such actions would materially adversely impact Clough's competitive position and make it very difficult to attract and retain key staff. The reason why Clough would have to undertake significant cost cutting and retrenchment is that without those drastic measures the pressure on Clough's cash position after paying US$21 million would be such that to be able to pay its ongoing debts from available cash resources Clough would have to reduce its expenses. The formal dispute commenced when the client called on performance guarantees granted in relation to Bass Gas project. The dispute relating to the Bass Gas Project is well known in the public domain and Mr Simons believes it has adversely affected Clough's reputation in the market. If ONGC calls on the performance guarantees then the same adverse outcomes resulting from drawing of the performance guarantees on the Bass Gas Project would be repeated and would, he believes, magnify the negative reputational impact as a result. He says that from his experience with Clough and as a result of having to deal with the reputational impact as a result of the calling on the performance guarantees in relation to the Bass Gas Project as well as from his experience generally, that the act of calling on the performance guarantees creates an impression amongst stakeholders (current and prospective employees, clients, suppliers and shareholders) that Clough has failed to perform its technical obligations on a project and may not be competent. He says that the clearing of Clough's name by litigation, after the performance guarantees had been called and paid, as a result of likely protracted litigation taking several years could, throughout that period, permanently adversely affect Clough's reputation as an engineer and contractor. He deposes that the impact could lead to a substantial reduction in the share price of the company. Indeed this is something which occurred when the dispute relating to the Bass Gas Project commenced. This in turn would make it very difficult to raise equity capital and debt capital from new lenders. 58 It would also be a concern amongst current and prospective clients about Clough's technical competency which would affect its ability to win new work, undertake and complete projects. 59 There would be concern amongst current and prospective clients about Clough's financial stability and its ability to complete the existing projects and take on new projects. Queries were raised in this regard by a number of prospective clients who questioned Clough's financial capability following the Bass Gas dispute. Mr Simons had to present Clough's financial position to a number of its clients and consultants. He deposes also to the tightening of credit facilities by suppliers such as Mitsui & Co, a long term supplier of pipes to Clough as a result of the Bass Gas dispute. Indeed Mitsui also required Clough to provided security for their trade debt prior to the shipment of their goods. 60 There will also be likely concern amongst Clough's employees about its financial stability and hence the security of their employment. The labour market is presently very competitive with organisations like Clough competing for resources. In such a buoyant labour market it is said it would be easy for employees to find other jobs and indeed Clough has lost a number of its employees to competitors and clients due, amongst other things, to concerns over Clough's financial stability. That position would merely be exacerbated in the event that ONGC drew on the performance guarantees and the Banks paid pursuant to those demands. He believes that if ONGC were to call on the performance guarantees (and these were paid) it would make it extremely difficult for Clough to obtain the issue of new guarantees from its Banks and other performance guarantees providers. Absent the ability to obtain such guarantees for future projects it would not be awarded new contracts. This in turn would lead potentially to consequences for the continued viability of Clough's business. 62 He concludes by stating his belief that Clough and the companies associated with it would suffer irreparable harm if payment under the performance guarantees were made in circumstances where, ONGC is not entitled to call on them. 63 Nothing of what was said by Mr Simons was in any way disputed by the Banks. The possibility of the Banks being confronted with contradictory orders by reason of any proceedings which may be instituted against them by ONGC in India, is just that, a mere possibility at present. The institution of such proceedings will possibly generate a number developments which might well avoid such a result. Clough might seek to be joined to those proceedings in order to protect its position. One way or another it is highly likely that the fact that these proceedings will be brought to the attention of the Indian court. This might lead to applications both in India and here in Australia as to which is the more appropriate forum. There is no reason for me to conclude at this stage that there is any real likelihood that an Indian court would ignore relevant principles of private international law including international curial comity. 65 Nor am I persuaded to give any significant weight to the expressed concern on the part of the Banks as to their commercial reputation or that there is any immediate likelihood of parties arranging international letters of credit and performance guarantees preferring Banks in jurisdictions other than Australia. The Banks have taken prompt action to have the interim injunctive orders dissolved in order to enable each of them to discharge their perceived obligations to ONGC. They cannot be accused of adopting a merely passive role. It is no discredit to the Banks to be the subject of injunctive orders, in these circumstances, by this Court. The circumstances of this case are in any event exceptional. 66 On the other hand, I am satisfied that to discharge the injunctions could very well lead, not only to irreparable harm to Clough as a company and thereby its shareholders but would likely visit adverse consequences upon its employees and others such as suppliers and parties with whom Clough has engineering contracts. I remain of the view that damages in this context would not be an adequate remedy. 67 In these circumstances, and in light of the serious issues to be tried as between Clough and ONGC, it is necessary, in my opinion, in order to preserve the status quo, and the efficacy of the injunctive orders made against ONGC, given the Banks' intention, otherwise, to pay under the guarantees, to restrain them from doing so: see Olex Focas at p 405. 68 Accordingly I am of the view that the motion by the Banks should be dismissed. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | application to discharge interim interlocutory injunction whether respondent banks ought be enjoined from paying under performance guarantees by way of ancillary relief to preserve status quo where principal already enjoined from taking further steps to demand or obtain payment under performance guarantees issued by banks. injunction |
I should indicate that I'm able to do that because I've had the benefit of written submissions, in advance, from Ms Jeilles and also from Ms Copley on behalf of the Commonwealth, which have been spoken to this morning in a very precise way, with respect, by each of the applicant and the respondent's representative. And the result of that is that I am of a very clear view as to what the outcome ought to be as a matter of law. 2 This is an application, then, under s 44 , subsection (2A), paragraph (a), of the Administrative Appeals Tribunal Act (1975). The decision of the tribunal is one given by Dr Levy, a Senior Member of that tribunal, on 24 January 2007. A grant of leave within which to appeal against that decision is necessary because, on any view --- and it seems to be common ground --- more than 28 days expired between when the decision came to the attention of Ms Jeilles and when a document was filed in this court. 4 For reasons that I will give shortly, it is not necessary to explore, in detail, precisely when the decision came to Ms Jeilles' attention from the tribunal. She has lodged, and read this morning, affidavits which explain in quite some detail the difficulties under which she was suffering in the earlier part of this year and they relate not just to matters of health but also the changes of residence that she experienced which are, as she's related, concerned with the economic circumstances in which she has found herself. I very well understand the difficulties in which that has placed her in relation to the receipt of communications from the tribunal. 5 To compound that and, again, as she's related and provided supporting evidence both from her osteopath and medical practitioner, she has been subject to particular medical treatments and, as well, had the unfortunate experience of a fall while bushwalking in early March. All of those have undoubtedly impacted, not just upon her ability to receive communications readily, but also, as well, to assimilate exactly what was going on as far as officialdom, in general, was concerned. Of course, each of us, when we're dealing with officialdom has a responsibility to make sure that we have a contact address which allows ready communication and that is part and parcel of the accessing of benefits that our society provides and the part and parcel is that we have to do our bit as well by making sure that we are able to be contacted if need be. 6 I have been given, very helpfully, by the respondent's legal representative, Ms Copley, a chronology which sets out a number of different scenarios as to dates upon which one might look to for when the decision arrived at a particular address or came in some way to Ms Jeilles' attention. Suffice to say, the periods of time involved differ from a matter of some few weeks to perhaps longer than that. But, again, as I've said, it is not necessary to fix upon a particular time because there are other factors which intrude on the exercise of the discretion that I have in relation to whether or not to grant an extension of time of the kind for which the statute provides. 7 Now, the exercise of the discretion that is conferred by s 44(2A) is the subject of well settled principles. Those principles have come to be regarded as having been set out by Wilcox J in a decision as far back as 1984, that decision being Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. 8 Although that decision was concerned with the exercise of a discretion in relation to the institution of proceedings under the Administrative Decisions (Judicial Review) Act 1977 , in this court those principles have been regarded as having an application in relation to the discretion conferred by s 44 of the Administrative Appeals Tribunal Act . In that regard, one might refer to decisions of this court such as Repatriation Commission v Tuite (1992) 37 FCR 571 at page 576, and also Department of Social Security v Van Den Boogaart (1995) 37 ALD 619 at page 620. 9 The principles, then, as I apprehend them, from the decisions that I've mentioned are these. Firstly, although s 44 does not in any particular way place an onus of proof on a person such as Ms Jeilles, there still has to be a satisfaction on the part of the court that it's proper to grant an extension. That is not to say that special circumstances have to be shown, but there has to be something which would engender a positive satisfaction that it is proper to grant an extension. Indeed, prima facie, the rule is that proceedings commenced outside the prescribed 28-day period ought not to be entertained. That was the subject of a particular decision or statement made by Fitzgerald J, when a member of this court, in a case Lucic v Nolan (1982) 45 ALR 411 at page 416. 10 The second principle that I apprehend is that action taken by an applicant other than just by making an application for review under the - or for an appeal, I should say - under the Administrative Appeals Tribunal Act is relevant to considering whether there is an acceptable explanation for delay. In other words, is this a circumstance where someone has, by means other than those within the formal processes of the court, endeavoured to make it known to a decision-maker that he or she was not resting on their rights? 11 The third principle I apprehend is that it is relevant to consider any prejudice to the respondent including any prejudice in defending the proceedings occasioned by a delay. 12 The fourth principle I apprehend is that a mere absence of prejudice of that kind is not enough to justify the grant of an extension. In other words, there are public interest considerations which intrude. These could be matters such as, if the application were successful, the unsettling of other people and even, for that matter, a public interest in the finality of administrative decision-making. 13 The fifth principle I apprehend is that the merits of the particular proposed appeal are properly to be taken into account in considering whether or not an extension of time should be granted. 14 Sixthly, I apprehend that considerations of relative fairness as between the applicant and other persons in a like position are relevant, insofar as they are raised, to the manner of the exercise of a discretion. 15 Having said that, the discretion concerned is an open-ended one, and I do not for one moment regard those principles that I've mentioned as the exclusive statement of everything that the court might properly take into account in deciding whether or not to grant an extension of time. 16 Of those principles, the one that seems most pertinent to me in the circumstances of the present case is the merits of the proposed appeal. In other words, I am prepared to assume, in favour of Ms Jeilles, that there is an acceptable explanation for the delay that has occurred, be it as long as that, perhaps, which might be identified by the Commonwealth on one scenario in the chronology, which is exhibit 5, or, perhaps, a rather shorter period. I am prepared to accept there is an acceptable explanation for delay. The real issue which intrudes upon the exercise of the discretion I have, as I apprehend it, is the question of the merits of the proposed appeal. 17 Now, in that regard, I remind myself that I am not trying an appeal, and that I must be careful to ensure that a case which is perhaps not as meritorious as one might think, but is nonetheless arguable, ought not summarily to be terminated, in effect, by a refusal of an extension of time. In other words, I should approach the question of considering merits tutored by the same sort of authorities that would intrude upon a question of summary judgment. Having said that, this does seem to me to be a clear case, and it is for that reason that I proceed to expand on why it is that I am proposing not to grant an extension of time. 18 An appeal to the Federal Court under s 44 is not an appeal at large. There are a number of decisions of Full Courts of this court which bind me, which make it quite plain that the identification of a question of law is an important matter, and, indeed, the very essence of the jurisdiction that the court exercises under s 44 is on a question of law, not, as I have said, at large. In this regard, I refer to a line of authority, the root authority for which in modern times might be regarded as being a decision of the Full Court in a case Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321. 20 I note, further, that, as long ago as when Gummow J sat as a member of this court, that his Honour was particularly concerned to emphasise the nature of the appeal jurisdiction, and it's strictly an original jurisdiction, as being on a question of law. 21 Ms Jeilles has the burden of not having legal representation and that has made it a burden, in the sense that, given the particular nature of the jurisdiction invoked, she has had to try, as best she can, herself, to identify questions of law that are said to be errors in the Tribunal's decision. She has, with respect, made a good job of trying, as best she could, to identify questions of law in the Tribunal's decision, in respect of which she would wish to institute an appeal proceeding. (ii) did the Tribunal err in its application of the "special circumstances" test to her particular circumstances? (iii) did the Tribunal deny her procedural fairness by the presence of either actual or apprehended bias in the conduct of proceedings or, put another way, and to use Mr Jeilles not inapt description of the latter, did she get a "fair go" in the Tribunal? They suffice though, in my respectful opinion, for present purposes. I propose to approach them in the reverse order, which means the first that I shall advert to is, again to use the broad, Australian description: did Ms Jeilles receive a "fair go" in the Tribunal? In this court, the better view seems to be that a denial of procedural fairness can, indeed, amount to a question of law. It's not necessary for me to expand upon the jurisprudence, both for and against that proposition, that is evident in decisions of this court, but rather, I shall assume in favour of Ms Jeilles, that it is, indeed, possible to formulate, as a question of law, fit for determination under s 44 of the Administration Appeals Tribunal Act , denial of procedural fairness as a ground of appeal. 23 A convenient summary of the content of procedural fairness or natural justice, as sometimes it's called, as known to our law, is to be found in a leading Australian text on administrative law, namely: Aronson, Dyer and Groves, "Judicial Review of Administrative Action", Third Edition, at page 370. The hearing rule requires a decision maker to hear a person before making a decision affecting the interests of that person. Clearly, the prohibition against actual bias is concerned with the mental processes of deliberation. However, the ground of actual basis is really of practical significance, unless the reasonable apprehension test has been limited or excluded. The way she formulates that is not by reference particularly to the transcript of proceedings, because that has not been introduced in evidence, but rather, she looks to Dr Levy's surname and apprehends that, with that surname, he may be Jewish and then, extrapolating from that, that, without criticising the following of that faith, that it may nonetheless mean that there was, even perhaps subconsciously, a bias on his part as against the pursuit of her occupation of belly dancing, because that was associated with the Middle East and particular nations, perhaps also, in the Middle East. 26 That, with respect, is drawing a long bow and does not, in terms of our law, amount to apprehended bias. There is no other evidence which would in any way support the proposition that she advances. Although I can understand how one might come to that view that she has reached on her own part, I should indicate that it is not a view, with respect, that I support in any way, shape or form. There is certainly not a basis which is raised on the evidence for an apprehended bias claim. To that extent, there is, therefore, no serious question to be tried on appeal, as far as that proposed question of law is concerned. 27 Proceeding then, again, in reverse order, the next question for me to consider is whether or not there was some error of law in the special circumstances test for which the Social Security Act provides. The Tribunal, in its reasons, correctly set out the jurisprudence that has developed in relation to the application of the special circumstances test. What followed thereafter in the Tribunal's reasons was a value judgment as to how applying those authorities to the circumstances, as raised on the evidence before the Tribunal, the special circumstances test ought to be applied. I can see no error of law in the way in which the Tribunal applied the special circumstances test. Whether or not I would have come to the same view in applying that test is not to the point. The question is whether or not the value judgment that was made by the Tribunal either involved the taking into account of some irrelevant consideration, a failure to take into account a relevant consideration, or was so unreasonable that no reasonable person could have exercised the special circumstances test in the manner in which the Tribunal chose to exercise it. 28 Approaching the matter in that way I do not see that there has been an error of law which would be productive of a question of law fit for appeal to this court in the special circumstances aspect of the case. That then leaves what is very much the core issue as I apprehend it as far as Ms Jeilles is concerned. That is whether there was some error on the part of the tribunal in the application of the Social Security Act insofar as it provides for lump sum preclusion periods and consequential obligations to repay or have recovered money that has otherwise been paid by way of, relevantly, a disability support pension to the circumstances of her case. 29 It's necessary to say something of what those circumstances are to reveal whether there is, indeed, a question of law. Now, those circumstances are necessarily, as far as this court is concerned, the subject of the findings of fact that were made by the tribunal and there has been no particular challenge to whether or not those findings of fact were open on the evidence. Rather than take up the time of everyone here in reading at length the findings of fact that the tribunal made what I propose to do instead is to incorporate, by reference, particular paragraphs of the tribunal's reasons and those paragraphs which I incorporate by reference will appear in the written reasons of the court that will be published in due course in a more formal sense. The applicant is 57 years of age, having been born on 20 June 1949. She currently lives in a granny flat and pays rent of $350 per month. While she spends approximately $1,000 per fortnight on alternative medicine, she also has large veterinary bills - she has one dog and eight cats. She spends $70 per week on food. In her oral evidence, the applicant stated that she previously did work as a belly dancer. She danced at weddings and other activities, but for her "students" she danced publicly. She stated that these activities helped some older women to learn to live without pain. As a result of the second motor vehicle accident on 23 April 1997, and the subsequent damages payout, a compensation charge of $14,411.40 was determined to be applicable and that a lump sum preclusion period from 23 April 1997 to 20 April 1999 should apply. No response was received in relation to these letters. On 20 March 2003, Centrelink was requested to provide an estimate of preclusion period and the applicable charge, if the claim was settled for $125,000. On 21 March 2003, Centrelink responded that the likely applicable charge would be $13,531.60, and it was estimated that there would be a preclusion period from 23 April 1997 to 30 March 1999. A further request was made of Centrelink on 24 March 2003 seeking an estimate of compensation charges and preclusion periods if the applicant's claim was settled for (a) $85,000; and (b) $50,000. On the same day, 24 March 2003, Centrelink responded that if the claim settled for $85,000 an amount of $6,563.50 would be the relevant charge and the estimated preclusion period would run from 23 April 1997 to 18 August 1998. On 25 March 2003, Centrelink advised that if the amount settled for $50,000, the relevant charge would probably be $741.40 and the relevant preclusion period was estimated to be 23 April 1997 to 27 January 1998. On 21 April 2004, Centrelink wrote to Murphy Schmidt, Solicitors requesting advice as to whether the claim had been finalised. Advice was subsequently received that the claim was settled for $138,101.34 and a judgment for this amount was made in the Supreme Court of the Northern Territory on 19 May 2005. That judgment included economic loss of approximately $25 per week for her former street entertainment activity as a belly dancer. On 2 June 2005, Centrelink decided that Ms Jeilles was liable for a compensation charge of $14,411.40 in respect of the period 8 January 1998 to 20 April 1999 in respect of which she had received a Disability Support Pension. It also determined that she was to be subjected to a lump sum preclusion period from 23 April 1997 until 20 April 1999. Under cross-examination she was referred to the SSAT decision where her evidence indicated that she had about $5,000 remaining at the time of that hearing. The applicant said she probably did get a letter from Centrelink about an obligation to pay back Disability Support Pension monies if she received a lump sum settlement. She also was referred to the SSAT decision where she had provided evidence to that Tribunal that she did recall receiving a letter from Centrelink advising that she might have to pay money back. However, she stated that her solicitor told her that depending on the settlement amount, she might not have to pay back any amount to Centrelink. (See T3, folio 11). She was also referred to a letter from Ward Keller, Lawyers to the Department of Social Security dated 27 May 2005 wherein it indicates that that firm had included in the settlement amount a calculation for economic loss of $25 per week to age 65, including a 3% multiplier, to cover loss of income as a belly dancer. (See T30, folio 82). The applicant did not agree that she was paid $25 per week for economic loss although she agreed that she had signed a statement to that effect and in fact, signed all documents prepared by her solicitor. The applicant was also referred to the letter from Ward Keller, Lawyers, dated 8 August 2005 and a summary of the disbursement of the settlement amount of $138,101.34. (See T42, folio 108). The applicant provided evidence that, consistent with what she had told the SSAT, she spends approximately $700 to $800 per fortnight on osteopathic and herbal treatments and a "pranic" healer. In response to a question from the respondent's advocate, she stated that she had considered pharmaceutical benefits available through conventional medicine, but she is extremely reactive to drugs and does not take conventional medication because of a genetic thyroid problem. She stated that she almost died at one time when previously on some prescribed medical treatment. She also indicated however, that she does go to her general practitioner for normal medical issues, eg X-rays. The applicant had been to an osteo specialist and had received four treatments which were covered by Medicare. However, she did not think that that treatment had been useful for her. Attachment A to the Secretary's Statement of Facts and Contentions (Exhibit 11), showed that as at 18 October 2006, the applicant was in receipt of a Disability Support Pension of $621.10 per fortnight (gross amount). She agreed that that was the last payment she had received and that the amount shown was correct. In response to cross-examination, the applicant stated that she thought that her expenses were approximately $1,000 per fortnight on petrol and other expenses associated with her rehabilitation (rather than $700 --- $800 per fortnight as previously stated). I have considered all the relevant statutory and case law as well as all of the evidence presented by both the applicant and the respondent, in formulating a determination in this matter. The second accident occurred on 23 April 1997 and a dispute in this matter arises from the settlement of that accident. In relation to Issue 1 --- whether Ms Jeilles is to be subject to a preclusion period , i.e. where she is not entitled to social security payments, s 1169 provides that where a person receives a compensation affected payment, and in addition receives a lump sum compensation payment, then the compensation affected payment is not payable for the "lump sum preclusion period". The "lump sum preclusion period" is defined in s 1170(1). Therefore as a matter of law, Ms Jeilles is subject to a preclusion period. In relation to Issue 2 --- whether the amount of any consequential compensation charge and the preclusion period, has been correctly calculated, the "compensation affected payment" includes a Disability Support Pension (see s 17(1)). Ms Jeilles received "compensation" in accordance with a scheme of insurance or compensation envisaged by s 17(2) of the Act. Under s 17(3) of the Act, 50% of the total lump sum received is deemed to be the "compensation part of the lump sum" or in other words 50% of $138,101.34. Therefore, the compensation part of the lump sum is $69,050.67. The lump sum preclusion period is defined in s 1170(1), and is determined by the formula as set out in s 1170(4). (See section 1170(5)). Applying that lump sum compensation payment to a statutory formula, which is set out in s 1170 of the Social Security Act , one derives what is known as a lump sump preclusion period. From a lump sum preclusion period one in turn derives both a number of weeks and then a monetary amount in respect of which the Commonwealth is entitled to recover a sum of disability support pension. 32 In this case that has been paid to a particular person. The underlying philosophy for this legislation seems to be that where a person receives either a damages award or a settlement sum in respect of an injury that has also been the subject of a disability support pension relevantly, that person ought not to receive both that pension as well as the damages settlement. Now, it may well be that the particular formula that the Parliament has struck in the legislation works in particular cases outcomes in respect of which reasonable people might reasonably differ, but we are all bound by the legislation as formulated by Parliament and to some extent there is a discretion to ameliorate outcomes by the special circumstances test. 33 When I look at the way that the tribunal has applied the Social Security Act to the facts that it found I do not see an error of law that comes from that in terms of the outcome for a lump sum preclusion period or a resultant repayment amount. More particularly or perhaps more accurately, what I do not see is an arguable case which would give pause for thought about the accuracy with which the tribunal has applied that legislation to the facts that it found. That being the case, it would be wrong for me to grant an extension of time where there was, in terms of matters that have been identified as giving rise to concern and, as best as she could, questions of law by Ms Jeilles, to allow an appeal to go forward. 34 For those reasons then I refuse the application for an extension of time. 35 The order that I propose to make then is to dismiss the application for an extension of time. The application for an extension of time is dismissed. There be no order as to costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | application for an extension of time by which to file an appeal from a decision of the administrative appeals tribunal consideration of the circumstances for the delay consideration of the merits of the proposed appeal social security |
However, they have raised a distinct and new legal and factual contest between Siam Polyethylene Co Limited and the respondents under the Customs Act 1901 (Cth). In the review judgment, the issue between the parties related to the Minister's decision on a review of anti-dumping measures under Div 5 of Pt XVB of the Act. In this judgment I have not repeated my analysis of the facts or legislation but have relied on it, so far as it is relevant and I have used the same expressions and short form descriptions. These proceedings concern a subsequent decision under Div 6A of Pt XVB by the Minister to continue against Siam existing anti-dumping measures in place following the earlier review. The Minister made the relevant decision on 27 August 2008 by signing a public notice pursuant to s 269ZHG(1) of the Act. In the notice the Minister declared that he had decided to take steps to secure the continuation of anti-dumping measures currently applying to the product exported to Australia from Thailand. The Minister also declared that he had considered Trade Measures Report No 137 ( Report 137 ), that had been completed by the CEO on 20 August 2008, and accepted its recommendations and the reasons for the recommendations including all the material findings of fact or law set out in the Report. However, Div 6A of Pt XVB provides a further part of the scheme and deals with consideration of whether existing anti-dumping measures ought be continued. The scheme of Div 6A of Pt XVB of the Act requires the CEO and the Minister to consider the operation and extension of a notice previously published pursuant to the power s 269TG(2). In the event that that earlier notice has been varied pursuant to a review under Div 5 of Pt XVB , it is the notice as varied that is the subject of consideration for a continuation under Div 6A. The CEO must publish a notice in certain newspapers not later than nine months before a particular anti-dumping measure is due to expire at the end of its then current 5 year term. The notice must inform persons that, relevantly, an existing dumping duty notice (such as that in the present case) is due to expire on a specified day and invite interested parties to apply to the CEO in accordance with s 269ZHC within 60 days for a continuation of those measures (s 269ZHB(1)). If no application for a continuation is received by the CEO within that time period, then on the specified expiry date, any dumping duty notice issued under s 269TG(2) expires (s 269ZHB(3)(a)). Next, s 269ZHC sets out for the formal requirements of an application to continue anti-dumping measures. Once such an application has been lodged with Customs, the CEO must examine each such application within 20 days after the end of the 60 day period referred to in s 269ZHB(1)(b) (see s 269ZHD(1)). The CEO then must publish in a newspaper a notice indicating that it is proposed to inquire whether the continuation of measures is justified if certain conditions are met (see s 269ZHD(1) , (2) and (4)). These are that the CEO is satisfied, having regard to the application and any other information that the CEO considers relevant, that the application complies with the formal requirements in s 269ZHC and there appear to be reasonable grounds for asserting that the expiration of the anti-dumping measures to which the application relates "... might lead, or might be likely to lead, to a continuation of, or a recurrence of, the material injury that the measures are intended to prevent". The words that I have just emphasised indicate the threshold prescribed by s 269ZHD(2)(b) for the satisfaction of the CEO to advertise the proposed inquiry. The CEO must prepare a report within no more than 155 days after publication of such a notice (s 269ZHD(5)(c) ; s 269ZHF(1)). Interested parties must be invited in the advertisement to lodge submissions concerning the continuation of the measures within 40 days (s 269ZHD(5)(d)). The CEO then publishes a statement of essential facts within 110 days after publication of the notice (s 269ZHD(5)(e) ; s 269ZHE). In formulating the statement of essential facts the CEO must have regard to the application concerned and submissions relating generally to the inquiry received by Customs within 40 days after the publication of the initial notice and any other matters that the CEO considers relevant (s 269ZHE(2)). Within 20 days of the statement being placed on the public record interested parties must be invited to lodge with the CEO submissions in response to that statement (s 269ZHD(5)(f)). The report to the Minister must include a statement of the CEO's reasons for any recommendation contained in the report, set out the material findings of fact on which that recommendation is based and provide particulars of the evidence relied on to support those findings: s 269ZHF(5). If the Minister declares that he or she has decided not to secure continuation of the anti-dumping measures then, on the specified day, the existing notice expires by force of s 269ZHG(3)(a). The continued notice then becomes reviewable under Div 5 of Pt XVB. On 18 February 2008 Qenos applied for that continuation and a month later Customs commenced the continuation inquiry. On 7 July 2008 Customs placed a statement of essential facts on the public record and invited interested parties to provide submissions in response to it within three weeks. The CEO prepared and provided the Minister with a final report, Report 137, on 20 August 2008. The period of inquiry for Report 137 was the calendar year 2007. In preparing Report 137 Customs stated that it had had regard to information it had obtained in the course of preparing, and the conclusions reached in, Report 134 the subject of the review judgment. The CEO concluded that it was not necessary to continue anti-dumping measures against the exports of the product from Korea, but was satisfied that the measures should be continued against exports of the product from Thailand, including exports by Siam. Report 137 found that the Australian market had grown from around 160,000 metric tonnes per annum in the period between 2004 and 2006 to approximately 220,000 metric tonnes in 2007. Qenos had attributed this increase to water restrictions and government incentive schemes that had promoted high demand in Australia for rotational moulding linear low density polyethylene for use in the manufacture of water tanks. However, Customs found that Siam did not export that type of polyethelene. Report 137 noted that Qenos had had to source imported material to supplement its own production. The Report found that the total import volumes of the product from all countries declined between 2003 and 2006 before doubling in 2007. In 2007 imports supplied approximately 50% of the Australian market, an increase from around 40% in previous years. Report 137 found that Qenos' market share increased in each year up to 2006 but fell in 2007 with the sharp increase in import volumes. The Report found following the imposition in December 2003 of anti-dumping measures on all Thai exporters import volumes from Thailand had declined in 2004 but imports had since gradually increased to levels where they were currently similar to those before the measures were imposed. Report 137 stated that it had used and verified the information Customs had obtained from Siam in the course of its inquiry in preparing Report 134. Report 137 noted that Qenos' application claimed that it had continued to experience price related injury from exports of the product to Australia at dumped prices from Korea and Thailand. Qenos provided the CEO with information based on a prediction in an industry consulting service report suggesting that prior to 2011 manufacturing capacity, particularly in the Asia-Pacific and Middle East regions, would increase by approximately 6.7 million metric tonnes out of a total world increase in capacity of 7.5 million metric tonnes. Customs analysed the Australian market in confidential appendices to Report 137. That analysis revealed that between 2003 and 2007 Qenos' total production and domestic sales had increased, as had its profitability, although there were signs of slowing demand and reduced profit in the December 2007 quarter. Qenos informed the CEO that costs and prices had been increasing in the market since 2003 and that the anti-dumping measures had had limited impact, because even when reviewed, the variable factors continually lagged behind the contemporary prices in the market. In response to Dow's claims about the strong industry performance referred to in the statement of essential facts for Report 134, Qenos argued that its performance had deteriorated more recently and reductions in its margins could be attributed to increases in dumped imports. During the course of the inquiry for Report 137, Dow agreed with Qenos that in recent years the anti-dumping measures had not reflected the increased regional and domestic pricing for the product, but it argued that Qenos had performed strongly in the periods when the measures were ineffective. Dow claimed that this supported its view that the imports from its supplier, Siam, had not caused injury to Qenos. Dow also agreed with Qenos that regional pricing was starting to soften in the market. But Dow argued that this softening and any foreshadowed increase in manufacturing capacity in coming years did not pose a threat of increased dumping and material injury to the Australian industry. Dow argued that any softening in prices in Australia would probably be accompanied by a general decline in pricing throughout Asia and the Middle East, resulting in reduced normal values and no great a risk of dumping. Dow also argued that Siam had a history of exports of its product to Australia at prices that did not cause injury to the Australian industry. Report 137 found that imports from Thailand were at dumped prices. It noted that no other country had in place, or was currently investigating, any anti-dumping measures against exports of the product from Thailand and that manufacturers in Thailand who exported to Australia were operating at close to full capacity. The Report found that on the information available to Customs, supply was expected to exceed demand in Asia in the coming years, although it had no information on the global demand/supply balance. The Report found that the information indicated there would be significant increases in capacity to supply the product in Asia and the Middle East in coming years and that this, when it came on line, could be expected to ease the tight supply to the market for the product in the region. Customs found that it was difficult to predict the timing and impact of the expansions in manufacturing capacity. The Report then examined the pricing of imports in the Australian market and the substitutability between varieties of the product here. The Report compared selling prices to Australian domestic customers common to both Qenos and Siam. It observed that there had been some price undercutting for some common customers. The analysis was in confidential appendix 7. I think it is possible to describe this material without divulging information that might be confidential. The sales' values and volumes recorded for each of the five quarters to December 2007 in confidential appendix 7 reveal minor instances where Dow's prices were less than Qenos'. However, their sales by value and volume for their largest common customers far exceeded the balance for the other customers. These recorded Dow's prices (for Siam's product) as always higher on those large volumes at a time when, as Report 134 later showed, no measures had any relation to the operation of the market. In the cases of some common customers, the value and volume of sales for one of either Dow or Qenos were radically different to those from the other, so that the differences begged an explanation that was not explored beyond the Report observing the mere price difference. In other instances, Qenos' prices for particular customers appeared well above its average prices, whereas Dow's appeared reasonably consistent with its average prices. And, in one case, despite Qenos' having higher prices in the only two quarters in which both it and Dow sold to the customer, Qenos appeared to be gaining significant sales at Dow's expense. Overall, confidential appendix 7 showed that Siam's average unit prices per kilogram appeared relatively consistent, but with minor variations in respect of each customer, while there were significant variations between customers in Qenos' average unit prices. The material in confidential appendix 7 suggested that there were factors particular to the individual customers, and quarters, that affected both the volumes and pricing of each of Qenos and Siam's products. A mere comparison of price did not self-evidently explain any of the recorded differences as being attributable to dumping. Indeed, the sheer size and value of the sales to the first two listed customers and for all customers (not limited to the common customers) suggested that Qenos was able to compete on price at large volumes without Dow undercutting it. Report 137 in its public section, found that the selling prices of imported product from Thailand were at times lower, higher and similar to Qenos' prices. The CEO expected that the removal on 1 January 2008 of Customs duty on product imported from Thailand would have made the prices of any dumped goods from Thailand "more competitive in the Australian market". It noted that the majority of the product imported from Thailand was C8 (grade) which, under normal market conditions, typically commanded a higher price than grades C6 or C4. The Report observed that Report 134 had found Thai export prices to be below its findings of the non-injurious prices. Report 137 noted that Dow had claimed that those non-injurious prices had been calculated at an artificially high level and reflected a level of profitability unlikely to be generally available to any other industry participant or to end-users. However, beyond displaying the comparative data, there was no analysis of or any reason given why, such relatively small undercutting by Dow as was recorded had occurred. Customs remains of the view that imports of [the product] from Thailand, if dumped, have the potential to cause injury to the Australian industry producing like goods. Report 137 found that although users had preferences for certain material, there was competition on prices between the product manufactured by Qenos and imports from Thailand. Customs observed undercutting to some common customers and Qenos provided reports of price competition between its product and Thai imports. This is likely to create an environment where the Australian industry is more susceptible to injury caused by dumping . The Australian industry's performance showed some signs of deterioration towards the end of the period examined. Report 137 recorded in section 8 the CEO's consideration and conclusions on the central questions of the likelihood of dumping and injury recurring. It found that the information provided to it by Siam, the other Thai exporter and a Korean exporter showed that the three manufacturers were operating at close to full capacity. It found this was supported by information supplied by Qenos that showed high capacity utilisation rates in both countries. However, in Customs view, the significant capacity expansions foreshadowed could cause oversupply and encourage producers to increase sales to export markets in an effort to keep plant utilisation high. Customs satisfaction about the likelihood of dumping from Thailand is principally based on its findings in the recent review of measures . The probability of increased supply in the region in coming years, including in Thailand, only serves to reinforce this satisfaction in respect to imports from Thailand. " (emphasis added: The "recent review of measures" was a reference to Report 134. Siam argued that the reasoning in Report 137 recording the CEO's satisfaction as to the matters set out in s 269ZHF(2) was the product of hypothesising about the impact of unknown and undefined future events that bore no causal relationship to the expiry of the measures. Siam contended that, the conclusions in Report 137 that the expiration of the measures would lead or be likely to lead to the occurrence or recurrence of both dumping and material injury, and particularly the likelihood of dumping causing or threatening material injury, were not sufficiently causally connected in a reasoning process in the Report to justify the decision to continue the measures against Siam. Siam argued that the respondents had used speculation rather than a rigorous examination of a kind envisaged by the WTO Appellate Body in United States --- Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan (AB-2003-5) at [111]. The respondents argued that the terms of s 269ZHF(2) were materially similar to Art 11.3 of the implementation agreement. They argued that the considerations identified by Report 137, provided a reasoning process that was open to, and sufficient for, the CEO and the Minister. They referred to the finding in the Report that Siam had continued to dump the product in Australia even while the existing measures were in force, as leaving it open to the CEO and the Minister to conclude that it was likely that such activity would continue if the measures did not remain in place. The respondents accepted that the CEO was not empowered to make a recommendation under s 269ZHF(2) on the mere possibility of dumping or on no more than speculation, but contended that the CEO had had a more solid foundation for the recommendation and had correctly applied the relevant test. The respondents contended that the CEO's conclusion that imports from Thailand actively competed on price with the product produced in Australia was open on the other findings in the Report notwithstanding that Siam's product was of a higher grade than Qenos'. They pointed to the findings that the average price of Thai imports at the end of 2007 was only slightly higher than Qenos' prices, despite Siam's being of a higher quality, and that the removal of duty from 1 January 2008 would only have improved the competitive position of Siam's products, if measures were not in place. They referred to the fact that Report 134 had ascertained a non-injurious price for Siam's products. They also relied on the Report's finding that Siam's product had a degree of substitutability that could cause injury to the Australian industry. The respondents contended that it was open to the CEO to make the finding in Report 137 that in that context it was likely that there would be price convergence between Siam's imports and Qenos' product. They argued that the test of causation of material injury was "essentially a practical exercise that had the purpose of achieving an objective of determining whether, viewed as a whole, the relevant Australian industry is suffering material injury from dumping", relying on what Lockhart J had said in Swan Portland Cement Ltd v Minister for Small Business and Customs [1991] FCA 49 ; (1991) 28 FCR 135 at 144; and Schaefer Waste Technology Sdn Bhd v Chief Executive Officer, Australian Customs Service [2006] FCA 1644 ; (2006) 156 FCR 94 at 115-116 [147] - [149] per Jacobson J. Siam argued that Report 137 did not address the central question in s 269ZHF(2) , because it did not identify the requisite degree of likelihood of the threat of dumping and material injury that the anti-dumping measure was intended to prevent. It contended that the final criterion in s 269ZHF(2) required the CEO and the Minister to address whether the injury or threat was foreseeable and imminent within the meaning of s 269TAE(2B). Siam argued that Report 137 had not found that any injury had been caused to Qenos in the past and none had been found that would be caused more probably than not in the future by the factors it considered. So, Siam argued, the exercise of the power to continue the measures, consistently with s 269ZHF(2) , required the CEO and the Minister to identify a threat of material injury that met or had regard to the test in s 269TG(2) for the initial imposition of anti-dumping measures. In support of this construction it relied on comments in the Explanatory Memorandum for the 1998 amendments that introduced s 269ZHF(2). Siam argued that in performing this task the Minister could take account only of such changes in circumstances, within the meaning of s 269TAE(2B) "as would make that injury foreseeable and imminent unless dumping ... measures were imposed". The respondents argued that s 269TAE(2B) had a limited role, and operated only in the situation in which there were no measures in place. They argued that s 269TAE(2B) had no relevance to an assessment of dumping, as opposed to material injury. The respondents contended that s 269ZHF(2) stated its own test for the purposes of a review under Div 6A of Pt XVB , and it was not constrained by, and applied in a different situation to, the test for imposing the measures originally under s 269TG(2) , using s 269TAE(2B). In addition, the respondents argued that they had considered the changes in market conditions, including that the market had continued to slow, in assessing that injury was likely, not merely threatened. They argued that there was also evidence of current pricing that would cause injury but for the measures and that sales at dumped prices would be below the non-injurious price. They relied on the decision of the WTO appellate body in United States --- Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina (AB-2004-4) at [271]-[285] as supporting the approach that they had taken. Siam argued that the CEO made no findings in Report 137 about Siam or its relationship to any material, or other, injury to Qenos from dumping. Rather, Siam complained that the Report merely asserted, without any analysis or reasoning, that Customs had not attributed any potential injury from other factors as increasing any potential injury from dumping. It contended that s 269TAE(2A) required the respondents, first, to consider whether any other factors were causing or threatening to cause material injury to the Australian industry and, secondly, not to attribute that injury to any such factor. The respondents responded that Report 137 had analysed whether material injury to Qenos was being caused or threatened in a practical manner as contemplated in Swan Portland 28 FCR at 144 and Schaefer 156 FCR at 115-116 [147]-[149]. They argued that the terms of s 269TAE(1) directed the Minister's enquiry to the exportation of goods from "the country of export", not to an individual exporter located there and that nothing in s 269TAE(2A) affected this construction. The respondents argued that Report 137 had considered Thai exports as a whole and their impact on the Australian industry in accordance with the requirements of Div 6A of Pt XVB. They contended that they had applied the right test and had used the non-injurious price analysis in Report 134 to arrive at their findings. Siam replied that the respondents' submissions had ignored the actual analysis, or rather lack of it, in Report 137 with respect to Siam. The imposition of the measures and their continuation is authorised under Pt XVB so as to protect Australian industry from material injury that has been, or is being caused, or that is threatened to be caused by the dumping of goods. This purpose is emphasised in the terms of s 269ZHF(2). That requires that before recommending to the Minister to take steps to secure the continuation of anti-dumping measures currently in place, the CEO must be satisfied that their expiration would lead or be likely to lead to a continuation of or a recurrence of the dumping and the material injury that the measures were intended to prevent. Thus, the formation of the requisite state of satisfaction by the CEO under s 269ZHF(2) is an essential precondition to the Minister being able to exercise his or her power under s 269ZHG(1) to decide whether or not to secure the continuation of the anti-dumping measures. And, the CEO's report under s 269ZHF , including the CEO's satisfaction, findings of fact, particulars of the evidence relied on and reasons to support the recommendations in accordance with s 269ZHF(2) and (5), must be considered by the Minister in arriving at a decision under s 269ZHG(1) , together with any other information he or she considers relevant. The discretion of the Minister in s 269ZHG(1) is expressed in wide terms. In the absence of some positive indication of the considerations on which a grant or refusal of consent is to depend, the discretion is "unconfined except in so far as the subject matter and the scope and purpose of the statutory enactments may enable the Court to pronounce given reasons to be definitely extraneous to any objects the legislature could have had in view", to use the words of Dixon J in Browning ((1977) 74 CLR at p 505). In that case his Honour went on to remark, (as he had done earlier in Swan Hill Corporation v Bradbury [1937] HCA 15 ; (1937) 56 CLR 746 at p 758)), "on the impossibility, when an administrative discretion is undefined, of a court's doing more than saying that this or that consideration is extraneous to the power". In that consideration, the Minister must also consider, as a fundamental matter in exercising his or her discretion, the central finding of the report that, in accordance with s 269ZHF(2) , the CEO was satisfied that the expiration of the measures would lead or be likely to lead to a continuation or recurrence of both the dumping and the material injury that the anti-dumping measure is intended to prevent. Thus, a review under Div 6A of Pt XVB is not intended as a complete replication of the process under Div 3 involved in the initial imposition of anti-dumping measures. But, the continuation review under Div 6A is still directed to the purpose of preventing material injury or the threat of such an injury caused by dumping. So, in exercising his or her discretion under s 269ZHG(1) , I am of opinion that the Minister must consider whether the existing measures are appropriate and adapted to achieve the purpose served by the measures identified in s 269ZHF(2) if they are to be continued. The purpose of the measure under consideration by the CEO and the Minister in s 269ZHF(2) , relevantly here, is to impose an anti-dumping duty that will equate to the sum provided in s 8(6) of the Dumping Duty Act . That requires that the dumping duty payable on goods "the subject of a notice under subsection 269TG .... (2)" of the Customs Act relevantly to be the difference between the amounts that the Minister ascertains to be the export price and the normal value of those particular goods. In evaluating what the duty must be, the Minister (and the CEO in making any recommendation) must evaluate the consequences of an expiration of the measures. Thus, s 269ZHF(2) addresses a number of possible scenarios including whether that expiration actually would lead, or alternatively would be likely to lead, to a continuation or recurrence of both the dumping and the material injury that the measures were intended to prevent. Although, s 269ZHF(2) uses the words "a continuation of, or a recurrence" in relation to two existing facts, namely dumping and material injury, no party submitted that the CEO could not make a recommendation under s 269ZHF(2) , or the Minister a decision to continue measures under s 269ZHG(1) , where the original measures had been imposed only to meet a threatened material injury. While neither s 269ZHD(2)(b) nor s 269ZHF(2) , expressly refers to a threat of material injury, Div 6A is concerned with the consequence of the expiration of existing measures, including those that are intended to prevent material injury being caused for the first time by dumping that would be threatened if there were no measures in place. The threat of material injury from dumping is a justification for the Minister giving a notice under s 269TG(2). It would be incongruous for Pt 6A of Div XVB to be construed in such a way that if that threat persisted after 5 years of effective measures that had counteracted it, Pt 6A did not allow the Minister to continue the measures. I do not consider that I should adopt a narrow construction of the scope of a continuation or sunset review under Pt 6A that would prevent the Minister continuing measures that that had been effective in meeting a threat. There is no indication in Pt XVB that such a narrow construction would achieve a purpose of the Parliament. Nor, if the construction were open, does Pt XVB prevent a new application for anti-dumping measures being made and granted under Divs 2 and 3 of Pt XVB. For the reasons below I am of opinion that the words "would be likely to lead" in s 269ZHF(2) can, and in a case like the present should, be read as applying directly to the expression "the dumping or subsidisation and the material injury that the anti-dumping measure is intended to prevent", without the meaning of that expression being qualified or restricted by the words "a continuation of, or a recurrence of". There was no finding in Report 137 that actual injury was being suffered by Qenos as a result of the dumping by Siam. Therefore, each of the CEO and the Minister was obliged to consider the second scenario of whether the expiration of the measures would be likely to lead to both dumping and the relevant material injury. The scenarios adverted to in s 269ZHF(2) involve a consideration of future events based on an evaluation of the present position. When s 269ZHF(2) refers to the question of whether the expiration of the measures would lead to a continuation or recurrence, it is addressing the issue that arises where current dumping would in fact cause material injury were it not for the operation of the measures that are in place at the time. Ordinarily, this will involve the CEO, then the Minister, considering whether the removal of the dumping duty then in place would cause the Australian industry material injury. Ordinarily, this will be because the price of the imported goods would be sufficiently below that of its Australian competitor to cause or be likely to cause it material injury. On the other hand, where the second limb of s 269ZHF(2) is relevant, namely whether the expiration of the measures "would be likely to lead" to dumping and material injury, the section requires a prediction to be made. The use of the word "likely" qualifies the nature of that prediction. Since s 269TG(2) authorised the use of the measures where there was a threat of material injury to an Australian industry caused by dumping, the character of the likelihood in s 269ZHF(2) will take its meaning from the purpose for which the original imposition of dumping duty under s 269TG(2) was imposed. I am of opinion that the character of the threat necessary for the purposes of s 269TG(2) should be read consistently with the degree of likelihood necessary to satisfy the criterion in s 269ZHF(2) of being "likely to lead" to the dumping and material injury that an existing measure is intended to prevent. That character is governed by s 269TAE(2B). The threat must be of an injury that is foreseeable and imminent unless dumping measures were imposed. I am satisfied that the word "likely" in s 269ZHF(2) should be interpreted as meaning more probably than not. First, s 269ZHF(2) uses the word "likely" as part of "would lead, or would be likely to lead". This draws a distinction between a prediction of something definite ("would lead") and something less definite ("would be likely to lead"). But the satisfaction of either prediction will have the result of the CEO recommending the continuation of a measure "intended to prevent" the predicted event. This context suggests that the Parliament used "likely" to convey "more probable than not", rather than a lesser degree of certainty. Secondly, the conditions that had justifyed the giving of a notice under s 269TG(2) , required the Minister to be satisfied, that a threat of injury was "foreseeable and imminent unless dumping ... measures were imposed" in accordance with the standard imposed in s 269TAE(2B). It would be consistent with achieving the original purpose of a notice under s 269TG(2) addressing such a threat of material injury, to construe the prediction required by the word "likely" in s 269ZHF(2) in the same manner. ( Shorter Oxford English Dictionary , 5 th ed, W.R. Trumble, A. Stevenson (eds) (Oxford University Press, 2002), Vol I, p 659. ) As for "review", definitions of this noun include "[a]n inspection, an examination" and a "general survey or reconsideration of some subject". ( Ibid ., Vol II, p 2567. ) Finally, the adjective "likely" is defined as "[h]aving an appearance of truth or fact; that looks as if it would happen, be realized, or prove to be what is alleged or suggested; probable; to be reasonably expected". ( Ibid ., Vol I, p 1595. In other words, Article 11.3 assigns an active rather than a passive decision-making role to the authorities. The words "review" and "determine" in Article 11.3 suggest that authorities conducting a sunset review must act with an appropriate degree of diligence and arrive at a reasoned conclusion on the basis of information gathered as part of a process of reconsideration and examination. In view of the use of the word "likely" in Article 11.3, an affirmative likelihood determination may be made only if the evidence demonstrates that dumping would be probable if the duty were terminated---and not simply if the evidence suggests that such a result might be possible or plausible . Article 11.4 applies the provisions of Article 6 regarding "evidence and procedure" to reviews, and Article 12.3 applies the provisions of Article 12 on "Public Notice and Explanation of Determinations" to reviews. Thus, even though the rules applicable to sunset reviews may not be identical in all respects to those applicable to original investigations, it is clear that the drafters of the Anti-Dumping Agreement intended a sunset review to include both full opportunity for all interested parties to defend their interests, and the right to receive notice of the process and reasons for the determination. This confirms that the mandatory rule in Article 11.3 applies in addition to, and irrespective of, the obligations set out in the first two paragraphs of Article 11. This also suggests to us that authorities must conduct a rigorous examination in a sunset review before the exception (namely, the continuation of the duty) can apply . In addition, our view of the exacting nature of the obligations imposed on authorities under Article 11.3 is supported by a consideration of the implications of initiating a sunset review. The last sentence of Article 11.3 allows the relevant duty to continue while the review is underway, and Article 11.4 contemplates that the review process may take up to one year. These provisions create an additional exception to the requirement that anti-dumping duties will be terminated after five years, permitting a Member to maintain the duty for the period during which the review is ongoing, regardless of the outcome of that review. This, too, suggests that the drafters of the Anti-Dumping Agreement saw the sunset review as a rigorous process that can take up to one year, involving a number of procedural steps, and requiring an appropriate degree of diligence on the part of the national authorities. That approach was approved by Black CJ, Neaves and von Doussa JJ in ICI Australia Operations Pty Ltd v Fraser [1992] FCA 120 ; (1992) 34 FCR 564 at 576, 577-578. The Full Court held that if the Australian ind`ustry had suffered detriment from a number of probable causes, then s 269TG required a determination whether there was a separate material injury or material incremental injury caused by the dumping over and above detriment caused by other factors: ICI Australia 34 FCR at 579. While in each of those cases the Court was considering the legislation in an earlier form than that it presently takes, those observations continue to assist in the construction of the present statutory scheme: see e.g. Schaefer 156 FCR at 115-116 [147]-[149] per Jacobson J. After finding that Siam was dumping, the reasoning in Report 137 did not address expressly the question of the likelihood of material injury being caused by that dumping. Rather, it used the expressions "... imports of [the product] from Thailand, if dumped have the potential to cause injury to the Australian industry producing like goods" and, the commencement of slowing the regional and Australian markets was " likely to create an environment where the Australian industry is more susceptible to injury caused by dumping". Those "findings" did not address the question of the likelihood of injury. The concepts that the Report used of potential of, and greater susceptibility to, injury do not describe any injury, let alone a material injury that is likely to be caused by dumping if the measures expire. The CEO and Minister did not make a quantitative assessment about, or undertake the practical exercise of assessing, whether material injury to Qenos was likely if the measures expired. The "findings" I have just identified provided no basis for a conclusion that dumping would, or would be likely, to cause material injury to Qenos if the measures expired. Report 137 did not make a finding that it was likely (i.e. more probable than not) that dumping by Siam would cause material injury to Qenos if the measures expired. The vapid assertions that there was potential of, or greater susceptibility to, injury did not address the statutory requirement in s 269ZHF(2) for the continuation of the measures that there was, at least, the existence of the likelihood of material injury being caused to Qenos by Siam's dumping. I am of opinion that the respondents applied the wrong test and failed to ask themselves the correct question for the purposes of ss 269ZHF(2) and 269ZHG (1) in arriving at their finding in Report 137 that it was likely that dumped imports from Thailand, and Siam, would cause material injury to Qenos if the measures expired. It follows that each decision of the respondents was not made according to law. Division XVB contemplates that after a notice is given under s 269TG(2) , it will be amended by the process of reviews under Pt 5 and Pt 6A. As I have explained, those reviews can culminate in the Minister making a declaration that has the practical effect of amending the terms and the operation of, initially the original notice given under s 269TG(2) , and subsequently the latest amendment (made under s 269ZDB or s 269ZHG). One crucial purpose of a notice under s 269TG(2) is that it, and it alone, creates the authority for duty to be collected under s 8 of the Dumping Duty Act . This is because s 8(2)(a) of that Act provides that duty is imposed on goods "... to which this section applies by virtue of a notice under subsection 269TG(1) or (2) of the Customs Act ". It follows that when s 269TAE(1) refers to the purposes of s 269TG , those purposes should not be confined to the initial decision to give a notice, but extend to amendments to the notice created by later decisions under Pt 5 and Pt 6A. A notice under s 269TG(2) continues in force, as amended by subsequent declarations made the Minister until revoked, subject to its having any different effect or operation by reason of the Minister revoking the notice in part or amending the variable factors under ss 269ZDB(1)(a)(i) or (ii), 269ZHG (4)(a) and (5). Indeed, s 269ZHG(4)(a) provides that when the Minister declares that he or she has decided to secure the continuation of anti-dumping measures, that continuation is secured, in respect of the (earlier) publication of a dumping duty notice (under s 269TG(2)) , by the Minister determining in writing "... that the notice continues in force after the specified expiry day" (emphasis added). I am of opinion that when s 269TAE(1) requires the Minister to have regard to certain factors in making determinations for the purposes of s 269TG , those purposes include any variations of notices issued, but remaining in force, under s 269TG(2). And, importantly, s 269TAE(1) authorises the Minister to have regard to a variety of factors for the purpose of determining whether material injury to an Australian industry has been, is being caused, or is threatened, "... or would and might have been caused" because of any circumstances in relation to the exportation of goods to Australia from the country of export. In considering circumstances and factors, including any that are referred to in terms in s 269TAE(1) , the Minister is constrained by the provisions of ss 269TAE(2A) and (2B). A notice that remains in force by reason of a determination (even if varied under ss 269ZDB(1)(a) or 269ZHG (4)) continues as a notice deriving its authority and effect by reason of s 269TG(2) and s 8(2) and (6) of the Dumping Duty Act . Such a notice does not lose its character as having been made for the purposes of s 269TG(2) merely because the Minister, on an interim or a sunset or continuation review under Div 5 or Div 6A of Pt XVB, determines that the notice continues in force in its original state or as varied. Dumping duty becomes payable by force of ss 8(2) and (6) of the Dumping Duty Act because of the existence of a notice under s 269TG(2). It follows that the purposes of s 269TG, referred to in s 269TAE(1), must include consideration of the situation on a review of an existing notice. Indeed, the additional words "or would or might have been caused" in the chapeau to s 269TAE(1) address the very situation that arises in a review of measures under either Div 5 or Div 6A of Pt XVB of the Act. In those situations the measures are already in place and the consideration that the Minister must give is to, among others, what "would or might have been caused" as an injury by dumping had those measures not been in place. That consideration does not arise when a notice is first given under s 269TG(2). Additionally, the test posed by s 269ZHF(2) expressly requires consideration of the material injury that the existing measure "is intended to prevent". I am of opinion that the express words "or would or might have been caused" in the chapeau to s 269TAE(1) are directed to this last consideration, namely whether the expiry of the measures would be likely to lead to a continuation or recurrence of the material injury that the measures are intended to prevent. Importantly, s 269TAE is directed to identifying and, to some extent, constraining the matters to which the Minister may have regard and those which he or she must consider for the purposes of the relevant provision in Pt XVB under which he or she is then acting in arriving at a state of satisfaction or conclusion (as the case requires), relating to the material injury or the threat or likelihood of material injury. Each of ss 269TAE(2A) and (2B) expressly refers to the purposes of s 269TAE(1). This reinforces the construction that applies the provisions of s 269TAE to identification of the material injury to which s 269ZHF(2) refers. Under s 269TAE(2B), the Minister is required to take account only of such changes in circumstances (as to which he or she is given a wide power) "... as would make that injury foreseeable and imminent unless dumping ... measures were imposed". The WTO Appellate Body found that it was necessary to conduct an analysis that rested on a sufficient factual basis in order for the anti-dumping agency to determine the likelihood of an injury based on "reasoned and adequate conclusions": Oil Country Tubular Goods (AB-2004-4) at [284]. In arriving at a conclusion under s 269TAE(1), the Minister must take account of the matters prescribed in ss 269TAE(2B) and 269TAE(2A). Thus, the question of the foreseeability and imminence of the threat of material injury must be addressed by eliminating factors other than the exportation of Siam's dumped goods in considering whether that dumping alone would be likely to lead to material injury to Qenos if the measures expired. The other aspect of a consideration whether an injury is caused or threatened is that the injury under consideration must be, itself, material. Once again, the imposition of measures is not authorised unless there is more than just a mere injury actual or threatened. Part XVB requires that the injury have the character of materiality to an Australian industry producing like goods. Thus, in arriving at a reasoned and adequate conclusion based on sufficient facts for the purposes of imposing or reviewing the existing or continuation of measures, the Minister must address the question of the materiality of any injury that is under consideration. Here, Report 137 adverted to a number of relevant changes in circumstances. First, it noted the removal of Customs duty from 1 January 2008. This factor could impact on the market in Australia immediately following the period of review ending in the December 2007 quarter. And, Report 137 noted that regional markets had begun to slow, which, it suggested, was likely to create an environment where Qenos was more susceptible to injury caused by dumping. It also concluded that Qenos' performance showed some signs of deterioration towards the end of the five quarters examined. I am of opinion that each of these factors amounted by itself and together as circumstances which the Minister was entitled to take into account in determining whether material injury to an Australian industry, Qenos, would or might have been caused or threatened if the measures expired. Each was a factor that was capable of being seen as making injury foreseeable and imminent unless dumping measures were imposed or continued. However, Report 137 also relied on the analysis in Report 134 to arrive at non-injurious prices for Siam's exports to Australia. Relying on that analysis, Report 137 found that imports of the product from Thailand, if dumped, "have the potential to cause injury to Qenos". I have found in the review judgment that Report 134 provided an insufficient basis in law for the Minister to arrive at a conclusion that the measures should have remained in place. It follows that in making his determination under s 269ZHG(1), the Minister had regard to an irrelevant consideration (namely the findings in Report 134 and the notice made under s 269ZDB((1)(a)) in arriving at the conclusion that the measures should be continued under s 269ZHG(1). Report 137 did not provide any reasoning process as to why the removal of measures against Siam would be likely to cause material injury to Qenos. While there may have been some substitutability between the different grades of product marketed by the two manufacturers, Qenos and Siam, there was not complete substitutability. Each had been able to compete in the market in the five quarters examined in Report 137 in circumstances where no dumping duty was payable on Siam's products imported into Australia, although these attracted ordinary customs duty payable. Confidential appendix 7 and Report 137 in its open section recognised that in general Qenos' prices were cheaper than Siam's, albeit that the removal of Customs duty from 1 January 2008 may have affected that in the future. Nonetheless, Qenos' market share had improved over the period examined and it had exhibited the strong performance as found in Report 137. The Report also found that Siam was operating at close to full capacity. While further capacity may have been expected to be developed in the South East Asian region in the future, the question for the Minister was whether some material injury that was foreseeable and imminent would be likely to occur were the measures to expire in December 2008. In considering any injury likely to be caused to Qenos based on the evidence of price undercutting, the Minister had to address under s 269TAE(2A) Dow's and Qenos' cost to supply their customers at their locations in Australia, any differences in grade and substitutability of the product supplied to or required by the customers, whether instances in confidential appendix 7 were simply the result of competition between Siam, as a foreign, and Qenos, as an Australian, producer of like goods or of some other factor or factors including ones relating to the customers. But, Report 137 did not examine any correlation between the price cutting referred to in confidential appendix 7 and the particular circumstances of any case of price cutting or relate these to the likelihood of material injury to Qenos were the measures to expire. I am not satisfied that Report 137 suffered from mere looseness in language when it concluded that the factors to which the Minister had regard were likely to create an environment where the Australian industry was "more susceptible to injury caused by dumping". That was not a finding on the question of whether some identifiable material injury to Qenos more probably than not would occur if the measures expired having regard to the parameters of forseeability and imminence referred to in s 269TAE(2B). The Minister (and the CEO) did not identify any threat of material injury to Qenos that would be likely to be caused by Siam's dumping that was foreseeable and imminent, if the dumping measures were allowed to expire. But, s 269TAE(2C) provided that the Minister should consider the cumulative effect of the exportation of like goods to Australia by different exporters from the same country of export (or from different countries of export) for the purposes referred to in s 269TAE(1) if, having regard to the conditions of competition between, first, those goods on the one hand and, secondly, those same goods and like goods produced domestically, he or she is satisfied that it is appropriate to do so. There was no finding in Report 137 that the CEO or the Minister was so satisfied. Indeed, I find that the CEO and the Minister were not satisfied that it was appropriate to have regard to the cumulative effect of their exports for the purposes of Report 137 or s 269TAE(2C). In fact, the notice and the relevant measure under s 269TG(2) that Report 137 and the Minister actually considered, did not identify Thailand as a country of export generically. The, then, current non-injurious price under s 269TG(3)(e) as amended by the notice issued under s 269ZDB(1)(c) following Report 134 had been fixed in accordance with s 269TACA(a) for the purposes of the existing notice. This information together with the other prices arrived at for Siam's exports, the subject of the current form of the notice, were used to fix the dumping duty payable on imports of Siam's product under s 8(2) and (6) of the Dumping Duty Act . That notice fixed for a non-injurious price, normal value and export price for Siam (and different ones for the other Thai exporter) in accordance with s 269TG(3). Thus, while the Minister was entitled to consider circumstances in relation to the exportation of goods to Australia from Thailand as the country of export under s 269TAE(1), in this particular case he had to consider those circumstances by addressing the position of each exporter to Australia from Thailand, including Siam, on which he had imposed differential measures. Each relevant measure was calculated to address the particular injury or threat of injury that would be caused to Qenos by each particular exporter from Thailand. Report 137, as had Report 134, examined the position of individual exporters from Thailand. I reject the respondents' argument that, in examining the continuation of the specific measures in place against Siam, they were entitled to have regard generically to exports from Thailand rather than to address any injury to Qenos caused or threatened by Siam. Next, Report 137 found that "generally there is competition on price between Australian manufactured [product] and imports from Thailand". The Report referred to a "price cutting analysis" being contained in confidential appendix 7. However, as I have explained above, confidential appendix 7 recorded comparative prices and sale quantities for Qenos and Dow during five quarters between December 2006 and December 2007 in respect of their common customers, together with averages over those periods both for the common customers and for the two vendors' total customers. The total averages for all common customers and customers overall did not disclose any undercutting of Qenos in sales of Siam's product by Dow at any time during the five quarters. And, during the five quarters, Qenos' prices were below Dow's in respect of the larger customers, by both volume and sales. Again, there was no analysis in Report 137 as to why that was so. Confidential appendix 7 disclosed that there were instances of price undercutting, but it did not examine, and no other part of Report 137 examined, whether any of these instances was an injury to Qenos caused by Siam's dumping or was competition in the market or was caused by some other factor of the kind referred to in s 269TAE(2A). Those factors can include location, particular type of goods for which the prices were recorded, being specialised items of one or other competitor, the result of difficulties in supply (bearing in mind that Qenos had to import some product for some part of the period under examination) or other reasons. Confidential appendix 7 did not contain any examination or reasoning as to why Dow's prices were less than Qenos' on the occasions it instanced. Without some analysis or reasoning it is not possible to draw a conclusion about whether dumping, or some other factor, explained the differences. The market activity recorded in confidential appendix 7 occurred at a time when no dumping duty was payable by Siam or Dow on the importation of the product (Report 134 led to the imposition of duty only in July 2008). From 1 January 2008, ordinary duty ceased to be payable on Siam's and other Thai exportation of the product into Australia. Because s 269ZHF(5) required the CEO to give reasons for any recommendation it is possible to analyse whether the CEO performed the statutory function of making the recommendation for continuation of the measures against Siam in accordance with the Act. The Minister declared in the notice that he gave under s 269ZHG(1) that he had accepted the CEO's recommendations, reasons and findings. Where a statute requires a decision-maker to arrive at a state of satisfaction as a condition of the exercise of a power, the courts can review whether the power has been exercised according to law: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 275-276 Brennan CJ, Toohey, McHugh and Gummow JJ. If the statute requires a decision-maker to be satisfied as to a certain matter or matters before making a decision, the decision can be set aside at common law if it is affected by a jurisdictional error. In instances where matters of opinion or taste or policy are involved, the courts have recognised that it may be very difficult to show that the decision-maker has made a jurisdictional error by misconstruing the applicable test, asking the wrong question, making some other mistake of law, taking into account an extraneous reason or excluding from consideration some factor that should affect the determination: Wu Shan Liang 185 CLR at 275-276; Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26 ; (1949) 78 CLR 353 at 360 per Dixon J; Buck v Bavone [1976] HCA 24 ; (1976) 135 CLR 110 at 118-119. Such a decision can also be set aside if a ground under the Administrative Decisions (Judicial Review) Act 1977 (Cth) is established. While the formation of a state of satisfaction under s 269ZHF(2) may involve a question of opinion, there must be a sufficient substratum of fact on which the CEO reasonably can entertain the opinion, before the CEO is entitled to make a recommendation. Report 137 asserted a conclusion that it was likely that Qenos would be injured by the dumping of product by Siam if the measures expired. Report 137 also made an assertion that in some instances price differences in confidential appendix 7 could be characterised as "undercutting" by Dow. In anti-dumping inquiries, a key starting point for the decision-making process is that the price of the goods exported to Australia will be below that of the local industry. However, is only a starting point of the inquiry, and, without more, this will not establish the statutory foundation justifying anti-dumping measures. The reasons for the price differential must be examined, because s 269TAE(2A) requires the decision-maker to eliminate other reasons for it for apart from dumping. It is not possible to read this "finding" as another way of stating that the CEO or the Minister had not attributed for the purposes of s 269TAE(2A) any injury or threat of injury to Qenos to factors other than the exportation of goods from Thailand or by Siam. In effect, this passage in the Report, did no more than say that the CEO had considered those factors in the sense of having looked at, but discarded, them in a cursory way: cf East Australian Pipeline Pty Ltd v Australian Competition and Consumer Commission [2007] HCA 44 ; (2007) 233 CLR 229 at 244 [52] per Gleeson CJ, Heydon and Crennan JJ, see also 256 [102] per Gummow and Hayne JJ. The attribution of dumping as the sole cause of the likelihood of material injury or its threat was fundamental to the imposition and continuation of anti-dumping measures. The CEO and the Minister had to give a reason to eliminate any factors other than dumping as being likely to cause such an injury or threat so as to arrive at the appropriate determination of what, if any, measures were needed to prevent that injury or threat, and if so, what the nature and extent of the measures would be. No other reason supported the conclusion that the threat of material injury to Qenos would be caused by Siam's dumping (or dumping of Thai exports) alone if the measures were allowed to expire. The material in Report 137 was inadequate to establish that the CEO and the Minister had considered what was shown in confidential appendix 7 as undercutting, in accordance with s 269TAE(2), by not attributing any factor other than dumping as being likely to cause material injury. They took the undercutting itself into account as material establishing the likelihood of a threat of material injury. But, that material begged questions, that were left unanswered, as to why the differences in price appeared and what injury was likely to be caused. Because of this inadequacy, the CEO and the Minister did not, in fact, have sufficient material on which to be satisfied that expiration of the measures would be likely to lead to a threat of material injury to Qenos caused by Siam's dumping: see Telstra Corporation Ltd v Australian Competition Consumer Commission (2008) 107 ALD 474 at 518-519 [180]-[182] where I examined the authorities; R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Company Pty Ltd (1953) 188 CLR 100 at 120 per Dixon CJ, Williams, Webb and Fullagar JJ. It was not enough for the CEO and the Minister merely to recite a paraphrase of the test in s 269TAE(2A) but discard it. A person entrusted with a discretion must call his own attention to the matters which he or she is bound to consider: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 39; Telstra 107 ALD at 502 [105]. For these reasons, I am of opinion that the Minister and Report 137 failed to make findings specific to Siam in relation to the actual measures imposed on it, that addressed the unidentified threat of material injury to Qenos that would be caused solely by Siam's dumping that the measures were intended to prevent. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | anti-dumping duty sunset review customs act 1901 (cth) div 6a pt xvb ss 269tae , 269 zhf, 269zhg test to be applied by chief executive officer of customs in preparing statement of essential facts and report to minister and by minister in declaring continuation of anti-dumping duty ceo had to be satisfied expiration of measures would lead or be likely to lead to continuation or recurrence of material injury existing measure intend to prevent whether the ceo and minister had to consider whether material injury was being caused, or threatened to be caused, by dumping whether s 269tae applied so as to require likelihood of material injury to be foreseeable and imminent whether material injury was being caused or threatened by a factor other than dumping of imports administrative decision making ceo required to form a particular state of satisfaction importance of decision maker actively considering a statutory requirement, rather than giving it cursory consideration and putting it to one side administrative law administrative law |
Mr Ting did not appear on 14 October 2005 when the application was first listed for hearing, and it was dismissed for want of prosecution. I directed that that order not be sealed for a period of time, to give Mr Ting an opportunity to re-instate the application if his non-attendance was for some satisfactory reason. 2 By motion of 9 November 2005, he applied to reinstate the application. The application and the motion have been adjourned from time to time at the request of the parties, or one or other of them. It is not necessary to go into the reasons why that has occurred. 3 Both the motion and, if it is re-instated, the application, are listed for hearing together. It was accepted that they should be heard together, because in substance the outcome of one would dictate the outcome of the other. It was also accepted that the relevant considerations to determine those matters include the length and reasons for the delay, and whether there is any real prospect of an appeal succeeding: see, e.g. Jess v Scott (1986) 12 FCR 187 at 195. 4 Under O 52 r 15(1)(a) any appeal from the decision of the Federal Magistrate had to be commenced within 21 days after judgment, namely 30 August 2005. The application was brought only some 9 days after that. The Minister does not suggest that the delay has caused her any prejudice. There is no evidence to explain why the proposed appeal was not instituted within time, but given the shortness of the delay, I do not think the delay weighs heavily against the application if it is shown to have arguable merit. Mr Ting's failure to attend the hearing on 14 October 2005 was because he had misplaced the application on which the hearing date was shown, and he had not received correspondence to his address for service as he had moved. He entered Australia on 22 July 2002 on a Short Stay (Visitor) (Class TR) visa, subclass 676. He was then granted a Student (Temporary) (Class TU) visa, subclass 572. The student visa was granted subject to conditions, including condition 8202 as specified in Sch 8 to the Migration Regulations 1994 (Cth): see cl 572.611(1)(a) of Sch 2 to the Regulations. Condition 8202 imposes enrolment and academic performance requirements on the holder of a student visa. 6 Mr Ting enrolled at the South Australian Institute of Business and Technology (SAIBT) in a course called a 'Mixed Program'. It is designed for international students with an English language proficiency below that required for a full academic program. 7 On 25 October 2004 the SAIBT notified the Department by a notice under s 20 of the Education Services for Overseas Students Act 2000 (Cth) that Mr Ting had breached the academic performance requirements of the course. Failed to meet conditional enrolment. Mr Ting then attended the Department on 22 November 2004. 9 Section 116(1)(b) of the Migration Act 1958 (Cth) (the Act) empowers the Minister to cancel a visa if satisfied that its holder has not complied with a condition of the visa. Section 116(3) obliges the Minister to cancel a visa under s 116(1) if there exist prescribed circumstances in which a visa must be cancelled. Regulation 2.43(2)(b) of the Regulations prescribes a breach of condition 8202 as a prescribed circumstance for the purposes of s 116(3). Hence, if the delegate of the Minister or on review the Migration Review Tribunal were satisfied that Mr Ting had not complied with condition 8202 of the visa, they were obliged to affirm the decision to cancel the visa. There was no discretion. 10 Mr Ting was given notice under s 119 of the Act that the Minister was considering cancelling his student visa for possible breach of condition 8202. The notice said that the applicant had been reported by the SAIBT for 'failing to meet the course requirements as Mr Ting had insufficient academic performance and failed to meet conditional enrolment'. Mr Ting took the opportunity at an interview on 7 December 2004 to make submissions about why the student visa should not be cancelled. He did not then dispute that he had breached condition 8202, but claimed his unsatisfactory academic performance was due to illness. There is no suggestion that the procedure for cancelling Mr Ting's visa imposed by Subdiv E of Div 3 of Pt 2 of the Migration Act was not followed. 11 On 16 December 2004 a delegate of the Minister decided to cancel the student visa. The record of decision records the breach of condition 8202 in the same terms as the notice given under s 119(1) as the reason for the cancellation. Having been satisfied that Mr Ting had not complied with a condition of his student visa, so as to activate the power to cancel his visa under s 116(1)(b) , the decision-maker was obliged to cancel it because of s 116(3). He contended that the basis of the notice under s 119(1) and for cancellation of his student visa was different from the contents of the s 20 notice because the s 20 notice 'did not mention the enrolment matter'. 13 Mr Ting also claimed that his unsatisfactory academic performance was because he had been put into a course which was too difficult for him. His evidence was that the SAIBT course required a 5.0 level under the International English Language Testing System (IELTS), but that he had attained only level 4.5, although he accepted he had been encouraged by his mother to enrol in the SAIBT course. 14 The Migration Review Tribunal rejected the first claim. It found that the s 20 notice did refer to 'conditional enrolment' (as it did), that the notice of intention to consider cancellation under s 119(1) adequately informed Mr Ting of the basis upon which his student visa might be cancelled, and was consistent with the s 20 notice. It certifies to the contrary. It is plain enough that condition 8202 was not satisfied. 17 It is convenient to deal with one contention of Mr Ting at this point. His submission was that the notice under s 119 given by the delegate of the Minister referred only to a 'possible breach' of condition 8202, so that somehow neither the delegate nor the Migration Review Tribunal was, or could be, satisfied that he had failed to satisfy the condition. There is no merit in the point. Condition 8202 is only satisfied if the education provider positively certifies that the visa holder has achieved at least a satisfactory academic result. Plainly it did not do so. Moreover, even if there were any inadequacy in the decision-making process of the delegate (and I do not think there was), the Migration Review Tribunal had the function of reconsidering all the material on the merits and making its own decision; any inadequacy on the part of the initial decision-maker would not affect the validity of the decision of the Migration Review Tribunal. 18 The Migration Review Tribunal then considered whether, by reason of Mr Ting's reasons for non-compliance with condition 8202, it could be said that there was nevertheless no breach of the condition. It regarded that the course was open to it (as distinct from excusing the breach, which s 116(3) does not permit), because there would otherwise be no purpose in the opportunity given by s 119(1) to show cause why the cancellation should not take place. It noted Mr Ting's concern that he had been permitted to enrol in a course for which the language entry equivalent was IELTS 5.0 or equivalent, when Mr Ting had attained only an IELTS 4.5 level, but it also had regard to the fact that Mr Ting had nevertheless enrolled in the course and had done so with his mother's encouragement. It also did not think that the illness of his grandparents, and the death of his grandmother, would support a conclusion that the breach of condition 8202 did not occur. 19 As the Migration Review Tribunal found Mr Ting had breached condition 8202, in the light of s 116(3) of the Act it had no option but to affirm the decision to cancel his student visa. 21 Mr Ting was represented by counsel. The only matter raised on his behalf as indicating error on the part of the Migration Review Tribunal was that the SAIBT had wrongly accepted Mr Ting into a course for which he was not eligible, because his standard of English was not at the required level. As the Federal Magistrate described it, the focus of submissions was really directed at the SAIBT for somehow having breached a duty of care to Mr Ting. 22 The Federal Magistrate did not consider that the contention that the SAIBT had somehow breached a duty of care owed to Mr Ting, even if established, would demonstrate jurisdictional error on the part of the Migration Review Tribunal. The Migration Review Tribunal was required to determine whether Mr Ting had breached condition 8202 in relation to the course of study he had undertaken. The reasons why he had undertaken the course, and any (assumed) fault in the education provider for letting him undertake that course, could not show that the Migration Review Tribunal itself had committed jurisdictional error. 23 The Federal Magistrate therefore refused to set aside the decision of the Migration Review Tribunal. He described the Migration Review Tribunal decision as being 'wrong and not fair to me'. He attached a 'Pleading'. That document firstly focused on the SAIBT having put him into a study program which was above his language ability. He said he had intended to study a program called Centre for English Language in the University of South Australia, but had enrolled in the higher language program prompted by his previous migration agent and by the SAIBT. (I interpose to note that there is no evidence that the SAIBT course was first promoted to the applicant as preferable for him by SAIBT; it seems to have emerged as an option from Mr Ting's then migration agent or his mother, or both of them). Mr Ting secondly claims that he requested the study director of the SAIBT during the course he had undertaken to transfer him to a lower level of English study program but was first told to keep trying, and then ignored. Hence, he claimed, the change in his study program was beyond his control. 25 There is also attached a proposed notice of appeal. 26 Mr Ting was also given the opportunity to make further written submissions after the hearing. I have addressed one of the matters he raised in those submissions in [17] above. The further written submissions were signed by the solicitor on the record for Mr Ting, although that solicitor at the hearing indicated he did not then wish to put anything forward on Mr Ting's behalf, and wished to cease acting for Mr Ting. It was that circumstance which led me to permit Mr Ting to make further written submissions. I have nevertheless considered the matters the further written submissions raise. Apart from the point addressed at [17] above, it is claimed that the delegate of the Minister failed to 'identify' that the reason why Mr Ting did not attain a satisfactory academic result, was because the education provider had put him into a course demanding too high an English competency, and had not allowed him to transfer from that course. Assuming those matters were put to the delegate (and the evidence does not suggest they were) for the reasons set out in [22], that does not demonstrate jurisdictional error on the part of the Migration Review Tribunal. The relevant condition requires that Mr Ting be certified as attaining a satisfactory academic result. It was not met. The reason why a satisfactory academic result is not attained, or more correctly is not certified as having been attained, does not affect the question of whether the condition is met. The further written submissions also claim that the Migration Review Tribunal should have set aside the cancellation order by reason of the matters mentioned in [25] above. I refer to those claims below. 27 Mr Ting may well have enrolled for a course requiring a proficiency in English somewhat above his ability. It is not necessary to decide whether he did so in part as a result of unwise advice (whether from his former migration agent or from his mother or from the educational institution) as well as a result of an error of judgment on his part. That is because the reason for him undertaking the particular course does not assist him in avoiding the consequences of his failure to satisfy condition 8202. Condition 8202 applies, in its own terms, whatever the reason why the particular course was undertaken. The Act then specifies in turn that there is power in the Minister for cancel a visa when satisfied that condition 8202 has not been met, and then that the power must be exercised to cancel the visa. 28 The Federal Magistrate did not therefore err in concluding that the decision of the Migration Review Tribunal was within jurisdiction. 29 Mr Ting may well have sought advice from the study director of the SAIBT as he asserted in contentions on the applications before me. There is nothing to indicate that matter was put to the education provider before it issued its notice under s 20 of the Education Services for Overseas Students Act 2000 (Cth), or to the initial decision-maker, or to the Migration Review Tribunal. Even assuming that information was capable of somehow enabling the Migration Review to reach a different conclusion (and it is not apparent to me that it would thereby be able to do so), the Tribunal could not be shown to have committed jurisdictional error by failing to consider that matter. The explanation is not shown to have been presented to the Tribunal, so it could not have been expected to have considered it. 30 In Webb v The Queen [1994] HCA 30 ; (1994) 181 CLR 41 at 67-68 Deane J explained that a judicial officer should not hear and determine an application if a fair minded lay observer, in all the circumstances, and with knowledge of the material objective facts might entertain a reasonable apprehension that the judicial officer might not bring an impartial and unprejudiced mind to the resolution of the question in issue. Mr Ting has not identified any material from which it might be concluded that the Federal Magistrate might not, or did not, approach the issue with an impartial and unprejudiced mind. The fact that Mr Ting's application was unsuccessful, or that the Federal Magistrate upon analysis and in the light of submissions could see little merit in it does not demonstrate apprehended bias. It is simply the result of due consideration of Mr Ting's case. 31 The Federal Magistrate was obliged to provide reasons for his decision, so as to reveal that he had understood and considered Mr Ting's claims, to show the reasoning leading to his conclusion, and thereby to enable Mr Ting and an appeal court to consider whether he properly applied the law: see e.g. Cypressvale Pty Ltd v Retail Shop Leases Tribunal [1996] 2 Qd R 462 at 483 per McPherson and Davies JJ. However, in my view, the complaint about the adequacy of the Federal Magistrate's reasons for judgment is also not made out. The reasons indicate why the Federal Magistrate considered there was no jurisdictional error on the part of the Tribunal. They indicate why the matters raised by Mr Ting did not demonstrate jurisdictional error. And they indicate that his Honour understood Mr Ting's contentions. The reality, in my view, is simply that Mr Ting does not accept that, having undertaken the course of study which he selected despite his lack of proficiency in the English language, he did not achieve a satisfactory academic result and the consequences of his failure to do so are prescribed by the legislation. 32 For those reasons, I do not think Mr Ting's proposed appeal has any prospect of success. Accordingly, the motion to reinstate the application for an extension of time to appeal from the Federal Magistrate's decision of 9 August 2005 is refused. The consequence is that the order dismissing that application made on 14 October 2005 stands, as does the decision of the Tribunal. Mr Ting must pay the Minister's costs of the motion. The costs of the application have already been ordered to be paid by him. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | application to reinstate proceeding previously dismissed for want of prosecution application for extension of time in which to file notice of appeal student visa whether breach of condition 8202 whether reasonable prospects of establishing jurisdictional error by tribunal. migration |
The proceedings at first instance are, in each case, an appeal against a decision made by the Commissioner adverse to McDonald's. Each proceeding is at an early stage --- no evidence has been filed and there has been no discovery. Nevertheless, in each case, McDonald's sought summary judgment. It relied on s 31A of the Federal Court of Australia Act 1976 (Cth) ('the Act). It clearly refers back to s 31A(1)(b). The assessment required, in a case of the present kind, is whether a party has no reasonable prospect of successfully defending a proceeding. 3 It is undoubted that s 31A , which also permits summary dismissal of claims, introduced a lower and more flexible standard for summary disposal of proceedings than earlier existed under the general law but it is not to be seen as an avenue to avoid the need to resolve the real issues on which the rights of parties depend (see Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at [13] ). 4 Furthermore, as Greenwood J pointed out in Rogers v Asset Loan Co Pty Limited [2007] FCA 195 (at [59] --- [60]), s 31A is not directed to striking out pleadings but proceedings as a whole. He referred to the judgment of French J in Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401. Greenwood J said that the necessary state of satisfaction 'will rarely be achieved (except in the most transparent of cases) on the strength of a conclusion that the applicant's statement of claim is deficient either in whole or in part' because of the facility for leave to replead. 5 The principles to be applied to determine the present applications are stated in Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 ( 'Décor' ). 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 its being reconsidered and whether substantial injustice would result if leave to appeal was refused, supposing the decision to be wrong. A matter relevant to the second aspect is whether the interlocutory decision under challenge is one that 'has the practical effect of finally determining the rights of the parties' (see Ex parte Bucknell [1936] HCA 67 ; (1936) 56 CLR 221 at 225; see also Yap v Granich and Associates [2001] FCA 1735 at [6] ). 6 Before the primary judge, McDonald's relied, for its contention that a defence to its applications was bound to fail, upon the contents of appeal statements filed by the respondent Commissioner pursuant to O 52B r 5 of the Federal Court Rules . The requirement imposed by that rule is to file a statement which is described by O 52B r 5(3) as 'a statement outlining succinctly the Commissioner's contentions and the facts and issues in the appeal as the Commissioner perceives them' . An appeal statement is not a pleading (see the definition of 'pleading' in O 1 r 4; see also WR Carpenter Holdings Pty Ltd v Commissioner of Taxation (Cth) (2006) 234 ALR 451). Even if it was, it would not be sufficient to rely simply upon pleading points to satisfy s 31A where there was any prospect that leave might be granted to state a respectable basis for defending proceedings (see also Rio Tinto Ltd v Federal Commissioner of Taxation (Cth) [2004] FCA 335 ; (2004) 55 ATR 321 ; BAE Systems Australia (NSW) Pty Limited v Commissioner of Taxation for the Commonwealth of Australia [2008] FCA 48). 7 At the time of the judgment under challenge the appeal statements had already been amended once. None of the facts contained in this statement constitute an admission of proof by the Commissioner. In light of the onus of proof referred to above, and the fact that this statement is filed before any such statement on behalf of the Applicant, and before discovery and the filing of evidence, the Commissioner reserves his right to add to or otherwise vary this statement. In fact, since the judgment under challenge was delivered, further amended appeal statements have been filed by consent. That circumstance emphasises that the position of the respondent Commissioner was not to be regarded necessarily as final or incapable of adjustment. McDonald's could only succeed in its applications for summary judgment if it was clear that any resistance to its appeals against the Commissioner's decisions would be unavailing, whatever legitimate adjustment the Commissioner might make to his position. 9 As the primary judge pointed out in the judgment which gives rise to the three applications for leave to appeal, McDonald's bears the onus in the proceedings which it has commenced. An application for summary judgment by a party which bears the burden of proof can be properly described as ambitious, particularly where the proceeding is at an early stage --- no evidence has been filed, there has been no discovery, no subpoenas have been issued and where there are no formal pleadings. It must also be borne in mind that the Commissioner has no first hand knowledge of the underlying facts and circumstances. Although his Honour was prepared to accept (without deciding) that an appeal statement filed under O 52B might reveal a fundamental flaw in a decision which was incapable of being cured, he was not satisfied that the cases before him fell into that category, assuming it to exist. 11 His Honour found the contentions advanced to him by McDonald's to be either incorrect as a matter of law, or contestable. One submission was that McDonald's did not get a 'GST benefit' from the arrangements described in brief outline by the primary judge. His Honour observed that the contention required the adoption of a hypothesis as to what would have occurred had the suggested scheme not been entered into. He noted alternative hypotheses identified by the Commissioner. He concluded that it was too early to rule out the Commissioner's contentions. Of another contention advanced by McDonald's he concluded that the question raised was 'a question of substance which should be determined in the light of the facts as found and with the benefit of full argument as to the operation of the GST Act. In my opinion, it is not a proper basis for summary judgment particularly where the burden of proof lies as it does'. He noted also a contention of the Commissioner which raised a further 'matter of substance which should be determined at trial' . Counsel was unable to persuade me by either written or oral submissions that these assessments were erroneous. 12 The essence of McDonald's contentions in support of its application for leave to appeal is that the primary judge had no option but to dismiss the proceedings in their entirety. I do not accept that is so. As his Honour said, it was a novel and ambitious application to suggest that the proceedings commenced by McDonald's were irresistible and that any defence was bound to be rejected as not reasonably arguable, particularly at a stage when evidence had not been filed and there had been no discovery. 13 In an affidavit filed in each proceeding by Gina Lazanas, a partner in the firm of solicitors acting for McDonald's, it is asserted that if leave to appeal is not granted McDonalds will have to prepare its evidence which will involve reviewing and considering approximately 18 boxes of documents and drafting affidavits of approximately seven witnesses. I accept that will impose a burden upon the applicant. On the other hand, the burden flows directly from the forensic decision to commence the proceedings. It does not provide a reason for granting leave to appeal in this case. 14 None of the tests for the grant of leave are made out in this case. All the arguments upon which McDonald's wishes to rely remain available to it at a final hearing. There is no pressing or otherwise sufficient case for determination of any of those matters in an interlocutory appeal. 15 McDonald's purported to elect to have its applications dealt with by a Full Court of this Court. For reasons which I explained in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2008] FCA 47 no such right of election now exists, if indeed it existed in the past. The provisions of O 52 r 2AA admit no debate about the existence of any such right of 'election'. An application, such as the present, brought under s 25(2) of the Act must be heard and determined by a single Judge unless a judge directs that the application be heard and determined by a Full Court. 16 In my view the present case is a clear case where leave to appeal should not be granted. I decline to direct that it be heard and determined by a Full Court. I dismiss the application in each case. It is appropriate that the applications be dismissed with costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | applications for leave to appeal an interlocutory judgment onus in proceedings borne by applicant for leave to appeal tests for the grant of leave not made out purported election to have applications dealt by the full court of the federal court no right of election exists under the federal court rules applications dismissed with costs practice and procedure |
She arrived in Australia on 6 January 2003 and shortly thereafter applied for a protection visa on the basis that she had a well founded fear of persecution from Chinese officials if she was required to return to that country. The Minister's delegate refused to grant the appellant a protection visa. That decision was affirmed by the Refugee Review Tribunal. An application to review the tribunal's decision in the Federal Magistrates Court was unsuccessful. On appeal to the Full Federal Court, the tribunal's decision was set aside and the matter remitted to the tribunal for rehearing. The second tribunal also affirmed the delegate's decision. An application to review that decision in the Federal Magistrates Court was unsuccessful. We now have a second appeal to the Federal Court. 2 A broad outline of the appellant's claim for refugee status is to be found in a statutory declaration attached to her protection visa application and in additional information provided to the tribunal prior to its decision. This is how she put her case. The appellant was elected as the "Standing Member of Women at the Workers Union" of a large state-owned factory in Qingdao City, Shandong Province. In that capacity she sought to promote the basic human rights of women workers. The factory president threatened the appellant when she advanced the case for a female worker who was not satisfactorily compensated after suffering a serious injury during the course of her employment. For one year following this threat the only activity the appellant undertook in her role as standing member concerned birth control. 3 In April 2001 120 workers were dismissed from their employment. In response the appellant drafted and distributed several copies of a petition complaining about the dismissals. She arranged to send copies of the petition to "higher authorities of the factory", the Government of Qingdao City and the media. There was little response so the appellant organised for an open protest to be held on 22 April 2001. The appellant was involved in drafting an application to obtain permission for the protest from the Public Security Bureau ('PSB'). On 19 April 2001 the appellant went to the offices of the PSB for an interview concerning the application. She was immediately detained and interrogated at least five times. She was permitted to return home on 10 May 2001 on the condition that she signed a statement to the effect that she would persuade the relevant unemployed workers not to engage in any protests in the future. 4 On 11 July 2001 the appellant was dismissed from her employment because she continued to actively promote her political opinions. 5 Between July and December 2001 the appellant formed a small group to plan for the establishment of an independent union. On 8 January 2002 the appellant and several of her associates, including a person named Mr Xu, set up a "Preparation Committee" that would establish the union. The aims of the committee were to secretly recruit members and to secretly distribute propaganda materials to promote its political opinions. The appellant was responsible for recruiting members. The union was divided into four groups. Mr Xu and the appellant were both leaders of a group. 6 In December 2002 Mr Xu was detained. Mr Xu knew "too much" about the appellant's group and, as such, it temporarily suspended its activities. The appellant was so concerned that she went into hiding. Following this, the appellant left China with the assistance of a secret member in the Tourism Bureau of Qingdao City. In March 2001 the appellant applied to have her Chinese passport renewed. For reasons that cannot be explained by the appellant, in May 2001 she was issued with a new passport. She had to pay for the passport which was acquired with the assistance of a friend who worked at a travel agency. When she was departing China, she signed her passport after an official at the airport pointed out that her passport had not been signed. 7 Following her departure from China her husband was questioned on three occasions by the PSB. The appellant's husband told her that the PSB was aware of her political activities as a result of the confession of Mr Xu. 8 The appellant had a second basis for claiming refugee status. She said she was involved in Falun Gong protests in Australia. The appellant claimed that this was known to the Chinese authorities and would result in her persecution if required to return to China. 9 The second tribunal affirmed the delegate's decision largely because it did not accept the appellant's account of events. It found the appellant was not a credible witness and did "not accept as valid her previously claimed history of dissident political activity in China (PRC)". The tribunal did not accept that the appellant had "democratic political opinions", that she had previously organised union activity or that she had supported "the cause of human rights in China". 10 It will be necessary to say more about the tribunal's reasons in a moment. It is convenient before doing so to refer to the basis upon which the tribunal's decision was challenged in the Magistrates Court. Several grounds were relied upon, but the only grounds presently relevant are that: (a) the tribunal misunderstood the appellant's case and thus failed to address that case; and (b) the tribunal failed to consider corroborative evidence provided by the appellant before making an adverse finding in relation to her credit. 11 The Magistrate found that the tribunal had not erred in law. He said that the tribunal had referred to and considered all the evidence and dealt with all the issues that had been raised. The Magistrate said that the appellant had failed in her application because the tribunal "ultimately regarded the [appellant] as an unreliable witness who fabricated her claims". On appeal the appellant pressed the argument that the tribunal misunderstood and therefore failed to address the case she had put forth. She contends that her claim was rejected because the tribunal decided that under Chinese law a person who had engaged in dissident behaviour would be prevented from leaving China. The appellant points out that she had not claimed that she was actively pursued by the authorities until she left China. She notes that her circumstances were not that she left China following a history activity that endangered the safety, the honour and the interest of the country (such circumstances being sufficient, under Chinese law, to prevent a person from leaving the country). The appellant identified the substance of her case as being that she had a well founded fear of persecution as a result of her political views and opinions leading her to become a member of an underground group but that she had not come to the attention of the authorities until she left the country. She pointed to her evidence that her husband had been questioned by officials after she had left China to demonstrate that it was only after she left China that the authorities began to actively pursue her. The appellant also noted in her submissions that she had told the tribunal that her application for a second passport had been filed prior to her being detained by the PSB. 12 On appeal the appellant pressed the argument that the tribunal misunderstood and therefore failed to address the case she had put forth. She contends that her claim was rejected because the tribunal decided that under Chinese law a person who had engaged in dissident behaviour would be prevented from leaving China. The appellant points out that she had not claimed that she was actively pursued by the authorities until she left China. She notes that her circumstances were not that she left China following a history of activity that endangered the safety, the honour and the interest of the country (such circumstances being sufficient, under Chinese law, to prevent a person from leaving the country). The appellant identified the substance of her case as being that she had a well founded fear of persecution as a result of her political views and opinions leading her to become a member of an underground group but that she had not come to the attention of the authorities until she left the country. She pointed to her evidence that her husband had been questioned by officials after she had left China to demonstrate that it was only after she left the country that the authorities began to actively pursue her. The appellant also noted in her submissions that she had told the tribunal that her application for a second passport had been filed prior to her being detained by the PSB. 13 In Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26 ; (2003) 197 ALR 389 the appellant sought refugee status on the basis that he was a member of a particular social group constituted by businessmen in Russia who publicly criticised law enforcement authorities for failing to take action against crime or criminals. The tribunal had decided the case against the appellant on the basis that he could not establish that any persecution he had suffered arose out of his membership of a particular social group constituted by businessmen in Russia. It decided another question, whether Mr Dranichnikov's membership of a social group, namely, of "businessmen in Russia" was a reason for his persecution and relevantly nothing more. The tribunal should have decided the matter which was put to it, whether Mr Dranichnikov was a member of a social group consisting of entrepreneurs and businessmen who publicly criticised law enforcement authorities for failing to take action against crime or criminals. 14 This approach is consistent with several previous decisions in the Federal Court. To make a decision without having considered all the claims is to fail to complete the exercise of jurisdiction embarked on. The claim or claims and its or their component integers are considerations made mandatorily relevant by the Act for consideration ... It is to be distinguished from errant fact finding. The nature and extent of the task of the tribunal revealed by the terms of the Act ... make it clear that the tribunal's statutorily required task is to examine and deal with the claims for asylum made by the applicant. 15 Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184 ; (2003) 75 ALD 630 , concerned an Iranian who had applied for a protection visa. The appellant and his family were members of the Sabian Mandaean religion. The appellant's son had married a Muslim woman. The appellant claimed this had repercussions for him and his family as his son's marriage to a Muslim woman was unlawful according to the principles of Islam, and that members from the Imam's offices would likely persecute the appellant and his family if they returned to Iran. The tribunal rejected the appellant's claim for refugee status on the basis that he had not given credible evidence. The tribunal did not make any reference to the claimed fear of persecution resulting from the marriage of the appellant's son, although it did refer to that event in its overview of the appellant's case. The Full Court (French, Sackville and Hely JJ), found the tribunal had erred in law. That is to say it must have considered the application which is the subject of review in light of the information, evidence and arguments which are relevant to the application and which are provided to it or which it obtains for itself. So much is contemplated by ss 423 , 424 , 425 and 426 of the Act ... The critical question which ordinarily will have to be addressed in applying this criterion is whether the applicant has a well-founded fear of persecution for one of the Convention reasons. If the tribunal fails to consider a contention that the applicant fears persecution for a particular reason which, if accepted, would justify concluding that the applicant has satisfied the relevant criterion, and if that contention is supported by probative material, the tribunal will have failed in the discharge of its duty ... to conduct a review of the decision. 16 The way the appellant had put her case to the tribunal bears repeating. She claims that she was the "Standing Member of Women at the Workers Union" of a large state-owned factory, and in that capacity sought to promote the basic human rights of women workers and became involved in issues concerning fair compensation for injured workers. She also claimed to have petitioned various authorities and the media after a number of female workers were dismissed from employment and subsequently decided to organise a legal protest. She was then detained and interrogated by the PSB. Ultimately, she was dismissed from her employment because of her political opinion following which she decided to help form a committee that secretly sought to establish an independent workers union. In 2002 the PSB arrested Mr Xu, a member of the committee, and fearing for her own safety, the appellant left China. The basis of the appellant's claim for refugee status was that she would face persecution if required to return to China because the PSB is aware, as a result of confessions made by Mr Xu, of her involvement in establishing the union. 17 On a fair reading of the tribunal's decision, it is apparent that it found against the appellant upon reasoning that did not address the substance of her case. It based its decision substantially on the basis that it did not accept as credible her explanation as to how she was able to obtain a passport to leave China. In its reasons the tribunal referred to country information that dealt with the ability of a person with a dissident history to leave China. That information was to the effect that if Chinese citizens engage in adverse conduct then they are generally unable to obtain a passport or exit the country. The information referred to Article 13 of the Law of the People's Republic of China on the Control of the Exit and Entry of Citizens. Under that Article, Chinese authorities involved in issuing passports have the power to cancel or invalidate passports. The country information also referred to Article 22 of the Regulations Concerning Implementation of Law of Exit and Entry of Citizens, which states that a person's passport can be cancelled or declared invalid if "[t]he holder has [been] involved in activities that are endangering the safety, the honour and the interest of the Country". The information also indicated that the exit control system at Beijing Airport is computerised and the names of all persons departing the country are checked through the computer system. The tenor of the information was that, generally speaking, if a person is able to obtain a passport in China it can be assumed that the Chinese authorities are not pursuing that person. The Tribunal is, however, not convinced of the truthfulness of the applicant's initial refugee claims prior to her arrival in Australia. The Tribunal is not satisfied that a person who claims to have had her very adverse history of detention and harassment and who engaged in dissident behaviour as part of a struggle for democratic rights to the point where she felt the necessity to hide and flee China (PRC) could obtain a passport and leave China (PRC) unhindered. Why would the PSB suddenly take interest in a dissident (who they had detained previously) but who subsequently was not the subject of monitoring? Why would they not prevent her departure at the airport through the monitoring control of the border police? How could she sign off her new passport in front of a border control officer without him being alerted to her significant dissident history? How would she leave unhindered when so obviously a person subject to the strictures of the Exit and Entry Law as outlined to her by both Tribunals and which would prevent her unhindered departure? 20 Inconsistencies in the appellant's evidence were referred to by the tribunal. With the effluxion of time the applicant has managed to elaborate evermore scenarios to explain away the various discrepancies in her story as they have emanated from both Tribunal hearings. She has at times been, for instance, unable to advance a persuasive argument why she was able to leave China (PRC) unhindered in rebuttal of logical observations by both Tribunals based on China (PRC) [sic] law or reliable country information. The claims she has made are a fabrication to give verisimilitude to her claims to be a refugee from the persecution she claims to have suffered in the PRC for her pro-democracy and anti-CCP and union activities. The Tribunal does not accept as convincing that she was able to leave China (PRC) unhindered with a valid passport whenb [sic] two days after she left she claimed the PSB came around to her house looking for her and harassing her spouse. The Tribunal finds unpersuasive her claim that the reason the PSB has shown adverse interest in her (after the departure) was the possibility of her union activist friend having divulged her activities to the PSB but that she later claimed she was (actually) able to leave unhindered because her friend did not divulge her name to the PSB ("they had no interest in her"). The Tribunal regards her comment as indicative that she is an unreliable witness and her claims are a fabrication. In turn the appellant's lack of credibility is founded on her ability to obtain a passport and leave China. 22 The tribunal did not deal with the appellant's case that she feared persecution because of her political opinion. It was sidetracked into an investigation of how the appellant was able to leave China. It overlooked the appellant's case that she was not being actively pursued by the authorities while she was in China and that her problems arose after she left. That is to say, the tribunal did not address the substance of the case put forward by the appellant. 23 It is only necessary to deal briefly with the second ground. The complaint is that the tribunal failed to "consider the corroborative evidence in the form of the Summons against the husband of the applicant and the Administrative Penalty Order, before making the adverse credibility finding". I take it to be a trite proposition that a decision-maker required to find facts, whether the decision-maker be a judge or an administrative official, must consider the totality of the evidence that bears upon the facts to be found. That requires the decision-maker to consider any direct evidence of the existence of the fact in issue together with any corroborative evidence that bears on that issue. This is nothing more than common sense. There may be circumstances where it is not necessary to pay due regard to corroborative evidence. In Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 ; (2003) 198 ALR 59 at [49] McHugh and Gummow JJ said "it is not unknown for a party's credibility to have been so weakened in cross-examination that the tribunal of fact may well treat what is proffered as corroborative evidence as of no weight because the well has been poisoned beyond redemption". That proposition is no doubt true. But the circumstances for its application will be rare indeed. Even experienced advocates can only point to a handful of cases where a witness' credit has been so badly destroyed in cross-examination that it is possible to make findings of fact based on that evidence alone and simply disregard any corroborative evidence. 24 For example in WAIJ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 74 ; (2004) 80 ALD 568 the appellant complained that the tribunal failed to have regard to certain documents because the tribunal was not convinced that the documents could overcome the difficulties that it had with the appellant's evidence. Necessarily, such findings are likely to negate allegedly corroborative material: see S20/2002 at [49] per McHugh and Gummow JJ. Obviously to come within that exception there will need to be cogent material to support a conclusion that the appellant has lied ... it will not be open to the Tribunal to state that it is unnecessary for it to consider material corroborative of an applicant's claims merely because it considers it unlikely that the events described by an applicant occurred. In such a circumstance the Tribunal would be bound to have regard to the corroborative material before attempting to reach a conclusion on the applicant's credibility. Failure to do so would provide a determination not carried out according to law and the decision would be affected by jurisdictional error: see Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 ; 180 ALR 1 ; 62 ALD 225 at [82] - [85] per McHugh, Gummow and Hayne JJ. 25 The appellant submitted that the conclusion that she had lied to the tribunal was based on the operation of Chinese law relating to the exit and entry of citizens and the issue of passports in circumstances where she had told to the tribunal that (a) she had only been administratively detained after her request for permission to hold a work related protest; (b) she had given an undertaking to persuade those unemployed workers to not engage in any protests in the future; (c) she had not come under any further adverse notice and was not actively sought until after her departure; (d) her application for the second passport was filed before her detention through a friend and money was involved; (e) her Australian visa was obtained through a secret member in the Tourism Bureau of Qingdao City; (f) Chinese law provides for cancellation of the passports of those who have been involved in activities that are endangering the safely, the honour and the interest of the country; and (g) some of the country information speaks only of the probability that a person who has obtained a Chinese passport and exit permit would not be on wanted lists. 26 I am in no doubt that, contrary to the views of the Magistrate, the tribunal should have had regard to the documents put forward by the appellant in order to assess her credibility. In its reasons the tribunal explained how it would have regard to the documents. The Tribunal is not convinced that this statement is true as it finds that it does not accept her claims and it does not accept, therefore, that her documentary evidence is authentic. 27 This is not a rational approach. Putting to one side the fact that the tribunal misunderstood the appellant's claim, it is false reasoning to find that the corroborative evidence was not authentic because the tribunal without regard to that evidence found the appellant to be dishonest. The tribunal should have had regard to the documents when assessing the appellant's credibility. In that process it might have found the documents not to be authentic. But that would need to have been for independent reasons, unless the appellant's evidence fell into the S20/2002 category. It plainly did not fall into that category. 28 I would allow the appeal with costs, set aside the orders made by the Magistrate, set aside the decision of the tribunal and remit the matter to the tribunal for determination according to law. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | refugee review tribunal judicial review whether tribunal considered case put by putative refugee whether tribunal was obliged to consider corroborative evidence migration |
2 The appellants, a mother and her two daughters, are citizens of Sri Lanka. The history of their claim bears reciting. The appellants arrived in Australia on 20 May 2000 and lodged an application for protection visas on 29 June 2000. A delegate of the first respondent refused their application and, on 31 August 2000, they applied for review of that decision. On 15 February 2002 the Refugee Review Tribunal ("RRT") handed down a decision affirming the delegate's decision not to grant protection visas. 3 On 14 March 2002, the appellants lodged an application for an order nisi in the High Court. The draft order nisi, which formed part of the appellants' application in the High Court, referred to a failure to accord the appellants natural justice and included, by way of particulars, allegations that the first appellant was medically unfit to attend the hearing and the RRT had disregarded medical evidence. 4 The matter was remitted to the Federal Court and heard as proceeding VID 676 of 2002. Following a direction by a Registrar of the Court, on 29 November 2002 the appellants filed an amended application under s 475A of the Migration Act 1958 ("the Act ") and s 39B of the Judiciary Act 1903 . That application, which was heard in the first instance by Sundberg J, alleged that the RRT fell into jurisdictional error by considering out-of-date country information. The appellants' written contentions of fact and law repeated this claim. By a decision delivered 12 November 2003, Sundberg J dismissed the application for review. It would have been irrelevant to consider current information about Sri Lanka in assessing the state of the country after the events were said to have occurred. When it was considering the real chance of persecution on return, it had regard to current information about the country. That is, it was alleged that the Tribunal fell into jurisdictional error by considering dated and not recent country information and the primary judge erred in not concluding that the Tribunal had fallen into jurisdictional error. They included that she had been denied procedural fairness because she had been required to attend the hearing before the Tribunal at a time when she was medically unfit. The appellant also contended, in effect, that the Tribunal failed to take into account her mental state when assessing her evidence and, in particular, when considering the significance of her inability to name the Tamil boarders she claimed to have taken in during 1999. That report recommended that the appellant should receive treatment for her condition in the interim. After the three months had passed, the Tribunal asked the appellant to attend a hearing on 25 May 2001 but, at the appellant's request (made on 24 May 2001) delayed that hearing until 31 May 2001. The Tribunal refused to delay the hearing for a longer period. It did so on the ground that the psychologist, although stating that the appellant still suffered from the same condition, reported that the appellant had not sought the recommended treatment. The appellant attended the delayed hearing with her legal representative. That application and those submissions appear to have abandoned a complaint made in the draft order nisi that the appellant was denied procedural fairness (and that the Tribunal failed to follow procedures required by [the Act ] and misconceived its duty) because the hearing before the Tribunal took place when she was suffering from a mental disability. It may well be that the matter was not pursued in either the application or submissions because those advising the appellant considered a denial of procedural fairness was not a ground available under the then legislative regime. However it is relatively clear the notice was prepared by the appellant without legal assistance. It was not. However, we have independently considered whether, had such an application made, there would have been any basis for granting leave; cf CDJ v VAJ [1998] HCA 76 ; (1998) 197 CLR 172. To that end, we have read the transcript of the hearing before the Tribunal. The appellant was then legally represented. The Tribunal was concerned to ensure that the appellant was able to answer questions asked of her. The appellant declined an offer by the Tribunal to undergo psychiatric assessment. The appellant indicated to the Tribunal she was prepared to proceed and her solicitor confirmed that was so. In our opinion, no purpose would be served by allowing the appellant to adduce further evidence in this appeal concerning her mental state at the time of the hearing before the Tribunal. In considering whether leave (if sought) would be granted to allow the appellants to adduce further evidence concerning the 'medically unfit' ground, their Honours held (at [17]-[20]) that, in light of the RRT's efforts to ensure that the first appellant was able to answer the questions asked of her, no such leave would be granted. 9 On 26 May 2005, the High Court refused an application for special leave from the Full Court's judgment. Before the Federal Magistrate, the appellants again argued that the RRT had erred by considering out-of-date country information and that there had been a denial of procedural fairness because the first appellant was medically unfit to attend the hearing before the RRT. The first respondent sought the summary dismissal of this application pursuant to rule 13.10(a) or rule 13.10(c) of the Rules of the Federal Magistrates Court. The Federal Magistrate held, in the alternative, that the application constituted an abuse of process and could also be dismissed on that basis. 12 The notice of appeal was broad and unparticularised. It was, however, accompanied by an affidavit sworn by the first appellant on 17 February 2006. The principal grounds of appeal raised by the appellants appear in this affidavit and in the appellants' written submissions filed on 25 April 2006. These grounds were: (1) that the first appellant was medically unfit to give evidence in support of her application before the RRT and was therefore denied procedural fairness and her rights under s 425 of the Act ; and (2) that the RRT failed to consider up-to-date country information. 13 On the hearing of the appeal, the first appellant reiterated both grounds and gave the Court copies of a document containing recent information on the situation in Sri Lanka. 14 In written submissions, the first respondent submitted that the appellants required leave to file and serve the affidavit of 17 February 2006 and that such leave should not be granted. It is, however, unnecessary to consider the question of leave, which was not formally sought by the appellants in any event. At the hearing the first appellant said that the affidavit was not intended to raise any matter that had not been before the Federal Magistrate. In substance, the affidavit provided 'particulars' of the notice of appeal that was filed at the same time. Further, the terms of the affidavit are the same as part of the appellants' written submissions. The grounds or proposed grounds were (1) the RRT's reliance on out-of-date country information and (2) save before Sundberg J, the first appellant's medical condition at the time of the hearing. At first instance and on appeal, the appellants were unsuccessful. The RRT's reliance on country information was the subject of Sundberg J's and the Full Court's consideration. The appellants seek to raise again the very same ground. I accept the first respondent's submission that there is no error shown in his Honour's conclusion that res judicata applied to preclude the appellants from pursuing a second judicial review application on this ground. Res judicata can operate as a bar to a judicial review application in these circumstances: see MZWHW v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 466 (" MZWHW ") at [11] referring to Re Wong v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 204 ALR 722 (" Wong ") at [71]. 16 The issue concerning the first appellant's medical condition formed part of the appellants' application in the High Court and a ground, or proposed ground, of appeal in the Full Court. The Full Court gave detailed consideration to the 'medically unfit' ground in determining whether, if an application to adduce further evidence were made, there would be any basis for the grant of leave. In substance, the Court held that there was no basis for the grant because the proposed ground was untenable in light of what had occurred at the RRT hearing. Even if this were insufficient to attract res judicata because directed to a different issue (namely, whether there was any basis to grant leave to adduce further evidence) from that which arises here, the history of the various proceedings instituted by the appellants discloses that his Honour correctly held the proceeding in the Federal Magistrates Court constituted an abuse of process. This is because, to the extent the appellants relied on the 'medically unfit' ground, these second judicial review proceedings would attract an Anshun estoppel: see Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 ; (1981) 147 CLR 589. Such an estoppel bars a party from raising any point which properly belonged to the subject of earlier litigation that the party, exercising reasonable diligence, might have brought forward at the time of the earlier proceeding. Plainly enough, the 'medically unfit' ground might have been brought forward for Sundberg J's consideration. Nothing has been established that would attract the discretion that forms part of the Anshun estoppel doctrine: see generally Wong at [49], [61]-[64], [149]. 17 As the Federal Magistrate noted, the relevant standard for assessing an application for summary dismissal is well established: see, e.g., in Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62. Although it must be very clear that summary dismissal is appropriate, no error is shown in his Honour's decision that this standard was met in this case. 18 The Federal Magistrate's decision was, so it seems to me, a final decision: see MZWHW at [6]; also SZEEO v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 546 at [8] - [11] ; NADZ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 975 at [29] ; and MZWZL v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1475 at [11] . Accordingly, the appellant did not require leave to appeal. 19 For the foregoing reasons, I would dismiss the appeal with costs. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | res judicata abuse of process migration |
The duty of the court when acting under s 411(6) of the Corporations Act 2001 (Cth) has been explained more than once. Nothing is served by going over old ground. It will be sufficient to refer to two short passages from the leading case: In re Alabama, New Orleans, Texas & Pacific Junction Railway Company [1891] 1 Ch 213. First there is the passage from Lindley LJ 238-239. The Court also has to see that the minority is not being overridden by a majority having interests of its own clashing with those of the minority whom they seek to coerce. Further than that, the Court has to look at the scheme and see whether it is one as to which persons acting honestly, and viewing the scheme laid before them in the interests of those whom they represent, take a view which can be reasonably taken by business men. The Court must look at the scheme, and see whether the Act has been complied with, whether the majority are acting bona fide, and whether they are coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and then see whether the scheme is a reasonable one or whether there is any reasonable objection to it, or such an objection to it as that any reasonable man might say that he could not approve of it. I shall not attempt to define what elements may enter into the consideration of the Court beyond this, that I do not doubt for a moment that the Court is bound to ascertain that all the conditions required by the statute have been complied with; it is bound to be satisfied that the proposition was made in good faith; and, further, it must be satisfied that the proposal was at least so far fair and reasonable, as that an intelligent and honest man, who is a member of that class, and acting alone in respect of his interest as such a member, might approve of it. What other circumstances the Court may take into consideration I will not attempt to forecast. On the other hand, if the members are acting with full knowledge and complete information and, also, are acting honestly, they are in a far better position than a judge to decide what is in their best interests. As regards these schemes, the meetings have been properly convened, the members have been given adequate information to enable them to make an informed judgment and in voting in favour of the schemes they are acting honestly, as far as I can see. Moreover the resolutions approving the schemes have been carried by very large majorities. In these circumstances I should not adopt a view of the schemes that is different from the view of the members not unless I could see that something was amiss. Nothing has been brought to my attention that suggests prejudice. The two conditions in s 411(17) being satisfied, I will make orders approving the schemes along with consequential orders under s 413 to give effect to the transfer of the undertaking and property of MDAV to United. It is also necessary to deal with the application under the Insurance Act 1973 (Cth) to confirm the scheme for the transfer of the assets of Australasian Medical Insurance Limited to Professional Indemnity Insurance Company Australia Pty Ltd. In substance the transfer of an insurance business from one insurer to another to create a merged and larger operation. The statutory requirements for the transfer have been satisfied and it is appropriate that the scheme be confirmed. The transfer is an essential element of the schemes to merge the operations of MDAV and United and in the absence of the transfer of the insurance option the principal scheme could not go proceed. It has often been pointed out that the Insurance Act fails to specify what, apart from compliance with the statutory conditions, must be shown to obtain the court's confirmation of a scheme. This is notwithstanding that the interests of policy holders must be kept uppermost in mind and if there were likely to be prejudice to policy holders the scheme would not be allowed. Here the position of all policy holders is that they are adequately protected. Indeed, their position will be enhanced by the implementation of the proposal. I will make orders in accordance with the minutes submitted by the parties with the changes I suggested during the course of today's hearing. | amalgamation of insurance business confirmation of scheme principles to be applied scheme of arrangement amalgamation of companies approval principles to be applied insurance corporations |
Its sole director and secretary is Mr Gerardus Peter Hanssen. In 2006, the company employed approximately 20 persons, the majority of whom were foreign nationals holding a Subclass 457 work visa (a 457 visa). These employees worked as tradesmen. In 2006, the appellant entered into an employment agreement, known under the Workplace Relations Act 1996 (Cth) (the Act) as an Australian Workplace Agreement (AWA), with each of a number of its employees who held a 457 visa. Later each of the AWAs was lodged with the Office of the Employment Advocate. This case is about the way in which those agreements were entered into and lodged. By an application dated 12 September 2007, filed in the Federal Magistrates Court, the respondent, who is a workplace inspector appointed pursuant to s 167 of the Act, alleged that the appellant had contravened s 341 of the Act in respect of the AWAs entered into with 10 of these employees; and that the appellant had contravened s 337(1) and s 337(8) as well as s 337(2) and s 337(9) in respect of the AWAs entered into with another five of these employees. It was also alleged that the appellant had contravened s 342 of the Act by failing to lodge an approved AWA entered into with an employee, Mr Salazar, within 14 days of approval. The respondent alleged that the contraventions of s 341 of the Act comprised the appellant lodging nine AWAs, each of which contained a date which did not reflect the date on which the employee had signed the AWA, and an AWA which did not contain any date reflecting the date of signature by the employee. The respondent also alleged that the appellant had failed to take reasonable steps to ensure that each of the five different employees had had ready access to his AWA during the seven-day period beginning seven days before the AWA was approved and so had contravened s 337(1) and s 337(8) of the Act. As to the contraventions of s 337(2) and s 337(9), the respondent alleged that the appellant had not taken reasonable steps to provide the five employees with an information statement containing information as to the contents of the proposed terms of the AWA at least seven days before the date of the approval of the AWA. The respondent claimed declarations that the appellant had contravened the Act in the manner referred to above, and that the appellant should pay a civil penalty in respect of the contraventions. At the first directions hearing on 15 October 2007, the appellant admitted the contraventions alleged and consented to the making of declarations. The Federal Magistrate, accordingly, made the declarations sought by the respondent. The only issue before the Federal Magistrate at the hearing on 5 November 2007 was the penalty to be imposed in respect of the contraventions of the Act which the appellant had admitted. The Federal Magistrate imposed a penalty totalling $173,250 in respect of the contraventions of s 337 and s 341 referred to above. The appellant has appealed against this penalty. The Federal Magistrate also imposed a penalty of $750 in respect of the contravention of s 342 of the Act, but no appeal is brought against the imposition of that penalty. Each of the agreements was in the same form. There was a place for the date to be inserted beneath the signature of each of the signatories to the agreement. There was also a space for the signature of a witness to be inserted. On 20 June 2006, the appellant lodged 10 of the AWAs with the Office of the Employment Advocate. Each of these AWAs reflected that Mr Hanssen had signed the agreements on behalf of the company on either 13 June or 14 June 2006 and that the employee in question, other than Mr Merina, had signed the agreement on 21 June 2006. In respect of Mr Merina, the agreement when lodged did not contain a date. It is the lodgement of these 10 AWAs which constitute the basis of the allegation that the appellant contravened s 341 of the Act. This was because it was apparent that something was awry - at least in respect of nine of the AWAs lodged on 20 June 2006, because the date of lodgement predated the date on which each of the employees had purportedly signed the agreement. On 10 July 2006, the appellant lodged an AWA which recorded that it had been signed by an employee of the appellant, Mr Salazar on 22 June 2006. It is this circumstance that formed the basis for the alleged contravention of s 342 of the Act. On 18 August 2006, the appellant entered into an AWA with Mr Frampton. On 24 August 2006, it entered into an AWA with Mr Hennessy and on 25 August 2006 it entered into an AWA with Mr Twomey. It had also entered into an AWA with Mr Orano on 13 June 2006. It was the circumstances surrounding the entry into the AWAs with each of these employees, as well as the agreement entered into with Mr Salazar, referred to above, that formed the basis of the allegations that the appellant had contravened s 337(8) and s 337(9) of the Act. On 13 September 2006, Mr Hanssen was interviewed by officers of the OWS. A record of interview was made by Ms Ride, one of the officers of the OWS. During the course of this interview, Mr Hanssen admitted that either he or someone else on behalf of the appellant, and not the employee, had inserted the date, 21 June 2006, beneath the employee's name in each of the nine AWAs. Mr Hanssen said that he had asked each of the employees to leave the space for the date blank, when they signed the AWA. On 14 December 2006, another meeting took place between Mr Hanssen and officers of the OWS. A record of this interview was also made. The evidence before the Federal Magistrate comprised an affidavit of Mr Hanssen and an affidavit of the respondent. Among the documents annexed to the respondent's affidavit were the records of the interviews between the officers of the OWS and Mr Hanssen on 13 September 2006 and 14 December 2006 respectively. Among the relevant considerations that the Federal Magistrate took into account, in assessing the appropriate penalty in these circumstances, were: As to the circumstances of the conduct, the Federal Magistrate observed that the 15 employees affected by the contraventions were holders of 457 visas and were, therefore, vulnerable because their remaining in Australia depended, at least in part, on their maintaining good relations with their employer, who was their sponsor for migration purposes. Mr Hanssen, the director and secretary of the [appellant], acknowledged that the employees "would sign anything" because they "are frightened of...being sent back". The Court has no difficulty in concluding that this was a vulnerable set of employees, that the [appellant], through its principal officer Mr Hanssen had knowledge of that, and that he exploited his perception of these employees as being malleable to the wishes of the [appellant]. The legal advice obtained was not followed by the [appellant], at least in relation to the contraventions. (Footnote omitted. The tenth AWA was undated. They were purportedly dated by employees on 21 June 2006. Mr Hanssen admitted asking the employees not to date the AWAs, and that that was done because he intended to date them. Mr Hanssen did so because he was aware of the 7 day access requirement. The Court finds that he did this deliberately in circumstances where he knew that the documents might not accurately reflect whether or not the employees had been afforded the requisite 7 day access period. Moreover he regarded this as of little consequence. The Federal Magistrate found that individual employees had been separately affected by the appellant's contraventions and that the contraventions could not be treated as a single course of conduct. The Federal Magistrate found that the consequences of the contravention of s 342 - being the late lodgement of Mr Salazar's AWA - were minor. It is a matter of serious concern to the Court that the [appellant] seemed to regard them as being of little consequence. Further, the [appellant] endeavoured to argue that the scheme of self-regulation was an excuse for its conduct, because of the complexity of the terms of the WR Act in relation to AWA approvals. The appellant's conduct, he said, was contrary to this regime. In assessing the seriousness of the [appellant's] conduct, and what the level of penalty might be, the Court must have regard to the statutory purposes of the WR Act . One of the reasons why the conduct of the [appellant] is serious is that if it were left unchecked, it might undermine some of the statutory objects and purposes of the WR Act which the Court has set out above. The appellant, said the Federal Magistrate, was a "largish Perth based construction company" and there was no evidence of an inability to pay the penalty suggested by the respondent. The Federal Magistrate then dealt with the issue of cooperation with regulatory authorities. The Federal Magistrate also said that there was an expression of contrition on the appellant's behalf by its counsel at the penalty hearing. However, the Federal Magistrate observed that there was no evidence on affidavit of the appellant's contrition. The Federal Magistrate went on to observe that the appellant was entitled to a substantial discount because of the evidence of contrition, but not as substantial as would have been appropriate if there was further direct evidence of contrition. As to the size of the prescribed penalty, the Federal Magistrate noted that the maximum penalty for breaches of s 337 and s 342 of the Act was $16,500 and the maximum penalty for a breach of s 341 was $33,000. In relation to the evidence of contrition, and recognising there is a significant overlap between that and the issues of cooperation and the early admission, the Court considers that a further penalty reduction of 25-30% is appropriate, but that penalty reduction must take account of the overlap. Therefore, considering these matters together, and taking account of the overlap, the Court considers that the [appellant] is entitled to a penalty reduction of 40-50% for the combined elements of cooperation, early admission and contrition. In those circumstances, the Court considers that a further penalty reduction of 5-10% is appropriate. Therefore, the penalty reductions will be at the lower end of the ranges of penalty indicated above. The Federal Magistrate accepted that the contravention of s 342 was not serious and he imposed a penalty of $750. The total penalty imposed for the 21 contraventions of the Act was $174,000. In applying the totality principle, the Federal Magistrate adopted the approach of the majority of the Full Court in Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith [2008] FCAFC 8 ; (2008) 165 FCR 560 which he described as: "to consider by an approach of instinctive synthesis whether or not the penalty is appropriate". A fine of $173,250.00 is a substantial fine, but there are 20 admitted contraventions of ss 337 and 341. In the circumstances, the Court considers $173,250.00 an appropriate penalty. In the alternative, the learned Magistrate erred in the exercise of his discretion in that the aggregate of the penalties imposed were, in all of the circumstances of the case, manifestly excessive. The first limb of this ground of appeal relates to the Federal Magistrate's finding as to the deliberateness of the appellant's conduct. In this regard, the appellant's complaint was that the Federal Magistrate failed to distinguish between the conduct comprising the admitted contraventions of s 337 and the conduct comprising the contraventions of s 341 but applied his finding of deliberateness to all the contraventions. The appellant contended that such findings of deliberateness that the Federal Magistrate made, were confined to the circumstances relating to the dating of the AWAs by the appellant. In other words, the finding was in relation to the contravention of s 341. There was, said the appellant, "no clear...finding" by the Federal Magistrate of deliberateness in relation to the circumstances of the appellant's conduct comprising the contraventions of s 337. The respondent, at paras 7-11 of his written submissions, referred to a number of passages from the transcript of the interviews with Mr Hanssen and contended that there was sufficient evidence to support the finding of the Federal Magistrate. There was no statement of agreed facts in this case. The Federal Magistrate's findings in respect of the deliberateness of the appellant's conduct were made in [9]-[11] of his reasons (see [21]-[23] above). In making his findings relating to the deliberateness of the appellant's conduct, the Federal Magistrate relied upon statements made by Mr Hanssen in the course of his interviews with the OWS. At [11] of his reasons (see [23] above), the Federal Magistrate referred to Mr Hanssen as having admitted in the interviews to "mucking around" with the dates, and to thinking that the appellant was breaching "the 7 day requirement" of the Act. I told them they had 7 days to think about it, but they didn't have anything to think about. The one thing they are frightened of is being sent back. They are only too eager to please, they blend in with the workforce. I didn't think it was a problem really. I observe, parenthetically, that Mr Hanssen does mention in one of the statements that he told the employees they had "seven days to think about it". This statement, which on the face of it indicates that the appellant did take some steps to comply with s 337(1), may explain why the respondent did not allege that the appellant had breached s 337 in relation to the 10 employees who were the subject of the contraventions of s 341. As already mentioned, the allegations of contraventions of s 341 of the Act related to 10 employees, whereas the respondent's claims of contraventions of s 337 of the Act related to five different employees. In relation to the latter alleged contraventions, there was no allegation that the appellant inserted false dates. Accordingly, the statements made by Mr Hanssen explaining the circumstances of inserting false dates (which were referred to by the Federal Magistrate in support of his findings in [9]-[11] of his reasons) are not germane to the alleged contraventions of s 337 of the Act, which as I have said, do not involve an allegation that there was the insertion of false dates. The reasons of the Federal Magistrate do not describe the circumstances in which the appellant failed to comply with s 337 of the Act in respect of the five employees in question. Further, the Federal Magistrate did not make any findings as to the deliberateness or otherwise, of the conduct comprising the contraventions of s 337 of the Act. There is a general reference in the Federal Magistrate's reasons to the failure to carry out legal advice but this is not related to any specific conduct by the appellant in relation to the five employees in question. The Federal Magistrate did not err in his finding that the lodging by the appellant of the nine AWAs was part of a deliberate strategy of the appellant to create the impression that each of the employees in question had had access to the AWA for at least seven days after the employer had signed the AWA, whether or not that had been the case. The evidence which the Federal Magistrate referred to in his judgment, as well as the other passages of Mr Hanssen's interviews referred to by the respondent in argument, more than adequately support the Federal Magistrate's finding in respect of deliberateness in relation to the contraventions of s 341 of the Act. However, in my view, the Federal Magistrate did err in transposing the finding of deliberateness in respect of the contraventions of s 341, to the contraventions of s 337 when considering the appropriate penalty. This was because the Federal Magistrate did not make any specific factual findings by reference to the evidence, as to the conduct comprising the contraventions of s 337. As the appellant pointed out, there are passages from the interviews in which Mr Hanssen says that he took steps to try and ensure that the employees retained the AWAs for seven days before returning them but that he was not always successful in persuading the employees to retain the AWAs during that period. The essence of the contravention of s 337 is the failure of the employer to "take reasonable steps" to ensure that each employee is given an information statement and has ready access to the AWA during the prescribed period. The Federal Magistrate's reasons do not identify the circumstances of the omissions and why those omissions were to be characterised as "deliberate" conduct. As to the second limb of this ground of appeal, the appellant's contention is that the Federal Magistrate erred in finding that the appellant had exploited the vulnerability of the employees, and in failing to find that none of the employees suffered any material disadvantage. The appellant accepted that the employees were, by reason of their immigration status, vulnerable to exploitation. However, said the appellant, there was no evidence that the terms of the AWAs which the appellant had entered into with each of the employees was harsh or unfair. Nor, said the appellant, had the respondent so contended at the hearing. There was, said the appellant, no evidence to support a finding that the appellant had exploited the vulnerability of the employees. It is apparent from his reasons [see [35] above], that the Federal Magistrate applied the finding that there had been an exploitation of the vulnerable employees in determining the appropriate penalty in respect of the contraventions both of s 337 and s 341. The difficulty with the Federal Magistrate's approach is that he did not make explicit findings as to the manner in which Mr Hanssen had exploited the vulnerability of the employees affected by the contraventions of s 337 or those employees the subject of the contraventions of s 341. The primary finding of the Federal Magistrate in respect of the exploitation of the vulnerability of the employees is found at [8] of his reasons (see [20]-[21] above). There, the Federal Magistrate referred to the fact that Mr Hanssen said in his interview that the employees would "sign anything". The Federal Magistrate then went on to find that Mr Hanssen knew that the employees were vulnerable and that he "exploited his perception of these employees as being malleable to the wishes" of the appellant. However, as already mentioned, the Federal Magistrate did not go on to make specific findings as to the form that the exploitation took. Nor did he refer to the detriment suffered by the employees by reason of the exploitation by the appellant. The finding of exploitation appears to be based on Mr Hanssen's statement that the employees would "sign anything". The evidence of Mr Hanssen that the employees would "sign anything" supports the finding of the Federal Magistrate that Mr Hanssen knew the employees were vulnerable. It does not support the finding that because they were willing to "sign anything" the appellant exploited that willingness to the disadvantage of the employees. In my view, in making a finding that there was exploitation by the appellant of vulnerable workers, and in treating that finding as an adverse circumstance affecting penalty, it was incumbent upon the Federal Magistrate to make specific findings in relation to the detrimental impact, if any, on the employees affected. This is because that finding and the treatment of that finding as an adverse factor, carried the implication that there had been such a detrimental effect. In any event, for the reasons expressed below, it was a relevant consideration in relation to any finding that there was exploitation of the employees' vulnerability. In my view, the Federal Magistrate erred in failing to recognise that there was no evidence that the contraventions had led to the employees entering into AWAs which were disadvantageous when compared to AWAs entered into by other employees. The Parliamentary intention behind this part of the Act is to prescribe a process which gives an employee enough time to consider the terms of the proposed AWA and, thereby, prevent the situation from arising where the employee is pressured to enter into an unfair contract because of an unfair process. In other words, the objective of the process is to preclude, so far as possible, an employer from exploiting the ignorance of an employee as to the terms of a proposed AWA, to pressure or cajole that employee into entering into an unfair contract. In considering the penalty, it was relevant to consider whether the conduct comprising the contraventions amounted to the very mischief to which the Act was directed. The respondent contended that the Federal Magistrate did not err in taking into account the exploitation of the vulnerability of the employees as a factor adverse to the appellant, because the appellant was incorrectly focusing on the indirect consequences of the contraventions of the Act. The detriment to the employees, said the respondent, flowed directly from the breach, namely, the employees did not receive the statutory benefits. In my view, this fact alone would not justify the Federal Magistrate treating "the exploitation of the vulnerability" of the employees as a specific adverse factor. The detriment identified in the respondent's submissions, namely, the denial of the statutory benefits, was no greater than, and of no different a character from that suffered by any non-vulnerable employee who had been denied the statutory benefits provided for under s 337 or s 341. In this case, there does not appear to have been any other additional material detriment suffered by these employees by reason of their vulnerability than would otherwise have been the case. In my view, the appellant is correct in its submission that the Federal Magistrate placed too much emphasis on the mere fact of the vulnerability of the employees, rather than articulating the actual detriment suffered by the employees beyond the denial of the statutory benefits. I, accordingly, uphold this ground of appeal. Because these findings undermine important findings of the Federal Magistrate on which the penalty was based, it follows that grounds three and four of the appeal should also be upheld. In each ground, the respondent contended that the Federal Magistrate had erred. However, the respondent did not ask the Court to increase the penalty because of these alleged errors, but submitted that these contentions constituted a basis for the Court not to reduce the penalty. The Federal Magistrate applied a discount of 25%-30% on the basis of the appellant's contrition. The Federal Magistrate said that the finding of contrition was based on the appellant's cooperation with authorities, its early admission, its expression of contrition and its subsequent compliance with the Act. First, the respondent submitted that the appellant's admissions should not be regarded as indicative of contrition, because they amounted to nothing more than the recognition by the appellant that there was an overwhelming case against it. The respondent said that the transcript of Mr Hanssen's first interview showed that he had initially maintained that the AWAs had been signed by the employees on 21 June 2006; and that it was only after Mr Hanssen appreciated the inconsistency of the date of signature post-dating the date of lodgement, that he admitted that the AWAs had been dated by him and not the employee in question. I accept the submission of the appellant that some caution must be exercised in drawing conclusions from the transcript of the interviews. This is so because it is clear that the transcripts are not verbatim transcripts of the interviews; and it also appears that Mr Hanssen's command of English is less than perfect. Nevertheless, there is, in my view, substance in the contention made by the respondent that the transcript appears to show that at the commencement of the first interview, Mr Hanssen did maintain that the AWAs had been signed by the employees on 21 June 2006, and that it was only after he appreciated that he had inserted a date which post-dated the date of lodgement, that he acknowledged that he had dated the AWAs. However, the interview transcript also indicates that, after what may be referred to as a false start, Mr Hanssen cooperated fully with the authorities. The Federal Magistrate does not refer to this matter in discussing contrition. He may have considered that the false start was an irrelevant consideration in considering contrition in light of the subsequent cooperation. In my view, the discount for contrition should have reflected this circumstance and in failing to do so, the Federal Magistrate erred. I do not accept, however, the consequence is that there should be no discount for contrition. The respondent also contended that the manner in which the appellant's counsel had conducted the hearing before the Federal Magistrate demonstrated an absence of genuine remorse. The respondent said that at the hearing the appellant's counsel had challenged the respondent's submission that Mr Hanssen's statements made in the interviews were admissions of "deliberate falsification" and also that Mr Hanssen regarded the false dating as inconsequential. It was said that the appellant's counsel had sought to downplay the seriousness of the appellant's conduct by characterising the breaches of s 341 of the Act as "technical breaches", and by submitting that none of the employees had suffered a disadvantage. In my view, the Federal Magistrate was best placed to determine whether the conduct of the case by the appellant's counsel was such as to demonstrate a lack of contrition by Mr Hanssen. The Federal Magistrate did not come to that view. I am not satisfied that the Federal Magistrate erred in that approach. It is the case that the appellant's counsel at the hearing before the Federal Magistrate made submissions that challenged the respondent's submissions as to the characterisation of Mr Hanssen's conduct. From the transcript, it appears that counsel for the appellant construed the respondent's submissions to be a submission that Mr Hanssen had acted fraudulently. The appellant's counsel sought to resist that submission. It appears that among the points that the appellant's counsel sought to make was that the appellant had not been charged with any fraudulent conduct, and that in dating the AWAs, Mr Hanssen had not thought that he was doing anything wrong because it was common practice in the industry to post-date documents. Although such a view on Mr Hanssen's part is seriously misguided, it was a submission that was open to the appellant's counsel to make, and it is not inconsistent with a capacity on Mr Hanssen's part subsequently to demonstrate contrition. Further, in referring to the breaches of s 341 as "technical", the appellant's counsel appeared to be contrasting the position of failing to comply with a formal requirement of the Act, namely, the accurate reflection of the date of the employee's signature, on the one hand; with the statutory purpose of this part of the Act, namely, the protection of employees from the imposition by stealth of unfair and oppressive terms, on the other hand. In my view, this was a distinction which was relevant and the appellant, through its counsel, was entitled to point out that there was no evidence that the employees had suffered any material disadvantage by reason of the contraventions of the Act. As already mentioned, the Federal Magistrate was in the best position to judge whether the conduct of the case by the appellant's counsel was such as to demonstrate a lack of contrition by Mr Hanssen and the appellant. Next, the respondent contended that further evidence of the absence of contrition was to be found in the fact that Mr Hanssen had failed to give evidence of the actual contrition at the hearing, despite having had an opportunity to do so. The Federal Magistrate was fully aware of the circumstances surrounding the question of Mr Hanssen personally expressing contrition on behalf of the appellant. He dealt with the issue at [36] and [37] of his reasons. The Federal Magistrate correctly recognised the absence of evidence of contrition and the limitations on the expressions of contrition which had been made to the court through counsel, and accorded that form of the expression of contrition appropriate weight. He correctly held that the appellant was not entitled to as much discount as it would have been entitled to had there been "further direct evidence of contrition". In my view, the Federal Magistrate did not err. Further, I do not accept the respondent's contention that further evidence of the appellant's lack of contrition is to be found in the challenge in this appeal to the Federal Magistrate's findings of deliberateness of the appellant's conduct. For the reasons which I have already given, there was substance in the appellant's challenge. The respondent also submitted that the appellant's subsequent compliance with the Act did not necessarily demonstrate genuine remorse. It was submitted that it was more likely to reflect a "pragmatic recognition" that it was not worth continuing to breach the Act. There was evidence that subsequent to Mr Hanssen's interviews, the appellant had admitted the contraventions and had cooperated with the authorities. The respondent did not point to any evidence before the Federal Magistrate that there were continuing failures by the appellant to comply with the Act. In my view, it was open to the Federal Magistrate to find that the appellant's subsequent compliance with the Act was evidence of contrition. Indeed, it appears that the respondent accepted this in his submissions before the Federal Magistrate. It follows that I partially uphold this ground of contention. The question is the extent to which the discount of 25%-30% which the Federal Magistrate determined, should be varied. Once Mr Hanssen abandoned his initial stance, which was only a short way into the first interview, he was very frank and forthcoming. His cooperation with the authorities commenced at a very early stage of the process --- well before the commencement of any legal proceedings. In my view, Mr Hanssen's conduct following his initial stance, should be construed as indicative of an acceptance of responsibility rather than the mere recognition of an overwhelming case. In my view, a reduction in the discount to a range of 20%-25% properly reflects Mr Hanssen's initial stance in the first interview of seeking to assert the truth of the contents of the documents. However, the Federal Magistrate recognised that there was a "significant overlap" between contrition and "the issues of cooperation and the early admission". Therefore, said the Federal Magistrate, considering these matters together, and taking account of the overlap, the appellant was "entitled to a penalty reduction of 40%-50% for the combined elements of cooperation, early admission and contrition". The respondent noted that this assessment of a 40%- 50% reduction by the Federal Magistrate represented an increase of 15% to the lower end of the range of 25%- 30% which he had assessed for cooperation and early admission. The respondent then noted the Federal Magistrate had said at [35] of his reasons, that the contrition was based on evidence of cooperation, early admission and subsequent compliance. It followed, contended the respondent, that the additional 15% expressed in the composite percentage reduction was to be attributed to no more than the subsequent compliance with the Act. This, said the respondent, was too generous a reduction and the Federal Magistrate had, therefore, erred. In my view, the Federal Magistrate did not err in his approach to setting a discount which took account of contrition, cooperation and early admission at 40%- 50%. First, the setting of a discount is not a precise science and on the analysis conducted by the Federal Magistrate, which recognised the overlap, it was open to him to come to the percentage discount to which he came. Secondly, the analysis relied upon by the respondent, which attributes the entire additional 15% increase for contrition to subsequent compliance, fails to recognise that the Federal Magistrate also included as an element of contrition, the fact that the appellant had expressed contrition to the court by its counsel. I, accordingly, dismiss this contention. However, the consequence of my finding in relation to the first ground of contention would mean that the combined discount would be in the range of 35%- 45%. The respondent contended that the Federal Magistrate erred in giving a discount of 40%- 50% for cooperation, early admission and contrition. This level, said the respondent, was too high because the appellant was not remorseful and the admission reflected recognition of an overwhelming case. The respondent referred to the case of Mornington Inn Pty Ltd v Jordan [2008] FCAFC 70 ; (2008) 168 FCR 383 ( Mornington Inn ) where the Court allowed a discount of 10% for an admission which reflected only the recognition of an overwhelming case. In my view, this contention reflects the tenor of the contentions made by the respondent in relation to the first two grounds of contention. The same reasoning as I have set out above in relation to those grounds applies to this ground. Further, the facts of this case are distinguishable from those in Mornington Inn . In Mornington Inn , the case had been contested on the pleadings and the admission had only occurred after monies were spent in preparation for trial. In this case, there was cooperation at a very early stage. This was not a case where the appellant had contested the matter on the pleadings and the respondent was required to spend a considerable amount of public monies in getting the case ready for trial. In my view, this contention is to be rejected. Whilst it may be the fact that the Federal Magistrate only referred to specific deterrence at that part of his reasons when assessing the question of the extent of the discount, the Federal Magistrate's reasons, taken as a whole, reflect that he had regard to both general, as well as specific, deterrence. This is evident from the Federal Magistrate's specific reference to general deterrence at [6(e)] of his reasons and his observations as to the importance to be placed on ensuring that employers give effect to the policy of self-regulation which underlies this part of the Act which permeate his reasons. In my view, the Federal Magistrate did not err in concluding that the contraventions did not fall into the worst category of cases. As to the contention that the Federal Magistrate should have taken into account that Mr Hanssen deliberately inserted false dates for the purpose of concealing the appellant's failure to comply with the Act (presumably s 337(1)) in respect of the nine employees, that submission cannot be accepted. The respondent never charged the appellant with having contravened s 337(1) of the Act in respect of any of the nine relevant employees. The essence of the offence arising from s 337(1) and s 337(8) is the failure to take reasonable steps to give an employee access to the AWA during the prescribed period. The Federal Magistrate never considered and never made primary findings on whether the appellant had failed to take reasonable steps to give the nine employees access to the AWAs. There was no need to do so. In any event, such evidence as there was on the question of whether the appellant had taken reasonable steps to give those employees access to the AWAs was ambiguous - see, for example, the comments made by Mr Hanssen as to asking the employees to keep their AWAs for seven days, set out at [45] above. This ambiguity in the evidence was presumably one reason why the respondent did not allege contraventions of s 337(1) and s 337(8) by the appellant in respect of the nine employees. As I have previously found the Federal Magistrate did not err in finding that the appellant engaged in deliberate conduct to create the impression that each of the nine employees had had access to the AWA for at least seven days, whether or not this was the case. This is a finding that the appellant engaged in deceptive conduct, but it does not amount to a finding that the conduct was directed to concealing an actual failure to comply with the Act. It is the case that Mr Hanssen said at one time during an interview that he thought the appellant may be breaching the Act, but this did not justify imposing a penalty on the basis that the insertion of the date was intended to conceal an actual breach of s 337(1) and s 337(8) of the Act. As to the remaining factors referred to by the respondent, the Federal Magistrate took these factors into account in reaching his view that the conduct did not amount to the worst category of cases. I have already found that, insofar as the Federal Magistrate took into account against the appellant that there had been exploitation of the vulnerability of the employees, the Federal Magistrate erred. This error would, of course, affect the Federal Magistrate's finding as to whether the appellant's conduct was in the worst category of cases. It also undermines the respondent's contention that this was a factor which should have caused the Federal Magistrate to find that the conduct was very serious. It follows that the respondent's contention that the Federal Magistrate erred in failing to find that the contraventions of s 341 were in the worst category of cases because they were very serious, is dismissed. Further, in my view, the observations that Mr Hanssen made during his interviews that the contravening conduct was "of no consequence" should be interpreted in its proper context. As previously mentioned, it appears there are limitations on Mr Hanssen's ability to express himself in English. It is entirely possible and, in my view, likely that in referring to the absence of "consequence", Mr Hanssen was trying to make the point that by permitting him to date the contracts, the employees were acting in accordance with common practice in the building industry, and that in doing so, they had suffered no adverse consequences because the terms of the contracts were not unfair. In my view, a distinction should be drawn between the contraventions of s 341 and s 337 in setting the appropriate discount on the basis of the seriousness of the contraventions. This is to reflect the finding of Mr Hanssen's deliberate intent to misrepresent that the employees had had access to the AWAs for seven days, regardless as to whether this was the true position. It is this element of the contravention, rather than any detriment suffered by the employees in not dating their own contracts, which makes this contravention more serious. This is because, as the Federal Magistrate found, it undermines the self-regulation policy of the Act. As the Federal Magistrate said, the appellant's conduct was not justified because there was a practice of permitting the other party to a contract to date contracts in the building industry. The post-dating of the AWAs in this case was different because it sought to foreclose an inquiry as to whether the appellant had taken reasonable steps to give the employees access to their AWAs for the requisite period. In my view, the discount in respect of the seriousness of the contravention should be 10% in respect of the contraventions of s 341 and 20% in respect of the contraventions of s 337. I deal first with the contraventions of s 337 of the Act. The maximum penalty prescribed by the Act for a contravention of s 337 is $16,500. The discount available to be applied to the contraventions of this section, based on the unchallenged findings of the Federal Magistrate and the considerations set out above, is 70%-95%. In my view, without the findings of deliberate conduct and exploitation of vulnerable employees, two major elements of the rationale used by the Federal Magistrate for setting the penalty at the lower end of the discount range are absent. In my view, it is appropriate to apply a discount of 90%. Accordingly, the total penalty payable in respect of the 10 contraventions of s 337, would be $16,500. As to the contraventions of s 341, the maximum penalty for a contravention of that section is $33,000. Based on the unchallenged findings of the Federal Magistrate and the considerations referred to above, the discount available to be applied to contraventions of this section is 65%-85%. However, in respect of these contraventions I have upheld the Federal Magistrate's finding that the appellant engaged in a deliberate course of conduct to misrepresent the date of the signing of the AWAs. This was to foreclose any inquiry as to whether the appellant had complied with s 337(1) of the Act. As previously stated, conduct of this nature undermines the policy and operation of the Act. The penalty should reflect both specific and general deterrence. One of the major considerations that the Federal Magistrate took into account in applying the discount at the lower end of the range was that there had been exploitation of vulnerable employees. I have held that he erred in doing so. In my view, the appropriate discount to be applied is 75%. The total penalty in respect of 10 contraventions of s 341 would, therefore, be $82,500. It remains to apply the totality principle. The total penalty in respect of all the contraventions of s 337 and s 341 would be $99,000. As previously mentioned, the one aggravating factor about the appellant's conduct is the fact that the appellant by Mr Hanssen engaged in a deliberate stratagem to foreclose an inquiry as to whether it had complied with s 337(1) and s 337(8) of the Act. However, there is no evidence that the appellant engaged in conduct of this nature for a concerted period of time and there is no evidence that the employees were materially disadvantaged. In my view, on the application of the totality principle, the appropriate penalty for the contraventions of s 337 and s 341 would be $85,000. It follows that the appeal is allowed and the orders of the Federal Magistrate are varied to substitute the penalty of $173,250 payable in respect of the contraventions of s 341 and s 337 of the Act with a penalty of $85,000. As I have previously mentioned, there was no appeal in respect of the penalty of $750 imposed by the Federal Magistrate in respect of the contravention of s 342 of the Act. | appeal from penalty imposed by federal magistrate appellant's employees were holders of subclass 457 work visas issued under the migration act 1958 (cth) whether the appellant exploited the vulnerability of the employees whether the appellant engaged in deliberate contraventions of the workplace relations act 1996 (cth) industrial law |
Those investigations were identified in the reasons for judgment at the time: ASIC v Carey (No 3) (2006) 232 ALR 577. The process that has followed the making of those orders, which affected former officers of the Westpoint group and a number of companies in the group, has been long and rather convoluted. Additional parties have been joined. There have been incidental and collateral issues of a contentious nature to be determined. There have been variations and refinements of the orders as particular problems have arisen from time to time. 3 The number of judgments that these proceedings have generated exceeds 20. At all times it has been necessary to bear in mind the nature and purpose of orders under section 1323. They are not punitive. They are intended to protect the interests of potential claimants against the assets and thereby the public interest and are necessarily of a temporary character. They are temporary because notwithstanding that they are made in the public interest, they involve a significant interference with the property rights and, in the case of these orders, the freedom of movement of the parties affected by them. 4 The Court acting under section 1323 must keep in mind the need to maintain an appropriate balance between those legitimate and competing interests in circumstances in which the evidence before the Court is necessarily incomplete. As I said in the original judgment, that evidence indicated serious misconduct and possible contraventions of the Corporations Act . However it was not evidence that was able to support final determinations of civil or criminal liability. Such determinations were not and could not be sought in these proceedings. They must be the subject of separate proceedings, be they civil or criminal. 5 ASIC has made it clear that the investigative process, insofar as it would support the continuation of existing orders, is coming to an end. There have been criminal briefs lodged with the Commonwealth Director of Public Prosecutions but no criminal prosecution has begun. There is a civil proceeding, although at the moment there is some debate about whether ASIC will to take it over and whether section 50 of the ASIC Act empowers it to do so. Whereas originally ASIC filed a motion seeking what amounted to a two year and three-month extension of the freezing orders, it has now accepted that it is appropriate that the restrictions should continue to apply for just over another three months to the end of June. It anticipates that the investigations that supported the original orders will come to an end by that date. 6 If further protective orders are thought to be necessary after 30 June, they can be made on the basis of some fresh criterion, such as the beginning of a criminal prosecution or civil proceedings. Alternatively, freezing orders can be sought as an incident of particular civil proceedings. It is appropriate that the existing orders should terminate on 30 June. I am satisfied, having regard to the agreement of the parties, that there is enough life left in the tail-end of the investigative process to justify extension of the orders to 30 June. 7 The extension of the orders being justified to 30 June, it is within my power to accept undertakings offered in lieu of the orders which would otherwise be made. An undertaking accepted by the Court has the force of an injunction as against the party making the undertaking. The Court will not accept an undertaking unless it is satisfied that it would have the power to make an order in those terms and that such an order would be, in a broad sense, appropriate. I am satisfied that the undertakings which are offered, which have been the subject of significant negotiation between ASIC and various parties affected, are within power and are appropriate. Copies of the undertakings are annexed to these reasons. Under the pre-existing orders that sum has been approved by the receivers, who will no longer continue to be receivers, at $4,000 per week. That has been the case for some time. Mr Zilko, on behalf of Mr Carey, says that I should simply extend it, keeping the status quo in place until the end of June. Mr Owen-Conway on behalf on ASIC says that ASIC does not accept that it is an appropriate amount. The more appropriate amount would be in the range of $3,000 to $3,250 per week. 9 The difference between the parties does not seem particularly significant in the context of this case and the remaining time for these orders to run. But given that I am being asked to consider the appropriateness of the figure, I will extend the current allowance for a period of two weeks and require evidentiary support for its extension to 30 June. After 30 June, of course, the undertaking will terminate and the question no longer arise, unless some fresh order is made in some other proceeding. In this connection I make the observation that I have already made to Mr Zilko, that the purpose of these orders is protective. It is not designed to punish respondents or defendants, against whom no positive findings have been made one way or the other. 10 The question requires consideration of the public interest and the legitimate private interests of the individual. That means that the assessment of the allowance is not to be guided solely by what a reasonable person might think the defendant would need to get by. It is a question of the overall balance between the protection of the global assets concerned, having regard to the period under which they will remain subject to the order, and the interests of the person affected. An order will be made that the weekly allowance for ordinary living expenses, fixed in respect of paragraph 7 of the undertaking proffered by the first defendant, is $4,000 per week until 26 March and, thereafter such rate as is fixed by the Court upon consideration of affidavit evidence to be provided by 19 March, along with written submissions. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Subject to paragraphs 10, 11, 12 & 13 I give this undertaking until midnight on 30 June 2008. The undertakings in paras 10 --- 12 survive 30 June 2008. 2. However, nothing herein prevents the entities referred to in para 3(h) below making any necessary taxation and compliance payments incurred in the ordinary course of business. I am also (despite paragraph 2) permitted to pay into a solicitors' trust bank account such amounts from My Account, as my legal representatives reasonably require from time to time on account of anticipated reasonable legal, accounting and/or expert fees and disbursements as referred to in paragraph 5 above. 7. I am also permitted to withdraw from My Accounts, and pay, ordinary living expenses of a weekly allowance as fixed by the Court from time to time. 8. I must keep and maintain a record of all withdrawals and payments from my Bank Account. 10. By 21 July 2008 I will provide to the Plaintiff's solicitors a copy of the record kept and maintained in accordance with paragraph 9. 11. I undertake to keep a copy of all invoices for any legal, accounting and/or expert fees incurred as provided for in paragraph 5 above and upon receipt of notice make such invoices available to the Plaintiff for inspection. 12. 13. I may apply to the Court to vary or discharge the terms of this undertaking on five (5) business days prior notice to the Plaintiff. Subject to paragraph 13, I give this Undertaking until midnight on 30 June 2008. 2. 3. However, My Property does not include that property described in para 5 below. 4. 5. Westpac Banking Corporation Account number 036-055-130309 in my name . 6. 7. Despite para 2 above, I may withdraw no more than $2,115 per week from the Bank Accounts to pay my ordinary living expenses. 8. Despite para 2 above, I may apply the balance of the facility provided by Edenlee Pty Ltd and secured against the property being located at Unit 4, 20 Hampden Street, South Perth WA 6151 for costs and expenses as permitted under para 6 above. 11. 12. I undertake to keep and maintain a record of all invoices for any legal, accounting and/or expert fees incurred as provided for in paragraph 6 above. 13. The Second Defendant may apply to the Court to vary or discharge the terms of this undertaking on 5 Business Days prior notice to the Plaintiff. Subject to paragraphs 8, 9, 10 & 11 the Company gives this undertaking until midnight on 30 June 2008. The undertakings in paras 8, 9, 10 & 11 survive 30 June 2008. 2. Subject to paragraph 6 below, this undertaking shall not prevent the Company from dealing with or disposing of any of the Company Property in the ordinary and proper course of the Company's business, including paying business expenses genuinely and reasonably incurred. 6. Despite paragraph 5 above, unless the transaction is an Excepted Transaction, the Company will not without the prior leave of the Court deal with or dispose of any of the Company Property as part of, in connection with or incidental to any transaction to which a Related Entity is a party or to which a Related Entity may benefit directly or indirectly. This undertaking shall not prevent the Company from withdrawing from the Company Bank Accounts and paying on behalf of the Company only and not for any other Third Party, all reasonable legal, accounting and/or expert fees and disbursements incurred in defending any legal proceedings that are commenced against it. 8. The Company undertakes to keep and maintain a record of all withdrawals and payments made pursuant to paragraphs 5 and 7 above. By 21 July 2008 the Company will provide to the Plaintiff's solicitors a copy of the record kept and maintained in accordance with paragraph 8. 10. 12. The Company may apply to the Court to vary or discharge the terms of this undertaking on five (5) business days prior notice to the Plaintiff. Subject to paragraphs 8, 9, 10 & 11 the Company gives this undertaking until midnight on 30 June 2008. The undertakings in paras 8, 9, 10 & 11 survive 30 June 2008. 2. Subject to paragraph 6 below, this undertaking shall not prevent the Company from dealing with or disposing of any of the Company Property in the ordinary and proper course of the Company's business, including paying business expenses bona fide and reasonably incurred. 6. Despite paragraph 5 above,, the Company will not without the prior leave of the Court deal with or dispose of any of the Company Property as part of, in connection with or incidental to any transaction to which a Related Entity is a party or to which a Related Entity may benefit directly or indirectly. This undertaking shall not prevent the Company from withdrawing from the Company Bank Accounts and paying on behalf of the Company only and not for any other Third Party, all reasonable legal, accounting and/or expert fees and disbursements incurred in defending any legal proceedings that are commenced against it. 8. The Company undertakes to keep and maintain a record of all withdrawals and payments made pursuant to paragraphs 5 and 7 above. By 21 July 2008 the Company will provide to the Plaintiff's solicitors a copy of the record kept and maintained in accordance with paragraph 8. 10. 12. The Company may apply to the Court to vary or discharge the terms of this undertaking on five (5) business days prior notice to the Plaintiff. Subject to paragraphs 8, 9, 10 & 11 the Company gives this undertaking until midnight on 30 June 2008. The undertakings in paras 8, 9, 10 & 11 survive 30 June 2008. 2. Subject to paragraph 6 below, this undertaking shall not prevent the Company from dealing with or disposing of any of the Company Property in the ordinary and proper course of the Company's business, including paying business expenses bona fide and reasonably incurred. 6. Despite paragraph 5 above,, the Company will not without the prior leave of the Court deal with or dispose of any of the Company Property as part of, in connection with or incidental to any transaction to which a Related Entity is a party or to which a Related Entity may benefit directly or indirectly. This undertaking shall not prevent the Company from withdrawing from the Company Bank Accounts and paying on behalf of the Company only and not for any other Third Party, all reasonable legal, accounting and/or expert fees and disbursements incurred in defending any legal proceedings that are commenced against it. 8. The Company undertakes to keep and maintain a record of all withdrawals and payments made pursuant to paragraphs 5 and 7 above. By 21 July 2008 the Company will provide to the Plaintiff's solicitors a copy of the record kept and maintained in accordance with paragraph 8. 10. 12. The Company may apply to the Court to vary or discharge the terms of this undertaking on five (5) business days prior notice to the Plaintiff. 13. | asset preservation orders under s 1323 corporations act 2001 (cth) undertakings proffered in lieu of orders whether within power and appropriate to accept undertakings corporations |
The proceeding is brought against the Human Rights and Equal Opportunity Commission (the Commission). The substance of the proceeding is that the applicant says the complaints that he made to the Commission arising out of his detention and involving a number of persons required investigation and remedy, but that the Commission did not properly carry out its function under its statute to investigate those complaints but rather terminated them without a proper basis. That, of course, is a very brief way of describing the nature of the case but I think it is adequate for present purposes. 2 There are several difficulties in the matter. The first is that the Commission wishes to submit to such order as the Court might make save for costs based upon the comments of the Full Court in Peacock v Human Rights and Equal Opportunity Commission [2005] FCAFC 45 at [38] ---[40] which in turn referred to the case of Commonwealth v Human Rights and Equal Opportunity Commission (1998) 76 FCR 513. That case in turn referred to Commonwealth v Human Rights and Equal Opportunity Commission (1995) 63 FCR 74. The fountainhead of this jurisprudence, at least in modern times for Australia, is R v Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13 ; (1980) 144 CLR 13. It is suggested that the role that the Commission has in this case is no different to the role that it had in the other cases in which its participation has been heavily criticized. I will come back to that point in a moment. The application on the part of the Commonwealth was, in effect, sparked by that problem, bearing in mind again the rather trenchant criticism by the Full Court of the lack of the Commonwealth's participation in Peacock [2005] FCAFC 45. 3 However, an alternative basis for joinder is that the complaints which were made to the Commission were about officers of the Commonwealth in the main. Some may have been independent statutory authorities but in the main they are officers of the Commonwealth. That being so, joinder of the Commonwealth is either necessary or desirable to enable the issues to be determined. The Commonwealth certainly has an interest in the case. Application on that basis is made pursuant to s 12 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) and O 6 of the Federal Court Rules . This proceeding is in the nature of a proceeding under the Administrative Decisions (Judicial Review) Act . However, because the applicant is self-represented, it is not easy to necessarily categorise it as only being such a case. Nonetheless the power given by s 12 , in a case such as the present, is no wider than arises under O 6 r 2 and O 6 r 8 of the Federal Court Rules . It is quite conventional in administrative law proceedings of one sort or another against an administrator or a decision maker that a third party who has an adverse interest is joined. Indeed, in many cases it would not be appropriate to give relief without that party being joined. It is not necessary in this case to decide into which category the present matter falls. In my opinion, the application for joinder must succeed. However, it should be done on terms that the applicant is not prejudiced as to costs and I, or whoever is managing this case, will ensure that that is honoured. 4 Secondly, there is a difficulty occasioned by the fact that there is a guardianship order in force in relation to the affairs of this applicant in the New South Wales jurisdiction. I do not pretend to have understood the full ramifications of that but it makes it desirable, in my opinion, that special liberty be reserved to the applicant to revoke this order once the position in relation to guardianship is resolved. I understand that this has its unsatisfactory aspects because it leaves matters in some doubt but, because I am left in some doubt as to whether the applicant is in a position to properly make decisions at the moment about this litigation, I think that such liberty must be reserved. 5 The next matter that is raised by the applicant is that, because of those unresolved New South Wales matters, and because of his inability to obtain legal aid, the matter ought be adjourned until after those issues have been resolved or at least until after the matter has been back to the New South Wales Supreme Court. That seems to me to be entirely appropriate. 6 Leave is not granted to the solicitor for the Commission to withdraw at this stage. The application of Peacock [2005] FCAFC 45 to this case was questioned by me in argument and can be discussed more fully when the matter comes back. 7 The orders I make are those that I have indicated, namely, that the Commonwealth will be added as a respondent on the terms which I have announced. There will be no order for costs of this application. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | application by party to be joined as respondent where existing respondent intends taking no active part in proceeding because of hardiman principle joinder appropriate as party has an interest in proceeding query application of hardiman principle practice and procedure |
The copyright claim has dominated the debate between the parties. Both companies are fully owned subsidiaries of Aristocrat Leisure Limited. They were represented at the hearing by Mr R Cobden SC and Mr N R Murray. 3 The first respondent was named in the proceeding as Vidtech Gaming Services Pty Limited ('Vidtech'). At the time of the institution of the proceeding, this was its name. At that time, the second and third respondents, David Allan Parry and Rhonda Denise Parry ('the personal respondents'), who are husband and wife, were its two directors. However, on 28 May 2005, Vidtech changed its name to DAP Services (Kempsey) Pty Limited. On 15 June 2005, it went into liquidation. 4 On 2 August 2005, I gave leave for the proceeding to continue against Vidtech. Nevertheless, Vidtech took no part in the trial. The personal respondents were represented by Mr J M Ireland QC and Mr D Accoto. 5 It is convenient for me to continue to call the first respondent 'Vidtech'. However, the Court record should be corrected by substituting the first respondent's new name. I will make an order to that effect. It is agreed that Aristocrat is the owner of various registered trade marks that it applies to EGMs manufactured by it. The registered trade marks include the following words, or collocations of words, relevant to this case: 'ARISTOCRAT', 'QUEEN OF THE NILE', 'DOLPHIN TREASURE', 'PENGUIN PAYS' and 'CHICKEN'. I will refer to these marks as 'the Aristocrat trade marks'. Aristocrat International is an authorised user of the Aristocrat trade marks. Both the personal respondents actively participated in the conduct of that business. Two of Vidtech's major customers were Belgian Gaming Technology ('BGT'), a firm based in Ghent, Belgium, and Happy Games, based in Lima, Peru. 9 During the period 2001 to 2004, one or other of the personal respondents, from time to time, commissioned V R Farrow & Co Pty Limited, trading as Capre Classic Graphics ('Capre'), to produce artwork that included substantial parts of the Aristocrat artwork for a particular model EGM. The artwork was displayed on perspex panels that were able to be installed in EGMs. There is a dispute as to the use that was made of this artwork. 10 The evidence refers to two different types of EGMs: 'casino' EGMs and 'lowboy' EGMs. Lowboy EGMs are sometimes called 'slant' EGMs. Casino EGMs stand higher than lowboys. Casino EGMs have two artwork panels: a top panel and a belly panel. Lowboy EGMs have only a belly panel. 11 On the basis of documents made available to the applicants, the parties agreed that about 615 artwork panels were produced by Capre on behalf of Vidtech. Having regard to the comparative incidence of casino and lowboy EGMs, they further agreed that 615 panels would have provided the artwork for about 400 EGMs. 12 The personal respondents concede that the manufacture of each perspex panel constituted an infringement of the first applicant's copyright in the relevant artwork. However, they say the infringer was Capre. They do not concede that Vidtech, or either of them, was an infringer. 13 As Vidtech was not represented at the trial, there is no agreement or concession binding that respondent. However, there is evidence of each of the matters of fact set out in paragraphs 6 to 12 and I make findings in the same terms as the agreements and concessions, against that respondent. During the course of these conversations, Ms Hsu referred to 'Cleopatra' EGMs. Mr Jolly told Ms Hsu that Cleopatra was not an Aristocrat game. He subsequently visited the customer's premises in Macau and found, amongst other machines, two EGMs that incorporated artwork panels that were substantially similar to those used in Aristocrat's 'Queen of the Nile' EGMs, but which bore only the name 'Cleopatra'. A shipping list revealed that the machines had been supplied to Ms Hsu's employer by BGT. 17 Mr Jolly purchased one of the 'Cleopatra' machines and had it brought to Sydney. The machine was displayed in court during the hearing of this case, along with a 'Queen of the Nile' machine. Photographs of each machine, and of their individual panels, were tendered in evidence. There is no doubt (and it is not disputed) that the 'Cleopatra' artwork reproduces a substantial part of the 'Queen of the Nile' artwork and, therefore, infringes Aristocrat's copyright in that artwork: see s 14(1) of the Copyright Act . 18 There are some differences between the 'Queen of the Nile' and 'Cleopatra' artwork. The major difference occurs in the casino EGMs. The belly panel of the 'Queen of the Nile' machine displays that title with a head portrait of a woman wearing Egyptian ornaments against a background of pyramids, palm trees and a river passing through a desert. This is a daytime scene. The top panel of the 'Queen of the Nile' machine (which includes the prize table) contains two smaller reproductions of the head portrait, one of which is accompanied by the word 'Cleopatra' and the other by the words 'Queen of the Nile'. 19 The 'Cleopatra' casino machine reverses this arrangement. The top panel contains the large head portrait, also with a background desert scene, including pyramids, but with a night-time sky instead of sunlight. The belly panel is substantially similar to the top 'Queen of the Nile' panel, including prize table, but it displays the name 'Cleopatra' alongside each of the smaller head portraits. The words 'Queen of the Nile' do not appear. The raid took place on 12 January 2005. It resulted in discovery, at BGT's premises, of 37 'Cleopatra' artwork panels, one 'Penguin Pays' artwork panel, one 'Dolphin Treasure' artwork panel, one Aristocrat EGM incorporating 'Cleopatra' artwork panels and a quantity of business records. 'Penguin Pays' and 'Dolphin Treasure' are each EGM models manufactured by Aristocrat. 21 The seized business records included an invoice from Vidtech to BGT dated 17 June 2003. The goods listed on that invoice included 64 Aristocrat machines, 20 items described as 'Casino Belly Panels Artwork' and 20 items called 'Casino Top Panels Artwork'. The artwork items were invoiced at US$50 each. The invoice also included four 'Mk 4 Conversion Kits' at $50 each. The abbreviation 'Mk 4' is a reference to Aristocrat's Mark IV 'Queen of the Nile' machine. A 'conversion kit' usually contains the artwork and EPROMs that are necessary to convert an EGM from one game to another. 22 The seized documents also included a Vidtech packing slip dated 10 June 2003. Amongst the goods listed on the packing slip were three machines, each identified as 'Cleopatra' and by reference to an individual serial number that corresponded with the serial number of an Aristocrat 'Queen of the Nile' machine. These three machines were noted as 'LB', which, the parties agree, means 'lowboy'. Cleopatra theme is not a problem, as you know we have developed the artwork for Queen of the Nile/Cleopatra, so we could make as many as you want. As a result of that conversation, Mr Parry assumed that Vidtech would become implicated in a copyright infringement case. Mr Parry discussed the matter with his wife. He then sent an email to Tim O'Reilly, the principal of Happy Games in Peru. This has implicated me as they are now in possession of my correspondence with him ...In future correspondence can you please ensure that you <U>NEVER</u> refer to the particular model of machine in question ... I am expecting to be contacted by various organizations in the near future regarding these matters. Please bear this in mind when we next talk on the phone --- you know the old saying: loose lips sinks ships. He said all the copied panels had gone to BGT. Mr Parry said that he had sold machines with artwork and EPROMs to Happy Games, but he insisted that this artwork and these EPROMs were original Aristocrat products, not copies made by Capre or anyone else. He said in evidence that his fear was not that he had sold Happy Games anything that would cause a problem, but that BGT may have done so. TMIS engaged two private investigators, Themis Papas and Julia Chai. The two investigators visited Vidtech's premises at Moorebank at about 1pm on 7 March 2005. Evidence about what happened during the course of that visit was given by Mr Papas and Mr Parry. Neither Ms Chai nor Mrs Parry gave evidence. No explanation was offered for the absence of either woman from the witness box. 28 Mr Papas said that, earlier on 7 March 2005, he and Ms Chai attended Aristocrat's office at Alexandria for a briefing. They then went to Moorebank and entered Vidtech's main office, located in unit 5 of an industrial complex. During the course of the ensuing half hour, they engaged in conversation, in that office, with Mr Parry. Mrs Parry was present during this conversation. She was apparently occupied with a laptop computer and made no substantive contribution to the conversation. Mr Papas secretly video-taped the visit. However, he had the sound turned off, in order to avoid contravening legislation relating to listening devices. His visual footage was produced at the hearing but was not very informative. 29 It seems nobody made a contemporaneous record of the conversation. However, immediately after the visit to Moorebank, Mr Papas made notes of the conversation. The personal respondents tendered them in evidence in this case. The notes are generally consistent with Mr Papas' affidavit and oral evidence, although there are items in the affidavit that do not appear in the notes. 30 In his affidavit, Mr Papas described the place where most of the conversation took place. He, Ms Chai and Mr Parry sat at a round meeting table. Mrs Parry worked at a desk nearby. Shelves near the meeting table were stacked with electronic switches and mother boards. 31 According to Mr Papas' affidavit, Ms Chai told Mr Parry that she and Mr Papas were interested in purchasing refurbished casino tops for export to China and Macau. Mr Parry described the nature of Vidtech's business. He asked what type of machine Ms Chai wanted. She replied 'Mark V Series 1'. This was a reference to an Aristocrat EGM model. Mr Parry said this machine 'is really hard to get at the moment' and recommended Mark V Series 2, a later Aristocrat model. After some discussion about the note validators on the machines, Mr Parry quoted prices for Mark V machines (US$2,250 for Series 2 and US$1,750 for Series 1). Ms Chai asked: 'Do you also do the conversion software? You tell me the games and I'll tell you if we can do it. The reason we are doing it this way is because we enter into copyright issues. The reason is that if a representative of Aristocrat were to see this he would be wondering why I copied it. But we do it. Here is one I have been working with. Its Queen of the Nile but we don't actually call it Queen of the Nile. We call it "Cleopatra". There is no mention of Queen of the Nile on there. Mr Party quoted a price of US$200. This is practically cost. We do the top artwork, the bottom artwork. So you get the top artwork, the bottom artwork, the button legends and the EPROM software for $200. Mr Papas said the sheets contained numerous EPROMs that had white stickers with the names of Aristocrat games on them. Like Margarita Magic, Enchanted Forest, Mystic Garden, Duke, Inca Sun, Golden Pyramid, Golden Ra, Golden Treasure, Penguin Pays. We keep a hardware copy. Mr Parry demonstrated the technique by placing a blank EPROM into an EPROM burner on a desk near the table. 36 There was discussion about delivery of machines to Hong Kong and installation there. Mr Parry offered to do the installation. He said: 'I have been to Hong Kong, I have been to Macau, Singapore. We do installations, as far as South America'. 37 According to Mr Papas, Mr Parry then took Ms Chai and Mr Papas to a store room on the ground floor of Unit 5. It contained about 30 Aristocrat and Konami EGMs. (Konami is another EGM manufacturer. ) Some machines had been refurbished, some had not. Mr Parry pointed to one EGM which had 'Cleopatra' on the top panel and 'Queen of the Nile' on the belly panel. Ours says 'Cleopatra'. We do subtle changes for copyright. Yeah, most of the software is on the EPROMs. We have what is called game control software programmers that can do ten games at a time. Or stick all the chips in and do them all at once. Mr Parry said: 'We sell these converted slant machines. ' Ms Chai remarked 'today we might just buy some software'. She added 'I must speak with my client and then make some further orders'. But if you buy the equipment first, we can supplement them. We are able to give you a package, we've got the facility to do that. Mr Parry uncovered a polystyrene sheet on the table that had the word 'Masters' in red letters. It contained over 100 EPROMs. These EPROMs bore Aristocrat game titles. Mr Parry said: 'We have every single game. These are the masters'. Ms Chai asked him which games were popular. He answered, naming (amongst others) 'Queen of the Nile', 'Dolphin Treasure', 'Penguin Pays' and 'Chicken'. I do not keep it on site as I have to be careful as there are copyright issues. Also it depends if I need to get artwork done. If not, and you take the four I have developed, then it will be faster I just need to call the printer who has it on the computer and tell him to press go. On her return, she told Mr Parry that she wished to buy 'six copies of each of Queen of the Nile, Penguin Pays, Chicken, Enchanted'. The party returned to the main office in unit 5. Mr Parry said a deposit of 20% was required, Ms Chai asked for a faxed quotation and Mr Papas said he would come back the next day and pay the deposit. Mr Papas and Ms Chai then left the premises. This Quotation does not include any freight/shipping charges. Full payment to [be] paid prior to shipping. 44 Mr Papas had agreed to pay a deposit on the following day. However, he did not do so. There was a telephone conversation between him and Mr Parry on that day in which Mr Parry claimed the deal was for both machines and conversion kits. There was discussion about that, in which Mr Papas said 'We'll still buy the conversion kits first and then we'll get the machines'. 45 There were later conversations and attempts by Mr Papas to contact Mr Parry in order to pay a deposit. These attempts were unsuccessful. However, I do agree that during the course of my discussions with them I showed them certain equipment including a machine which I had purchased from GPT Software which is used for programming and reprogramming bill validators in relation to all poker machines. I also showed the investigators some artwork for one or more brochures stored on my laptop computer. At no stage did I show them the software for any Aristocrat EPROMS stored on my laptop computer and no such software was then stored on it. The only form in which I had the software for EPROMS was in the collection of EPROMS which had been obtained from original Aristocrat machines. 47 Under cross-examination by Mr Ireland, Mr Papas said Ms Chai had the primary role, he was merely assisting her. Ms Chai 'handled most of the discussion'. He agreed that his affidavit did not set out all the conversation. He said 'there would be heaps ... that's not in the affidavit that was said in an hour ... there was way too much to remember'. In the course of questioning, Mr Papas mentioned some of the other matters, including that it was Ms Chai (not Mr Parry) who first mentioned conversion kits. Mr Papas also agreed that Mr Parry had cautioned against the purchase of machines that had been used in Queensland, apparently because of the way they had had to be programmed for use in that State. 48 Mr Ireland asked Mr Papas whether the artwork was the first thing shown to him by Mr Parry. He said it was and quoted Mr Parry's statement about 'Cleopatra' being 'still Queen of the Nile', 'we change the name slightly to Cleopatra because of copyright issues'. Mr Papas confirmed Ms Chai 'chopping and changing' between talking about machines and conversion kits. He also confirmed that Mr Parry had both quoted prices for machines and US$200 for conversion kits. Mr Ireland also took Mr Papas once again through his description of Mr Parry's action in burning an EPROM and his observations about the number of EPROMs in the polystyrene sheets. 49 Mr Ireland asked Mr Papas how he would have handled the interview with Mr Parry, if he had been in charge. The exchange between Mr Ireland and Mr Papas was not without interest; but what is important about the cross-examination is that at no time did Mr Ireland challenge the essential elements in Mr Papas' account of the conversation and the events that occurred during, or after, his visit to Moorebank. 50 Mr Cobden asked Mr Parry few questions about the visit. Mr Parry said he had felt at the time that the story of Mr Papas and Ms Chai 'just didn't ring true'. We had done our business with them and they kept enforcing they wanted conversions, conversions, conversions and I just thought, well, that's not the way it normally works. They normally buy machines off me, that's what I do. But he had admitted to Mr Cobden that, at least by January 2005, he was aware of the infringement. The seized documents established that the manufacturer for Vidtech of the perspex artwork was Capre. The principal of Capre, Mr V R Farrow, subsequently made an affidavit that was read at the trial in the applicants' case. He attended for cross-examination by Mr Ireland. 55 The Anton Piller search disclosed several polystyrene trays and motherboards containing EPROMs, 757 in all, six perspex panels and various documents including invoices, packing slips and emails. The solicitors for the applicants gained access to those documents. They provided information about the affairs of the company, but nothing about the extent of its copyright infringements. There is no suggestion that either Mr or Mrs Parry personally copied any Aristocrat artwork. The case against them is that they authorised the copying effected by Capre; which copying constituted an infringement of Aristocrat's copyright in the artwork: see s 36(1) of the Copyright Act . This case is established. Both Mr Farrow and Mr Parry gave evidence that all the panels were produced, from time to time, pursuant to instructions given to Capre by Mr or Mrs Parry. Mrs Parry made no admission. However, as she elected not to give evidence, the evidence of Mr Farrow and Mr Parry about her participation stands unchallenged. 58 As Mr and Mrs Parry were at all times acting on behalf of Vidtech, that respondent must also be taken to have authorised the infringements. 59 Section 36(1) of the Copyright Act makes it an infringement of copyright for a person, who is not the owner or licensee of a copyright, to authorise the doing in Australia of any act comprised in the copyright. See also s 13(2) of the Copyright Act . So all three respondents have infringed Aristocrat's artwork copyrights. 60 A question arises as to whether Mr and Mrs Parry, or either of them, knew from the outset that the artwork produced by Capre infringed Aristocrat's copyright. Mr Parry conceded he knew this at least by January 2005. 61 Mr Farrow gave evidence about the first discussion between himself and Mr Parry. He said Mr Parry's first request, relevant to this case, was made in 2001. That request concerned reproduction of 'Queen of the Nile' panels, changing the name to 'Cleopatra'. During the course of his cross-examination, Mr Farrow had a discussion with Mr Ireland about the extent of the changes Capre made to the 'Queen of the Nile' artwork. He emphasised the similarities between the original and reproduced artwork and said he 'presumed, after deleting the word "copyright" off the panel, that [we] were infringing copyright'. So I did the art, he signed them off. I was asked to do a job. I did a job, signed off and I got paid. In his affidavit, Mr Farrow said he never asked Mr and Mrs Parry what they did, or intended to do, with the perspex panels produced by Capre. I am also aware that the respondents submitted taxation exemption documents to Capre which contain a declaration by either Mr Parry or Mrs Parry that they intended to export the printed Perspex panels supplied to them by Capre. Sales that were intended for export were exempt from sales tax (and later, GST). 64 Mr Parry was asked about his knowledge of the copyright situation. He conceded that, in 2001, he understood 'that to copy existing artwork would infringe copyright'. He also understood this would apply to the painting of 'a faithful copy' of the artwork. The pay schedule might have been different. I discussed it with Viv but --- yes. It was only after he had produced it and we seen the layout as you see there. The pay tables had to correspond with the software program embedded in the relevant EPROM. The pay schedule had to match. He went on to refer to his discussion with Mr Farrow and said 'from his professional aspect of it I believed that it was sufficient'. 67 Immediately before Mr Parry left the witness box for an overnight adjournment, I sought to clarify what seemed to be inconsistencies in his evidence regarding knowledge. But if he'd have made a replica copy exactly, I would have known that infringed. Is that what you're saying?---I'm not quite --- I don't understand your Honour. Once Mr Farrow had shown me that as a proof, he hadn't produced the artwork. It came out in a drawing type of thing. I thought it was sufficient to get past and discussions with him led me to believe that it would not contravene artwork. Later I do believe it contravenes artwork. However, despite some assertions by him to the contrary, it seems Mr Parry knew this from the outset. He was always aware it was essential exactly to reproduce the Aristocrat pay table for the relevant machine. If you played the machine and then said that --- say for instance three Queens should have [given] you 14 coins and the artwork said 12, so I had to reproduce; the pay table had to be reproduced accurately. 70 There is no direct evidence that Mrs Parry knew Capre's reproduction of the panels infringed Aristocrat's copyright. However, especially having regard to the absence of evidence to the contrary, I think I should draw the inference that she either knew or suspected this to be so. Mr and Mrs Parry worked together in the business; apparently both of them full-time. They shared a small office and the work that needed to be done. I have found that Mr Parry was aware there was a copyright problem in relation to the reproduction of the artwork contained on manufacturers' EGMs and that reproduction of the pay tables was itself enough to constitute infringement. It is improbable that Mr Parry failed to discuss these important matters with his wife and tell her his conclusions. 71 I find that both the personal respondents knowingly infringed Aristocrat's artwork copyright. As they were acting on behalf of Vidtech, it follows that Vidtech also knowingly infringed. Mr Parry consistently asserted he had copied Aristocrat EPROMs only rarely, when it was necessary for him to replace a damaged or defective EPROM. Mr Parry agreed that it would be necessary for a customer, which wished to convert a machine from one game to another, to change the EPROMs in the machine; otherwise the software would not coincide with the pay tables displayed on the new artwork. However, he said it was not necessary for him to send copies of EPROMs to customers wishing to convert; EPROMs for all the games were readily obtainable from machines the customers already had; they could build up their own library of master EPROMs. 73 There is no doubt that Vidtech held an extensive EPROM library, both at the time of the 'trap purchase' visit and the date of execution of the Anton Piller order. The size and careful organisation of the EPROM library naturally create suspicion of extensive EPROM copying. 74 Mr Parry vigorously denied extensive copying. The only ones we burnt was for the repair of the machines. There was no way in the world [they] would purchase EPROMs off me when they had them in their own warehouse. There might have been an odd occasion when they particularly didn't - or they'd lost the set themselves or whatever. 75 Mr Parry's statement about BGT not often needing him to provide EPROM copies has some credibility. I accept that a large customer like BGT might have built up its own EPROM library, by burning copies of genuine Aristocrat EPROMs taken out of second-hand machines that it had purchased from Vidtech or someone else. It might often be enough for a customer like BGT to purchase artwork panels, and perhaps other hardware, in order to convert one game to another. This conclusion is supported by the circumstance that the Cleopatra machine discovered in Macau, which was purchased from BGT, had EPROMs with yellow labels, whereas Vidtech seems always to have used white labels. 76 However, there is evidence that Vidtech sold machines or conversion kits containing copied EPROMs. It comes, first, from two email exchanges in early 2005 and, second, from Mr Papas' account of the conversation during the visit of 7 March 2005. 77 The first email exchange was on 13 January 2005. On that day, Mr Temmerman of BGT emailed to Vidtech a request for its inventory. He added: 'Do you have any Mk5/MVP with Cleopatra theme? If yes, how many available? Cleopatra theme is not a problem, as you know we have developed the artwork for Queen of the Nile / Cleopatra, so we could make as many as you want. Will send you an invoice for the Stop the Clock artwork. What Aristocrats do you want ? MK5 series 1, or MVP,s? 80 I have already recounted the evidence of Mr Papas concerning the conversation that he and Ms Chai had with Mr Parry on 7 March 2005. It will be recalled that Ms Chai asked Mr Parry whether Vidtech did 'the conversion software'. He responded: 'We can supply any game you want'. Mr Parry quoted a price of $200 for conversion kits, stating 'you get the top artwork, the bottom artwork, the button legends and the EPROM software for $200. ' It was in that context that Mr Parry showed Ms Chai and Mr Papas his EPROM library. Later he spoke about 'software programmers that can do ten games at a time'. Such a rate of production would be unnecessary if copying was done only to replace the odd damaged or defective EPROM. 81 Mr Parry also spoke about upgrading machines 'to just about the latest game that comes out the door'; something that could only be done with a package that included the relevant EPROMs. In response to Ms Chai's inquiry about time for delivery of games, Mr Parry said: 'The EPROMs are copied here but the screen printing is done elsewhere'. 82 All of these statements are inconsistent with Mr Parry's assertion that Vidtech only copied EPROMs in order to replace the odd damaged or defective original EPROM. Importantly, Mr Ireland did not challenge Mr Papas' evidence, and Mr Parry did not deny, that the statements were made. Moreover, the alleged statements are consistent with the contents of the quotation faxed to Mr Papas on the afternoon of the visit, which included 24 conversion sets for four specified Aristocrat games. Mr Parry acknowledged in cross-examination that 'mere artwork wouldn't convert a machine', EPROMs would also be needed. It is true, as counsel for the respondents submitted, that Mr Parry's offer to sell conversion kits to Mr Papas does not itself prove he had sold conversion kits in the past. However, it would be surprising if the first occasion on which he made this offer was to people whom he thought 'did not ring true'. 83 In their final written submissions, counsel for the applicants claimed there was an incongruity between Mr Parry's evidence that he sometimes copied whole sets of EPROMs --- see para 74 above --- and his claim that he only copied EPROMs where this was necessary in order to replace damaged or defective EPROMs. He burned whatever was needed for that purpose, even whole sets ... He also burnt and supplied EPROM sets to overseas customers; he said in the witness box that this was only for the same purpose but that should not be believed. Why it was that among the sets of EPROMs found at Vidtech on execution of the orders, including the "Master" library, each set is almost invariably similarly labelled --- so that if there is one handwritten label, the whole set is hand-labelled --- was not explained. It speaks of an enterprise of copying EPROMs in complete sets. Mr Parry's denial to the contrary should not be accepted. Although the evidence is sparse, there is enough to satisfy me that Vidtech copied Aristocrat's EPROMs whenever it needed to do so in order to make up a conversion kit to change one game to another or to provide appropriate software to a machine being converted from one game to another. 87 It is plain that Mr Parry was involved in the copying of EPROMs on behalf of Vidtech. There is no evidence that Mrs Parry copied EPROMs. However, the personal respondents worked in an office that contained numerous EPROMs. It is inconceivable that Mrs Parry did not know what was going on. Unlike the situation in relation to artwork, the copying of EPROMs was not a matter of degree; the whole of the material on an EPROM had to be copied. It follows that, if Mrs Parry burnt an EPROM, or saw someone else do so, she must have realised this was an infringement of copyright. 88 Counsel for the respondents submitted that 'not one document has been obtained which sustains the fundamental submission made to the Court by Aristocrat that the whole of the business of Vidtech involved the creation of counterfeit gaming machines employing perspex panels used in conjunction with replicated EPROMs for that purpose'. 89 I agree that the evidence does not establish that the whole of Vidtech's business 'involved the creation of counterfeit gaming machines'; I do not believe this activity did constitute the whole of Vidtech's business. However, such a claim is not a fundamental of the applicants' case; indeed they did not make that claim at all. 90 Another comment made by counsel for the respondent, in their final written submissions, was that 'each computer program embodied in an EPROM has a unique algorithm which allows a test to see whether two programs are the same. No evidence was offered that any of the EPROMs found on the Vidtech premises during the search conducted on 1 April 2005 was other than an authentic EPROM'. 91 The problem about this comment is the lack of relevant evidence. I am prepared to assume the correctness of counsel's statement that 'each computer program ... has a unique algorithm'. However, in the absence of evidence to the contrary effect, I would have thought that, when a new EPROM is burned, it reproduces exactly the same program, with the same algorithm, as the original. 92 The applicants led no evidence that the seized EPROMs were counterfeit. Accordingly, if there were evidence that it would have been possible for the applicants' experts to detect whether those EPROMs were counterfeit or original Aristocrat products, counsel's submission would be highly persuasive. However, there is no such evidence. For all I know, it was impossible for the applicants' experts to tell whether the EPROMs seized on the Anton Piller search were genuine or not. Consequently, I can give no weight to this comment. 93 Having regard to the finding set out in para 86, it is not strictly necessary for me to resolve an issue between the parties about the packing slip of 10 June 2003 seized in Belgium. This document listed machines that were being placed in a container intended for shipment to BGT on 'MV Commander'. The list stated the name, serial number, date of manufacture and style of each machine. It named one machine as 'Queen of the Nile' and three machines as 'Cleopatra'. All four machines had Aristocrat serial numbers. 94 Mr Cobden questioned Mr Parry about this packing slip. Now, Aristocrat has never manufactured a machine called Cleopatra?---That's correct. Now, these machines were low boys and they all had plastic bags on them and I presume that one of the boys put his hand over the top of the glass and the first he's seen was Cleopatra and he wrote down Cleopatra. By "one of the boys" do you mean Mr Logan or your son?---Yes. I actually think I circled it but because were producing Cleopatra Queen of the Nile, Queen of the Nile Cleopatra, I just accepted it as a mix up and I let it go. In contrast to the machine identified as 'Queen of the Nile', all three machines listed as 'Cleopatra' were lowboy machines. They had only one perspex panel, the panel containing the pay scales. Although the authentic version of that panel contains the words 'Queen of the Nile' in the bottom left hand corner, the top of the panel is dominated by the word 'Cleopatra' alongside the Egyptian head portrait. It is not unlikely that a relatively junior employee would have looked at this word and written it down as the name of the machine. Furthermore, someone has drawn a circle around the letters 'LB', inserted in relation to each of these machines, but not in relation to any other machines on the list. This suggests that someone noted an error, or made a query, in relation to these machines. Mr Parry was not able to say who circled the letters. It seems it must have been somebody at either Vidtech or BGT. Apparently the packing slip was in that form when it was seized in Belgium. 96 The evidence does not permit me to say how many Aristocrat EPROMs were copied by Vidtech. The parties' agreement about the approximate number of machines upon which infringing artwork was installed (400) suggests this is likely to be the upper limit of the number of machines and conversion kits for which EPROMs were copied. However, the figure of 400 is unlikely to be precisely correct. There were probably occasions upon which it was not necessary for Vidtech to supply copied EPROMs, as Mr Parry explained. Against that, there would have been occasions upon which EPROMs were copied in order to replace damaged or defective EPROMs in otherwise non-infringing machines. Moreover, there is some evidence of the large-scale supply of EPROMs by Vidtech, separately from the supply of either EGMs or conversion kits. I think I would do no injustice to the respondents if I proceeded on the basis that Vidtech copied the EPROMs necessary to service 400 EGMs. 98 However, the personal respondents contended that, in this case, an injunction is unnecessary. A few days after Vidtech went into liquidation, a new company, Vidtech Gaming Technology Pty Limited, commenced conducting the same type of business as that previously conducted by Vidtech. The sole director of the new company is James Parry, a son of Mr and Mrs Parry. Both Mr and Mrs Parry work for the new company. Counsel argued that the replacement of the old Vidtech company by the new 'demonstrates why injunctive relief against Mr and Mrs Parry is appropriate'. 100 Notwithstanding this consideration, I see no need for an injunction. Any injunction would need to be couched in language very similar to the language of the undertaking. There is no need for an injunction addressed to the old Vidtech company; it has ceased to exist. The new Vidtech company is not a party to this proceeding, so no injunction may be granted against it. An injunction could only restrain acts performed by the personal respondents; the undertaking covers the same ground. Moreover, the undertaking extends beyond the four games named in this proceeding to include 'any other poker machine games manufactured and sold by either of the applicants'. 101 The undertaking set out in the filed document is offered to the Court. It has the same practical effect as an injunction; in either event, non-compliance is punishable as a contempt of court. I accept the undertaking and, on that basis, refuse the applicants' request for an injunction. The applicants led evidence from a chartered accountant, Stuart Robertson, calculating total losses at $6,350,145. By contrast, counsel for the respondents submitted that the applicants' maximum damages were $30,750. 103 Mr Robertson's computation depended almost entirely on data supplied to him by others. So it is not a criticism of Mr Robertson for me to say there are numerous problems with his final figure, considered as an appropriate measure of the applicants' damages. 104 First, Mr Robertson broke up the final figure into losses by Aristocrat of $1,260,104, losses by Aristocrat International of $980,649 and the remainder ($4,109,389) as being losses sustained by 'Aristocrat International's subsidiaries'. However, none of the subsidiaries is an applicant. Consequently, any such losses would not be recoverable in this proceeding, even if I were satisfied that the relevant subsidiary had sustained the loss. 105 Second, Mr Robertson calculated the losses by applying Aristocrat sales prices and cost data to estimates of the volume of Vidtech's sales of Aristocrat product. The sales prices and cost data were supplied to him by Graham John Ward, Aristocrat's Group Financial Controller. Mr Ward made an affidavit to which he exhibited a sheet showing the average revenues and costs per unit (Mark IV and Mark V machines only) in each of the financial years 1999 to 2005 inclusive. As I understand the position, Mr Ward used the word 'unit' to describe a 'game kit': those elements in an EGM or conversion kit that are subject to copyright i.e. the perspex panels, computer software burnt into EPROMs and button inserts. His sheet disclosed substantial, and unexplained, differences in the revenues and costs averages for each year. 106 Apparently, the information on this sheet was what was supplied to Mr Robertson, so his calculation was not of the difference between the gross proceeds of sale of EGMs and conversion kits and the gross costs of producing those products, but the difference between the estimated proceeds of sale of 'units' and the costs of producing those 'units'. 107 Mr Robertson made an estimate of Vidtech's volume of sales of Aristocrat product (EGMs and conversion kits) between April 1999 and March 2005 and assumed, as he was instructed to do, that each Vidtech sale was of product that included infringing material (artwork or EPROMs) and was made at the expense of a sale by the Aristocrat company that serviced the relevant geographical area. I have been instructed to calculate the value of lost sales (resulting from Vidtech's infringing conduct) on the basis of these revenues and marginal costs per unit. I am instructed that Aristocrat EGMs have a higher selling price and margin than Aristocrat conversion kits and initial game kit component of EGMs. I note that calculating lost sales on the basis of conversion kits margins is therefore a conservative approach. It does not take into account the additional profit margin lost to Aristocrat, Aristocrat International and or the latter's subsidiaries as a result of sales of infringing EGMs. However, only conversion kits were separately sold. In order to relate lost EGM sales to the claim, it was necessary to assess what proportion of their value was attributable to the 'game kit' they contained. 110 I think both the assumptions adopted by Mr Robertson are unsupportable. 111 Mr Ward gave evidence that Aristocrat sold both new machines and refurbished used machines. However, the data supplied by him to Mr Robertson excluded used machines. So the assumption is that each sale by Vidtech was at the expense of an Aristocrat sale of a new machine. Vidtech was a refurbisher and vendor of used machines. As is evident from the quotation faxed by Mr Parry to Mr Papas, it was prepared to offer machines at prices around $US2,000. Apparently, the sale price of a new Aristocrat machine in March 2005 was about $AUD12,000. Having regard to that substantial difference, it cannot be assumed that each Vidtech sale cost Aristocrat a sale of a new machine. 112 Furthermore, the data supplied to Mr Robertson claimed a total of 2,375 lost sales over the relevant period. Yet, as I have indicated, the highest available estimate of the number of infringing machines or conversion kits sold by Vidtech is 400. It is that figure, rather than 2,375, which must be used for the purposes of any computation of compensatory damages. There is no evidentiary basis for the assumption that all 2,375 machines contained infringing material. 113 In their written submissions, counsel for the applicants correctly observed that the financial records produced by Vidtech are poor and incomplete. I agree there are significant unexplained cash transactions, that money has been directed to places (like the Isle of Man) where tracing is difficult and that money has been muddled up between corporate and personal accounts. Counsel submitted that, in these circumstances, it was appropriate for their clients to approach the problem of computation in the manner adopted by Mr Robertson. However, they effectively conceded that the figure of $6.3 million cannot be supported. Plainly some authentic reconditioned second hand machine[s] were sold. The total figure identified in Mr Robertson's report provides a "ready reckoner" for the purposes of assessing compensatory damages and interest. In relation to EPROMs, the admission extends only to copying EPROMs to replace damages or defective EPROMs. However, as I have indicated, I am prepared to estimate total sales of infringing products (EGMs or conversion kits) at 400. I accept the thrust of points (b) and (c) of counsel's submission. 116 It appears that Aristocrat sells conversion kits that enable customers to convert one Aristocrat game to another. The kit contains the necessary artwork and EPROMs. Mr Ward said the conversion kit price differs between markets and from customer to customer; in Australia the price range would be $3,000 - $4,000. This seems a high figure, being well above the cost of purchasing a refurbished used machine from a company like Vidtech. However, counsel for the applicants pointed out that, in some places, gaming operators are limited to a particular number of machines. They said the operator might prefer to convert a relatively new, untarnished machine, rather than to acquire a second-hand machine which, even refurbished, might not be so attractive to gamblers as a newer, converted machine. 117 No doubt some operators would think this way. That might explain conversion kit sales in the price range mentioned by Mr Ward. However, there is no evidence of the volume of such sales, in Australia or overseas. Nor is there any evidence of the price that Aristocrat charges overseas customers for conversion kits. Given that Vidtech seems to have sold mainly, if not exclusively, to overseas customers, overseas prices are more relevant to this case than the Australian price. 118 Having regard to these considerations, I think it would be unfair to the respondents, and incorrect, to use the Australian conversion kit price ($3,000 - $4,000) as a basis for calculation of compensatory damages. But I lack the evidence necessary for me to calculate the value of Aristocrat's lost overseas sales (if any) of conversion kits and used EGMs. So I do not think it is possible for me to compute damages by reference to Aristocrat's loss. The only feasible course is to adopt an accounting for profit approach; to estimate the amount of Vidtech's net gain from its infringing conduct. 119 Counsel for the respondents based their submission about damages upon the premise that the only infringement of copyright established against the respondents is in relation to the 615 perspex panels manufactured by Capre. Counsel argued the 'only proper basis to approach damages in this case is to assume a loss to Aristocrat constituted by the profit it would have made in the sale to Vidtech in Australia of perspex panels, assuming that had occurred'. Counsel referred to documents produced by the applicants showing sales of perspex artwork panels to Aristocrat customers at prices ranging from nil to $225. The figures average $114. Counsel then referred to invoices showing Capre had charged Aristocrat an average of $40 for each perspex panel made by Capre on Aristocrat's instructions. Counsel said that, allowing something for whatever other costs would have been incurred by Aristocrat, it was reasonable to take a figure of $50 as representing the average net profit which would have been earned by Aristocrat if the 615 panels in question had been supplied by it to Vidtech. Multiplying 615 panels by $50 yields a figure of $30,750 which, counsel argued, 'is the limit of the claim on the matters established by Aristocrat in its case'. 120 These figures might be justified if the only infringement was that relating to artwork. However, that is not the case. EPROMs were also copied. In the absence of a better guide, I have assumed that the number of copied EPROM sets was roughly the same as the number of sets of artwork; that is, EPROMs for about 400 EGMs. On that basis, the infringing items constituted the bulk of the items that would be included in a conversion kit. 121 Mr Parry quoted $US200 per conversion kit in the fax he sent Mr Papas on 7 March 2005. At that time, $US200 would have amounted to about $AUD275. The cost of production of the conversion kits (including the non-copyright items) would probably not have exceeded about $75, leaving a minimum profit of about $200, on a sale at this price, ascribable predominantly to the inclusion of infringing material. 122 The evidence contains an email from Mr Parry to Mr O'Reilly of Happy Games, dated 18 August 2004. This email reports the dispatch of five parcels 'to the first five people on that list you sent me'. Mr Parry also claimed $US7,320 for EPROMs, apparently 750 in all. This email seems to indicate that $US200 was not necessarily the maximum price obtainable for conversion kits. It also suggests EPROM copying on a massive sale. 123 It is possible --- indeed likely, given the items seized in the pre-trial raid on BGT - that some artwork panels were sold separately from EPROMs. That being so, the agreement about artwork for 400 machines does not necessarily mean that 400 EGMs or conversion kits containing infringing EPROMs were sold. On the other hand, as the email to Mr O'Reilly suggests, some conversion kits may have been sold at prices above $US200 and copied EPROMs may have been sold separately from copied artwork. 124 It will be seen there are factors supporting both a higher and lower figure than $200 in relation to the profit derived by Vidtech from each unit. The evidence does not permit a precise calculation of the appropriate figure for damages. As counsel for the applicants submitted, I can only make a broad assessment. I think my decision would fairly reflect the evidence if I maintained the figure of $200, as an overall average figure, per infringing 'game kit'. 400 x $200 equals $80,000. I propose to assess compensatory damages, in relation to each respondent, at that sum. 125 It is necessary to add to that assessment an allowance for interest. The infringing conduct took place over a four year period, from sometime in 2001, to about April 2005. I will take the mid-point of that period (2003) and allow interest for three years at 8% per annum; that is $19,200. It follows that the total amount of compensatory damages, in relation to each respondent, will be $99,200. Whilst copying of artwork and EPROMs was admitted by Mr Parry in cross-examination, this followed a history of the respondents covering their tracks prior to, and during the preparatory stages of, this proceeding. Liability has never been admitted on the pleadings. Mr Parry has admitted knowledge of copyright issues and innocent infringement was never pleaded. It was in this period, counsel said, that Mr Parry gave his 'loose lips sink ships' warning to Mr O'Reilly; yet he continued to offer Cleopatra machines to BGT and Mr Janjen and made a written offer to sell conversion kits to Mr Papas. His attitude was 'business as usual'. This was confirmed by Mr Parry in his justification of the offer to provide conversion kits to Mr Papas. The EGMs were sold for amounts starting at, but often in excess of, $US1,200.00. The respondents have given no evidence of their costs structure or of their profitability, and again, in the absence of such evidence the Court will not draw inferences in their favour. 131 There is force in the submissions made by the applicants in relation to s 115(4) ; however, I think, only in relation to Vidtech and Mr Parry. Although I have found that Mrs Parry authorised artwork copying, and was aware, or at least had reason to suspect, that this copying involved infringement of copyright, I do not think the evidence establishes flagrancy on her part. I do not propose to award additional damages against Mrs Parry. 132 Section 115(4) of the Copyright Act offers little guidance as to computation of additional damages. It merely authorises an award of 'such additional damages as [the Court] considers appropriate in the circumstances'. Having given the matter careful consideration, I am of the opinion that, in relation to Vidtech and Mr Parry, I should add an additional 50% to the calculated compensatory damages, before interest; that is to say $40,000. The application of those registered trade marks was not carried out by Vidtech itself. It was done by Capre Graphics. The Trade Marks Act does not have a comparable doctrine to the law of authorisation such as operates under copyright law. Vidtech did not sell the panels in Australia. It sold them to overseas purchasers and a sale to overseas purchasers is not a use of the trade mark in Australia, within the reach of the Act. In short, no trade mark infringement has been demonstrated by Aristocrat in these proceedings. The applicants' trade mark claim is not made out. There is actual evidence of confusion: Ms Hsu in Macau had received an infringing Cleopatra machine but though [sic] it was an authentic Aristocrat machine. They say there is no evidence of any misleading representation in trade or commerce. 138 The counterfeit artwork suggested the EGM to which it was attached, or would be attached by use of the conversion kit, was a genuine Aristocrat product. That was not true. However, the difficulty, from the applicants' point of view, is that there is no evidence that any suppliee of the counterfeit artwork was misled. BGT and Happy Games seem to have been well aware of what was going on; possibly other purchasers also were. 139 It is possible that persons who purchased from a Vidtech suppliee, such as the Macau company which employed Ms Hsu, were misled. Poker machine players may also have been misled. However, so far as the evidence reveals, all these people were outside Australia; any representation made to them was made outside Australia. Under these circumstances, there must be a doubt as to whether the respondents' misleading conduct falls within s 52 of the Trade Practices Act . 140 This issue was not addressed by counsel and I have not attempted to form a view about it. Even if the s 52 claim were to succeed, it would not affect the relief to which the applicants are entitled. Any payment on account of damages by one respondent is to be regarded as a satisfaction, to that extent, of the judgment against the others. 142 The applicants seek a general order for costs. Counsel for the respondents requested that, given the matters in contention between the parties and the discrepancy between the scale of the applicants' claim 'and the damages which may ultimately be awarded', the Court should later hear submissions on costs. 143 I am prepared to accede to this request. However, I do not wish the parties to be put to the expense of a further oral hearing. I will direct that, within 21 days, each set of parties is to forward to my Associate a written submission about costs. I certify that the preceding one hundred and forty-three (143) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. | action for infringement of copyright over artwork and computer programs associated with poker machines extent of infringements whether personal respondents authorised infringements relief having regard to respondents' undertaking, whether injunctive relief should be granted assessment of compensatory damages whether there should be an award of additional damages. whether respondents applied trade marks to counterfeit perspex panels no sales of panels in australia. alleged misleading and deceptive conduct whether a false representation was made consequence of misled persons all being outside australia. copyright trade marks trade practices |
It made that payment in the belief, said to have been induced by false representations made by the prospectors, that the tenements had significant gold mineralisation. It subsequently turned out that there was no gold in the tenements. The prospectors were charged and, in July 1993 were convicted in the District Court of Western Australia, on counts of conspiracy to defraud and false pretences in relation to the sale of the tenements. Restitution orders were made under which Norilya recovered over $5 million from the prospectors and associated entities. The company commenced an action for loss and damages for the remainder of the sum it had paid together with consequential loss in the Supreme Court of Western Australia. On 28 March 2003, nearly ten years later, the Court of Criminal Appeal quashed the convictions following the referral to the Court by the Attorney-General of a petition seeking the exercise of the Royal Prerogative of Mercy. On 10 June 2005 the Court of Criminal Appeal declared the restitution orders to be null and void and directed repayment by Norilya. Norilya wishes to proceed with its claim against all the prospectors in the Supreme Court of Western Australia. One of them, Mr Dean Ireland, became a bankrupt in 1995. He was discharged from that bankruptcy in 1998. He has since died. Norilya has two principal causes of action against the estate of the late Mr Ireland and the other prospectors. They are for misleading or deceptive conduct under the Fair Trading Act 1987 (WA) and for fraud. Norilya is concerned that the cause of action in fraud may be characterised as a cause of action in relation to a provable debt under the Bankruptcy Act 1966 (Cth) and thus require the leave of the Court before the proceedings can continue. The executor of the late Mr Ireland's estate does not oppose the grant of leave but seeks to attach a condition that Norilya repay to the estate the restitution moneys which the Court of Criminal Appeal ordered be repaid following the quashing of Mr Ireland's conviction. For the reasons that follow, I am satisfied that leave should be granted under s 58(3) of the Bankruptcy Act and that no condition should be attached to the grant of that leave. In 1988 the prospectors held mineral tenements comprising two prospecting licences and an exploration licence in respect of land located near Mt Gibson in Western Australia. They conducted two phases of drilling on the tenements in September 1988 and March 1990. Samples of the first drillings which were submitted for laboratory analysis recorded little in the way of gold mineralisation. Samples from the second drilling however indicated significant amounts of gold. On 1 June 1990 the prospectors entered into a Deed with Acarus Pty Ltd (Acarus). Under the Deed, for a sum of $130,000, Acarus acquired the option to purchase the tenements and the right to mine them for $6 million reserving to the prospectors a 5% royalty subject to certain terms and conditions. It was a term of the Deed that the prospectors would cause a confirmation drilling program to be carried out on the tenements including assaying of samples of material obtained from the drilling. Upon completion of the confirmation drilling they would obtain a detailed report on the tenements and the result of the drilling. The option could then be exercised by Acarus within 30 days of its receipt of the report and the sum of $6 million would be payable 14 days thereafter. On 8 June 1990 Norilya, which was then known as Noranda Exploration Pty Ltd (Noranda), made an agreement with Acarus under which it obtained an option to acquire a 30% interest in the tenements from Acarus. The company had the right under the agreement to be an on-site observer during the conduct of the confirmation program defined in the option deed and to have complete access to the report referred to in the option deed. A third phase of drilling was conducted by the prospectors in June 1990. Samples from this confirmation drilling were submitted for laboratory analysis and revealed significant gold mineralisation. Acarus exercised its option to acquire the tenements under its agreement with the prospectors. Norilya, in turn, exercised its option to acquire 30% of the tenements from Acarus. Pursuant to the terms of the latter option, Norilya paid the prospectors the sum of $6,013,808.21 on 9 July 1990 at the direction of Acarus. On the same day, 9 July 1990, Acarus transferred 30% of its interest in the tenements to Norilya. Upon registration of those transfers Norilya and Acarus became the registered proprietors of the tenements. Also on the same day Acarus and Norilya entered into a Deed of Assumption. This provided, inter alia, that Norilya would be jointly and severally liable together with Acarus to pay any royalties due to the prospectors by virtue of the terms of the Acarus deed. The prospectors were also parties to the deed of assumption. Between 22 July and 6 August 1990 Acarus and Norilya conducted a drilling program on the tenements. Samples from this program were submitted for laboratory analysis which revealed that there was no gold mineralisation of any significance on the tenements. On 31 July 1990 a complaint was made to the Western Australian Police. They conducted a further drilling program on the tenements which again revealed no gold mineralisation. The prospectors were arrested on 27 February 1991 and each charged with one count of conspiracy to defraud and ten counts of false pretences in relation to the sale of the tenements. The charges against the prospectors were heard in the District Court of Western Australia before his Honour Chief Judge Hammond and a jury in mid 1993. Each of the prospectors was found guilty on 28 July 1993 on each count against them. Norilya applied to the trial judge for restitution orders under s 717 of The Criminal Code (WA). Those orders were made on 20 August 1993. They took the form of orders directing the transfer of moneys and assets to Norilya from accounts and companies apparently controlled by the prospectors. The prospectors each lodged an appeal against their convictions to the Court of Criminal Appeal. Enforcement of the restitution orders was stayed. However the appeals were dismissed on 6 May 1994 --- Ireland v The Queen (unreported CCA Sup Ct of WA Library Number 9401656, 6 May 1994). The restitution orders made were thereafter enforced. Norilya recovered $5,782,556.94 upon the execution of the orders. Norilya commenced proceedings in the Supreme Court of Western Australia on 14 August 1990 against the prospectors. In their defence to the civil action filed 3 December 1990, the prospectors denied that the samples submitted for assay from the phase 2 and phase 3 drillings contained gold which had been added to those samples. In August 1993 Norilya applied for summary judgment in the civil action in reliance on the convictions of the prospectors. Summary judgment, for damages to be assessed, was granted against each of the prospectors in August 1994. The calculation of the damages in that case would, of course, have had to take account of sums received under the restitution orders. In 1998 the prospectors lodged a petition for the exercise of the Royal Prerogative of Mercy. The petition was referred to the Court of Criminal Appeal by the Attorney-General pursuant to s 140(1) of the Sentencing Act 1995 (WA). Such a petition is to be heard and determined under the section as if it were an appeal against the convictions. Upon the hearing of the petition the Court quashed the convictions of each of the applicants on 28 March 2003 --- Easterday v R (2003) 143 A Crim R 154. The result turned upon non-disclosure by the Crown of a document relating to share trading patterns in the market at the relevant time which might have pointed to other persons as responsible for the alleged salting of the assay samples. The failure by the Crown to disclose the report to the defence in a timely fashion was found by Scott J to have put the prospectors in the position where a relevant line of investigation could not be pursued. He was of the view that the Crown's case was a very strong circumstantial evidence case but that notwithstanding that the appeal should be allowed. They acknowledged that salting had occurred. They conceded that the evidence was overwhelming in that respect. However, they advanced the proposition that it was not them who had salted the tenements and that the fresh or new evidence now available demonstrates that others had both the motive and opportunity to do so. They contend that the absence of this fresh or new evidence at the trial and at their previous appeal deprived them of a real chance of acquittal which would otherwise have existed. They also applied to join Noranda Inc as a respondent to the application, it being related to Norilya and the ultimate beneficiary of the restitution made to Norilya. The Court of Criminal Appeal, in a judgment published on 10 June 2005, declared the restitution orders to be null and void. It also held that it had a discretionary power to order the repayment of moneys paid pursuant to a restitution order. The Court gave the parties the opportunity to make submissions as to further orders that should be made --- Easterday v State of Western Australia (2005) 30 WAR 122. On 28 October 2005, following submissions, the Court said it would further order that Norilya repay to each of the prospectors the amount received by it from that prospector pursuant to the making of the restitution orders. An application for a stay by Norilya was dismissed. Instead, Norilya would be allowed to benefit from the judgment by retaining money which it would not otherwise have held and to which it has yet to establish any entitlement ... The position would, in reality, be no different than if the Court had declined to make orders for restitution pending the outcome of the civil action. That being so, and given the potential prejudice which that course might work upon the applicants (as a consequence, at least, of what would then be their inability to resort to any funds, which might otherwise have been repaid by Norilya, for the purpose of funding their defence of the civil action), and given also that no other basis has been put forward to support the imposition of a stay, it seems to me that it would be inappropriate to order a stay and I would decline to do so. The judgment for damages which had been entered against each of the prospectors in the civil action in the Supreme Court was set aside by consent on 7 December 2005. Mr Dean Ireland had lodged a debtors petition on 13 March 1995 pursuant to s 55 of the Bankruptcy Act . He became bankrupt on that date. Norilya lodged a proof of debt in the bankrupt estate for the amount of $980,945. This was for the difference between loss and damage suffered by Norilya and the total amount recovered by it from the prospectors under the restitution orders. On 12 April 1996 Norilya received a distribution of $42,430.75 in the bankrupt estate. Mr Ireland was discharged from bankruptcy with effect from 14 March 1998. It pleaded the making of the Acarus option and further representations concerning the third phase assay results. The representations were said to have been made in order to induce Norilya, then Noranda, to acquire an interest in the tenements. This had occurred with the creation of the Noranda option on 8 June 1990 and the subsequent exercise of that option in which the sum of $6 million was paid by Norilya to the prospectors and $150,000 to Acarus pursuant to the Noranda option. The representations were said to have been made by the prospectors fraudulently in that, when each representation was made, they knew that it was false or did not believe that it was true. The causes of action identified in the statement of claim were deceit and misleading or deceptive conduct in contravention of the Fair Trading Act . The amount of damages claimed was $6,163,808.21 together with consequential loss, particulars of which were to be rendered separately. In its proposed amended statement of claim Norilya maintains the plea that it was induced, by the false representations which it attributed to the prospectors, to enter into the Noranda option with Acarus and to exercise it by paying to the prospectors the purchase price for the tenements. Importantly, the plea does not rely upon any contract between Norilya and the prospectors. In particular, it does not rely upon any contract between Norilya and Mr Dean Ireland. Having been discharged in March 1998 he was released from all debts provable in the bankruptcy. The question would arise whether that release operates as a defence to any proceedings brought in respect of such a debt and so makes the question of leave moot. Discharge of a bankrupt does not spell the end of the trustee's duties to distribute to creditors such property as remains vested in the trustee. Property, including choses in action, which has vested in a trustee by reason of bankruptcy continues to be so vested after the discharge of the bankrupt. The release provision, s 153(1) , does not revest in the bankrupt property previously vested in the trustee --- Daemar v Industrial Commission of NSW (No 2) (1990) 22 NSWLR 178. In that case the Court of Appeal of New South Wales held that a right of action which the former bankrupt had to challenge certain orders of the Industrial Commission, remains vested in his trustee. It would seem to be implicit in the continuing responsibility of the trustee for the distribution of the former bankrupt's estate to creditors, in respect of provable debts, that the leave requirement under s 58(3) remains in place to the extent that there is a dispute about the existence of such a debt. Such leave could authorise a resolution of that dispute in separate proceedings. The leave requirement is not expressly limited in time. Section 58(3) refers to the period '... after a debtor has become bankrupt'. It would seem that in all but the most unusual cases, of which this is one, questions of the kind raised here would not arise in any practical sense. The release for which s 153(1) provides does not extend to release the bankrupt from a debt incurred by means of fraud. One of the claims made against Mr Dean Ireland was that he practiced a fraud upon Norilya. Norilya is concerned that the discharge of Mr Ireland from bankruptcy does not excuse it from the requirement to seek leave to prosecute its claim for fraud in the civil action. It is concerned, moreover, that the claim for fraud may arguably be a claim for liquidated damages comprising the purchase price paid by it to Mr Ireland at the direction of Acarus to acquire a 30% interest in the tenements. So the damages claim, albeit based in fraud, may give rise to a 'provable debt' within the meaning of s 82. To the extent that the claim seeks recovery of moneys paid by way of the purchase price for the tenements, it is arguably a claim for liquidated damages. liquidated". This is of course subject to the qualification that the claim arises 'other than by reason of a contract, promise or breach of trust'. In Coventry the High Court was concerned with an action for misleading or deceptive conduct under s 995(2) and s 1005 of the Corporations Law (Qld). The Court held by majority that a statutory claim for unliquidated damages for misleading or deceptive conduct which induced the claimant to make a contract with some party other than the bankrupt but not with the bankrupt is not a provable debt for the purposes of s 82. It is a demand in the nature of unliquidated damages arising otherwise than by reason of a contract or promise. The bankrupt is not discharged from liability. The claim may be pursued by the claimant during the bankruptcy and after discharge from bankruptcy. By contrast, a claim for unliquidated damages for misleading or deceptive conduct by the bankrupt, which induced the claimant to make a contact with the bankrupt, would be a debt provable in bankruptcy. Its contract was with Acarus, albeit its payments were made to the prospectors. It does not rely upon the Deed of Assumption in that respect. Counsel for Mr Dean Ireland's executor conceded that, if leave be necessary, it should be granted but sought the attachment of a condition requiring that Norilya comply with the orders of the Court of Criminal Appeal of the Supreme Court of Western Australia made on 28 October 2005 and 8 February 2006 respectively. The executor would add a further requirement that payment of the moneys ordered to be paid to the various parties should be made forthwith. In this case leave is appropriate. The matter is plainly one of some complexity and the justice of the case requires that Norilya has the opportunity to pursue what may be in effect, a set-off against the obligation which it has to repay the restitution moneys under the orders of the Court of Criminal Appeal --- Macquarie Bank Ltd v Bardetta (2005) 216 ALR 670 at [20] --- [21] (Conti J). I am not disposed to attach any such condition to the grant of leave, which in this case will only be necessary in relation to the fraud claim. The question whether any stay of proceedings should be sought in the light of the unsatisfied orders of the Court of Criminal Appeal is a matter for the Supreme Court. The justice of such a condition is not immediately apparent. In my opinion the costs of this proceeding should be costs in the Supreme Court proceeding, but I will hear from the parties as to that. | debts provable debts definition requirement for leave to proceed whether requirement survives discharge of bankruptcy cause of action in respect of recovery of moneys previously in part by restitution orders following upon conviction of debtor conviction quashed on appeal many years later order for repayment of restitution moneys whether leave should be conditional upon repayment of restitution moneys bankruptcy |
On behalf of Ox Operations Pty Ltd they filed an application under s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand that had been served on the company by Land Mark Property Developments (Vic) Pty Ltd (in liq). The instruction to file the application was given by John Grezos. Mr Grezos has been, but was not at the time he gave the instruction, a director of Ox Operations. The action, then, was not properly constituted and Land Mark Property seeks an order that it be dismissed. 2 The usual course when a company is improperly made a plaintiff is to stay or dismiss the action and require the solicitor who purported to act for the company to pay the costs: Newbiggin-by-the-sea Gas Company v Armstrong (1879) LR 13 Ch D 310; East Pant Du United Lead Mining Co (Limited) v Merryweather (1864) 2 H&M 254 [(1864) 71 ER 460]; Duckett v Gover (1877) LR 6 Ch D 82; Daimler Company Ltd v Continental Tyre & Rubber Company (Great Britain) Ltd [1916] 2 AC 307. The cases also show that the action though brought without authority is not a nullity in the sense that it is void ab initio without the possibility of subsequent ratification. To the contrary, it is well established that it is possible for the company to ratify the unauthorised act of the solicitor in bringing an action in its name without its actual or implied authority: Danish Mercantile Co Ltd v Beaumont [1951] Ch 680. And, because ratification is possible, a practice has developed that when an action is brought without authority it will not be stayed or dismissed forthwith, but the company will be permitted to convene a general meeting or a meeting of its directors to consider whether to adopt the action: S.B.A. Properties Ltd v Craddock [1967] 1 WLR 716, 722. 3 The plaintiff contends that at a meeting of its members (in fact there is only one member) held on 27 June 2007 it was decided that the action should continue. According to the minutes of that meeting "it was unanimously RESOLVED that [the] actions of Mr John Grezos on behalf of the company in instructing the firm of Paul Egan & Associates on 16 June 2007 [to] defend the winding up application brought against the company by Land Mark Property Developments (Vic) Pty Ltd (in liquidation) be ratified. " Putting to one side for a moment the effect of this resolution, the defendant says that because the Constitution of the company vests the power of management in the directors there is no power in a general meeting to ratify the institution of legal proceedings. Reliance is placed on Massey v Wales [2003] NSWCA 212 ; (2003) 57 NSWLR 718. There it was held that where the articles of association of a company provided that the business of the company was to be managed by the directors, there was no power in a general meeting to make management decisions or to control or direct the board of directors in the management of the company. This rule was said to apply to the commencement of legal proceedings just as to any other aspect of management of the company's business: Massey v Wales (2003) 57 NSWLR at 730. But this case is different because ratification (if the resolution constitutes ratification) was by the assent of all shareholders (Ox Group Pty Ltd, a company belonging to Mr Grezos, holds all 100 ordinary shares in the company) and it is well established that if all shareholders signify their assent to a transaction which is within power their decision will be effective provided also the transaction is honest: In re Duomatic Ltd [1969] 2 Ch 365; Re Compaction Systems Pty Ltd and the Companies Act [1976] 2 NSWLR 477. 4 Returning to the resolution, the defendant points out that it is not specifically directed to the institution of an action to set aside a statutory demand, but is confined to authorising the solicitors to "defend the winding up application brought against the company. " Notwithstanding the inelegance in its language, the resolution covers this case. In the present context an instruction to defend a winding up application authorises the solicitor to take whatever action is necessary to set aside a statutory demand. After all, a statutory demand is but a precursor to an application to wind up a company and an application to set aside the demand can properly be characterised as a step in the defence of a winding up application. 5 Accordingly, the relief sought will be refused. It is not, however, appropriate for the costs to follow the event. While the action was brought without authority, the plaintiff did not let the defendant know the action had been authorised until the application to dismiss was filed. In all the circumstances the costs should lie where they fall. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | action commenced in name of company without authority action not authorised application to dismiss proceeding proceedings adopted by all members effect of ratification meeting of members management and administration powers of members whether power to ratify legal proceedings practice and procedure corporations |
One method of achieving this object is through a deed of company arrangement that provides for the partial payment of debts due to creditors in full settlement of their claims. For the most part, the legislation does not require creditors to be treated equally or that they be given the same priority as in a winding up. There is one exception. By s 444DA a deed of company arrangement must contain a provision that employee creditors be given at least the same priority as in a winding up unless a majority otherwise agree, or the court permits, a departure from that rule. The court's power to approve a deed is limited. It can only make an order if it "is satisfied that the non-inclusion of the provision would be likely to result in the same or a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of the company": s 444DA(5). Such an order was made in relation to a deed proposed for Advance Healthcare Group Ltd (AHG). It remains to explain why. 2 AHG operates in the pharmaceutical industry through its trading subsidiary, Pharmeasy Pty Ltd. Shares in AHG are quoted on the Australian Stock Exchange (ASX), although trading in those shares has been suspended. On 28 April 2008, Mr Fitzgerald and Mr Dixon of BDO Kendalls, were appointed joint administrators of AHG. Mr Fitzgerald and Mr Hancock, also of BDO Kendalls, were appointed joint administrators of Pharmeasy on the same day. The appointor was Fulcrum Equity Limited, a major shareholder and the only secured creditor of AHG. 3 The administrators conducted an investigation into the affairs of AHG and Pharmeasy. They reached the conclusion that both were insolvent. In particular, AHG had a shortfall of assets over liabilities that exceeded $8 million. Its creditors were Fulcrum Equity, which was owed $3.4 million, priority creditors (employees) who were owed approximately $377,740 and unsecured creditors whose claims totalled $7,430,687. The administrators were of the view that if AHG were wound up both employee and unsecured creditors would receive nothing. In part this was because, in their view, a liquidator would have no claims against the directors for insolvent trading or breach of duty and neither AHG nor Pharmeasy had entered into any transaction that could be set aside as an unfair preference, unfair commercial transaction or unfair loan. 4 The administrators received from Romfal Corporate Pty Ltd, acting on behalf of a syndicate of investors, a proposal that, if implemented, would have both AHG and Pharmeasy execute a deed of company arrangement that would see creditors' claims compromised and AHG relisted. Romfal has been involved in several reorganisations of public companies and their re-quotation on the ASX. The administrators put the proposal to the second meeting of creditors of each company. A report in relation to each company was produced and provided to the creditors. 5 The aspect of the proposal that is important for present purposes is that under the deed the priority given to employee creditors would be limited to an amount equal to what "they would receive under GEERS plus an additional 10%". GEERS is the acronym for the General Employee Entitlements and Redundancy Scheme a non-statutory scheme established by the Commonwealth. The scheme is administered by the Department of Education, Employment and Workplace Relations. Under the scheme money granted by Parliament is distributed to employees whose employment has been terminated because their employer is insolvent, the employer has insufficient assets to pay their entitlements and there is no other source of funds available to pay those entitlements. The entitlements covered by the scheme are unpaid wages, unpaid annual leave, unpaid long service leave, unpaid payment of notice and up to 16 weeks redundancy pay. The scheme is discretionary. The Department decides which employees are to benefit and in what amount. 6 AHG had three employee creditors, Mr Atkinson, Mr Law and Ms McGinn. The amounts they were owed were, respectively, $288,676, $55,856 and $33,140. The fund to be put up by the investors was sufficient for these debts to be paid in full, however under the proposed deed the amounts they would receive would be less than the full amount. According to the calculations made by the administrators, Mr Atkinson would receive between $85,796 and $11,166, Mr Law between $24,799 and $12,059 and Ms McGinn between $23,267 and $9,411. 7 The proposal could not go ahead without the employee creditors approval or court order. In the first instance the administrators sought the approval of the employees. They convened a telephone meeting of the employee creditors. Mr Atkinson and Mr Law attended the meeting. Ms McGinn appeared by her proxy, Mr Harrison, a solicitor who acts for all three employee creditors. The meeting was held prior to the finalisation of the proposed deed and was intended by the administrators as an opportunity to determine whether the employee creditors would be minded to approve a deed of company arrangement that did not contain a provision that gave them the same priority they would receive in a winding up. The three employees attended the meeting as did their solicitor. The solicitor advised the meeting that his clients were against the proposal. He said Fulcrum Equity was responsible for the insolvency of AHG and that there were causes of action against the company which a liquidator could pursue, albeit his clients did not wish to become involved in such litigation. He did not say what the actions were. He did, however, say that his clients required Fulcrum Equity to contribute more to the proposed fund and that its level of participation in the distribution of the fund should be reduced. Each employee also spoke. Mr Law said the deed was unacceptable and that AHG should be wound up. Mr Atkinson agreed. Ms McGinn said she was prepared to write off all her entitlements in order that Mr Boyd, a director of Fulcrum Equity, receive nothing in the liquidation. The minutes of the meeting record that the employee creditors did not agree to the non-inclusion of a provision in the proposed deed giving them the same priority as they would obtain in a winding up. At a later meeting the employees voted down the proposal. 8 While the employees of AHG would not support the proposed deed, it was approved by the general body of creditors. So also was the deed proposed for Pharmeasy which was interdependent on the AHG proposal being implemented. Incidentally, the deed proposed for that company contained a similar provision relating to the employees of Pharmeasy. Those employees agreed unanimously to the non-inclusion of a provision giving them the same priority as in a winding up. However, because the employee creditors of AHG voted down the proposal the whole arrangement could not go ahead without an order of the court. 9 Prior to 2007 there was a view that the distribution of the assets of an insolvent company under a deed of company arrangement otherwise than in accordance with the rules that apply in a winding up was contrary to the policy established by the Corporations Act . See for example, Re Ansett Australia Ltd (No 1) [2001] FCA 1806 ; (2002) 115 FCR 376 ; Expile Pty Ltd v Jabb's Excavations Pty Ltd (2004) 22 ACLC 667 and Lam Soon Australia Pty Ltd (Administrator Appointed) v Molit (No 55) Pty Ltd (1996) 70 FCR 34 , among other cases. The view was that if a deed did not adopt the pari passu rule in s 555 , or the priorities established by s 556 , the deed was liable to be set aside under s 445D. According to that section, a deed may be terminated for a variety of reasons including that it is unfairly prejudicial to, or unfairly discriminatory against, a creditor, or that it should be terminated for some other reason. 10 My own view was that Part 5.3A did not require creditors to be treated equally. Nor did it require adoption of the priorities that applied in a winding up. I explained why in Commonwealth of Australia v Rocklea Spinning Mills Pty Ltd (Receivers and Managers Appointed) (Subject to a Deed of Company Arrangement) [2005] FCA 902 ; (2005) 145 FCR 220. I provided examples of circumstances in which ordinary commercial commonsense dictated that the priority given to employees in a winding up should be altered and that unsecured creditors should not be treated equally. One example was that of a company trading from leased premises that were purpose built and in an ideal location. The interests of all creditors would be best served if the arrears of rent were paid to prevent a forfeiture of the lease notwithstanding that other creditors only received a portion of their claims. Another example was of a business that employs both skilled and unskilled workers. The skilled workers may be difficult to replace. To ensure that the business survived it may be necessary to pay the skilled workers in full and let the others go. Put rather more directly, there will be cases where the equal treatment of creditors and the maintenance of priorities will thwart an attempt to revive an ailing company. 11 My view has not survived, at least so far as priority claims are concerned. In 2004 the Parliamentary Joint Committee on Corporations and Financial Services published its review of corporate insolvency laws. The Joint Committee found that in some circumstances it may be appropriate that a deed provide for the different treatment of creditors: Parliamentary Joint Committee on Corporations and Financial Services, Corporate Insolvency Laws: A Stocktake (Canberra, 2004) at para 11.16. However, as regards employees, the Joint Committee recommended that the Corporations Act be amended to make it mandatory for a deed of company arrangement to reserve the priority available to creditors in a winding up unless affected creditors agreed to waive their priority: para 11.20. The Joint Committee added that the amendment should allow creditors or the administrator the right to initiate court proceedings to have the deed upheld if in the court's view the deed offered the dissenting creditors a better return than they would obtain in a liquidation. 12 This aspect of the Joint Committee's report was implemented in substance by the Corporations Amendment (Insolvency) Act 2007 (Cth). That statute introduced a range of measures to modernise the insolvency provisions in the Corporations Act . One was the introduction of s 444DA. The Explanatory Memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth) said (perhaps by way of overstatement) that it was implicit in the then current law that the priorities provided for in a liquidation would generally be observed in the deed of company arrangement: para 4.1. This was for the reason that the model deed in Sch 8A of the Corporations Regulations 2001 (Cth) preserves to creditors the priorities applicable in a winding up. Yet there was no obligation to adopt the model deed. If it was not adopted the only remedy to affected creditors was to apply to have the deed set aside. That would be difficult for employee creditors having regard to the cost of court proceedings. Thus "To enhance the standing of employee creditors in voluntary administrations, the Bill will amend the law to make it mandatory for a [deed] to preserve the priority available to employee creditors in a winding up unless employees agree to waive their priority": Explanatory Memorandum at para 4.3. The provision in the Bill (Sch 1, item 1) recognised that the priority of employee entitlements should be safeguarded in deeds but not in the precise terms proposed by the Joint Committee: Explanatory Memorandum at para 3.42. 13 It has long been a public policy objective to protect employee entitlements in the insolvency of the employer. Employees have been accorded a measure of priority in both private bankruptcies and company liquidations for many years, not only in Australia but in many other jurisdictions as well. Part 5.3A does not apply to companies that are being wound up. Its main object is to keep corporations alive. It is possible that object will be compromised by the new s 444DA if a company in difficult financial circumstances cannot be saved because priority must be given to its employees. This will be to the disadvantage not only of the employee creditors but also to the creditors as a whole. 14 Fortunately that will not happen in this case. First of all, as the administrators explained, having regard to the financial position of AHG in a winding up the employees could not do better than what they might obtain under GEERS. Accordingly, the condition to the operation of s 444DA(5) was satisfied. It is difficult to understand why the employees were prepared to forego the possibility of obtaining a significant sum for no apparent gain. Most likely their objective was to achieve a better offer. In other words, they were engaging in commercial blackmail of sorts. History shows they were not successful. The other possibility is they were motivated by spite. If that is the case they deserve little sympathy. Whatever the employees' motives it was clearly in the interests of the general body of unsecured creditors for the proposal to go ahead. In a winding up they stood to get nothing. Under the proposal they were to receive a significant distribution. The only thing that stood in their way was the intransigence of the employee creditors. Their reasons (whatever they may be) for not wanting the proposal to go ahead could not be allowed to stop an otherwise beneficial outcome. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | administration deed of company arrangement employee creditors not given priority employee creditors fail to approve deed circumstances in which court will approve deed corporations |
In accordance with s 119 of the Corporations Law Regis Towers came into existence as a body corporate at the beginning of that day. 2 By virtue of s 1378(1) of the Corporations Act 2001 (Cth) ('the Corporations Act ') the registration of Regis Towers had effect, as from 15 July 2001, as if it were a registration under Part 2A.2 of the Corporations Act , its registration being taken to have commenced on 12 April 1999 (see s 1402(2) of the Corporations Act ). 3 By virtue of s 114 of the Corporations Act , Regis Towers needed to have at least one member and by virtue of s 201A(1) it needed to have at least one director ordinarily resident in Australia. The comparable sections in the Corporations Law made similar provision in respect of the period up to 15 July 2001. 4 As it transpires Cesscut Pty Limited was registered as a shelf company by Patricia Holdings Pty Limited. It would appear that on 19 April 1999 the original share, a redeemable preference share allotted to Mr Dalgleish of Patricia Holdings Pty Limited, was duly redeemed out of the proceeds of a fresh issue of shares. On that day four ordinary shares in the capital of Cesscut Pty Limited were allotted, one to John Emmanuel Rose ('the bankrupt'), one to Penelope (also known as Popi) Rose, the bankrupt's former wife, one to Kerrie McInnes, a licensed real estate agent, and one to her son-in-law, Craig Stewart. 5 On 19 April 1999 the registered office of Cesscut Pty Limited was changed to Unit 1, 724 Darling Road (sic), Rozelle, NSW 2039. 6 On 28 April 1999 Cesscut Pty Limited changed its name to Regis Towers Real Estate Pty Limited and, on the same day, notice of the resolution changing the name, signed by the bankrupt, was lodged with the Australian Securities and Investments Commission. 7 On about 6 May 1999 Ms McInnes and Mr Stewart withdrew from the new enterprise and transferred their respective shares to the bankrupt so that the shareholding became, as it remained thereafter, three ordinary shares held by the bankrupt and one ordinary share held by his former wife. At that time Mr Rose paid $218,750 to Ms McInnes to reimburse her for moneys she is said to have paid to Meriton Apartments Pty Limited on behalf of Regis Towers. He also paid, as he put it, $1 'across the table' to each of Ms McInnes and Mr Stewart to acquire their respective shares. 8 On 18 May 1999 the registered office of Regis Towers was changed from 1/724 Darling Street, Rozelle to Unit 454, Ground Level, Regis Towers, 303 Castlereagh Street, Sydney, NSW 2000. The relevant notification to the Australian Securities and Investments Commission dated 26 May 1999 was signed by the bankrupt and lodged on the same day. 9 Thereafter on 1 June 1999 a notification of change to office holders was lodged with the Australian Securities & Investments Commission, notifying the appointment of the bankrupt as a director and also as the secretary of Regis Towers on, so it was said, 19 April 1999. This notice was signed by the bankrupt and dated 1 June 1999. 10 The 1999 annual return of Regis Towers lodged on 29 February 2000 showed the registered office and the principal place of business of Regis Towers as 'John Rose & Co Solicitors Suite 149 Level 2, 416 Pitt Street, Sydney, NSW 2000'. That annual return showed the bankrupt as the sole director and the secretary. 11 It would appear that on 14 January 2003 the registered office of Regis Towers was further altered to become 'John Rose & Co Solicitors Suite 459, Level 5, 311-315 Castlereagh Street Sydney NSW 2000'. That address became the principal place of business of Regis Towers as from 6 January 2003. 12 Whilst the position in relation to office holders of Regis Towers between 19 April 1999 and 1 June 1999 is not entirely clear, it appears that at least on 20 April 1999 the bankrupt was a director of the company and Kerrie McInnes was its secretary. On 20 April 1999 the common seal of Cesscut Pty Limited was affixed to a deed between Cesscut Pty Limited and Meriton Apartments Pty Limited, the affixing being witnessed by the bankrupt as a director and Ms McInnes as secretary. That deed showed the address of Cesscut Pty Limited as 74 Spit Road, Mosman, NSW 2088, being the residential address of Mr Stewart. 13 Ms McInnes' status as a secretary of Regis Towers is further evidenced by a deed made 6 August 1999 referred to as a 'DEED OF CONSENT TO SECURITY' between Meriton Apartments Pty Limited, Owners Corporation for 'The Regis Strata Plan Number 58946 (sic)' and Cesscut Pty Limited of 74 Spit Road, Mosman, NSW 2088. That deed bears the common seals of Meriton Apartments Pty Limited ACN 000 644 888, The Owners --- Strata Plan No. 56443 and Cesscut Pty Limited ACN 087 088 202. 14 In the case of The Owners --- Strata Plan No. 56443 execution of the Deed clearly took place on 6 August 1999. 15 In the case of Cesscut Pty Limited the affixing of the common seal to the Deed was witnessed by the bankrupt as 'Director' and by Ms McInnes as 'Secretary'. It is common ground that, in relation to the execution of the Deed by Cesscut Pty Limited, this occurred before 6 May 1999 i.e. the date on which Ms McInnes and Mr Stewart withdrew from the new enterprise. 16 Regis Towers became a company under administration on 17 September 2004, Murray Roderick Godfrey ('the Administrator') being appointed as its Administrator in accordance with s 436A of the Corporations Act . In accordance with s 156A of the Act Robert William Whitton ('the Trustee') became the Trustee of the estate of the bankrupt on the same day. 18 The bankrupt remained the sole director and secretary of Regis Towers from about 6 May 1999 until 15 August 2005. However, he became disqualified from managing Regis Towers upon becoming a bankrupt (see s 206B(3) of the Corporations Act ). By then, of course, Regis Towers was a company under administration. 19 Expressed in the simplest of terms, the proceedings presently before the Court require determinations to be made as to whether certain assets should inure for the benefit of the creditors of Regis Towers or for the benefit of the creditors of the bankrupt. The competing protagonists are the Administrator and the Trustee and each has pursued his case with appropriate vigour. 20 Proceeding NSD 641 of 2006 was commenced by the Administrator by an application filed 29 March 2006. It challenged a Notice given to the Administrator by the acting Official Receiver for the Bankruptcy District of New South Wales in relation to the estate of the bankrupt and also a Notice of Demand given by the Trustee to the Administrator. 21 On 15 May 2006 the Trustee filed a cross-application against the Administrator and Regis Towers. Pursuant to an order made on 7 September 2006, the Administrator, personally, ceased to be a party to the cross-application. In the cross-application the Trustee seeks relief against Regis Towers under s 121 of the Act. 22 The applicants' claims in the proceedings were resolved on 22 June 2006, a series of declarations and orders being made by consent on that day. Responsibility for the costs of the applicants' amended application was also determined on that day. 23 The cross-application is one of the matters presently before the Court. On 9 August 2006 leave was granted, by consent, to the Trustee to proceed with the cross-application against Regis Towers. 24 The other matter presently before the Court, matter No. NSD 1657 of 2006, is an application, filed 29 August 2006, under s 104 of the Act by Regis Towers for review of a decision of the Trustee under s 102(1)(c) of the Act to reject a proof of debt lodged by Regis Towers with the Trustee in accordance with s 84 of the Act. This application was filed after Regis Towers filed a 'Second Cross Application' against the Trustee in proceeding NSD 641 of 2006 on 17 July 2006, in which substantially the same relief had been sought. 25 On 7 September 2006 the Court ordered that the cross-application in proceeding NSD 641 of 2006 and proceeding NSD 1657 of 2006 be heard together with evidence in one matter to be evidence in the other. 26 On 14 July 2006 the Trustee filed an amended cross-application in NSD 641 of 2006. That cross-application was superseded by a further amended cross-application filed 10 October 2006 which, in turn, was superseded by a second further amended cross-application filed 17 October 2006. 27 The cross-application falls to be determined by reference to a Second Further Amended Points of Cross-Claim filed 17 October 2006 and Points of Defence thereto filed by Regis Towers on 18 October 2006, the sixth and seventh days respectively, of the hearing. 28 In relation to the review of the rejection of Regis Towers' proof of debt in NSD 1657 of 2006 the Trustee filed a 'Notice Stating Grounds of Opposition to Application, Interim Application or Petition' on 19 September 2006. 29 Section 121 of the Act was amended by the Bankruptcy Legislation (Anti-avoidance) Act 2006 (Cth) which, relevantly commenced on 31 May 2006. However the amendments only applied to transfers of property made on or after 31 May 2006. Accordingly, the new provisions have no application to the facts of this case. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time---relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilising such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. A company is not necessarily solvent on a particular day if it was, on that day, in a position to meet any demand lawfully made by a creditor. It may be necessary to investigate the sources from which such payments might be made. If, for example, the company could pay one debt only by borrowing from someone else, its solvency could come into question: cf Re Australian Co-operative Development Society Ltd. It is clear that a lack of liquidity is not equivalent to insolvency; I think the converse is also true, namely, that the fact that a company has liquid assets is not conclusive of its solvency. If it is, then one should take account of readily realisable assets. Of course, it follows that, in doing so, one is looking to the future and, in my opinion, if one does so in order to see whether a temporary lack of liquidity can be overcome, one cannot overlook debts which will become payable during the period in which the lack of liquidity is being cured. The Council of the City of Sydney duly consented to a Development Application in respect of the land, being Application No 724/96. 37 Under s 41 of the Strata Schemes (Freehold Development) Act 1973 (NSW) the Registrar-General is empowered to register, amongst other things, strata plans and strata plans of subdivision. Upon the registration of a strata plan for a strata scheme, an owners corporation is established as a body corporate under the name 'The Owners --- Strata Plan No X' ('X' being the registered number of the strata plan to which that strata scheme relates). (See ss 8 and 11 of the Strata Schemes Management Act 1996 (NSW). Lots 1 --- 153 had Unit Entitlements varying from 7 out of an aggregate of 10,000 to 56 out of an aggregate of 10,000. Lot 154 had a Unit Entitlement of 5,094 out of an aggregate of 10,000 and Lot 155 had a Unit Entitlement of 2,644 out of an aggregate of 10,000. 40 At the time of the registration of Strata Plan No 56443 a 32 level brick and concrete residential and commercial building fronting Pitt Street, with car parking under part thereof, had been constructed on part of the land. The Pitt Street tower was known as 414 --- 418 Pitt Street, Sydney. 41 On 3 March 1999 Strata Plan No 58946, being a subdivision of Lots 154 and 155 in Strata Plan No 56443, was duly registered. By Strata Plan No 58946, new Lots 156 --- 455 were created. The Unit Entitlements for Lots 1 --- 153 covered by SP 56443 remained in place. The Unit Entitlements attributed to the new Lots 156 --- 454 varied from 1 out of an aggregate of 10,000 to 43 out of an aggregate of 10,000. Lot 455 had a Unit Entitlement of 2,974 out of an aggregate of 10,000. 42 By the time of the registration of SP 58946 a 43 level brick and concrete residential and commercial building (including car parking under) had been constructed on the northern part of the land fronting on to Castlereagh Street. The Castlereagh Street tower was known as 303 --- 321 Castlereagh Street, Sydney. 43 On 2 November 1999 Strata Plan No 61369 was duly registered as a strata plan of subdivision of Lot 455 in Strata Plan No 58946. By the time of the registration of Strata Plan No 61369 a 36 level brick and concrete residential and commercial building (including car parking under) had been constructed on the land with frontages to Campbell and Castlereagh Streets. Upon the registration of Strata Plan No 61369 Lots 456 --- 650 were created, the Unit Entitlements of which varied from 1 to 26 out of an aggregate of 2,974, being the Unit Entitlement out of an aggregate of 10,000 previously applicable to Lot 455 in Strata Plan No 58946. The street address for the Campbell Street tower was 317 --- 321 Castlereagh Street, Sydney. 44 The By-Laws for the Strata Scheme which came into existence upon the registration of SP 56443 included provision for the owner of a lot to have rights in respect of part of the common property designated 'Caretaker-Manager's Office', to perform the responsibilities of a caretaker (see By-Law 25). 45 The By-Laws also empowered the Owners Corporation to appoint and enter into an agreement with a security company for the security of any building and common property (see By-Law 27). 46 By dealing number 6029751N the By-Laws for the common property Strata Plan No 56443 were changed with the addition of Special By-Laws 1, 2, 3 and 4. Thereafter, by dealing number 6150919W Special By-Laws 1 --- 4, said to have been made on 12 July 1999, were replaced by new Special By-Laws to which the common seal of The Owners --- Strata Plan No 56443 was affixed on 1 September 1999. The substituted Special By-Laws 1 -4 were generally in accord with the original Special By-Laws 1 --- 4. They did, however, tighten up the rights of the owners of Lots 149, 454, 488 and 650 under the Special By-Laws and also the rights of the Caretaker-Manager under Special By-Law 3. In addition a new Special By-Law 6 was added conferring rights on the owner for the time being of Lot 144 in respect of exclusive use and enjoyment of part of the common property. 47 Special By-Law 1 empowered the Owners Corporation 'to appoint and enter into an agreement with a Caretaker-Manager to provide management, leasing, security, cleaning and operational services for the strata scheme'. Purposes permitted by Special By-Law 1. Any activity identical or substantially identical with any of the services relating to the letting of lots referred to in Special By-Law 1, and/or the Caretaker-Manager Agreement. Purposes permitted by Special By-Law No. 1. 50 There is no evidence that Meriton Apartments Pty Limited ever owned any lots in the strata scheme. The relevant owner of lots in the scheme was Meriton Property Management Pty Limited. 51 Plainly, the rights conferred on the owners for the time being of lots 149, 454, 488 and 650 and the rights conferred under Special By-Law 1 on any Caretaker/Manager appointed by the owners corporation were of considerable value. The Law Almanac for 1998, to which the parties have agreed that the Court may have regard, showed him to be a suburban solicitor practising from 1/724 Darling Street, Rozelle under the firm name 'John Rose & Co, Solicitors & Attorneys'. The Law Almanac for 1999 contains an identical listing. 53 As at 17 March 1999 John Rose & Co's facsimile cover sheets showed the firm's business premises as being 'Rozelle Chambers, 1/724 Darling Street, Rozelle NSW 2039'. 54 The bankrupt moved away from practising as a solicitor towards the end of 1998, after which he ceased to take on new matters. Whilst no contracts for the purchase of any of the lots in the various strata plans to which the bankrupt was a party, are in evidence, it seems clear that the first contracts, to which the bankrupt was a party were entered into on 1 March 1999 when he agreed to purchase Lot 564 in what later became Strata Plan No 61369 'off the plan' for $411,000 and also Lot 565 in what later became Strata Plan No 61369 'off the plan' for $353,000. 56 Details of the transfers of lots into the name of the bankrupt or the bankrupt and his former wife, Popi Rose, are set out in the table appearing hereunder. The bankrupt acquired, in his own name, eight lots in the Campbell Street tower strata plan. In the case of the purchases effected by Regis Towers (then known as Cesscut Pty Limited) three contracts are in evidence, each dated 20 April 1999. 60 Whilst the contract for the purchase of Lot 454 shows the relevant strata plan as Strata Plan No 58586, it seems clear that the intention of the parties was that the subject matter of the contract would be Lot 454 in Strata Plan No 58946 which had been registered on 3 March 1999. 61 The purchases of Lots 488 and 650 were 'off the plan' and related to the strata plan which later became registered as Strata Plan No 61369 on 2 November 1999. 62 The deposit payable in respect of Lot 454 was $4,500, in the case of Lot 488 it was $15,900 and in the case of Lot 650 it was $33,750. 63 In each of the contracts Meriton Apartments Pty Limited ACN 000 644 888 was shown as the 'vendor's representative'. Each contract provided for the deposit 'To be released to Meriton Apartments Pty Ltd as at the date hereof'. 67 In the deed Meriton Apartments Pty Limited is described as the 'Developer' and Regis Towers as the 'Caretaker'. The deed made provision for Meriton Apartments Pty Limited to procure the 'Owners Corporation' to resolve to enter into a proposed Caretaker-Manager Agreement in respect of the complex, a copy of which was said to be contained in Schedule 2 to the deed. Neither copy of the deed contains a form of Caretaker-Manager (or Caretaker-Management) Agreement in Schedule 2. 68 The bankrupt says that he saw a draft Caretaker-Management Agreement in Mr Londy's office at Glebe on or about 16 April 1999. 69 One copy of the deed which is in evidence contains two copies of the page which commences with clause 4 but lacks the page commencing with clause 2.3. No issue arising from the apparent lack of correspondence between the part and counterpart has been raised. 70 For the rights conferred on Regis Towers by the deed Regis Towers agreed to pay Meriton Apartments Pty Limited $1,750,000 by way of consideration. 71 The deed was executed under the common seal of Meriton Apartments Pty Limited ACN 000 644 888, the counterpart being executed under the common seal of Cesscut Pty Limited ACN 087 088 202. Once again the affixing of the common seal was witnessed by the bankrupt as director and by Kerrie McInnes as secretary. The Developer is the developer of a complex to be constructed on the Land described in Schedule 1. The Caretaker has requested the Developer to arrange the granting by the Owners Corporation to the Caretaker of the caretaking and letting rights in respect of the complex to be constructed by the Developer. The Developer acknowledges that this is a fundamental term of this Agreement. 74 Annexure A to the deed was a draft mortgage in favour of Meriton Finance Pty Limited ACN 086 507 280. Whilst the agreement bears date 6 August 1999, it is clear that it was only executed by Regis Towers on 17 August 1999. 76 The common seal of Regis Towers was affixed to the agreement in the presence of the bankrupt as a director. To assist it in the performance of this responsibility, the Owners Corporation wishes to appoint a Caretaker. The Owners Corporation engages the Caretaker to perform the duties set out in Schedule 2 in a conscientious, expeditious and workmanlike manner so as to maintain the common areas of the building and to permit them to be enjoyed to a standard appropriate to a residential development and the Caretaker accepts the engagement upon the terms and conditions of this Agreement. For the performance by the Caretaker of its duties specified in Schedule 2, the Owners Corporation must pay the Caretaker the sum per annum specified in Item 2 of Schedule 1, in equal fortnightly instalments in arrears. The first page had the heading " DUTIES OF CARETAKER ' followed by alphabetically identified paragraphs (a) to (ax) inclusive. However, the copy of the agreement which is in evidence does not include the page which presumably recorded paragraphs (v) to (z) inclusive. The next section of Schedule 2 bore the heading "CLEANING DUTIES ' which recorded a number of obligations in alphabetically identified paragraphs (a) --- (j) inclusive. The final part of Schedule 2 had a heading " CONCIERGE DUTIES " which was followed by a number of obligations in alphabetically identified paragraphs (a) --- (i) inclusive. This Agreement shall not operate as an appointment of the Caretaker as a 'Strata Managing Agent' under Section 27 of the Strata Schemes Management Act 1996 . Collecting rents payable in respect of any lease of lots within the strata scheme. In no circumstances shall the Owners Corporation be liable to pay the Caretaker remuneration for these services, or to reimburse for it (sic) any expenses in providing these services. The Caretaker may conduct the business of providing these services from Lots 489, 454 and 650 pursuant to rights conferred on the owner of the Caretaker's lots (being the lot specified in Item 3 of Schedule 1) by a by-law of the type referred to in Section 51 of the Strata Schemes Management Act 1996 the terms of which are set out in Schedule 3. Hence, Regis Towers purchased both lots 488 and 489 in Strata Plan No 61369. The plans will remain the property of the Owners Corporation and must be returned to the Owners Corporation upon the expiration or sooner determination of this Agreement. 79 What is known is that on 20 April 1999 Kerrie McInnes drew a number of cheques on a bank account in her name at the Jannali, NSW branch of Commonwealth Bank of Australia. At least three of those cheques were drawn in favour of 'Meriton Apartments P/L'. It is common ground that Ms McInnes' cheques were used to meet all the deposit obligations of Regis Towers under the several contracts entered into by Regis Towers on 20 April 1999 with Meriton Property Management Pty Limited and/or Meriton Apartments Pty Limited. Such cheques appear to have totalled $218,750. 81 As part of the arrangement between the bankrupt, his former wife, Ms McInnes and Mr Stewart for the withdrawal of Ms McInnes and Mr Stewart from the joint enterprise it became necessary for the bankrupt to reimburse Ms McInnes for the $218,750 she had paid on Regis Towers' behalf by way of deposit. 82 As indicated above, the bankrupt did so on or about 6 May 1999, raising the necessary funds by borrowing $327,000 from Raymond Howes and Helen Linsey Howes, Peter Cole and Dorothy Cole, Thomas and Pamela Bradshaw, Alice Pauline Edwards and Lesley Berry, third party mortgage security being provided by Popi Rose's parents, Christos Pappas and Eugenia Pappas over their property known as 14 Birchgrove Road, Balmain. The bankrupt $103,731.00. 84 It is common ground that on or about 6 May 1999 Kerrie McInnes received $218,750.00 borrowed by the bankrupt as aforesaid. 85 On 6 August 1999 the bankrupt drew a cheque (number 007) in the sum of $257,814.51 on a Cash Management Call Account in his name at the Liverpool and Castlereagh Streets, Sydney branch of Commonwealth Bank of Australia in favour of Meriton Apartments Pty Ltd. The cheque butt recorded the purpose of the payment as 'Settlement of Management Rights'. 86 It will be recalled that 6 August 1999 was the date that the Caretaker-Management agreement bore, even though it was not executed by Regis Towers until 17 August 1999. 6 August 1999 was also the date on which Regis Towers settled the purchase of Lot 149 in Strata Plan No 56443 and also Lot 454 in Strata Plan No 58946 from Meriton Property Management Pty Limited. By virtue of the settlement of the purchase of Lot 454, $1,017,500 became payable by Regis Towers to Meriton Apartments Pty Limited under the head agreement made 20 April 1999 (see clause 3.1(b)). 87 The bank statement in respect of the bankrupt's Cash Management Call Account shows that cheques 007, 008 and 009 were all cleared through the account on 9 August 1999. The bankrupt's secretary, Rada Popovski, noted on the bank statement for the period 13 July 1999 to 6 September 1999 that cheque 007 in the amount of $257,814.51 was for 'Settlement of Management Rights', cheque number 008 in the sum of $35,790.89 was for 'Settlement 149 PT', which I would understand to be a reference to Lot 149 in Strata Plan No 56443, and cheque 009 in the sum of $14,499.47 was for 'Settlement 454 CT', which I would understand to be a reference to Lot 454 in what was in fact Strata Plan 58946. 88 The balance of the $1,017,500.00 payable by Regis Towers to Meriton Apartments Pty Limited pursuant to clause 3.1(b) of the head agreement of 20 April 1999, upon the settlement of the purchase of Lot 454 on 6 August 1999, was provided by an unsecured loan in the sum of $770,000 from Meriton Finance Pty Limited to Regis Towers dated 6 August 1999. A form of mortgage document over unidentified real estate was stamped in respect of a total advance of $770,000 on 6 August 1999. 89 The bankrupt appears to have opened the above-mentioned Cash Management Call Account on 13 July 1999 with a deposit of $491,232.92. The closing credit balance on the account as at 6 September 1999 was $45,765.55. 90 The bankrupt obtained the amount of $491,232.92, which was credited to his Cash Management Call Account on 13 July 1999 by mortgaging Lot 24 in DP 192676 being the property known as 736 Darling Street, Rozelle of which, at the time, the bankrupt and his brother Nicholas Rose were registered proprietors as tenants in common in equal shares. The bankrupt held a power of attorney from his brother Nicholas. He proceeded to mortgage the Darling Street, Rozelle property in favour of Permanent Trustee Australia Limited, having secured a revaluation of the property from Alcorn Lupton & Associates on 14 May 1999. 91 I would interpolate that a standard technique employed by the bankrupt to generate cash flow both for himself and Regis Towers was to acquire properties at one price, funding a significant proportion of the purchase price with borrowed funds secured over the property purchased, then obtaining revaluations of the properties at higher amounts, which valuations were used to obtain refinancing of the properties in greater sums, thereby allowing the original financier to be paid and surplus funds generated. 92 Part of a bank statement referable to the bankrupt's Cash Management Call Account for the period 16 November --- 1 December 1999 is in evidence. It indicated that there was a credit balance in the account as at 16 November of $422,287.27 which rose to a credit balance of $428,100.89 as at 30 November 1999. A further extract from a bank statement covering the period 7 December 1999 to 24 December 1999 in respect of the Cash Management Call Account shows it as having a credit balance as at 7 December 1999 of $58,374.79 and a closing credit balance as at 24 December 1999 of $18,553.29. 93 Neither of the last two mentioned extracts from bank statements referable to the bankrupt's Cash Management Call Account shows the payment of cheque number 112, although a strong inference is available that it was presented for payment and paid in the first week of December 1999. 94 The cheque butt referable to cheque number 112 indicates that is was drawn on 2 December 1999 in the sum of $361,103.28 and made payable to 'Meriton Apartments' for 'settlement' of Lots 501 ($26,663.40), 488 ($35,925.48), 489 ($39,188.67) and 650 ($259,325.73). 95 From the foregoing it may be inferred that out of the amount of $361,103.28 paid by the bankrupt to Meriton Apartments on or about 2 December 1999 , $26,663.40 was paid in relation to the settlement of the purchase by the bankrupt and his former wife, Popi Rose, of Lot 501, the balance of $334,439.88 having been paid by the bankrupt in relation to the settlement of purchases by Regis Towers of Lots 488, 489 and 650 in Strata Plan No 61369 from Meriton Property Management Pty Limited. 96 It may be observed that on 3 December 1999 Meriton Finance Pty Limited lent $455,000 to Regis Towers to facilitate the final payment of $601,250 by Regis Towers to Meriton Apartments Pty Limited which was due under clause 3.1(c) of the Head Agreement dated 20 April 1999 upon the settlement of the sale of Lot 650. On 3 December 1999, Meriton Finance Pty Limited also lent $315,000 to Regis Towers on the security of Lot 650 in Strata Plan No 61369 to facilitate the settlement of its purchase. The payment by the bankrupt of $259,325.73 to 'Meriton Apartments' referred to above covered not only the balance due to Meriton Property Management Pty Limited as vendor of Lot 650 in DP 61369 but also the balance due to Meriton Apartments Pty Limited under clause 3.1(c) of the Head Agreement. Consequently, as the director's loan account is in debit there is no claim by Mr Rose against the company. The form was signed by the Administrator on behalf of Regis Towers on 13 March 2006. 102 A ledger account number 2140 in respect of 'Loans to directors' for the year ended 30 June 2000 was prepared for Regis Towers by Mr Harris of Messrs Harris Cottis, an accountant who was retained by the bankrupt in about 2002 to prepare a tax return for him for the financial year ended 30 June 2000. Mr Harris also prepared financial accounts for Regis Towers for the periods ended 30 June 2000 and 30 June 2001 at that time. 103 The sole director of the company in the financial year ended 30 June 2000 was the bankrupt. His loan account in the books of the company prepared as mentioned above contained 90 entries recording what were said to be some 63 payments made by Regis Towers on the bankrupt's behalf and three receipts of monies from the bankrupt, although the details of those receipts are imprecise. There was one minor accounting adjustment in respect of an amount of one cent and 23 journal entries, one said to have been made on 1 July 1999 in respect of an amount of $4 and 22 entries said to have been made on 30 June 2000. The evidence is that the journal entries were initiated by Mr Harris. However, the evidence does not support the conclusion that the journal entries were made in accordance with the bankrupt's instructions or with his acquiescence. Indeed, the evidence is that the bankrupt only recently saw the ledger account detailing the journal entries for the first time. 104 Were the entries in the ledger account reflective of the true indebtedness of Regis Towers to the bankrupt and of the bankrupt to Regis Towers it would follow that as at 30 June 2000 the bankrupt owed Regis Towers $7,875.46 being the product of deducting all of the credits totalling $1,458,365.65 from $1,466,241.11 being the total of all of the debits. 105 The Trustee has acknowledged that if the 30 June 2000 balance of $7,875.46 was truly owing by the bankrupt to Regis Towers as at 30 June 2000, then it would follow that the amount owing by the bankrupt to Regis Towers at 31 December 2003, being the date mentioned in the Administrator's letter of 20 March 2006, would be $483,970.21 as claimed by Regis Towers, subject to one matter to which I will return later. 106 The primary issue in respect of the rejection by the Trustee of Regis Towers' proof of debt revolves around the reliability of the stated indebtedness as at 30 June 2000 of the bankrupt to Regis Towers of $7,875.46. 107 Of critical significance to the establishment of the starting figure of $7,875.46 is the debiting to the bankrupt's loan account of an amount of $1,198,969.72 by journal entry on 30 June 2000 described simply as 'Take up Balance of Funds Borrowed per li'. 108 The credit side of the journal entry whereby the bankrupt's loan account was debited with $1,198,969.72 is to be found in a ledger account number 3565 produced by Mr Harris and described as 'Loans from other persons'. This ledger account shows an indebtedness by the company to a person or persons unknown of $3,378,800 made up of 'reallocation' $2,179,830.28 and 'Take up Balance of Funds Borrowed per li' in the amount of $1,198,969.72. 109 The 'reallocation' in the sum of $2,179,830.28 is itself the subject of a journal entry made by Mr Harris on 30 June 2000. No evidence has been provided to found Mr Harris' journal entries in the amounts mentioned and, in particular, the journal entry referrable to the amount of $1,198,969.72. 'Can you recall whether or not in either of the two years in which you were involved you initiated journal entries? 'I am sure we would have. 'Do you recall whether or not Mr Rose initiated any journal entries which he directed you to make? 'Not specifically. It wasn't a matter of him identifying the transaction and saying, that shouldn't be there it should be over here or in a different account. There were instances where he was not sure about certain things and wanted me to have a look at the transactions. 'So this is the position, that the journal entries that one finds in the general ledger were done by you and your staff; is that correct? 'Yes. 'And they were done by you and your staff without the direction of Mr Rose; is that correct? 'Well, Mr Rose did not direct you what journal entries to make; did he? 'No. 'To the extent relevant, it was you who decided, or your team, what journal entries should be made in relation to the general ledger; correct? 'By and large, yes. 'Did you get Mr Rose's acquiescence to those or did you just make them of your own accord? 'Various things would have been mentioned to him in passing. The accounts would have been sent to him towards the end. He would look at them and he would occasionally ask questions. ' ... you can't tell the court, can you, what transactions that amount relates to, that is, the $1,198,969.72? 'I don't recall. I don't recall the make-up of that. 'You don't know, do you, whether that relates to any moneys borrowed by Mr Rose from the company, do you? 'You can't assist his Honour by saying whether that relates to any borrowings actually made by Mr Rose from the company, can you? 'Well, I repeat what I said. I don't recall the make-up of that transaction. 'Can you tell me what the journal entry was that is posted here that entitled you or that provided the basis for the recognition by the company of an indebtedness ... by him of $1,198,000? 'I don't recall. I don't know off the top of my head. 'To the extent that it's described as "take up balance of funds" it appears to be a balancing entry, doesn't it? 'Yes. 'From what you've earlier told me, you would agree with me, wouldn't you, that that's a balancing entry that would have been made by your staff and was not something done at the direction of Mr Rose, correct? 'I think that entry was made by my staff, yes. '... are you able to say what the take up balance of funds borrowed per LI refers in the accounts of the company? 'I'm not sure ... I believe that it may refer possibly to line of credit ... and I think what would've happened there we would've calculated the total loans and we'd need to balance them off with where the funds went or came from and we ended up with that figure. '... in relation to that entry you were asked questions about in respect of the $1,198,969.72 the position is you are not able to say whether that relates to any moneys that were actually borrowed from the company by Mr Rose; correct? 'I don't recall exactly how that's made up. That's the simple answer. I have been informed by John Rose, the director of the Plaintiff [referring to Regis Towers] , and believe, that part but not all of the amounts shown as "Non Current Liabilities Unsecured Loans from other persons - $3,378,800" is in fact secured by mortgages over real estate. I have been retained by John Rose as his accountant for a period in excess of 15 years, although I understand he has engaged other accountants for different purposes from time to time. As a result of my professional relationship with Mr Rose, I have been involved in dealings with the plaintiff of which Mr Rose and his wife Popi Rose are the shareholders and Mr Rose the sole director. I have been the accountant for the plaintiff since its incorporation in about April 1999 and have been responsible for the preparation of its financial statements from that time. 115 It is clear that the amount of $345,000 said to represent a borrowing by Regis Towers from Wizard Home Loans had nothing to do with Regis Towers. 116 The amount of $345,000 was borrowed by Mr and Mrs Pappas from Permanent Custodians Limited in its capacity as trustee for Wizard Home Loans on or about 7 May 2001. Mr and Mrs Pappas on-lent the amount in question to the bankrupt, who used it to discharge his indebtedness to Patricia Dawn Grierson from whom the bankrupt had borrowed $327,000 on or about 12 May 2000 upon the security of a further third party mortgage given by Mr and Mrs Pappas over their property known as 14 Birchgrove Road, Balmain, which he then used to repay his original borrowing of $327,000 from Howes & Ors of 6 May 1999. 117 By a deed made 5 August 2002 between Mr and Mrs Pappas, Regis Towers and the bankrupt and his then wife Popi Rose, Regis Towers granted to Mr and Mrs Pappas a first fixed and floating charge over the whole business and assets of Regis Towers to secure repayment of an amount of $355,000 agreed to be lent by Mr and Mrs Pappas to Regis Towers, which the deed recorded as having already been advanced by Mr and Mrs Pappas to Regis Towers. 118 The deed provided for the bankrupt and Popi Rose to guarantee the repayment of the loan and any outstanding interest to Mr and Mrs Pappas. 119 As it transpires no such loan was ever made by Mr and Mrs Pappas to Regis Towers. The amount $483,970.21 claimed represents the balance of "Loans to directors" account in the company balance sheet as at 31 December 2003 under the heading "Receivables". However, it does not reconcile with the company accounts. Inspection of other items under the heading "Receivables" suggests that the amount is unreliable as most of these items are in fact liabilities , not debtors. Mr Ben Wiles of your office represented that the company accounts were prepared by Harris Cottis whereas Harris Cottis categorically deny this. According to Harris Cottis, the "Loans to directors" account recorded remuneration appropriated by both Mr and Mrs Rose, neither of whom was on a fixed salary package, pending its setoff against Mr Rose's accumulated tax losses. [the amount of $334,439.88 was originally erroneously expressed as $361,183.28 (it should have read $361,103.28) but $26,663.40 out of this payment was abandoned by the Trustee as constituting an alleged transfer that was void against him, being the amount paid by the bankrupt to 'Meriton Apartments' on 3 December 1999 in respect of the settlement of the purchase of Lot 501 in DP 61369 by the bankrupt and his former wife, Popi Rose]. 127 The Trustee's case in respect of the Head Agreement choses in action is that they would probably have become part of the bankrupt's estate within the meaning of s 121(1)(a) of the Act were it not for the transfer that was taken to have occurred in accordance s 121(9)(b) i.e. had the bankrupt not done the something that resulted in Regis Towers becoming the owner of the Head Agreement choses in action. Whilst the alternative provided for in s 121(1)(a) of the Act has been pleaded, it was not pressed. 128 The Trustee submits that the bankrupt's main purpose in making the transfer, i.e. in doing the something that resulted in Regis Towers becoming the owner of the Head Agreement choses in action, fell within s 121(1)(b) of the Act. However, it is not submitted that the evidence would allow a finding that the bankrupt's main purpose fell within s 121(1)(b), but for s 121(2). The Trustee contends that s 121(1)(b) is satisfied because it can reasonably be inferred from all the circumstances that, at the time of the deemed transfer, the bankrupt was, or was about to become, insolvent. 129 The Trustee submits that the alleged transfer of the Head Agreement choses in action which was taken to have occurred by virtue of s 121(9)(b) was not saved from avoidance by s 121(4) of the Act. In the circumstances of an alleged deemed transfer of the Head Agreement choses in action, s 121(4) would require an evaluation of the consideration, if any, that Regis Towers gave for the rights created in its favour under the Head Agreement made 20 April 1999 and a determination as to whether such consideration was at least as valuable as the market value of the Head Agreement choses in action, a determination as to whether Regis Towers knew that the bankrupt's main purpose in doing the something that resulted in Regis Towers acquiring the rights created in its favour under the Head Agreement made 20 April 1999 was to prevent the Head Agreement choses in action from becoming divisible property amongst the bankrupt's creditors, or to hinder or delay the process of making property available for division amongst the bankrupt's creditors and, a determination as to whether Regis Towers could or could not reasonably have inferred that as at 20 April 1999, the bankrupt was, or was about to become, insolvent. 130 Were it to be found that a transfer was taken to have occurred by the bankrupt to Regis Towers of rights created in favour of Regis Towers under the Head Agreement made 20 April 1999 between Meriton Apartments Pty Limited and Regis Towers and that such transfer was void against the Trustee, consideration would also have to be given to what if any property had been acquired by any other person from Regis Towers, in respect of the rights created in favour of Regis Towers, in good faith and for at least the market value of such property (see s 121(8) of the Act). 131 In addition a determination would be required as to the value of any consideration that Regis Towers gave for the rights created in its favour under the Head Agreement made 20 April 1999 which the Trustee would be required to pay to Regis Towers in accordance with s 121(5) of the Act. The former s 121 dealing with 'fraudulent dispositions' was repealed and replaced by a new s 121 entitled 'Transfers to Defeat Creditors'. Item 208 of the Bill proposes the replacement of existing sections 120 and 121, and some substantial modifications are proposed to section 122 to modernise and strengthen the law relating to the avoidance of antecedent transactions. ... The word transfer will have its ordinary meaning in the new and revised provisions, except to the extent that it is given an expanded definition by proposed subsections 120(7), 121(9) and 122(8), so that it encompasses a payment of money, or the doing of some act or thing which results in another person becoming the owner of property which did not previously exist. The Second Revised Edition of the Macquarie Dictionary defines among the meanings of transfer "1. to remove from 1 place, person etc to another. 2. Law to make over or convey ..." . It will be seen that in ordinary parlance, the term transfer does not carry with it any connotation that any property which is transferred is intended to be retained permanently, or at all by the transferee. This will make the new section 120 stricter than the present provision, because of the absence of the test of permanency. Thus where a person creates an interest in property, for example by allowing a mortgage or charge to be created over it, the person will be taken to have transferred property, for the purposes of the section. Likewise, if Frank who subsequently became a bankrupt constructed a residence on a block of land owned by Eugenie, Frank would be taken to have transferred property to Eugenie. The transfer would be void against the trustee if the house was constructed within 2 years before the commencement of the bankruptcy and Eugenie had either not paid Frank, or if Frank's work in constructing the residence was worth $300,000, but Eugenie had only paid him $150,000. Another example might be a situation where 3 years before the commencement of her bankruptcy, Gertrude conferred a licence on Harold to use a trademark, or an Item the subject of a patent, where no licence to use the Item previously existed. Gertrude would be taken to be transferring property to Harold, and if this was done for less than what might be expected to be the market value of the rights conferred by the licence, the transfer would be void, unless Harold could prove that Gertrude was not insolvent at the time of giving the licence. The requirement is intended to overcome the decision of the High Court in Barton v Official Receiver [1986] HCA 44 ; (1986) 161 CLR 75 that a person who claims to be a purchaser of the property need not show that he or she has given fully adequate consideration for the transfer, but nevertheless must have given real and substantial consideration, and not consideration which is merely nominal, trivial or colourable. The expression "market value" is intended to refer to the value of the property concerned if it were disposed of to an unrelated purchaser bidding in a market on an ordinary commercial basis for property of the kind disposed of, without any sort of discount or incentive for purchase being offered. The expression is not intended to include a situation where the property was being disposed of at a "fire sale", at discounted prices because of some immediate need on the part of the owner to liquidate his or her assets. Of course, there may be differing opinions as to the precise market value of some property, for example house properties, where valuers or real estate agents may give kerbside valuations which spread over a range of monetary values. Income in this context refers to income according to ordinary usages and concepts, rather than that term as specially defined for the purposes of the compulsory income contribution regime established by Division 4B of Part VI of the Act. A person will be insolvent at a particular time if his or her income, as well as assets, are insufficient to meet his or her liabilities. Absence of an income flow may cause a temporary lack of liquidity, of the kind spoken of by Barwick CJ in Sandell v Porter , referred to earlier, which is not of itself indicative of insolvency, but in many instances a lack of cash flow will for all intents and purposes prevent a debtor from readily meeting his or her liabilities as and when they become due, and may make it necessary for a person to arrange to dispose of some part of his or her assets very quickly. For this reason, lack of liquidity because of absence of income flow should be a factor to be taken into account in determining insolvency, because income does form part of the moneys and assets a debtor may have at his or her disposal to pay debts. The proposed new provision will change the tenor of the provision, and instead of focussing on the notion of fraud, is concerned with a person's purpose of delaying the satisfaction of creditors. On 11 September 2003 Mr Pinna, who later became a bankrupt, executed a transfer to himself of a 'one-half interest in fee simple' in the matrimonial home which was registered in the names of Mr and Mrs Pinna as joint tenants. At the time in question Mr Pinna was approximately 80 years of age and Mrs Pinna approximately 78 years of age. The relevant instrument was registered on 5 November 2003 with the consequence that Mr and Mrs Pinna became tenants in common in undivided one half shares in respect of the property at Carindale which they had originally acquired in 1995 as joint tenants. 134 As it transpires Mrs Pinna died on 12 January 2004, some three months before a sequestration order was made against the estate of Mr Pinna. 135 The question which arose for consideration was whether Mrs Pinna's interest in the property would probably have become part of Mr Pinna's bankrupt estate within the meaning of s 121(1)(a) of the Act. The section impugns transactions which answer the description of a "transfer of property". This expression will bear its ordinary meaning, save to the extent that this is expanded by s 121(9). The term "transfer of property" also appears in s 120 ("Undervalued transactions") and s 122 ("Avoidance of preferences"). Further, these sections contain definitional provisions which were introduced by the 1996 Act and are in identical terms to s 121(9). Thus, par (b) expands the concepts at the heart of s 121 beyond their natural meaning. It is expressed in similar terms to the former s 160M(6) of the Income Tax Assessment Act 1936 (Cth), which was the subject of the litigation in Hepples v Federal Commissioner of Taxation . Section 160M(6) consistently attracted the description "obscure". That same adjective also appropriately describes par (b) of s 121(9) of the Bankruptcy Act . As noted above, par (b) of s 121(9) operates to treat person A, who did something which resulted in person B becoming the owner of property that did not "previously" exist, as having transferred "the property" to B. In its natural sense, the word "previously" indicates that the property did not exist prior to the act of A which results in B becoming the owner of it. The act of A which produces the result that B becomes the owner of that property is to be regarded as the "transfer of property". Upon an ordinary reading, the corollary of this is that the property that did not previously exist is taken to be the "transferred property". It is to be expected that the sub-section has the same meaning in each provision. Further instances would include the grant of a lease over freehold property and a declaration of a trust over property vested in the "transferor". In all of these cases, the same act both creates the property in question and vests it in the other person. Instances of this relate primarily to the diversion of future property (necessarily constituting property that did not previously exist) from coming into the hands of the person who later becomes bankrupt. This may occur by the assignment, whether absolutely or by way of charge, of property such as future income, royalties yet to be earned, and damages which may be recovered in pending litigation. (Consideration is required for the assignment to be effective, but that issue is dealt with by s 121(4) of the Bankruptcy Act . ) In such cases, the assignment operates immediately upon acquisition by the assignor and vests the property in the assignee. Mrs Pinna's undivided one half interest as a tenant in common in the Carindale property, could not be said to have been carved out of any property of Mr Pinna, nevertheless the Court found that Mr Pinna should be taken to have transferred such property to Mrs Pinna within the meaning of s 121(9)(b) of the Act. She acquired an interest as tenant in common in the Carindale property whereas previously she had held an interest as joint tenant in the Carindale property (which included the right of survivorship). That interest as joint tenant was transformed into, or extinguished and replaced by, the interest as tenant in common. Accordingly, the terms of par (b) of s 121(9) were met because, by Mr Pinna registering the transfer unilaterally severing the joint tenancy, he did something by dint of which he was taken to have transferred the interest as tenant in common to Mrs Pinna. 140 Assuming for the moment that the bankrupt is to be taken to have transferred to Regis Towers the rights created in favour of Regis Towers under the Head Agreement made 20 April 1999 between Meriton Apartments Pty Limited and Regis Towers in accordance with s 121(9)(b) of the Act, one has to then determine the manner in which s 121 operates upon the relevant 'transfer of property'. 141 As the Court said in Peldan there is an apparent conundrum (see [34]). Section 121(1)(a) of the Act presupposes that there was no transfer and asks what would have happened to 'the property' in that situation (see [33]). May the words "the property" in the opening words of par (a) of s 121(1) be construed as referring to something other than "the property that did not previously exist"? This removes from the operation of s 121(1)(a) the assumption that it is existing property which is being transferred. It involves treating the words "the property" in s 121(1)(a) in a special sense to give to s 121(1) an extended operation as required by s 121(9)(b). Having found that that interest could never have become part of Mr Pinna's bankrupt estate, the Court concluded that the trustees of his bankrupt estate would have no claim to the whole of the proceeds of sale of the Carindale property as they had sought. (See Peldan at [48]. This submission seems to me to be correct. 150 In paragraphs 17 --- 36 of his affidavit, sworn 28 August 2006, the bankrupt gave evidence of his 'Arrangements with Kerrie McInnes'. I bought all these apartments in the Regis Towers complex and now I can't use them as serviced apartments as he said I could because Meriton are selling caretaker/management rights which contain exclusivity provisions. She's cashed up at the moment and looking for real estate businesses to purchase. Perhaps we could have a look at Regis Towers? Why not call Londy direct and go and have a look? I propose to incorporate a company to buy this business and we would like you in the deal as you know about it already. Kerrie would like a partner. The development should be finished in about September'. However, the bankrupt has been unable to locate that document. There is no evidence as to its contents. 153 In paragraph 21 of his affidavit the bankrupt deposed to Mr Stewart being the moving party in relation to the acquisition of the shelf company which became Regis Towers. 154 In the course of his evidence in chief the bankrupt was asked why he wanted Regis Towers to enter into the Head Agreement with Meriton Apartments Pty Limited on 20 April 1999. It was suggested to me by Mr Stuart (sic) that perhaps I would want to incorporate a company to give effect to the partnership or trade, the partnership by virtue of the company. I gave instructions that that was okay to have the company incorporate for that purpose. His actions may, just like his getting out of bed on the morning of 20 April 1999, have contributed to Regis Towers becoming the owner of the Head Agreement choses in action, but they did not result in Regis Towers becoming their owner. 157 For the doing of something by a person to result in another person becoming the owner of property within the meaning of s 121(9)(b) more is required than a mere link between the doing of the something and the outcome. The doing of the something must bring about the outcome. The outcome has to arise as an effect of the relevant action. 158 To use the High Court's expressions in Peldan at [25] the doing of something has to be the act which 'produces the result' or, as indicated at [30], one must be able to say that 'by dint of' the doing of the something , the other person became the owner of the property that did not previously exist. 159 Turning to the events of 20 April 1999 the relevant something which the bankrupt did in relation to the making of the Head Agreement of 20 April 1999 between Meriton Apartments Pty Limited and Regis Towers was to agree with Kerrie McInnes, as a de facto director of Regis Towers within the meaning of s 9 of the Corporations Act (or with Kerrie McInnes, Craig Stewart and Popi Rose as de facto directors), that Regis Towers should enter into the Head Agreement, and, to witness, together with Kerrie McInnes, the affixing of the common seal of Regis Towers (then known as Cesscut Pty Limited) to the Head Agreement. 160 Other things which led to Regis Towers becoming the owner of the Head Agreement choses in action were the concurrence of Kerrie McInnes (or of Kerrie McInnes, Craig Stewart and Popi Rose) in the action taken by Regis Towers, the payment by Kerrie McInnes on behalf of Regis Towers of the deposit of $131,250 due to be paid by Regis Towers to Meriton Apartments Pty Limited under the Head Agreement (see clause 3.1(a)) and the execution of the Head Agreement by Meriton Apartments Pty Limited. What is clear is that neither Regis Towers nor the bankrupt had the financial capacity, independently of the assistance provided by Kerrie McInnes, to enter into an agreement with Meriton Apartments Pty Limited on 20 April 1999 in the terms of the Head Agreement. 161 It follows that the bankrupt did not relevantly do something which resulted in Regis Towers becoming the owner of the Head Agreement choses in action that did not previously exist. Accordingly, the bankrupt was not taken to have transferred the Head Agreement choses of action to Regis Towers within the meaning of s 121(9)(b) of the Act. 162 If, contrary to my opinion, the bankrupt was taken to have transferred the Head Agreement choses in action to Regis Towers then such transfer was not void against the Trustee because there was no property in the hands of the bankrupt , prior to the bankrupt doing the something, taken to be the transfer, which resulted in Regis Towers becoming the owner of the Head Agreement choses in action that did not previously exist, which would probably have become part of the bankrupt's estate or would probably have been available to creditors if the Head Agreement choses in action had not been taken to have been transferred. 163 Apart from the foregoing findings, which are adverse to the Trustee's case in respect of the Head Agreement choses in action, I do not consider that it could reasonably be inferred from all the circumstances that, as at 20 April 1999, the bankrupt was or was about to become insolvent in accordance with the abovementioned principles, nor do I consider that it could reasonably be inferred from all the circumstances, at any other relevant time in 1999, that the bankrupt was or was about to become insolvent. I will amplify my reasoning in this regard later. 164 One other matter which I propose to deal with in relation to the claimed avoidance against the Trustee of the transfer by the bankrupt to Regis Towers of rights created in favour of Regis Towers under the Head Agreement made 20 April 1999 between Meriton Apartments Pty Limited and Regis Towers and taken to have occurred in accordance with s 121(9)(b) of the Act, is the question of whether or not, in the event that the transfer was found to be void, the Trustee would be obliged under s 121(5) of the Act to pay to Regis Towers an amount equal to the value of the consideration that Regis Towers gave for the Head Agreement choses in action, being the relevant property that did not previously exist. In my opinion, it is clear that the Trustee would have to pay Regis Towers an amount equal to the value of Regis Towers' promise under clause 3.1 of the Head Agreement to pay Meriton Apartments the sum of $1,750,000 in the manner indicated in clause 3.1 of the Head Agreement. I do not accept the Trustee's submission that the only relevant consideration under s 121(5) of the Act is that moving from Regis Towers which may be payable to the bankrupt. Whilst it is unnecessary, for present purposes, to undertake a valuation of the relevant consideration, there would seem to be compelling reasons for concluding that the value of the relevant consideration was, in the circumstances of this case, $1,750,000. 165 Turning now to the alleged transfer by the bankrupt to Regis Towers of rights created in favour of Regis Towers under the Caretaker-Management Agreement made on or about 17 August 1999 between The Owners --- Strata Plan No 56443 and Regis Towers, taken to have occurred in accordance with s 121(9)(b) of the Act, it may be noted that this is the aspect of the case to which the Trustee under its amended pleading gives the greatest emphasis. However, the Trustee's case fails for substantially similar reasons to those set out above in respect of the Head Agreement choses in action. 166 The Trustee contends that the bankrupt did something that resulted in Regis Towers becoming the owner of the beneficial promises under the Caretaker-Management Agreement, presumably the choses in action arising from the entry by Regis Towers into the Caretaker-Management Agreement ('the Caretaker-Management Agreement choses in action'). 167 Once again, it may be observed that the bankrupt did not relevantly do something which resulted in Regis Towers becoming the owner of the Caretaker-Management Agreement choses in action, being property that did not previously exist. His actions may, just like his getting out of bed on the morning of 17 August 1999, have contributed to Regis Towers becoming the owner of the Caretaker-Management Agreement choses in action, but they did not result in Regis Towers becoming their owner. 168 The relevant something which the bankrupt did in relation to the making of the Caretaker-Management Agreement between the Owners --- Strata Plan No 56443 and Regis Towers was, as the company's sole director at the time, to cause Regis Towers to enter into the Caretaker-Management Agreement and, to witness the affixing of the common seal of Regis Towers to that agreement. 169 However, the other thing which led to Regis Tower becoming the owner of the Caretaker-Management Agreement choses in action was the execution of the Caretaker-Management Agreement by The Owners --- Strata Plan No 56443 on 6 August 1999 and the making of the agreement thereafter. What is clear is that, given Meriton Property Management Pty Limited's standing as the original owner of all of the lots in the Strata Plans comprising the Strata Scheme, Meriton Apartments Pty Limited's standing as Meriton Property Management Pty Limited's 'vendor's representative' and Meriton Apartments Pty Limited's obligations under clause 2.1(c) of the Head Agreement of 20 April 1999 to cause The Owners Corporation to 'Resolve to enter into the Caretaker-Manager Agreement with the Caretaker [Regis Towers] and to execute such agreements', the primary reason for The Owners --- Strata Plan No 56443 entering into the Caretaker-Management Agreement with Regis Towers was to enable Meriton Apartments Pty Limited to fulfil its obligations to Regis Towers under the Head Agreement of 20 April 1999. 170 The bankrupt should not be taken to have transferred the Caretaker-Management Agreement choses in action to Regis Towers within the meaning of s 121(9)(b) of the Act. 171 If, contrary to my opinion, the bankrupt was taken to have transferred the Caretaker-Management Agreement choses in action to Regis Towers then such transfer was not void against the Trustee because there was no property in the hands of the bankrupt , prior to the bankrupt doing the something, taken to be the transfer, which resulted in Regis Towers becoming the owner of the Caretaker-Management Agreement choses in action that did not previously exist, which would probably have become part of the bankrupt's estate or would probably have been available to creditors if the Caretaker-Management Agreement choses in action had not been taken to have been transferred. 172 Apart from the foregoing findings, which are adverse to the Trustee's case in respect of the Caretaker-Management Agreement choses in action, I do not, as indicated above, consider that it could reasonably be inferred from all the circumstances that, as at 17 August 1999, the bankrupt was or was about to become insolvent in accordance with the abovementioned principles. 173 The remaining matter which I propose to deal with in relation to the claimed avoidance against the Trustee of the transfer by the bankrupt to Regis Towers of rights created in favour of Regis Towers under the Caretaker-Management Agreement made on or about 17 August 1999 between The Owners --- Strata Plan No 56443 and Regis Towers and taken to have occurred in accordance with s 121(9)(b) of the Act, is the question of whether or not in the event that the transfer was found to be void, the Trustee would be obliged under s 121(5) of the Act to pay to Regis Towers an amount equal to the value of the consideration that Regis Towers gave for the Caretaker-Management Agreement choses in action , being the relevant property that did not previously exist. In my opinion, it is clear that the Trustee would have to pay Regis Towers an amount equal to the value of Regis Towers' promises to perform its caretaker, cleaning and concierge duties in a conscientious, expeditious and workmanlike manner during the term of the agreement as required by clause 1 of the Caretaker-Management Agreement. Once again, I do not accept the Trustee's submission that the only relevant consideration under s 121(5) of the Act is that moving from Regis Towers which may directly benefit the bankrupt. It is unnecessary, for present purposes, to undertake a valuation of the relevant consideration, but plainly it would be substantial. 174 Turning now to the alleged transfers by the bankrupt to Regis Towers of rights created in favour of Regis Towers under the several agreements for purchase made on or about 20 April 1999 between Meriton Property Management Pty Limited and Regis Towers for the purchase by Regis Towers of Lot 149 in Strata Plan No 56443, Lot 454 in Strata Plan No 58946 (earlier identified as 58586), Lot 488 in the strata plan which later became Strata Plan No 61369, Lot 489 in the strata plan which later became Strata Plan No 61369 and Lot 650 in the strata plan which later became Strata Plan No 61369, taken to have occurred in accordance with s 121(9)(b) of the Act, the Trustee's case fails, once again, for substantially similar reasons to those set out above in respect of the Head Agreement choses in action. 175 The Trustee contends that in the case of each agreement for purchase the bankrupt did something that resulted in Regis Towers becoming the owner of the relevant beneficial promises under such agreements, presumably the choses in action arising from the entry by Regis Towers into such agreements (collectively 'the agreements for purchase choses in action'). 176 It may again be observed that the bankrupt did not in relation to any of the agreements for purchase relevantly do something which resulted in Regis Towers becoming the owner of the agreements for purchase choses in action or any of them, being property that did not previously exist. His actions may, just like his getting out of bed on the morning of 20 April 1999, have contributed to Regis Towers becoming the owner of the agreements for purchase choses in action, but they did not result in Regis Towers becoming their owner. 177 The relevant something which the bankrupt did in relation to the making of each of the agreements for purchase on or about 20 April 1999 between Meriton Property Management Pty Limited and Regis Towers for the purchase of the several lots mentioned was to agree with Kerrie McInnes, as a de facto director of Regis Towers within the meaning of s 9 of the Corporations Act (or with Kerrie McInnes, Craig Stewart and Popi Rose as de facto directors) that Regis Towers should enter into the several agreements for purchase, and, to witness, together with Kerrie McInnes, the affixing of the common seal of Regis Towers (then known as Cesscut Pty Limited) to each of the agreements for purchase. 178 Other things which led to Regis Towers becoming the owner of the several agreements for purchase choses in action were the concurrence of Kerrie McInnes (or of Kerrie McInnes, Craig Stewart and Popi Rose) in the action taken by Regis Towers, the payment by Kerrie McInnes on behalf of Regis Towers of the several deposits due to be paid by Regis Towers to Meriton Property Management Pty Limited (to be released to Meriton Apartments Pty Limited as at the date of each agreement) and the execution of the several agreements by Meriton Property Management Pty Limited. It is clear that neither Regis Towers nor the bankrupt had the financial capacity, independently of the assistance provided by Kerrie McInnes, to enter into agreements with Meriton Property Management Pty Limited on or about 20 April 1999 in the terms of the several agreements for purchase. 179 Whilst there are only contracts in evidence referable to the purchase of Lots 454, 488 and 650, it may be assumed that there were like contracts between Meriton Property Management Pty Limited and Regis Towers referable to the purchase by Regis Towers of Lots 149 and 489. 180 It follows that the bankrupt did not relevantly do something which resulted in Regis Towers becoming the owner of the several agreements for purchase choses in action that did not previously exist. Accordingly, the bankrupt was not taken to have transferred the several agreements for purchase choses in action to Regis Towers within the meaning of s 121(9)(b) of the Act. 181 If, contrary to my opinion, the bankrupt was taken to have transferred the several agreements for purchase choses in action to Regis Towers then such transfers were not void against the Trustee because there was no property in the hands of the bankrupt , prior to the bankrupt doing the several things, taken to be the transfers, which resulted in Regis Towers becoming the owner of the several agreements for purchase choses in action that did not previously exist, which would probably have become part of the bankrupt's estate or would probably have been available to creditors if the several agreements for purchase choses in action had not been taken to have been transferred. 182 Apart from the foregoing findings, which are adverse to the Trustee's case in respect of the several agreements for purchase choses in action, I do not consider, as indicated above, that it could reasonably be inferred from all the circumstances that, as at 20 April 1999 or thereabouts, the bankrupt was or was about to become insolvent in accordance with the abovementioned principles. 183 The remaining matter which I propose to deal with in relation to the claimed avoidance as against the Trustee of the transfer by the bankrupt to Regis Towers of rights created in favour of Regis Towers under the several agreements for purchase made on or about 20 April 1999 between Meriton Property Management Pty Limited and Regis Towers and taken to have occurred in accordance with s 121(9)(b) of the Act, is the question of whether or not in the event that the transfers were found to be void, the Trustee would be obliged under s 121(5) of the Act to pay to Regis Towers amounts equal to the value of the consideration that Regis Towers gave for the several agreements for purchase choses in action, being the relevant property that did not previously exist. In my opinion, it is clear that the Trustee would have to pay to Regis Towers an amount equal to the value of Regis Towers' promises to pay Meriton Property Management Pty Limited the purchase prices due under the several agreements for purchase. I do not accept the Trustee's submission that the only relevant consideration under s 121(5) of the Act is that moving from Regis Towers which may be payable to the bankrupt. It is unnecessary, for present purposes, to undertake a valuation of the relevant consideration under each agreement for purchase, but plainly the amounts would be substantial. 184 It follows from the above that the Trustee's Amended Cross Application filed in Court on 17 October 2006 fails in respect of the prayers for relief in paragraphs 2, 3, 4, 5, 6 and 7 thereof. 186 By virtue of s 121(9)(a) of the Act, a payment of money is within the meaning of 'transfer of property' for the purposes of s 121. There was no such payment. 191 The evidence establishes that on or about 20 April 1999 Kerrie McInnes paid $218,750 to Meriton Apartments Pty Limited as indicated above to meet all the deposit obligations of Regis Towers under the several contracts entered into by Regis Towers on 20 April 1999 with Meriton Property Management Pty Limited and/or Meriton Apartments Pty Limited. There is no suggestion that Regis Towers agreed to allot shares in its capital to Kerrie McInnes for the money so paid nor is there any suggestion that Kerrie McInnes intended to give the money to Regis Towers. 192 The agreement of Ms McInnes to 'put all the money in now' on the basis that the bankrupt would put his half share in later, supports an inference that Ms McInnes agreed to lend the amount so paid to Regis Towers. 193 Whilst there is some evidence that a 'stop payment' was placed or to be placed on Ms McInnes' cheques, it is clear that the cheques were ultimately met. 194 When Ms McInnes and Mr Stewart withdrew from the enterprise on or about 6 May 1999 and the bankrupt proceeded to pay $218,750 to Ms McInnes as indicated above, the effect of the payment was for the bankrupt to take an assignment of Regis Towers' indebtedness to Ms McInnes for a like amount. 195 No claim is made by the Trustee that the payment of $218,750 by the bankrupt to Ms McInnes on or about 6 May 1999 constituted a transfer of property which was void against the Trustee. Even if such a claim had been made, and assuming that Ms McInnes had been made a party to the proceedings, it would, in my opinion, fail. 196 The Court could not conclude that the monies the subject of the payment would probably have become part of the bankrupt's estate or would probably have been available to creditors if the payment had not been made. 197 The bankrupt did not become bankrupt until 21 June 2005. The earliest possible date for the commencement of his bankruptcy under s 115(2) of the Act, would, in the circumstances, have been 21 December 2004. The payment in question was made five and a half years before that date. 198 If the payment to Ms McInnes had not been made, the likelihood is that the monies the subject of the payment would have been used to repay the borrowing made by the bankrupt from Howes & Ors, or otherwise expended. 199 Apart from the above consideration, I could not reasonably infer from all the circumstances that, as at 6 May 1999, the bankrupt was or was about to become insolvent in accordance with the relevant principles referred to above. 200 In addition, if the payment of $218,750 by the bankrupt to Ms McInnes were found to be void against the Trustee, the Trustee would be required, under s 121(5) of the Act, to pay to Ms McInnes an amount equal to the value of the consideration given by her for the payment i.e. the value of the assignment by her to the bankrupt of her right to be repaid the amount of $218,750 lent by her to Regis Towers. Without attempting to value that consideration, it is difficult to contemplate that, as at 6 May 1999 it would have been less than $218,750. 201 This leaves for consideration the payments made by the bankrupt to Meriton Apartments Pty Limited on 6 August 1999 and 2 December 1999. Before addressing the operation of s 121 of the Act in relation to those payments, it is appropriate to expand on the observations made above that it could not reasonably be inferred from all the circumstances that at any relevant time in 1999, the bankrupt was, or was about to become, insolvent. 203 The possibility could always exist that such a person might, when about to become insolvent, enjoy a windfall gain which might have the effect of staving off the fateful day for another five years or so. Having said that, I do not consider that in the circumstances of the present case, one can dismiss as irrelevant the long delay between the bankrupt's alleged insolvency in 1999 and his ultimate bankruptcy in 2005. 204 It is significant, as submitted by Regis Towers, that there is no evidence of any cheques having been drawn by the bankrupt which were dishonoured on presentation. There is no evidence of any claims having been made for unpaid taxation and there is no evidence of any notices having been served on the bankrupt under s 57(2)(b) of the Real Property Act 1900 (NSW). 205 Whilst the bankrupt may, on or about 17 April 1999 have been 'out of money', it must be observed that the reason for him finding himself in such a position was that he had just 'acquired all these other units', a reference, no doubt, to the acquisition by himself or by himself and his then wife, Popi Rose, of Lots 417, 582, 587, 567, 471, 564, 505, 561, 565, 501 and 459 in the various strata plans forming part of the strata scheme. 206 The purchases by the bankrupt or by the bankrupt and his wife all proceeded to settlement between July and December 1999 without default. The purchase prices paid by them totalled, as indicated above, $4,603,500. 207 The bankrupt opened his Cash Management Call Account at the Liverpool and Castlereagh Streets branch of Commonwealth Bank of Australia on 13 July 1999 with a deposit of $491,232.92. That account had a credit balance of $45,765.55 as at 6 September 1999, a credit balance of $422,287.27 as at 16 November 1999, a credit balance of $58,374.79 as at 7 December 1999 and a credit balance of $18,553.29 as at 24 December 1999. 208 In support of his case for a finding of insolvency or approaching insolvency in 1999 the Trustee relies upon a balance sheet for the bankrupt prepared by Mr Harris in 2002. This balance sheet showed total assets as at 30 June 1999 of $2,364,920.85 and total liabilities of $2,830,505.30, indicating a deficiency of assets over liabilities of $465,584.45. The comparable figures as at 30 June 2000 were total assets of $7,294,651.23 and total liabilities of $7,749,466.70, indicating a deficiency of assets over liabilities of $454,815.47. However, the balance sheets appear to have been prepared on an historical cost basis with the consequence that none of the unrealised capital gains, reflected in the post acquisition valuations of numerous lots in the strata scheme, were taken into account. 209 The Trustee also relied upon an understatement in the balance sheet of the bankrupt's indebtedness as at 30 June 1999 to Howes & Ors, which should have been recorded at $327,000. In the balance sheet it was shown as an indebtedness to Nugent Wallam (sic) & Carter in the sum of $103,731.00. Nugent Wallman & Carter were the solicitors for Howes & Ors. The Trustee's observation in respect of the understatement of the liability seems to be correct, but that does not relevantly establish insolvency on the part of the bankrupt. 210 When Mr Harris prepared the balance sheets for the bankrupt, he also prepared two detailed profit and loss statements for him. For the year ended 30 June 1999, the year in which the bankrupt effectively gave up practising as a solicitor and established himself as a real estate investor and property manager, one profit and loss statement showed a loss of $68,301.50. The other profit and loss statement showed a loss of $83,041.18 in respect of the bankrupt's property which he was developing at number 1, 722 Darling Street, Rozelle. The comparable profit and loss statements for the year ended 30 June 2000 showed a profit of $269,567.00 and a loss of $93,650.70. 211 The bankrupt's 1999 tax return showed a net loss of $151,171 and his 2000 return showed a net profit of $175,917. Whilst there has been some conjecture as to whether the copy tax returns, to which I have referred, reflect the income of the bankrupt as returned, I am satisfied that the returns were in fact copies of those that were lodged. 212 Other matters upon which the Trustee relied included defaults by the bankrupt in meeting certain demands upon him. 213 On 13 May 1999 Leichhardt Municipal Council instituted proceedings against the bankrupt in the Sutherland Local Court for non payment of rates and charges due and owing as at 18 March 1999 in respect of the property known as 1/724 Darling Street, Rozelle, in the sum of $22,605.15 plus costs. On the same day another action was commenced by the Council against the bankrupt for non payment of a 's 94 Open Space Contribution in respect of Development Application number 436/95' in the sum of $20,888 plus costs. There is no evidence that either of these matters proceeded to judgment. 214 There is evidence that a series of letters were written by Suncorp-Metway Limited to the bankrupt in April, June, July and September 1999 and January 2000 drawing his attention to arrears in respect of minimum monthly payments due under a loan from that company to the bankrupt. The amounts claimed as due or overdue in seven separate letters varied from a high of $2,767 to a low of $607.95. 215 On 5 April 2005 G B Fernie & Co Solicitors of 301 Castlereagh Street, Sydney, a building adjacent to the Castlereagh Street tower, submitted a memorandum of fees to Emanuel (sic) Triantafilis, the bankrupt's father, for $500 inclusive of GST. That memorandum of fees recorded that it had already been paid. The description of the work to which the memorandum related was 'To our professional fees of obtaining instructions from you, drafting and filing Statement of Claim, Confession and entering Judgment'. Mr Triantafilis's address was shown as 8/13 Harriette Street, Neutral Bay. At the time Mr Triantafilis was living in Sydney. 216 The bankrupt changed his name from Triantafilis, which apparently means rose in Greek, to Rose many years ago. G B Fernie & Co in fact drafted a Statement of Liquidated Claim for proceedings to be instituted by Mr Triantafilis against his son, the bankrupt, claiming $750,000 although in the Statement of Claim this was recorded as a claim for $500,000 plus interest up to judgment and costs. The cause of action pleaded was an alleged failure by the bankrupt to account to his father for the proceeds of sale of a property known as 5 Quirk Street, Rozelle, said to have been sold by the bankrupt, exercising a power of attorney on behalf of his father, in September 1994, and for which he failed to account. At the same time as G B Fernie & Co drafted the Statement of Claim they also drafted a Statement of Confession for the bankrupt to sign and verify on 8 April 2005, i.e. three days after the date of G B Fernie & Co's memorandum of fees, together with a draft affidavit for Mr Triantafilis to swear on 8 April 2005 in support of an application for a garnishee order against the bankrupt and also a draft garnishee order in respect of monies held by the bankrupt in an account with Laiki Bank Australia Limited, number 309682. 217 I am not prepared to accept that these documents demonstrate any genuine indebtedness of the bankrupt to his father in 1999 or that, if there was an indebtedness, any claim had been made for payment of the monies in question. There is no evidence that the monies were due in 1999. 219 I am not satisfied that the monies the subject of the payment on or about 6 August 1999 would probably have become part of the bankrupt's estate or would probably have been available to creditors if the payment had not been made. 220 Furthermore I am not satisfied that the monies the subject of the payment made on or about 2 December 1999 would probably have become part of the bankrupt's estate or would probably have been available to creditors if the payment had not been made. 221 If the payment of $257,814.51 had not been made on or about 6 August 1999, the likelihood is that the monies the subject of the payment would have been used to repay part of the borrowing made by the bankrupt and his brother on the security of the Darling Street, Rozelle property or otherwise expended. Similarly, the likelihood is that the monies the subject of the payment of $334,439.88 on or about 2 December 1999 would have been used to repay indebtedness or otherwise expended long before December 2004. 222 Apart from the above consideration, I could not reasonably infer from all the circumstances that as at 6 August 1999 or 2 December 1999, the bankrupt was or was about to become insolvent in accordance with the principles referred to above. 223 There is the further question in relation to the payments made to Meriton Apartments Pty Limited on or about 6 August 1999 and on or about 2 December 1999 as to what, if any, amounts the Trustee would have to pay, representing the value of the consideration that was given for the payments, were they to be found to be void against the Trustee, in accordance with s 121(5) of the Act. 224 If the payment of $257,814.51 by the bankrupt to Meriton Apartments Pty Limited was found to be void against the Trustee, the Trustee would be required under s 121(5) of the Act to pay to Meriton Apartments Pty Limited an amount equal to the value of the consideration given by Meriton Apartments Pty Limited for such payment. The relevant consideration would be an implied promise by Meriton Apartments Pty Limited to release Regis Towers from its obligation under the Head Agreement of 20 April 1999 to itself pay such an amount to Meriton Apartments Pty Limited. It is unnecessary to undertake a valuation of such consideration, but prima facie it would be unlikely that its value would be less than $275,814.51. 225 As for the payment of $334,439.88 by the bankrupt to Meriton Apartments Pty Limited, $75,114.15 represented monies paid to Meriton Apartments Pty Limited as Meriton Property Management Pty Limited's 'vendor's representative' in respect of the settlement of the purchases by Regis Towers of Lots 488 and 489 in Strata Plan No 61369. The balance of $259,325.73 included an amount paid to Meriton Apartments Pty Limited as Meriton Property Management Pty Limited's 'vendor's representative' in respect of the settlement of the purchase by Regis Towers of Lot 650 in Strata Plan No 61369 and an amount due to Meriton Apartments Pty Limited to fulfil the balance of Regis Towers' obligations to Meriton Apartments Pty Limited under the Head Agreement made 20 April 1999 between Meriton Apartments Pty Limited and Regis Towers. 226 If the payment of those amounts or any of them were found to be void against the Trustee, the Trustee would be required under s 121(5) of the Act to pay to Meriton Apartments Pty Limited and/or Meriton Property Management Pty Limited amounts equal to the value of the consideration given by them for such payments. The relevant consideration would be an implied promise by Meriton Apartments Pty Limited to release Regis Towers from its obligation under the Head Agreement of 20 April 1999 to itself pay the relevant amount to Meriton Apartments Pty Limited and an implied promise by Meriton Property Management Pty Limited to release Regis Towers from its obligation under the three agreements for purchase of Lots 488, 489 and 650 to itself pay the relevant amounts to Meriton Apartments Pty Limited as Meriton Property Management Pty Limited's 'vendor's representative'. It is unnecessary to undertake a valuation of such consideration, but prima facie the total would be unlikely to have a value less than $334,439.88. 227 In the foregoing circumstances, it follows that the Trustee's Second Further Amended Cross Application filed in Court on 17 October 2006 fails in respect of prayers for relief 8 and 9. Accordingly, the Second Further Amended Cross Application in proceeding No NSD 641 of 2006 should be dismissed. 229 The decision of the Trustee on Regis Towers' proof of debt was recorded in his notice of rejection dated 23 June 2006. In the circumstances, it seems to me that the 21 day period prescribed in s 104(3) for Regis Towers' application for review to be brought expired on Friday 14 July 2006. As indicated above, the application for review was not filed until 29 August 2006 but, in the meantime, an application had been filed in the form of a 'Second Cross Application' in proceeding number NSD 641 of 2006 on Monday 17 July 2006, which, following the institution of NSD 1657 of 2006, Regis Towers is no longer pressing, in which similar relief was sought. 230 In these circumstances, the failure to file the application for review within the prescribed time should be viewed de minimis. No relevant prejudice having been caused, the time within which the application for review may be brought should be extended nunc pro tunc to 29 August 2006 so that the application may be taken to have been brought within time. 231 As to the application for review itself, the administrator conceded 'that there weren't proper books and records kept in relation to the company (referring to Regis Towers)'. Indeed, he reported this deficiency to both the Australian Securities and Investments Commission and also Regis Towers' creditors. In the circumstances, the evidentiary value of Regis Towers' books is significantly eroded (cf s 1305 of the Corporations Act ). 232 Mr Harris' evidence in respect of the making of the journal entries affecting the bankrupt's directors' loan account as at 30 June 2000 does not allow a finding to be made that those entries were reliable or, for that matter, authorised. I accept the bankrupt's evidence that he probably only saw the directors' loan account record, including the debit entry of $1,198,969.72, recently. He entertained the possibility that he may have seen 'some other closely resembling form on another occasion', but I am unable to make a finding that he did see any earlier version. 233 The administrator has worked assiduously to demonstrate that one can properly get to the 30 June 2000 starting point of a debit balance in the bankrupt's loan account with Regis Towers of $7,875.46 by means other than the ledger account figures thrown up by Mr Harris when he prepared accounts for Regis Towers for the year ended 30 June 2000 in 2002. The problem is that, to get to the $7,875.46 figure, as he sought to do in his final submissions of 18 October 2006, the administrator had to invite the Court to find that the monies borrowed by the bankrupt from Howes & Ors on 6 May 1999 on the security of Mr and Mrs Pappas' third party mortgage, had been received by the bankrupt from Regis Towers and further that the $345,000 lent by Mr and Mrs Pappas to the bankrupt on or about 7 May 2001 had been received by the bankrupt from Regis Towers on or before 30 June 2000. 234 There were other flaws in the Administrator's attempted reconstruction, such as reliance on 'Adjustments'. 235 One other aspect of the matter that needs to be considered, and upon which the Trustee relies, is the lack of any allowance for directors' fees to be paid by Regis Towers to the bankrupt in respect of the period 1 July 2002 --- 31 December 2004, even though significant directors' fees had been provided for, and also included by the bankrupt in his tax returns, for earlier years. The directors' loan account for the year ended 30 June 2000 showed $269,000 as being payable to the bankrupt for 'Director Fee'. In his tax return for that financial year, the bankrupt in fact disclosed the receipt of $271,000 as 'Directors bonus --- Regis Towers'. 236 The Trustee's submission is that, taking all these matters into account, it cannot be said that the Trustee wrongfully rejected Regis Towers' proof of debt. I agree. I certify that the preceding two hundred and thirty-seven (237) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | whether transfers of property should be taken to have occurred within the meaning of s 121(9)(b) of the bankruptcy act application of s 121 of the act in relation to transfers of property taken to have been made under s 121(9)(b) application of s 121 of the act to payments of money application for review of decision to reject wholly a proof of debt meaning of 'results' in s 121(9)(b) of the bankruptcy act bankruptcy bankruptcy word and phrases |
On the hearing of the appeal the appellant made no oral submissions in support of his grounds of appeal, save to say that he wished to remain in Australia and that he was a practitioner of Falun Gong, and for that reason cannot go back to the People's Republic of China. 2 The appellant claims to be a citizen of the People's Republic of China. He entered Australia on 20 June 2004 and lodged an application for a Protection (Class XA) Visa on 19 July 2004. On 22 July 2004 a delegate of the Minister refused to grant the applicant a Protection Visa. Notification of that decision was sent under cover of a letter dated 22 July 2004. On 25 August 2004, the appellant applied to the Tribunal for review of the decision of the delegate. The Tribunal handed down a decision affirming the decision of the delegate on 6 January 2005. On 6 February 2006, the appellant filed an application for judicial review in the Federal Magistrates Court. On 13 May 2006 Barnes FM dismissed the application for judicial review of the decision of the Tribunal. 3 The appellant appeals to this Court by Notice of Appeal filed on 3 July 2006. The Tribunal failed to carry out its statutory duty. The Tribunal based its findings on the information, or lack of information, contained in the applicant's application for a visa and was required, by s 424A [of the Migration Act 1958 (Cth ) ['the Act']], to give particulars of the information, explain why the information is relevant and provide the applicant with an opportunity to comment upon it. The Tribunal's failure to so act was a jurisdictional error. The Tribunal referred to the scant details of the applicant's claims and gave examples of such inadequacy. Rather the decision turned on the inadequacy of the materials provided. In such circumstances, as in SZEZI v Minister for Immigration and Multicultural and Indigenous Affairs [ 2005 ] FCA 1195 ['SZEZI'] , it cannot be said that there is information which forms the reason or part of the reason for affirming a decision under review subject to the operation of the obligation in section 424A(1). The Tribunal, having read all the material and having evaluated its content and weight, was unable to reach a specified mental state. It was not satisfied that the appellant had a well-founded fear because of subjectively perceived inadequacies in the information. The reason for the decision was simply (and no more than) the evaluative conclusion founded upon the perceived inadequacy of the information, in the sense of an absence of detail and intrinsic explanation which had been invited. It would be an inadequate and misleading statement to say that the information was the reason or part of the reason for the decision. It was the lack of the requested further assistance and explanation that was the reason. The material before the Court does not disclose any reviewable error in the decision of Barnes FM. 8 The appeal of the appellant is dismissed. 9 There is no reason in this case why I should not make the usual order. The appellant is to pay the first respondent's costs of and incidental to the appeal, to be taxed if not agreed. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. | protection visa whether reviewable error migration |
The appellant ("Mrs Roper") applied to the respondent, the Repatriation Commission ("the Commission"), for a pension pursuant to the Veterans' Entitlements Act 1986 (Cth) ("the VE Act "). Mrs Roper's application was unsuccessful. Mrs Roper appealed unsuccessfully to the Veterans' Review Board. She then appealed to the Administrative Appeals Tribunal ("the Tribunal"). A hearing was held to determine the preliminary issue of whether Mr Roper had rendered "operational service" within the meaning of the VE Act . The Tribunal found that Mr Roper had not rendered "operational service". Mrs Roper purports to appeal from the Tribunal's decision to this Court pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act "). 2 The Commission objected to the competency of the appeal on the ground that Mrs Roper had failed to identify any question of law in her notice of appeal. Mrs Roper responded by seeking leave to file an amended notice of appeal which, it was contended, had overcome any deficiency in the original notice. Leave was granted. Although the Commission did not oppose the granting of leave it maintained that, in its amended form, the notice of appeal still failed to identify any question of law. In the alternative the Commission argued that the Tribunal's decision was not, in any event, affected by legal error. On 4 January 2002 the Commission determined that the death of Mr Roper was not war-caused. The Veterans' Review Board affirmed the Commission's decision on 26 September 2005. On 3 November 2005 Mrs Roper applied to the Tribunal for a merits review of the Commission's decision. 4 The Tribunal held a hearing to determine the preliminary issue of whether the veteran had rendered "operational service" within the meaning of s 6A(1) the VE Act . If Mr Roper had rendered operational service, Mrs Roper's application for a pension would be determined according to the more favourable standard of proof specified in ss 120(1) and (3), rather than that which would apply if Mr Roper had not rendered operational service (see s 120(4)). The Tribunal decided that Mr Roper did not render operational service and, therefore, the issues before it must be decided according to the standard of proof specified in s 120(4) of the VE Act . It is this decision that Mrs Roper now seeks to challenge. He served with the Royal Australian Air Force from 21 April 1944 until 24 October 1945. His RAAF postings were all within Australia. On 11 April 1945 and 23 April 1945, as part of his training with the No. 7 Operational Training Unit at Tocumwal, Mr Roper was an air gunner on a B-24 Liberator (a long range American bomber) which flew to or towards Middleton Reef. These two flights took Mr Roper outside the Australian Territorial Zone. 6 The Tribunal had to determine whether, in flying to or towards Middleton Reef, Mr Roper had rendered operational service. A claim for a pension is made pursuant to s 14. Under s 19 , the Commission has the primary responsibility for determining a claim. 8 Mr Roper served in World War II as a member of the Defence Force. As a result only paragraphs (a), (c) and (d) of Item 1 of s 6A(1) were of potential relevance. 10 The expression "continuous full-time service" is defined in s 5C of the Act. As Mr Roper was a member of the RAAF, it means "service in the Air Force of the Commonwealth of the kind known as continuous full-time air force service. Mr Roper flew beyond Australia's shoreline on eight occasions. Two of his flights took him beyond Australia's territorial limits however they are defined. They did so on 11 and 23 April 1945 with the flights taking 12 hours and 9 hours 35 minutes respectively. In light of both the length of the Liberator course Mr Roper was attending in the period from 20 February 1945 and 14 May 1945 and Mr Stephen Roper's evidence that his father was on "an active patrol albeit part of a broad familiarisation process with the new aircraft prior to overseas posting", I am satisfied that the flights were taken as part of training. Also on the basis of Mr Stephen Roper's evidence of what his father had told him, I find that the training was in preparation for his being posted overseas. That posting did not eventuate before Mr Roper was discharged from the RAAF. The aircrew were expected to, and no doubt did, undertake surveillance in relation to, for example, unidentified shipping. Certainly, activities such as surveillance might well have had relevance to operations beyond their relevance to the aircrew's training. That they might well have had a dual purpose, does not detract from the fact that the flights were for the purpose of training aircrew and familiarising them with the Liberator. " (Emphasis in original. ) (Footnote omitted. It accepted that, during these flights, bombs were dropped into the sea and the aircraft's machine gun was fired. The Tribunal noted that the flights on 11 and 23 April 1945 were the only occasions on which Mr Roper's duties took him outside Australia. Having regard to all of these matters, I am satisfied that the essential character of Mr Roper's service during the periods he was outside Australia was one of training and familiarisation with the Liberator. It was not one of his being on operational service of a kind referred to in Item 1(a) or (b). That is to say, their essential character was not that of continuous full-time service outside Australia during World War II or service in the relevant geographical areas in the Northern Territory and at the times specified in Item 1(b). Therefore, Mr Roper did not have operational service and Mrs Roper must establish her claim to the reasonable satisfaction of the Tribunal rather than the more liberal reasonable hypothesis test. No reference is made to paragraphs (c) or (d) which the Tribunal had considered to be of potential relevance. It does not, however, appear that any reliance was placed on these paragraphs by Mrs Roper. There were five matching grounds of appeal. The Commission's objection to the competency of the appeal makes it necessary to set out the questions and grounds in full. They should be read as "23 April 1945", the date of Mr Roper's second flight to or towards Middleton Reef. Order 53 r 3(2)(b) of the Federal Court Rules requires the notice of appeal to state "the question or questions of law to be raised on the appeal. If the notice of appeal fails to disclose a question of law the necessary subject matter of the appeal is lacking. The Court has repeatedly emphasised the need for pure questions of law to be identified and for them to appear in the notice of appeal in order for the Court to be able to entertain an appeal: see, for example, Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515 at 524; Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 ; (2003) 76 ALD 321 at 324-325; Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244 ; (2003) 133 FCR 290 at 300-302; Comcare v Etheridge [2006] FCAFC 27 ; (2006) 149 FCR 522 at 526-527; Commissioner of Taxation v Dixon [2006] FCA 1250 ; (2006) 155 FCR 101 at 104-106; Hussain v Minister for Foreign Affairs [2008] FCAFC 128 ; (2008) 248 ALR 456 at 465-468. It is in the specification of the grounds relied upon in support of the orders sought that, in our view, one should expect to find the links between the question of law, the circumstances of the particular case and the orders sought on the appeal. " (Emphasis added. 21 Each of the questions is fraught with ambiguity. Each asks, in substance, whether, on the facts found by the Tribunal, it was open to it to make the finding of fact that Mr Roper did not render operational service during World War II. The ambiguity arises, particularly in relation to question 2.4, because the questions may be understood as asking either whether there was any evidence accepted by the Tribunal which supported its finding or whether the evidence or the weight of the evidence before the Tribunal supported its finding: cf Lambroglou at 523. A question of the latter kind is not a question of law. There would not, however, have been grounds which linked these questions to the circumstances of the case and the orders sought by Mrs Roper. Grounds 4.1 and 4.3 appear to allege that the Tribunal misconstrued Item 1(a) in s 6A of the VE Act rather than suggest that there was no evidence to support the findings. 22 In any event, had the questions been framed in the manner suggested the answer to both of them must have been: no. The Tribunal's task, when called on to apply s 6A(1) , necessarily involves questions of degree and requires the making of value judgments. In Repatriation Commission v Kohn (1989) 87 ALR 511 , Hill J provided guidance on the exercise of the Tribunal's power under s 6A. When attention is focused on the rendering of continuous full-time service outside Australia, it is not correct to look in isolation at the period of time in which the member of the defence force is outside the three mile limit to the exclusion of the periods of time immediately before and immediately after that period. Nor is the purpose for which the member of the forces comes to be outside Australia irrelevant. Rather, it may be necessary to consider a wider period of time. How wide a band of time that is to be considered will depend upon the facts of each case. One must then ask, looking at the relevant period overall, whether it is correct to categorise the member's service in that time as being continuous full-time service inside Australia or continuous full-time service outside Australia. If the essential character of the service considered overall can be seen to be continuous full-time service outside Australia, then for the purpose of the legislation it is to be treated as operational service. If, on the other hand, looked at overall, notwithstanding that at a discrete moment of time the service of the member was outside Australia, the service is properly as a matter of ordinary English language to be seen as having an essential character of continuous full-time service within Australia, then for the purposes of the legislation it will not be treated as "operational service". It is obvious that there can be questions of degree involved. Service on a naval ship, where the ship was sailing to some place in the middle of the ocean to refuel planes there and then return during the war, would clearly enough be characterised as service outside Australia. The purpose of the voyage will in such a case give the service its essential character. So too, an airman piloting a plane on a mission from Australia and back, not landing in the meantime, will likewise be seen to be engaged in operational service for the purposes of the legislation because it will then, having regard to the purpose of the mission and as a matter of fact, be proper to look at this mission in isolation and characterise the airman's service by reference to it. However, where the purpose of the journey outside Australia itself, being but brief, is merely to facilitate the performance of service which itself is continuous full-time service within Australia, the service outside Australia will not give colour to the service nor will it permit a characterisation of the service as being continuous full-time service outside Australia. Kohn has been adopted and applied by the Court in later cases: see Proctor at [16] and [24] and Roscoe at [35]. 23 Mr Roper had ventured outside Australia on only two occasions during his military service. There was evidence before the Tribunal, including evidence from Mr Roper's son, that the two flights formed part of the training regime for aircrew. The training was designed to familiarise the crew (including Mr Roper) with new aircraft prior to them being posted overseas. The possibility of any enemy contact during the flights was low. The fact that surveillance work was undertaken during the flights did not detract from the essential training purpose which they served. It was open to the Tribunal to determine that the relevant service of Mr Roper fell into the second category of case identified by Hill J, namely, that in which when "looked at overall, notwithstanding that at a discrete moment of time the service of the member was outside Australia, the service is properly as a matter of ordinary English language to be seen as having an essential character of continuous full-time service within Australia ...". The training base was in Australia. The training flights left from and returned to the Australian base. The duration of those parts of the flights which took place outside Australian territorial limits were relatively short. In these circumstances it cannot, in my opinion, be said that there was no evidence to support the two impugned findings. Nor can the submission, made by counsel for Mrs Roper, that the only conclusion open on the facts found was that Mr Roper performed operational service outside Australia, be accepted. Paragraph 2.13 appears to attribute to the Tribunal a finding which it did not make. The Tribunal did not reason that, because the two flights were for the purposes of training and familiarisation with the new aircraft, this precluded Mr Roper's service being operational service. Paragraph 2.14 appears designed to raise a construction point. It seems intended to raise the question of whether, in deciding whether or not Mr Roper had rendered continuous full time service outside Australia, the Tribunal was entitled to pose and answer the subsidiary question of whether the service was for the purpose of training and familiarisation with the new aircraft. The Tribunal did not ask this question. It asked whether "the essential character of Mr Roper's service during the periods he was outside Australia was one of training and familiarisation with the Liberator. " Neither paragraph propounds a pure question of law. 25 These questions appear to be linked to grounds 4.5 --- 4.7. Mrs Roper submits that the question for the Tribunal was whether Mr Roper rendered service outside Australia. By asking itself whether the essential character of the service was "one of training and familiarisation with the Liberator" the Tribunal was, so it was said, diverted from giving attention to this question. Mrs Roper complains that the Tribunal treated the task of characterisation as being at large and that the Tribunal drew a dichotomy between service and training which was inconsistent with the terms of s 6A(1) of the VE Act . 26 The question for the Tribunal was not whether Mr Roper rendered service outside Australia, but whether Mr Roper rendered continuous full-time service outside Australia within the meaning of s 6A Item 1(a) of the VE Act . The distinction is important. Although there is no minimum period specified in s 6A Item 1(a), as Mrs Roper properly concedes, not all service outside Australia will constitute continuous full-time service outside Australia within the meaning of the VE Act . Ground 4.7, however, appears to suggest that the Tribunal should not have paid any regard to the length of time Mr Roper spent outside Australia. 27 The Tribunal directed itself consistently with Hill J's judgment in Kohn. It was required to characterise Mr Roper's flights to (or towards) Middleton Reef. The amount of time Mr Roper spent outside Australia during these flights was a matter to be considered in forming this judgment. This was a fact finding exercise. It is clear from the principles identified by the Tribunal (see above at [11]) that it correctly understood the task it was required to perform. It did not treat the time spent outside Australia as a relevant principle. Rather it identified this as a matter which, in an appropriate case, would assist in determining the essential character of a veteran's service. The Tribunal's reasoning at paragraphs [44] to [47] demonstrates that it considered the evidence before it in light of the principles which it had distilled from decisions of this Court. 28 For the reasons explained above at [23], it was open to the Tribunal to find that the flights were undertaken for training purposes and that the essential character of Mr Roper's relevant service, considered overall, was not continuous full-time service outside Australia. In particular, it is not clear what is comprehended by the phrase "the correct application of s 6A Item 1(a) ...". If paragraph 2.15 is intended to raise the question of whether, on the facts found, Mr Roper's two flights outside Australia constituted operational service within the meaning of s 6A , a pure question of law could probably be framed. It is another way of raising the issue to which question 2.1 seems to be directed. 30 Mrs Roper submits that the Tribunal incorrectly applied s 6A Item 1(a) to the facts. She contends that the questions of whether facts fully found fall within the provisions of an enactment properly construed is a question of law: see Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36 ; (1996) 186 CLR 389. In Agfa , the High Court set out the five general propositions identified by the Full Court of this Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 322 ; (1993) 43 FCR 280 at 287, the fifth of which was: "The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law". As noted by the High Court, the Full Court had qualified this proposition: "when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or not is one of fact": see Agfa at 395. For the reasons given earlier the facts found by the Tribunal did not necessarily render Mr Roper's service, in the course of the two flights, continuous full-time service outside Australia. There is, therefore, no question of law raised by paragraph 2.15, even if it is broadly construed. 32 For these reasons I do not consider that a question of law has been identified for the purposes of s 44 of the AAT Act . Even if the necessary foundation for the Court's jurisdiction had been established the appeal would, for the reasons given above, have failed. It is brought against what amounts to a preliminary decision on a matter of evidence. The Tribunal has yet to determine Mrs Roper's application to it. There are strong policy reasons for avoiding fragmentation of and delay in proceedings before the Tribunal. 34 In Director-General of Social Services v Chaney (1980) 31 ALR 571 Deane J, with whom Fisher J agreed, held (at 593) that, subject to some immaterial exceptions, "an appeal under s 44(1) of the [AAT] Act lies only from a decision of the Tribunal which constitutes the effective decision or determination of the application for review". His Honour held that, in the normal case, "such a decision will be the final decision formulated in accordance with the provisions of s 43 of the Act. " In WAKN v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1245 ; (2004) 40 AAR 223 at 232 French J held that "[o]rdinarily it would not seem that any s 44 appeal would lie against a ruling on a preliminary question unless it finally disposed of the application. The Tribunal has yet to determine the ultimate question raised on Mrs Roper's application, namely, whether or not she is entitled to a pension, under the VE Act , by reason of her husband's service in the Defence Force during World War II. That question may be resolved favourably to her. The Tribunal's decision on the standard of proof is not in any sense dispositive of the application. If Mrs Roper succeeds in her application to the Tribunal the preliminary decisions which she presently seeks to challenge will have had no adverse bearing on the outcome of her case. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey. | pension death of veteran operational service two flights outside the australian territorial zone whether full-time continuous service outside australia essential character of veteran's service veterans' entitlements |
This is an application for leave to appeal from orders of Federal Magistrate Lloyd-Jones made on 11 November 2005. Those orders were made in the context of his Honour's conclusion that a certain application filed on 30 August 2005 related to a privative clause decision, and moreover had not been filed within 28 days of the applicants being notified of that decision as required by s 477(1A) of the Migration Act 1958 (Cth). By those orders, the Minister's objection to competency was upheld, the applicant's substantive proceedings were dismissed, and the applicant was ordered to pay the Minister's costs and disbursements of and incidental to the application. 2. His Honour's reasons recorded circumstances attending or relating to the application for a protection visa originally made on 10 October 2001. That application was rejected by a delegate of the Minister on 8 January 2002, and the delegate's decision was in turn affirmed by the Refugee Review Tribunal on 1 July 2003. 3. In support of the present application, the applicant filed written submissions dated 2 March 2006, which made extensive criticisms of the original decision of the Minister's delegate and thereafter of the Tribunal, being submissions which purported to expose a lack of procedural fairness and natural justice. An affidavit of the applicant sworn on 28 November 2005 was additionally provided which did not however identify or particularise any error of law. 5. As submitted on behalf of the Minister, the applicant now seeks to raise matters concerning his 'discontent with the Tribunal's decision'. In particular, the applicant made no submission explanatory as to how the Federal Magistrate could have justifiably departed from the decision of a superior court on the question as to whether the decision of the Magistrate constituted a privative clause decision. Once a finding to that effect was made, as was inevitable, the disqualifying time limit under s 477(1A) necessarily applied, and the outcome before the Federal Magistrate's Court was inevitable. 6. Those submissions of the Minister were soundly conceived and were not adequately addressed by the applicant. Inevitably his present application necessarily attracted dismissal, accompanied by an order as to costs in the sum of $800.00. The accompanying application to join the tribunal to the proceedings must suffer a similar fate. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti. | no unusual features migration |
Skiwing Pty Limited v Trust Company of Australia Ltd (No 2) [2003] NSWADT 243 ; Skiwing Pty Limited v Trust Co of Australia Ltd (No 3) [2004] NSWADT 94 ; Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Limited (No 2) (RLD) [2005] NSWADTAP 78 ; Trust Company of Australia Ltd (t/as Stockland Property Management) v Skiwing Pty Limited (t/as Café Tiffany's) [2006] NSWCA 185 , (2006) 66 NSWLR 77 ; Skiwing Pty Limited v Trust Company of Australia Ltd (t/as Stockland Property Management) [2006] NSWCA 276 ; Trust Company of Australia Ltd v Skiwing Pty Limited [2006] NSWCA 387 , (2006) 68 NSWLR 366 ; Skiwing Pty Limited v Trust Company of Australia [2007] HCA trans 488; Skiwing Pty Limited v Trust Company of Australia Limited [2008] HCASL 229). Skiwing persuaded the Appeal Panel of the ADT that the ADT had jurisdiction to hear a claim under s 52 of the Trade Practices Act 1974 (Cth) ("the TP Act"). The New South Wales Court of Appeal reversed that decision on 13 July 2006. After a further period of time proceedings were commenced in this Court In the proceedings in this Court, which were commenced on 27 March 2008 by application supported by a statement of claim, Skiwing has again alleged that Stockland breached s 52 of the TP Act. The lease was executed by Skiwing on 20 December 1999 and Stockland on 28 March 2000. It followed an earlier lease of seven years from 1993. The lease related to premises in the "Stockland Imperial Arcade" ("the arcade") between Castlereagh and Pitt Streets in Sydney. Skiwing asserted in its statement of claim that it incurred loss from reliance on three types of representations. The first was to the effect that Stockland would consent to the erection of a balcony adjoining the Pitt Street frontage of the shop leased by Skiwing. It was alleged that representations to that effect were made in late 1998, before the lease was executed, and again in January 2001, after it came into effect. According to the statement of claim, renovations of the arcade were carried out by Stockland between about April 1999 and August 2000. The second group of asserted representations was to the effect that Stockland would undertake certain steps after the renovations which would enhance the attractiveness of the arcade. Those representations were allegedly made, before the lease was executed, in April, September and December 1999. The third group of asserted representations was to the effect that a second major renovation would be carried out which would require Skiwing to relocate within the arcade. Those representations, it was said, should be implied from Stockland's conduct in serving three relocation notices on 23 October 2001, 30 November 2001 and 1 March 2002. I shall refer to the three groups of representations as the balcony representations, the first renovation representations and the second renovation representations respectively. It may be seen that they were all said to have been made before 27 March 2002. Skiwing alleged in its statement of claim that it incurred direct costs arising from the balcony representations and suffered other loss and damage arising from each of the balcony representations and the first and second renovation representations. It was not pleaded that loss and damage did not occur until after 27 March 2002. On the contrary, in particulars provided in support of the statement of claim it was claimed that loss and damage arose from reliance upon each group of representations before 27 March 2002. Stockland claims that Skiwing's alleged causes of action were complete, if they exist at all, at the latest when non-negligible damage was first suffered. Skiwing says its causes of action were not complete until it was clear the representations would not be fulfilled because it was only then that the representations were shown to be misleading. In its statement of claim Skiwing alleged, in effect, that the balcony and second renovation representations were not effectively dispelled until 4 April 2002 and 12 April 2002 respectively by direct advice to that effect. In the case of the first renovation representations it was pleaded that failure to fulfil the representations was demonstrated by conduct between January 2001 and late 2002. That the proceeding be dismissed pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). Judgment for the respondent in relation to the whole of the proceeding. The applicant pay the respondent's costs of the motion and the proceeding. Proposed order 3 would require adjustment. Apart from any other consideration it is most unlikely that an order would be made to immediately dismiss a proceeding for failure to provide security for costs. A stay of proceedings would be more likely. Apart from the matters raised for consideration by the notice of motion filed on 6 August 2008 counsel for Skiwing foreshadowed, at a directions hearing on 8 August 2008, an application by Skiwing to join its director and principal, Mr Stojanoski, as a second applicant with his consent. That application has now been made and leave has also been sought to amend the statement of claim to add further allegations. The matters to be added allege that Mr Stojanoski relied personally on each of the representations to which I earlier referred and suffered loss because he reduced the wages which he drew from Skiwing in the financial year 2000-2001. The joinder of Mr Stojanoski was opposed. The proposed amendments were also opposed. Stockland contended that "the proposed amendment is for an entirely new cause of action by a new applicant" outside the limitation period. In the present case Skiwing's causes of action depend upon the satisfaction of two fundamental elements. First it must establish conduct in breach of s 52 of the TP Act. Secondly, it must establish loss or damage suffered as a consequence of the contravention of s 52. Normally, the time at which a representation (or conduct which is said to amount to a representation) is to be assessed for its character (i.e. whether misleading or deceptive or likely to mislead or deceive) is the time when the representation was made or the conduct occurred (see Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513 and McGrath v Australian Natural Care [2008] FCAFC 2 ; (2008) 165 FCR 230 ( "McGrath") at [146] and [198]). Skiwing pleaded, however, that certain of the representations were continuing representations and remained actionable until dispelled. One circumstance in which a representation might be regarded as a continuing one is where a representation, not initially misleading or deceptive, has been falsified to the knowledge of the representor. It has been suggested that in such a case there may be a duty to speak. Reliance on the representation may become actionable even though it was accurate when made. In this sense the representation is said to be a continuing one (see e.g. Australian Securities and Investments Commission v Solution 6 Holdings Ltd (1999) 30 ACSR 605 at 610-611 and McGrath at [147]). Another example is a representation that is taken to be repeatedly or continuously remade (see McGrath at [148]). Neither category applies in the present case. The representations relied upon in the present case were identified by reference to the time they were made, or were to be implied. Skiwing alleged that it relied upon them from those times and, by its particulars, claimed it commenced to suffer loss as a result. I do not accept that representations of the kind relied upon in the present proceedings may be regarded as continuing representations so that they become, and remain, actionable along some continuum of time. There has been disagreement in this Court whether the effect of s 51A is that the onus of showing that there were reasonable grounds for a representation about future matters shifts to and remains with a corporate representor or whether, if a corporate representor does adduce "evidence to the contrary", the deeming provision in s 51A ceases to operate. The history of that debate was traced by Allsop J in McGrath at [162]-[194]. His Honour expressed a firm view (at [192]) to the effect that s 51A raised only an initial onus to provide some evidence that there were reasonable grounds for making a representation, in which event the deeming provision ceased to operated. Emmett J (at [44]) expressed a similar view. Despite the earlier debate, in this Court and other courts, I would regard myself as obliged to apply this most recent and, with respect, thorough analysis of the issue. The significance, for the present case, of that view of the effect of s 51A is that in accordance with the analysis in McGrath , Skiwing may lose the effective benefit of s 51A and, in the proceedings, be obliged to prove its case without the benefit of any presumption. It would be entitled to attempt to do so by reference to all the relevant surrounding circumstances. One issue which is therefore exposed for attention is whether the causes of action based upon the asserted representations, all of which occurred more than six years before the commencement of proceedings in this Court, necessarily "accrued" within the meaning of s 82(2) of the TP Act at the time when it may now be said, with the benefit of hindsight, that non-negligible loss was first suffered. Alternatively, may the correct view ultimately be that they did not accrue until later, when it became clear the representations would not be fulfilled. To examine that issue it is necessary to identify first what is involved in the concept of a "cause of action". It is simply the fact or combination of facts which gives rise to a right to sue. In written submissions filed in answer to the notice of motion Skiwing contended that the causes of action did not arise until Stockland took the steps which rendered the representations misleading. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved. The facts may include the bringing into existence of legal persons capable of suing and being sued, but do not include unrelated matters such as notice requirements or Ministerial consent. A pleading of a claim under s.52 will be incomplete without a statement of the material facts relied on to demonstrate the misleading nature of the representation . Whether a representation was misleading at the time it was made is not to be determined by reference only to the facts as known at that time. It may not be possible to determine whether a representation as to a future matter was misleading until some later date . Until those facts occur, not only will a prospective applicant not know whether there is a cause of action (which, in the absence of fraud, may be fatal to an applicant's ability to sue), there will be no cause of action in existence. It is not the applicant's position that the representations relied on here were not misleading when made but became misleading at some future date, but rather that they were shown to have been misleading at the time they were made by events which occurred at a later date. Before the enactment of s 51A it was established that non-satisfaction of a promise or representation about a future event or conduct did not, without more, make a representation misleading or deceptive. Similarly, that a prediction proves inaccurate does not of itself establish that the maker of the prediction did not believe that it would eventuate or that the belief lacked any, or any adequate, foundation. Likewise, the incorrectness of an opinion (assuming that can be established) does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any, or any adequate, foundation. The question here, however, is the obverse. Can a representation be shown to have been misleading, if relied upon, until the time for fulfilment has passed or it has otherwise been denounced? However, without the intervention of s 51A the burden would remain upon the applicant to show that the representation, in whatever form it took, was misleading or deceptive or likely to mislead or deceive. In the ordinary case where a representation as to future conduct or events is alleged to have been made, that means that the burden would be upon the applicant to show not merely that the conduct or event has not come to pass but also that at the time the representation was made the respondent did not believe that the conduct or event would come to pass or that there was no basis for a belief that the conduct or event would come to pass: James v ANZ Banking Group Ltd (1986) 64 ALR 347 ; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180 ; (1984) 2 FCR 82 at 88 [1984] FCA 180 ; ; 55 ALR 25. In any of these circumstances it is necessary to plead more than simply the fact of the representation as to the future matter and the fact that it does not occur. One has to plead material facts in relation to the implication in the statement of the present or past fact, the present intention and the means to carry it out, the relevant state of mind and the fact that there was no basis for it, and the relevant circumstance giving rise to the qualification. Without pleading such matters all the material facts necessary to complete the cause of action have not been stated and the respondent does not know what case it has to meet. Section 51A(2) makes it clear that an applicant does not have to establish as an ingredient of its cause of action that the representor did not have reasonable grounds for making the representation. That sub-section rather throws the evidentiary burden on a respondent to establish that reasonable grounds for making the representation existed and in the absence of such evidence the deeming provision has the consequence that the representation is taken to be misleading. Section 51A does not create an independent cause of action separate from s 52 and other sections in Pt V of the Act but rather casts the burden of proof on the respondent and if that burden is not discharged then a breach of s 52 is established by the applicant proving the representation as to the future matter and the fact that it did not come to pass (cf Ting v Blanche [1993] FCA 524 ; (1993) 118 ALR 543 , 552). (Emphasis added. No evidence has yet been filed. It is too early to know whether Skiwing should have concluded before 27 March 2002 that the asserted representations would not be fulfilled. There is another aspect of the matter to consider. That is whether, accepting the assertions in the statement of claim at face value, and independently of whether non-fulfilment is a part of the cause of action, it should be concluded at this early stage of the proceedings that actual loss was necessarily suffered before the non-fulfilment of each representation. At that stage, the cause of action will not have accrued, may never accrue, and will not accrue whilst the suffering of the loss or damage remains a likelihood rather than a reality . That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of 'loss or damage'. And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater. The liability was therefore contingent and executory (see at 524). The majority in Wardley concluded that the contingent nature of the loss was decisive of whether time in which to commence an action had begun to run. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled . However, by contrast with the present case, although the misleading representations in Wardley (which are summarised at 521) induced the grant of the indemnity they did not take their character from the failure of any promise connected with the indemnity. It is necessary to bear that in mind when the application of Wardley to the present case is assessed. Murphy v Overton Investments Pty Limited [2004] HCA 3 ; (2004) 216 CLR 388 ( "Murphy v Overton" ) involved a prediction by a developer about future outgoings under a lease. The estimate failed to take into account or disclose further possible charges within the discretion of the developer. It was held that loss was suffered because the continuing financial obligations proved to be larger than had been stated. Here, therefore, the appellants suffered no loss as a result of undertaking the obligations they did unless and until the contingency which the misrepresentation hid (that items other than those used to form the estimate were then being incurred and could be charged as outgoings) was first realised. That was a contingency in the sense that the adverse risk might never have eventuated . When the lease was entered in 1992, the respondent was charging levies in relation only to limited categories of the overall outgoings. The respondent might have chosen to continue to charge the appellants only for those limited categories. On the other hand, it was possible that after 1992 it might decide to charge for wider categories. It was only from the time when it in fact decided to depart from the 1992 position and charge for the wider categories that the adverse risk eventuated. When it did, but only then, the appellants suffered loss and damage. And this Court's decision in Wardley requires the conclusion, on the evidence in this case, that it was only when the contingency came to pass that the appellants sustained loss or damage. It follows that no limitation defence was available. They do not, any more than do the observations in Wardley , therefore, give direct support to the possibility I earlier discussed that denunciation or failure of the asserted representations might be an integral part of the causes of action. Nevertheless, in this case I need to accept, for present purposes, that Skiwing may establish the following matters: that the asserted representations were made; that it relied upon them; that as a result it conducted its business in a way it would not have; that those decisions caused an ultimate loss; that there were no reasonable grounds for making the representations; that had they nevertheless been fulfilled there would have been a net gain to Skiwing; and that the failure to fulfil the representations was, even if not a separate element in the causes of action related to the misleading character of the representations, nevertheless the happening of a contingency which caused actual loss. Although it seems clear that Skiwing now wishes to calculate its asserted loss and damage from the time it says it acted in reliance upon the representations it asserts, it is equally clear that the essence of its complaint is that, apart from direct costs and expenses associated with plans for the balcony, many of the losses only arose because its expectations of more favourable trading circumstances were disappointed. In that sense I take it to be alleging that it suffered, comparatively, a loss compared to what it would have realised had the representations it asserts were made been honoured. On that view those losses, assuming in Skiwing's favour that they were attributable to reliance on the asserted representations, may be said to have crystallised only upon non-fulfilment of the representations even though calculated with hindsight. I do not think it is possible to say, in the absence of evidence, that occurrence of loss, on the pleaded case, fell necessarily into place before 27 March 2002. The two matters I have discussed, namely, what may be said to make up the cause of action and when loss may be said to have been occasioned, lead me to conclude that this is not an appropriate case in which to dismiss the proceedings at their present stage. I should stress that I have no concluded view about any of these matters. I am only concerned, at the moment, with respectable possibilities. Some may be barred, but a definite answer in respect of particular causes of action can, in my opinion, only be given upon an analysis of the evidence offered at the trial. In my view, the question whether a claim is statute-barred can only be resolved definitely by reference to the evidence in the particular case. Beyond this it is difficult to generalise. I am not satisfied that the present is a clear case where dismissal of the proceedings at this stage would be justified. It is not necessary for me to discuss the various cases referred to by the parties concerning the effect and operation of s 31A of the Federal Court of Australia Act 1976 (Cth) ("the FCA Act"). Some reference was made to the fact that company searches established that it is a "$2 company" but that is not evidence of the necessary kind. It appears from evidence which I permitted Stockland to read on the notice of motion that there has been a long history of litigation between the present parties. Orders have been made against Skiwing, including costs orders. There is no evidence that any such orders have been enforced and not met. There was an estimate of costs advanced by way of assertion in an affidavit from the solicitor having conduct of the matter for Stockland that costs of the proceedings for solicitors and counsel would be of the order of $100,000. I would not be prepared to act upon such a bare assertion for the purpose of fixing an amount for security for costs, assuming that a case had otherwise been established to justify such an order. Counsel for Skiwing indicated that Mr Stojanoski was prepared to give an undertaking to be personally responsible for any costs ordered against Skiwing although he was not prepared to volunteer security for costs either in his personal capacity or if joined as an applicant in the proceedings. However, the present is not a case where the offer might be seen as an alternative to an order otherwise justified. As I have found that no case has been made out to order security for costs I do not think it would be appropriate to hold Mr Stojanoski to the undertaking which was offered. However, it appeared to me at the hearing of the notice of motion and the application for joinder that the application for joinder was now advanced on an independent footing. The application to amend the statement of claim was foreshadowed, made and argued at a time when, even on the view most favourable to Skiwing and Mr Stojanoski, more than six years had elapsed from the accrual of the additional cause of action which Mr Stojanoski wished to agitate. Section 59(2B) of the FCA Act permits rules to be made allowing an amendment of that kind. Such a rule may be found in O 13 r 2(3) of the Federal Court Rules . In the circumstances of the present case an amendment might be made if the new claim for relief arises out of substantially the same facts as those already pleaded. It does not seem to me that there would be any prejudice to Stockland if I permitted the joinder and the amendment. If, upon closer examination of the facts of the case, the limitation point proved to be well taken then it would apply to the additional matters to which the amended pleading was intended to be directed. The joinder of Mr Stojanoski would, coincidentally, make his personal resources available to satisfy any order for costs which may eventually be made. However, in Advanced Switching Services Pty Ltd v State Bank of New South Wales t/as Colonial State Bank [2007] FCA 954 Rares J expressed the view (at [67]-[70]) that O 13 r 2(3) did not permit an amendment to plead additional material facts necessary to constitute a cause of action. His Honour was dealing with an application to rectify a defective pleading but his remarks apply equally to applications to plead new material facts to support a new cause of action. Hill J in Harris v Western Australian Exim Corporation (1994) 56 FCR 1 appeared to take a different view. He allowed an amendment to pleadings to add not only a new statutory cause of action but to plead additional facts. Against that, the approach favoured by Rares J appeared also to have been favoured by Kiefel J in Grundy v Lewis (1995) 62 FCR 567 and Matthews v Ross Neilson Investments Pty Ltd [1995] FCA 1009 and by Branson J in Rodgers v Commissioner of Taxation (1998) 28 ACSR 42. The matters to be pleaded if the amendment and joinder were permitted are clearly new material facts. In my view the appropriate course to take in the present case is to follow and apply, as a matter of comity, the construction preferred by Rares J. It is the most recent relevant decision and addressed the point squarely. In the circumstances I will not grant leave to join Mr Stojanoski as second applicant or to amend the proceedings in the form proposed. Stockland should pay 75% of Skiwing's costs of the hearing itself. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | misleading or deceptive conduct representations as to future matters onus of proof in establishing 'reasonable grounds' for making representation onus of proof when a corporate representor adduces some evidence it has reasonable grounds for making a representation whether onus remains with a corporate representor or whether a deeming provision to that effect ceases to operate non-fulfilment of a representation whether part of a cause of action or connected with loss being suffered limitation upon commencement of action meaning of expression "date on which the cause of action accrued". when non-negligible damage is first suffered. joinder of a party limitation period whether joinder or amendment would be permitted where new material facts would be pleaded. trade practices damages practice and procedure |
It arises because a trustee of the bankrupt estates of directors of a company in liquidation rejected proofs of debt of the liquidator of the company based upon the directors having allowed the company to trade while insolvent. The liquidator seeks review of the trustee's decision under s 104(1) of the Bankruptcy Act . 2 Section 588M of the Corporations Act is the present legislative expression of the circumstances in which the liquidator of an insolvent company may recover, from a director of that company, losses incurred by creditors during a period of insolvent trading. Section 588M(2) says that the liquidator may recover "an amount equal to the loss and damage" from the director "as a debt due to the company". The "loss and damage" refers back to s 588M(1)(b) and is the loss and damage of a creditor because of the company's insolvency. Previous provisions regulating directors' liability for insolvent trading, particularly s 556 of the Companies Act 1981 (Cth) (the Code) and until the commencement of Part 5.7B of the Corporations Act 1989 (Cth) (the Corporations Law) s 592 , were expressed somewhat differently. 4 DPS Technology Pty Ltd (the Company) was a precision engineering and tool making business. The directors of the company are Pompeo and Susan Feleppa (the directors). The Company went into liquidation on 15 April 2004. Austin Taylor was the appointed liquidator (the Liquidator). The directors declared themselves bankrupt on 22 June 2004. Maris Rudaks (the Trustee) is the trustee of the separate estates of the directors of the Company as well as of their joint estate in bankruptcy. 5 The Liquidator lodged proofs of debt on behalf of the Company with the Trustee on 28 October 2004 in the joint and individual estates of the directors. Each proof of debt claims an amount of $961,760.91 owing to the Company by the directors for debts incurred by it between 1 October 2001 and 20 August 2003 when it was trading while insolvent. The amount claimed in the proofs encompasses demands upon the company from trade creditors, from the Australian Taxation Office (including BAS payments and general interest charges on those debts and superannuation guarantee charges) and by Revenue SA and by the WorkCover Corporation. The amounts relating to trade creditors, as indicated in the Liquidator's Insolvency Report, include the supply of trade materials to the Company. Those debts of the Company remain unpaid. They are unsecured. At the present time there has been no action commenced under s 588G of the Corporations Act against the Directors for insolvent trading. 6 The proofs of debt were formally rejected by the Trustee on 31 January 2007. 7 There is an additional issue arising from the fact that the Liquidator's proofs of debt are based in part upon liabilities of the Company to the Australian Taxation Office. The Australian Taxation Office has separately lodged proofs of debt against the individual estates of the directors. The Trustee in Bankruptcy has admitted each of them. Such proofs include late payment tax and interest charged on unpaid income tax at the end of the 2002 financial year in the case of Pompeo Fileppa and debts owing from directors penalties imposed under the Income Tax (Assessment) Act 1936 (Cth) (the ITAA) in 2001-2002 in the case of each of the directors. The Australian Taxation Office has also separately lodged proofs of debt in the liquidation of the Company in respect of unpaid PAYG, superannuation and BAS liabilities debts from 2000 to 2004. The parties agreed that the Australian Taxation Office had been invited to lodge a joint debt application with the Liquidator, and had been notified and invited to participate in these proceedings. It is unclear the extent to which, if at all, the accepted proof of debt from the Australian Taxation Office overlap with the liquidator's proof of debt. (3) The creditor may, as provided in Subdivision B but not otherwise, recover from the director, as a debt due to the creditor, an amount equal to the amount of the loss or damage. (4) Proceedings under this section may only be begun within 6 years after the beginning of the winding up. In short, the Trustee has not put in issue that s 588G(1) applied at the time those debts were incurred by the Company. The Trustee also has not put in issue that the Directors contravened s 588G by failing to prevent the Company from incurring those debts, because one of ss 588G(2)(a) or 588G(2)(b) applies. Section 588H of the Corporations Act makes available to the Directors certain defences to a contravention of s 588G, but the Trustee has not sought to enliven any of those defences. 11 The real issue is whether the liability under s 588M(2) falls within provable debts as described in s 82(1) of the Bankruptcy Act or is excluded by s 82(2). (1A) Without limiting subsection (1), debts referred to in that subsection include a debt consisting of all or part of a sum that became payable by the bankrupt under a maintenance agreement or maintenance order before the date of the bankruptcy. The Trustee argues that they are excluded by s 82(2) of the Bankruptcy Act as being unliquidated claims for damages which did not arise by reason of a contract, promise or breach of trust. Accordingly, the argument concerns the character of the liquidator's claims under s 588M(2) of the Corporations Act . 14 The parties referred the Court to various authorities considering s 556 of the Code and the former s 592 of the Corporations Law. Both parties agreed that there is no decided authority directly determining the question, even though relevantly ss 588G and 588M in their present terms have been on the statute books since 1992. 15 If the Liquidator's proofs of debt are admissible in the bankrupt estates of the directors, there are subsidiary issues of whether the proofs of debt are admissible only in the joint bankrupt estate, and as to whether the amount of the Liquidator's proofs of debt should be reduced having regard to the proofs of debt lodged by the Australian Taxation Office with the Trustee, so as not to result in a situation of double proof of the same debt or "double dipping" in the bankrupt estates of the directors. The Liquidator under s 588M(2) is then empowered to recover from the director as a debt due to the company an amount equal to that loss or damage suffered by the creditor. 17 By way of contrast, the ancestors of s 588M found in s 556 of the Code and in the former s 592 of the Corporations Law rendered a director liable to a company for the payment of a debt incurred by the company when, in circumstances where it applied, the debt was incurred when the company was insolvent. There was no refinement of their application by reference to the loss and damage which the creditor had incurred. The terms of s 556 of the Code illustrate the point. Official Trustee in Bankruptcy v CS & GJ Handby Pty Ltd (1989) 21 FCR 19; Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702; CCA Systems Pty Ltd v Communications & Peripherals (Australia) Pty Ltd (1989) 15 ACLR 720 at 728 --- 729. In Handby 21 FCR 19, the Full Court (Morling Beaumont and Burchett JJ) concluded that s 556(1) of the Code rendered the company and the director (in the circumstances prescribed) jointly and severally liable for the debt. Their Honours observed at 24 --- 25 that s 82(1) of the Bankruptcy Act and its precursors have been generously construed, and that there was no reason why it should not encompass debts or liabilities arising under statute. They then concluded at 26 --- 27 that the statutory liability created by s 556(1) of the Code is for "the payment of the debt incurred by the company" (the Full Court's emphasis), and is a liability for a nominated debt which was not a demand in the nature of a demand for unliquidated damages but a claim for money under a statute. The present issue requires consideration of its terms. And, as the present contentions demonstrate, its terms are capable of supporting alternative constructions, which would produce a different effect in the application of s 82(2) of the Bankruptcy Act . The issue therefore invites consideration of the policy underlying ss 588G and 588M. 20 As noted above, ss 588G and 588M were introduced by s 111 of the Corporate Law Reform Act 1992 (Cth). It amended the Corporations Law by introducing Part 5.7B , entitled Recovering Property or Compensation for the Benefit of Creditors of Insolvent Company, including Division 4 called "Director liable to compensate company" containing ss 588J-588U. Subsequent extensive amendments to the Corporations Law did not materially change the terms of ss 588G or 588M. No submission was put to the contrary, so it is not necessary to specifically note the amendments to ss 588G or 588M up to the enactment of the Corporations Act or by that Act. 21 As is well known, the Corporations Act followed the decisions of the High Court in Re Wakim; Ex parte McNally [1999] HCA 27 ; (1999) 198 CLR 511; and Bond v R [2000] HCA 13 ; (2000) 169 ALR 607 and R v Hughes [2000] HCA 22 ; (2000) 171 ALR 155. The States referred power to the Commonwealth so as to enable it to enact the Corporations Act under s 51(xxxvii) of the Constitution . The Corporations Act then largely re-enacted the previous Corporations Law as a single Commonwealth law. Obviously, there are some differences, but none relevant to the present issue. As the terms of ss 588G and 588M were not materially altered when carried forward into the Corporations Act , it is not surprising that there are no observations in the parliamentary materials surrounding the enactment of the Corporations Act which enlighten the legislative intention in relation to those sections, or indeed of Div 4 of Pt 5.7B of the Corporations Act in which they stand. 22 The Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth) at p 217 refers generally to the purpose of what then became Div 4 of Pt 5.7B of the Corporations Law. The recovery of "compensation" by the liquidator from a director in breach of s 588G is clearly for the benefit of the unsecured creditors. That reflects the view of the Harmer Report (Report of The Law Reform Commission, Report No 45, General Insolvency Inquiry, AGPS Canberra 1988) that amounts recovered from directors be available to unsecured creditors generally, as they normally suffer greatest loss as a consequence of a corporation's insolvent trading. 23 The Harmer Report and the Discussion Paper of The Law Reform Commission (Discussion Paper 32, August 1987) explain generally the rationale of what became Pt 5.7B of the Corporations Law. It was to impose a positive duty upon a director owed to the company to prevent the company from engaging in insolvent trading. Thus, it was intended to produce a legislative structure which enables all creditors to share equally in the sums recovered, so as to promote the principle of equality. The reason for the change from a focus upon a creditor recovering a debt to the liquidator recovering loss and damage suffered by a creditor in relation to a debt is set out in pars 200 and 201 of the Discussion Paper and in the legislative proposals then put forward. It is relevantly summarised in par 202 of the Discussion Paper as being that the amount of the liability is to be determined by the Court and measured by reference to the loss and damage sustained by the creditors, and the sum recovered should then be applied for the benefit of all the unsecured creditors. This is to ensure that the damages recovered do not simply reflect some nominal damage to the company. The damage suffered by creditors is the relevant measure. This is consistent with Kinsela's case . It is not sufficient simply to provide that the measure of damages should be an amount equal to the sum of the unpaid debts which were incurred during the period of insolvent trading. Where debts are incurred, the company usually obtains some benefit. ... The amount for which a director who is found to have breached the duty should be liable is a matter requiring careful quantification on the facts of each case. A broad discretion to be exercised by the court is appropriate. The reference to Kinsela's case is a reference to Kinsela v Russell Kinsela Pty Ltd (in liq) (1986) 4 NSWLR 722, where Street CJ (with whom Hope and McHugh JJA agreed) at 732 --- 733 said that the damage suffered by creditors from insolvent trading supports the view that the directors of a corporation must owe a duty to consider, in certain circumstances, the interests of the creditors. The text appears to assume that the liquidator will effect recovery of the loss and damage suffered by a creditor to whom a debt is owed by "action", and explains why such "proceedings" should generally be permitted only through the liquidator, so the creditor's right to bring proceedings under s 588M(3) is curtailed: see s 588R --- 588U. That was said to ensure the principle of equal sharing. 25 Nothing is said in the Explanatory Memorandum as to why the expression "loss and damage in relation to a debt" was introduced, rather than the form of expression in the earlier legislation. 26 The question is whether the essential character of the demand contained in the proofs of debt is in respect of a debt provable in the bankruptcies: Cornelius v Barewa Oil & Mining (NL) (In liq) (1982) 42 ALR 83 per Wickham J at 89-90. All debts and liabilities are provable in the bankruptcy unless they fall within one or more of the exceptions specified in s 82 , relevantly for present purposes, s 82(2) of the Bankruptcy Act . 27 Section 82(1) of the Bankruptcy Act adopts the use of wide language in expressing what are to be considered admissible debts and liabilities in bankruptcy. See for example the discussion of its history and of its terms in the joint judgment of the majority (Gleeson CJ, Gummow, Hayne and Callinan JJ) in Coventry v Charter Pacific Corp Ltd (2005) 227 CLR 234 at [20] --- [29]; Re Hide; Ex parte Llynvi Coal and Iron Co (1871) 7 Ch App 28 at 31 --- 32 per James LJ. 28 Section 82(2) exists as an exception to the debts and liabilities which are admissible in bankruptcy. Under this provision, claims in the nature of unliquidated damages are inadmissible unless they arise by nature of contract, promise or breach of trust with the bankrupt. In this matter, the trustee argues that the liability of the directors to the company enforceable by the liquidator under s 588M is unliquidated and does not arise in the circumstances otherwise mentioned in the section, that is, it does not arise by reason of contract, promise or breach of trust. The liquidator's primary position is that his claims are not claims falling within s 82(2). 29 It is worthwhile considering the consequences of the trustee's approach. It would mean that the liquidator of a company could not prove the liability enlivened by s 588M(2) of the Corporations Act in any bankruptcy of a director. Nor could a creditor under s 588M(3). The right of recovery from the director, as a debt due to the company, of an amount equal to the loss or damage suffered by the creditor or creditors would not be provable in the bankruptcy because, so the argument runs, it is a demand in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust. That would be a surprising outcome. It would be surprising because it would be so different from the regime which existed up to the time Pt 5.7B , including Div 4 of Pt 5.7B , was inserted into the Corporations Law in 1992. Up to that time, it is plain that a debt incurred by a company for which a director was liable under s 592 of the Corporations Law or s 556 of the Code was provable in the bankruptcy of the debtor. It would also mean that, upon the discharge of the bankrupt from bankruptcy, the bankrupt would not be released from those liabilities because they would not have been provable in the bankruptcy: see s 153(1) of the Bankruptcy Act . Indeed, it would further mean that a creditor of the company, or the liquidator of the company, could institute and maintain proceedings against the bankrupt personally during the bankruptcy unrestrained by the operation of s 58(3) of the Bankruptcy Act because the remedy sought to be invoked would not be in respect of a provable debt. The power to stay actions under s 60 of the Bankruptcy Act also generally appears to be confined to actions to recover provable debts: see s 60(1)(b). There is nothing in the Harmer Report which suggests that the then proposed amendments to the Corporations Law by the addition of Div 4 of Pt 5.7B would make a dramatic change in that regime. Such a dramatic change would have the consequence that neither the liquidator of a company nor its creditors could enforce their rights under s 588M(2) and (3) by participating in the distribution of the bankrupt estate of the director who had breached the duty to the company imposed by s 588G. In my view, Div 4 of Pt 5.7B of the Corporations Act does not have that purpose or intention. 30 The wording of s 588M(2) also, in my view, tends to confirm that no such dramatic change was contemplated by the introduction of Div 4 of Pt 5.7B. Section 588M(2) empowers the liquidator to recover from the director "as a debt due to the company" an amount equal to the amount of loss or damage. That is the loss or damage suffered by the creditor or creditors in relation to the debt because of the company's insolvency. The use of the word "debt" in s 588M(2) and in s 588M(3) in the case of a creditor's action must be given some work. In Fryer v Powell (2001) 159 FLR 433, the Full Court of the Supreme Court of South Australia (Olsson, Duggan and Williams JJ) addressed the use of that word "debt" in s 588G and s 588M. In that case the liquidators of a company in liquidation sued the directors for recovery of a sum of money equivalent to the sum of the debts incurred at the time when the company was insolvent or when grounds existed for a reasonable suspicion that it was insolvent, to the knowledge of the directors. Judgment was given against the directors and they appealed. The relevant issue on that appeal was whether statutory imposts under the ITAA could constitute a debt for the purposes of s 588G of the Corporations Law, so the precise issue in this matter did not directly arise. The claim against the directors included a range of categories of debt including debts due to trade creditors (which do not appear to have been contentious), accrued leave entitlements, unpaid sales tax liabilities, penalties for non-payment of sales tax, unpaid group tax and assessed penalties for non-payment of group tax, and unpaid WorkCover levies and penalties for non-payment of WorkCover levies. Olsson J (with whom Duggan and Williams JJ agreed) concluded at 442, at [62] --- [63] that the ordinary English meaning of the word "debt" should be adopted, there being nothing in the Corporations Law to suggest any other special meaning, and because that meaning had been attributed to that word in s 556 of the Companies Code: see eg per Gleeson CJ in Hawkins v Bank of China (1992) 26 NSWLR 562 at 572. It, too, is not defined either in the Corporations Law or in the Corporations Act . The argument was that the expression "loss or damage" indicated that the quantification of the liability was not the amount of the unpaid trade debt in each instance, and it was necessary for the Court to examine each individual debt and to make various potential abatements of it. This is the view which was obviously taken by Austin J in Tourprint International Pty Ltd (In Liq) v Bott (1999) 32 ACSR 201 at 217 and, in my experience, has always been applied to the practical administration of the statute. Whilst the provisions of the Corporations Law , so applied, may give rise to some practical consequences which could be said to be somewhat arbitrary and possibly inequitable in some respects, the insolvency law has always, as a matter of practicality and commercial expediency, had to adopt certain parameters which are arbitrary. There is nothing particularly novel in the approach here in question. By way of contrast, the adoption of the approach espoused by Mr Randle would render administration in insolvency virtually unworkable. The legislature could not possibly have envisaged creating the inevitable complexity and requirement for detailed examination of collateral issues which Mr Randle propounds. I therefore reject his submissions and conclude that the "loss or damage" in question will normally be the quantum of relevant unpaid debts. See at [78]. His Honour's observations are certainly consistent with that conclusion, but they do not contain any consideration specifically of the point. 31 On the other hand, Mandie J in Australian Securities and Investments Commission v Plymin (No 1) recognised, correctly in my view, that Fryer v Powell 159 FLR 433 laid down only a general rule capable of variation according to particular circumstances: see at [2003] VSC 123 ; (2003) 175 FLR 124 at 255, at [535]. In that case, the loss and damage suffered by the creditors of a company in their claim against the directors needed to be adjusted beyond the amount of the unpaid debt because of an interim dividend distributed by the administrator under a scheme of arrangement of the company and for a further dividend which those creditors were likely to receive. Those two things are not necessarily the same. The difference may not have been significant to the resolution of that case. 33 In my view, the difference in expression is also not of significance to the issue which presently arises in this matter. That is because the question is as to the nature of the entitlement in the liquidator established by s 588M(2) so far as it applies in the bankruptcy of the directors, having regard to s 82(1) and (2) of the Bankruptcy Act . 34 I do not consider it is useful to import into the words of s 588M(2) a requirement that the loss and damage referred to in s 588M(1)(b) and s 588M(2) be characterised as liquidated or unliquidated. Clearly, s 588M(2) entitles the liquidator to recover the loss and damage, whatever its character, from the directors as a debt due to the company. It is the debt due to the company which entitles the liquidator to prove in the bankruptcy of the directors. Although the wording of s 588M(1)(b) and (c) indicate that the loss and damage of the creditor or creditors need not equate to the amount of the debt or debts (eg as Mandie J identified in Plymin [2003] VSC 123 ; 175 FLR 124), if there has been a distribution in the liquidation of the company to reduce that debt as at the date of the claim made in the bankruptcy by realisation of other assets of the company), s 588M(2) states that the loss and damage for the purposes of the claim against the directors be recoverable as a debt. I note that Hammerschlag J in Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd [2007] NSWSC 930 at [24] --- [25] adopted that position, albeit that the question was not apparently in contention before his Honour. 35 In the case of a claim made by a liquidator or creditor against a director under s 588M(2) or (3) respectively, the director may put in issue the amount of the claimed debt. There will then need to be a determination about the extent of the loss and damage, as in any debt claim where the amount claimed may be put in issue. If the director does not do so, the claim should be treated as a claim for a debt because that is the statutory nature of the claim. Of course, the director may also dispute any contravention of s 588G(2) or (3) or enliven the defence available under s 588H; see s 588M(1)(a). In the present circumstances, the Trustee has the role on behalf of the director of deciding whether to dispute the claimed debt or to accept the claimed debt in whole or in part on the basis that the loss and damage which underlies it either was not suffered or was not suffered to the extent claimed. Any decision in that regard is reviewable under s 104(1) of the Bankruptcy Act . For the reasons given, I consider that the trustee erred in doing so. It is not therefore necessary to address the qualification in s 82(2) excluding claims for unliquidated damages arising otherwise than by reason of a contract promise or breach of trust. That qualification in s 82(2) was considered by the High Court in Coventry 227 CLR 234. If it had been necessary to address that qualification, there may have been some difference between the Liquidator's claim based upon unpaid trade creditors of the Company and the statutory imposts also included in his proofs of debt. 37 In reaching that conclusion, I have not overlooked the observation of Hill J in Commonwealth Bank of Australia v Paola [2005] FCA 855 at [25] upon which senior counsel for the Trustee relied. That case concerned the opposition of a bankruptcy petition based upon an act of bankruptcy --- the failure to comply with a bankruptcy notice founded upon a judgment debt. The debtor disputed his insolvency, and claimed that he would receive funds to pay the judgment debt from the liquidator of another company in liquidation who had accepted a proof of debt from the debtor for a significant sum. Alternatively, the debtor sought the bankruptcy petition be adjourned until the liquidator paid a dividend to the creditors of the company in liquidation. The payment of the anticipated dividend was held up pending the hearing of certain proceedings involving that company. 38 His Honour rejected the debtor's claim of solvency. He observed that the outstanding proceedings included a contested claim against the debtor for insolvent trading in his capacity as a director of the company, but declined to adjourn the bankruptcy petition pending the outcome of that proceeding in the exercise of his discretion because its resolution was a considerable time off, and because its outcome was uncertain. In the course of considering the exercise of the discretion, his Honour said at [25] that, even if a sequestration order were made, the proceedings against the debtor for insolvent trading would be stayed under s 58(3)(a) of the Bankruptcy Act because that claim fell under s 82(2) of that Act. 39 Although his Honour's remarks suggest that he held the view that a claim under s 588M(2) of the Corporations Act is not a claim provable in the bankruptcy of a director, that view was not expressed after the benefit of argument on the matter. It does not form part of the ratio decidendi of the decision. It is not a view which his Honour reached after the opportunity of considering the decisions to which I have referred or the analysis of the precise wording of s 588M. I accordingly do not think that the decision obliges me to reach a conclusion different from that I have reached; nor that I should do so. 40 The liquidator asserts a right to prove in the joint estate of the directors and in the separate estates of the directors, on the authority of Manpac Industries Pty Ltd v Ceccattini (2002) 20 ACLC 1304. The Trustee says that, in any event, the claims may only be proved in the separate estates of the directors. 41 Manpac 20 ACLC 1304 concerned an action under s 588M of the Corporations Act in which Young CJ in Eq held the directors jointly and severally liable for insolvent trading. There was apparently no debate in that case as to whether such liability should be joint and several. Such an order mirrors the wording of s 556 of the Code and the former s 592 of the Corporations Law, where the directors were expressly said to be "jointly and severally liable". There is no such expression in s 588M of the Corporations Act . 42 The liquidator also relied upon Macks (trustee of the estate of Weber), Re Weber (bankrupt) [2006] FCA 636 ; (2006) 233 ALR 50. I do not think that decision is of particular significance. Relevantly, it concerned the entitlement of creditors under certain contracts to prove in the joint and several estates of the bankrupts by reason of s 95 of the Bankruptcy Act : see per Finn J at [13] --- [16]. 43 At present, I see no reason why the fact that s 588M does not use the words "joint and several" should preclude the Liquidator from proving his debt under s 588M(2) in both the joint and several estates of the directors. 44 In my judgment, there is nothing in s 588M which supports the conclusion that the recovery of a debt under s 588M must be confined to the several estates of the delictual directors, provided at least that the conduct giving rise to their liability is in substance the same. 45 Further, one might rhetorically ask why, where there is no suggestion that the directors did not each breach s 588G over the same period of time, assuming their only assets were jointly owned and assuming that they had no other creditors, those assets in the hands of the Trustee should be immune from the reach of the Liquidator. 46 On the limited material before me, the directors' respective liability to the Liquidator is the same debt arising out of the same conduct incurred by them in the same capacity. The rule against double proof discussed by Mandie J in Re Master Painters Association of Victoria Ltd (subject to deed of company arrangement) (2004) 211 ALR 316 at 319 --- 324 at [29] is not shown to have been enlivened. The rule preventing double dividends to the detriment of other creditors can be addressed by the Trustee as discussed below. 47 I note that the directors' penalty imposed under the ITAA can be characterised as a debt admissible to proof in bankruptcy. See eg Deputy Commissioner of Taxation v Woodhams [2000] HCA 10 ; (2000) 199 CLR 370 at [16] - [17] and Forsyth v Deputy Federal Commissioner of Taxation [2007] HCA 8 at [16] . 48 Apart from the late payment penalty and interest imposed on Pompeo Feleppo of $8,148.20, the proofs of debt of the Australian Taxation Office submitted to, and accepted by, the trustee concern $180,363 of penalties imposed upon each of the directors under s 222AOC of the ITAA for failing to cause the Company to meet its obligations in relation to deductions made or amounts withheld by the Company: s 222AOB(1)(a) and s 222AOB(2). The penalties are an amount equal to the unpaid amount of the Company's liability under the relevant remittance provision. Consequently, it appears that there is a parallel between the liability of the Company to the Australian Taxation Office which is included in the Liquidator's proofs of debt and the penalty liability of each of the directors which is the subject of the proofs of debt of the Australian Taxation Office. 49 Section 222AOH of the ITAA appears to address that circumstance. However, this subsection does not discharge a liability to a greater extent than the amount of the liability. 51 In my view, that recognises that the penalty liability of the directors under s 222AOC is a different liability to that of the company, and that the payment by a director towards satisfaction of the penalty liability pro tanto discharges the liability of the company. Section 222AOI then gives such a director the same rights against the company as if the payment by the director was made under a guarantee. 52 That does not give the result that the proofs of debt lodged by the Liquidator, apparently including certain of the Company's liability to the Australian Taxation Office which also led to the penalty liability imposed upon the directors, are not properly made. Nor does it make the Australian Taxation Office proofs of debt improper, because they are based upon a parallel but independent liability of the directors based on s 222AOC of the ITAA. Thus, its claims against the directors in respect of the penalty assessments are not claims under s 588M(3) and so they are not claims which might not be permitted whilst the Liquidator's claims under s 588M(2) is being pursued. 53 It is a matter for the Trustee, in due course, when and if a dividend is to be declared in any of the joint or several bankrupt estates of the directors, to make the appropriate adjustments. If the direct claims of the Australian Taxation Office are met or partially met from the bankrupt estate of one or other of the directors or from their joint estate, that will pro rata reduce the claims of the Liquidator to that extent. Ultimately, the unsecured creditors in each of the joint and several bankrupt estates of the directors should be treated equally as amongst themselves. 54 I note that a claim by a director under s 222AOH of the ITAA might then be made by the Trustee against the Company in due course. I do not know sufficient of the circumstances to comment upon whether any such putative claim by a director would be provable in the winding up of the Company under s 553 of the Corporations Act . I do not know anything about the state of the winding up of the Company. Consequently, I do not know if there is any prospect of a claim by a director in such circumstances. There may also be some circularity in the director, in such circumstances, having a claim against the Company in respect of a liability which the director should have procured the Company to have made. That problem does not arise for present consideration. 55 I note the suggestion that the Trustee may seek to set off against the claims of the Liquidator certain director's loans to the Company. I do not know the details of any such claimed entitlement, and have not been asked to adjudicate upon it. I declare that those proofs of debt are capable of being admitted to proof in those bankrupt estates. 57 I do not think I need to go further. There are other matters which the Trustee may now have to address as to the amount of those proofs. And, in due course, the Trustee may have to make adjustments to avoid the Liquidator or the Australian Taxation Office from "double dipping" to the detriment of any other creditors. For the reasons given, it is not appropriate to make any orders on those matters at present. It did not appear or make any submissions on any of the matters discussed above. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | proof of debt whether claim of liquidator of company under s 588m of the corporations act 2001 (cth) against directors for insolvent trading admissible to proof in bankruptcy of directors under s 82(1) bankruptcy act 1966 (cth) whether liquidator's claim unliquidated arising otherwise than by reason of breach of contract, promise or breach of trust so as to be excluded from proof under s 82(2) nature of liquidator's claim where based on "loss and damage" suffered by creditors of company review of decision of trustee in bankruptcy to reject proofs of debt claims made against joint estate of two bankrupts and against separate estates whether double proof permitted avoidance of "double dipping" where claim of australian taxation office against directors of company for penalty taxation proved in bankrupt estate nature of claim where claim of liquidator of company under s 588m corporations act 2001 (cth) also sought to be proved in bankrupt estate where claim of liquidator included debt of company to australian taxation office in respect of which penalty assessment issued against directors whether both claims admissible to proof avoidance of "double dipping" whether claim of liquidator under s 588m of corporations act 2001 (cth) for loss and damage suffered by creditors against directors provable in bankruptcy of directors liability of directors of insolvent company for insolvent trading under s 588g bankruptcy bankruptcy bankruptcy corporations |
2 Broadly speaking, Div 245 applies where there is forgiveness of a commercial debt . In such event the net forgiven amount of the debt will be set off for tax purposes against benefits the taxpayer would otherwise enjoy, such as revenue losses, capital losses and other deductible amounts: see s 245-2. The present law creates scope for duplication of deductions in circumstances where the creditor would be entitled to tax relief for a loss on a debt that is forgiven or otherwise settled for less than full value. It was a wholly owned subsidiary of Sumikin Bussan Corporation Limited (SBC), a Japanese corporation. In November 1996 SBAF was used by SBC as the entity to acquire the meat processing and exporting business formerly owned and operated by the Gilbertson Group. 5 The acquisition was funded partly by share capital and partly by loans from SBC. The business was not a success and incurred heavy trading losses. SBC advanced further loans totalling $118,696,459. 6 By a share sale agreement dated 27 February 2002 SBC sold its shares in SBAF to Tasman Group Holdings Pty Ltd for about $17 million. None of SBC's loans were repaid to it by SBAF. By cl 8.2(a) of the agreement SBC agreed to "ensure" that on the Completion Date (1 March 2002) "no amount of Financial Indebtedness exists". Financial Indebtedness was defined to mean "financial indebtedness owed to the Vendor Group [ie SBC and its related bodies corporate] by the Company [ie SBAF]". The sale was in fact completed on or about the Completion Date. Did SBAF owe SBC any debt ? 2. Was any such debt a commercial debt ? 3. Was any such debt forgiven ? 9 The relevant events in the history of SBAF are as follows. It also had plants at Longford in Tasmania and on King Island and a wholesale depot at Gepps Cross in South Australia, together with some retail outlets. 11 From the commencement of trading in November 1996, three SBC executives were assigned by SBC to assume active participation in the management of SBAF. They were appointed respectively as Deputy Managing Director, Marketing Director and Finance manager. They and their subsequent replacements were paid directly by SBC. They occupied offices at SBAF's Altona head office. Under a formal agreement, which was varied from time to time, SBAF paid a fee to SBC for the services of these executives. 12 The chairmen of SBAF from time to time were senior members of SBC's board in Japan. They travelled to Australia for the monthly meeting of the SBAF board. Occasionally the SBAF board met in Japan and Australian resident directors would travel to the meetings. 13 Decisions concerning matters such as capital expenditure, payroll, staffing levels, repairs and maintenance and export marketing were subject to SBC's approval, based on submissions and recommendations by the three SBC executives. However, from the latter part of 1997 until the sale in February 2002 SBAF's financial position deteriorated and did not recover. One of the basic contributing problems was that the Altona plant was antiquated and made the company uncompetitive. 17 The watershed was the year ending 31 December 1998 when SBAF recorded a loss of $20.4 million. 18 SBAF obtained the Subsequent Loans for funding its ongoing operations, that is to say for providing working capital and also for capital investment. Applications were prepared by the Australian management, which included the SBC secondees. Formal agreements were prepared by SBC in Tokyo, executed there and sent to Altona for execution by SBAF. Execution was ratified at the next board meeting of SBAF. The agreements were always in the same form. NOW, THEREFORE, IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS. 1. The interest shall be calculated on the basis of the actual number of days elapsed and a year of 365 days, and shall be paid in Australian Dollar on 30 th September, 1999 (the "Interest Payment Date"). The Borrower shall forward to the Lender the original official receipt of each tax payment issued by the taxation authority. After that loans were interest free. Previously SBAF had remitted interest to SBC and returned such interest for tax purposes. 20 Also SBC agreed to the extension of the time for repayment of the loans and recorded those extensions in various amending agreements. For example, by an agreement made on 30 March 2001 SBC agreed to extend the time for repayment of nine loans totalling $60,550,000 from 31 March 2001 to 30 September 2001. Eventually all 29 advances from SBC had the same repayment date of 31 March 2002. After the acquisition various proposals were discussed between the bank and SBC. Eventually the bank modified its requirement for subordination of shareholder loans and accepted that SBC give legally enforceable undertakings that the loans not be withdrawn without ANZ's consent. In a letter dated 12 December 1996 the bank confirmed that in the event of such an undertaking it would treat the loans as shareholders funds for the purpose of measuring against proposed lending covenants. The undertaking was duly given. 22 At various times over the next few years, with the encouragement of ANZ, SBAF discussed the possibility of converting the Japanese yen loans to equity but nothing ever came of this. SBC duly provided such a letter dated 25 May 1999. Ltd. The parent entity acknowledges that as at 31 December 1998 the current liabilities of SBA Foods Pty. Ltd. exceed its current assets. To not call for repayment of the loans outstanding at 31 December 1998 of [yen]1,997,599,755 prior to 30 November 2001. To continue to provide ongoing financial support to enable SBA Foods Pty. Ltd. to meet its liabilities as and when they fall due. These covenants were passed at a meeting of directors of Sumikin Bussan Corporation on 11 May 1999. The parent entity acknowledges that as at 31 October 2001 the current liabilities of SBA Foods Pty Limited exceed its current assets and if the parent entity called for repayment of its debts, SBA Foods Pty Limited would be unable to pay its debts as and when they fall due. To not call for repayment of the loans outstanding at 31 October 2001 of A$67,600,000.00 and [yen]3,167,690,801 prior to 30 September 2003. To continue to provide ongoing financial support to enable SBA Foods Pty. Limited to meet its liabilities as and when they fall due. In October a possible purchaser withdrew from negotiations, to the disappointment of ANZ. Other parties expressed interest. SBC advised that it required the business to be sold by March 2002. In January Tasman emerged as a buyer. ANZ agreed to extend facilities until 15 February 2002. 26 As already mentioned, on 27 February 2002 SBAF and SBC executed the share sale agreement with Tasman. By a loan agreement made on the same day SBC advanced $5.3 million. This amount was used to repay the amounts owing to ANZ prior to completion of the sale of the SBAF shares. 27 After the completion of the sale of shares SBAF's balance sheet disclosed no indebtedness to SBC. 28 Mr Malcolm Slinger, who was the Managing Director of SBAF, deposed that, other than what is contained in the share sale agreement, he was not aware of, and has not signed, any other documents, agreements or deeds under which SBC expressly released or waived the amounts owing by SBAF to SBC. Issue 1: debt ? 30 The applicant submits that the loan agreements were, as at the completion of the share sale agreement (1 March 2002), unenforceable as SBC would have breached covenants both to SBAF and to ANZ if it had sought repayment. Further, SBC would have been estopped from seeking to enforce the expressed terms of the loan agreements. 31 The short answer is that there is still an enforceable obligation imposed by law to pay a creditor even if the time for payment is postponed or deferred. In terms of the legislative purpose of Div 245, there is just as much an economic benefit for a debtor if his creditor forgives a debt which is not yet due for payment as there is when the debt is due, or overdue. 32 With the SBC loans there was not a condition precedent to the coming into existence of the liability, as was the case in Emu Bay Railway Co Ltd v Federal Commissioner of Taxation [1944] HCA 28 ; (1944) 71 CLR 596. The loan agreements, under which money was advanced, stipulated dates for repayment and created unconditional obligations, notwithstanding that such obligations were extended from time to time: cf Federal Commissioner of Taxation v Citylink Melbourne Limited (2006) 228 CLR 1 at [134]. Prior to the sale of share agreement, there was no suggestion that SBC's rights would be abandoned. 33 Some points can be made as to the construction of the letters of comfort, or more specifically, the second one, which was operative at the relevant time. 34 First, covenant 2 relating to "ongoing financial support" is an obligation distinct from and independent of covenant 1. Consistently with the letter SBC could call for repayment after 30 September 2003 but still be obliged to "continue to provide ongoing financial support". 35 Secondly, both covenants were no longer operative once SBC sold its shares in SBAF. This is inconsistent with the necessary implication in the applicant's argument that on selling its shares SBC was still inhibited from enforcing its right of recovery against SBAF. 36 Issue 1 must be answered: yes. Issue 2: commercial debt ? The same result follows if interest is not payable but, had interest been payable, the interest would have been allowable as a deduction to the debtor: s 245-25(3). 38 That requires consideration whether interest paid or payable by SBAF satisfies s 8-1 of the Income Tax Assessment Act 1997 (Cth), that is to say whether interest (or hypothetical interest) was an outgoing incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing such income, and was not an outgoing of capital or of a capital nature. 39 The applicant contends that the Initial Loans were used to fund the acquisition of the business, and that interest might have been deductible in the initial years, but there was no intention on the part of SBC or SBAF that these loans be repaid. Accordingly, it is said, they lacked the "ephemeral character" of a loan and took on the character of an equity investment. They amounted to " de facto equity". From June 1999 onwards the outgoings lacked contemporaneity with the gaining or producing of assessable income; they were made for the purpose of enabling SBAF to repay other debts and to meet immediate requirements so that it might remain in business. It was insolvent on its own account and had no foreseeable prospect of gaining or producing income. At least in the case of the Subsequent Loans, the advances were made for the purpose of "propping up" an ailing business. 40 In my opinion, both the Initial Loans and the Subsequent Loans constituted debt. They did not constitute equity, whether de facto or de iure . When anyone is planning to engage in business through the medium of a company the investment can be made via loans or share capital or a combination of both. On a risk and reward analysis, either course has its pros and cons. In the present case there was a decision by sophisticated business people to invest via loans. The loan agreements, the variations thereof and the payments made thereunder were properly documented. The documentation and the underlying commercial reality were consistent with each other. SBAF functioned as a separate entity, with regular formal meetings of its own board and independently audited accounts. There is no suggestion of sham. The fact that lender and borrower were parent and wholly owned subsidiary does not alter that characterisation. 41 The applicant relied on Spassked v Federal Commissioner of Taxation [2003] FCAFC 282 ; (2003) 136 FCR 441 at [128] where Gyles J said that the parent-subsidiary relationship in that case was such that the loans were "purely intra-group arrangements with no external aspect" and many of the companies involved had "no external role at all". Thus the requisite connection or relationship between the outgoing and the earning of assessable income "was not to be inferred but must be positively established". However, in the present case SBAF certainly had an external role. It was a trading entity in its own right, albeit an unsuccessful one, and used the borrowed funds for working capital to pay the expenses of its business. 42 The relevant taxpayer is the applicant. The focus is upon it and the use to which it put the borrowed funds. The Court is not concerned with SBC's purpose in advancing funds: GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 136-137. 43 I conclude the answer to Issue 2 is: yes. Issue 3: forgiveness ? 45 Alternatively, s 245 - 35 (3) provides that if debtor and creditor enter into an agreement (whether or not legally enforceable) and under the agreement the debtor's obligation is to cease at a particular future time and the cessation of the obligation is to occur without the debtor incurring any financial or other obligation, then the debt is taken to be forgiven when the agreement is entered into. 46 The relevant provisions in the share sale agreement have already been mentioned: [6] above. 47 SBAF's internal records are consistent with forgiveness. Minutes of a directors' meeting of 1 March 2002 records "that SBC has agreed to cancel all the loans from SBC to (SBAF)". Appropriate entries were made in SBAF's general ledger. A note to SBAF's financial report for the six months ended 30 June 2002 recorded the debt forgiveness. 48 There is no evidence of any relevant documentation of the creditor SBC. However the applicant does not take any Jones v Dunkel point. 49 The Commissioner relied on an affidavit by a Japanese lawyer, Mr Masatoshi Yasunaga. 50 The applicant argued that the debt must be expressly forgiven and there was no evidence that this had been done. It says that SBC's obligation under the sale of shares agreement was to the purchaser, not to SBAF qua debtor. 51 In my opinion, the words of s 245-35(1) cannot be read down so as to require some express forgiveness. Waiver, for example, may be by conduct; it is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right: Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64 ; (1920) 28 CLR 305 at 326, Grundt v Great Boulder Gold Mines Ltd [1937] HCA 58 ; (1937) 59 CLR 641 at 658. The expression "or otherwise extinguished" is wide and would cover an agreement, enforceable in equity, not to set up the cause of action in debt: McDermott v Black [1940] HCA 4 ; (1940) 63 CLR 161. SBAF was of course a party to the sale of shares agreement. After settlement of the sale of shares agreement and SBC's receipt of the purchase price from Tasman Group there is no way in which SBC could have recovered the debts previously owing by SBAF. 52 In any event, s 245-35(3) would apply, the "particular future time" being the Completion Date (1 March 2002). 53 The answer to Issue 3 is: yes. Issue 4: is the solvency assumption applicable? Each debt was a CGT asset : 1997 Act s 108-5. The forgiveness of the debt was a CGT event : s 104-25(1). 58 Each debt was used by SBC in carrying on a business through a permanent establishment in Australia. SBC carried on a business there through its wholly owned subsidiary SBAF. The financing of that business was to a large extent through the loans which created the debts. 60 I answer Issue 4: no. Issue 5: going concern? 62 The parties called experts as to the valuation issues, Mr Damien Hodgkinson on behalf of the applicant and Mr Gregory Meredith on behalf of the Commissioner. 63 The first issue of principle is whether, as Mr Hodgkinson contended, capacity to pay is to be assessed on a going concern basis. Mr Meredith's opposing view is that one assumes a liquidation and the realisable value of the assets on an orderly realisation. 64 The term "capacity" is not defined in the legislation. Mr Hodgkinson said that it refers to "the ability to service a particular level of debt on a going concern basis and not on repayment, and that the ability of (SBAF) to service the debt was based on its ability to pay interest". On this view, the debtor's capacity to pay the debt is to be treated as a function of surplus cash flows from trading operations and interest, being interest in fact charged on the loans to 1 July 2000 and thereafter at the 90 day bank bill rate. 65 Mr Hodgkinson's approach is perhaps somewhat unrealistic in the circumstances of this case, given that SBAF never generated surplus cash flows from trading operations, and had to be continually propped up by SBC. It is difficult to see why a willing but not anxious buyer of the debts from SBC would not take these circumstances into account. More generally, I see no rational basis, in the valuation of a debt, in a distinction between capacity to pay interest and capacity to repay principal. Both have economic value. A valuation of the debt must have regard to both. 66 Mr Meredith, correctly in my view, identified the debtor's capacity to pay as a function of the resources which would be available, including assets which the debtor could realise in a reasonable time frame, and taking into account other liabilities. This approach is consistent with the classic definition of solvency in Sandell v Porter [1966] HCA 28 ; (1966) 115 CLR 666 at 670. 67 I would therefore not accept Mr Hodgkinson's going concern basis. Issue 6: first in first/out? Therefore, he said, on Mr Meredith's figures, totalling SBC advances outstanding prior to each new advance meant that the distribution would be insufficient to repay any further advance after 31 January 1997. 69 I agree with the Commissioner's submission that the first in/first out principle is not relevant in the present context. It is concerned with allocation of payments by a creditor, not with the debtor's capacity to pay. Issue 7: subordination? 71 The Commissioner, correctly in my view, contended that the SBC debts must be treated as ranking pari passu with those of other unsecured creditors. The letters do not purport to interfere with the priority as between creditors. There is no suggestion that they were communicated to or relied on by other creditors. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | claims by applicant (sbaf) that the forgiveness of commercial debt provisions do not apply to its assessment for 2003 and 2004 tax years sbaf's japanese parent company sbc made several loans to sbaf for purposes of initial acquisition of the business and to provide working capital loans extended over time and interest and principal amounts never repaid by subsidiary sbc gave several "letters of comfort" to bank and auditors sbc sold all shares in sbaf under sale of shares agreement sbc covenanted that on completion no financial indebtedness would be owed by sbaf to sbc held: income tax |
Both claim to be citizens of India. 2 The Appellants arrived in Australia on 31 January 2006 and applied to the Department of Immigration & Multicultural Affairs for Protection (Class XA) Visas on 10 March 2006. The Appellants are Hindu and, in their application for the protection visas, claimed that they " fear for our lives under the grounds of race and religion and politics ". They further claimed that " the muslim people are also main problem ". 3 A delegate refused that application and an application for review was thereafter filed with the Refugee Review Tribunal on 5 June 2006. A hearing before the Tribunal took place on 10 August 2006. The Tribunal affirmed the decision not to grant the visas sought and handed down its reasons for decision on 31 August 2006. 4 The Federal Magistrates Court ultimately dismissed an application seeking to review the decision of the Tribunal: SZJLH v Minister for Immigration & Citizenship [2008] FMCA 175. 5 The Appellants now appeal to this Court from that decision. Federal Magistartae Raphel FM failed to hold that the Refugee Review Tribunal made a jurisdictional error when it misunderstood or misconstrued the term "religious belief" as it appears in the UN Refugee Convention . The RRT failed to appreciate that appellant suffered harm at the hands of Muslims opponents only because of his religious belief being a Hindu . The Tribunal did not understand the applicant's fear of harm and misaaplied the law-affected the Tribunal's application of law. The appellants claim that the Tribunal failed to assess the cumulative effects of separate incidents of attacks on the appellant related with his claim for the protection visa. The Appellants claim that they have fear of persecution . 2.The appellants were denied procedural fairness when Hon Federal Magistrate failed to consider that appellants did not attend the scheduled hearing on 28 November 2007 due to financial hardship . They were unable to pay airfare and train fare because of financial hardship . They could not inform the Court because the network in that countryside was not working . Hon. Federal Magistrate did not give any consideration to waive the Respondent's cost of $4500. Notwithstanding the numbering appearing in those grounds, it is considered that the Notice of Appeal raises three grounds. 6 There was, however, no appearance for the Appellants when the matter was called on for hearing at 2.20 pm this afternoon. The matter was then called outside the Court, but to no avail. The proceedings were stood down to 2.35 pm to accommodate the prospect that the Appellants may have been late in arriving. The matter was then called outside the Court but again to no avail. The interpreter who attended Court to assist the Appellants was requested to telephone the Appellants on the mobile phone number set forth in their Notice of Appeal . That number was dialled, but the mobile telephone was turned off. 7 Counsel for the First Respondent sought an order that the appeal be dismissed pursuant to s 25(2B)(bb)(ii) of the Federal Court of Australia Act 1976 (Cth). 8 Previously filed by the Appellants was a written Outline of Submissions which has been considered, as have the Respondent Minister's written submissions. 9 Rather than dismissing the appeal pursuant to s 25(2B)(bb)(ii) of the 1976 Act, it was considered more prudent to proceed to hear the appeal in the absence of the Appellants and to rely upon the written submissions they had filed: Federal Court Rules 1979 (Cth), O 52, r 38A(1)(d). Oral submissions were advanced on behalf of the Respondent Minister and the matter was stood down for judgment at 3.05 pm. The hearing in fact resumed at 3.15 pm and, before judgment was delivered, the matter was again called outside the Court but with no greater success than on the first two occasions. 10 Having so proceeded, it is considered that none of the Grounds set forth in the Notice of Appeal have been made out and that the appeal should be dismissed. 12 The misconstruction of the phrase " religious belief ", as alleged in the Notice of Appeal , was not further identified. 13 The Appellants, however, confront a fundamental difficulty in making out the first Ground of Appeal -- namely, whatever may have been the misconstruction of that phrase, any detriment suffered was not a detriment occasioned by their religion or any other Convention related reason. I am also satisfied that India has a "generally tolerant and highly diverse" society. I am further satisfied that Hindus are not generally denied police or other state protection because of their religion --- indeed it appears that the reverse is more often the case. For these reasons I am not satisfied that merely being Hindu in India is sufficient to give rise to a well-founded fear of persecution for the Convention reason of religion. As to [SZJLH's] oral account of his reasons for leaving India, I accept that he was the owner of a business which specialised in wedding decorations, and that between 2004 and 2006 a competitor tried to drive him out of business. Although he claimed this businessman was a Muslim, [SZJLH] unequivocally stated that the reason for the harassment was business-related. It was not for the reason of his religion ... [SZJLH] also gave clear evidence that, with the exception of one other family, the town's other Hindus were not being seriously harassed or harmed by local Muslims, a matter which indicates that the essential and significant reason for whatever problems he faced was not his religion. 15 The first Ground of Appeal is considered to be without merit and is thus rejected. Concurrence is expressed with the conclusion as reached by the Federal Magistrate. Left to one side for present purposes is the fact that this asserted grievance is one directed to an alleged error on the part of the Tribunal and that the present proceedings are an appeal from the decision of the Federal Magistrates Court. 17 After recounting its assessment as to the oral account given by the Appellants of their reasons for leaving India, the Tribunal went on to make further findings in respect of the accounts given as to attacks upon the Appellants' family. As to his claim that there was an attempt to abduct his children in late 2005, I have the greatest difficulty believing this, given that the applicants chose to leave their children in their family home two months later when the applicants left India, where they would presumably remain vulnerable to a further abduction attempt and, further, that the applicants made no attempt themselves to move to another village or town rather than leave the country --- an option which would have enabled them to remain with their children. ... The Tribunal further made separate findings in respect of claims said to have been lodged with the police. I am satisfied that the applicants could return to their village and would not be persecuted there for any of the reasons set out in the Convention. Therefore I find that they do not have a well-founded fear of Convention-related persecution in India. The Tribunal's reasons also recount that it had " considered the evidence as a whole ". 18 The findings of the Tribunal were open to it upon the evidence before it and no error is exposed in the Tribunal's reasons. There has been no failure on the part of the Tribunal to consider the claims to harm asserted by the Appellants. 19 The contention advanced on behalf of the Appellants, namely that the Tribunal failed " to assess the cumulative effects of separate incidents of attacks on the [First] appellant related with his claim for the protection visa ", is denied by the detailed findings of fact made by the Tribunal. The contention is thus rejected. A reading of the reasons of the Tribunal discloses findings being made in respect of the matters raised by the Appellants and an ultimate conclusion being reached which assessed those matters taken into account in their entirety. 20 As has been repeatedly pointed out, judicial review of an administrative decision -- let alone judicial review confined to jurisdictional error -- does not extend to a review of the merits of a decision: Attorney-General (NSW) v Quin [1990] HCA 21 ; (1990) 170 CLR 1. 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. These observations have been oft cited with approval: eg, Minister for Immigration & Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ. Even a wrong finding of fact alone does not constitute an error of law: Abebe v Commonwealth [1999] HCA 14 at [137] , [2004] HCA 32 ; 197 CLR 510 at 560 per Gummow and Hayne JJ. 21 The second Ground of Appeal is rejected. It is an impermissible challenge to the findings of fact as made by the Tribunal and is, in any event, contrary to the findings of fact as made by the Tribunal. 23 On that occasion there was no appearance by either of the now Appellants and the application was dismissed pursuant to r 13.03A(c) of the Federal Magistrates Court Rules 2001 (Cth): SZJLH v Minister for Immigration & Citizenship [2007] FMCA 2067. 24 Any continuing significance as to the events of 28 November 2007, however, remains elusive. As set forth in the reasons for decision of the Federal Magistrates Court now under appeal, an application was made on 12 February 2008 to vacate the orders previously made and, on that occasion, the Federal Magistrate in fact vacated the orders as requested and proceeded to hear and resolve the case then sought to be advanced. 25 There is no procedural unfairness in either the Federal Magistrate initially dismissing the application in November 2007, when the now Appellants failed to appear, and certainly no procedural unfairness in the Federal Magistrate thereafter, in February 2008, entertaining and resolving the arguments that were subsequently sought to be advanced. Whatever may have been the reasons for the now Appellants not previously appearing before the Federal Magistrates Court, they need not be further pursued; their case has been heard and determined by that Court in a procedurally fair manner. 26 To the extent that some complaint is made as to the Federal Magistrates Court not giving " consideration to waive the Respondent's cost of $4500 ", it is sufficient to note that an order for costs was within the discretion of the learned Federal Magistrate. There is no discernible denial of procedural fairness in the Federal Magistrate making that order or any other reason to set aside that order. Although the quantum of the costs ordered may, without explanation, appear to have been somewhat greater than may have been otherwise anticipated, the Federal Magistrate explained that the costs ordered to be paid took " into account both hearings ". 27 At the conclusion of the present appeal, leave was granted to the First Respondent to file an Affidavit which estimated the Respondent Minister's costs of these proceedings as exceeding $2,250. A fixed order for costs in the sum of $1,600 was sought and it is considered that such an order should be made. The appeal be dismissed. 2. The Appellants to pay the costs of the First Respondent fixed in the sum of $1,600. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | failure of appellants to appear appeal proceeded in absence of appellants no convention persecution no failure on the part of the refugee review tribunal to assess the claims findings of tribunal were findings of fact open to be made no denial of procedural fairness migration |
2 Her Honour dismissed an application for constitutional writs in respect of a decision of the Migration Review Tribunal on 13 October 2006. The Tribunal there affirmed a decision of a delegate of the First Respondent refusing to grant an application for a temporary Business Entry (Class UC) visa. 3 The difficulty confronting the First Appellant before the Tribunal was the fact that the " sponsor " nominated by him for his visa " went bankrupt ". He sought to have another sponsor substituted. The Tribunal concluded that cl 457.223(4)(a) of Sch 2 to the Migration Regulations 1994 (Cth) did not permit any change in the identity of the sponsor nominated. That was also the decision of the Federal Magistrate. I will provide copy of the transcript. That statement, it is understood, was the " four page statement " referred to in the Notice of Appeal . 6 In addition a community volunteer, Mr Laba-Sarkis JP, sought the indulgence of the Court to make submissions on the Appellant's behalf. That course was not opposed by counsel for the First Respondent. A like indulgence was extended in SZFCX v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 394 at [16] , 90 ALD 634 at 646---6. The latter submission was that the status of the sponsor, as at the date of the decision, was irrelevant. 7 None of the grounds of appeal in the Notice of Appeal as further elaborated by Mr Laba-Sarkis have merit and each should be rejected. 9 In the present appeal there has been no attempt to establish by way of admissible evidence what had actually occurred before Emmett FM. A conclusion that her Honour denied the Appellants procedural fairness should not be lightly made. This is especially so in circumstances where it is apparent that her Honour extended what would appear to be a more than adequate opportunity to the Appellants to make out their case. The Applicant had the assistance of an interpreter and informed the Court that he represented all the applicants. However, during the hearing, both Raymond Sam and Raymona Sam made submissions to the Court. [25] The Applicant, after consultation with his family, confirmed that he relied upon the grounds in the application filed on 7 November 2006. Not surprisingly there was no attempt by her Honour to limit the Applicants to making submissions through only one particular nominated person, and no attempt to restrict consultation between the Applicants in order to ensure the basis upon which the case was to be presented. 10 Even though it has been concluded that Emmett FM did not deny the now Appellants any procedural unfairness this Court has had the benefit of the statement to which reference has been made in the Notice of Appeal . That statement, it is considered, does not advance for resolution the issues then before the Federal Magistrates Court. Whether or not the statement was made or prevented from being made to Emmett FM need not be resolved. 11 No attempt has been made to prove the " incompetence " of the interpreter. Nothing is known as to the qualifications of the interpreter and nothing is known as to the basis upon which it is contended that the interpreter did not properly discharge his functions. 12 The grounds of appeal seeking to allege a denial of procedural fairness in the Federal Magistrates Court are rejected. 14 What is intended to be conveyed by the phrase " what happened to me since my arrival in Australia " was not elucidated in at the hearing of this appeal. The relevance of any such explanation as to the issues before the Tribunal is again elusive. Similarly, the manner in which the Tribunal is said to have " exceeded its authority and power and erred in law " is left unexplained. 15 The decision of the Tribunal has, however, been reviewed. No error or excesses of authority or power is apparent. This complaint is misconceived in that cl.457.223(4) has the effect of requiring the sponsor at the time of the Tribunal's decision to be the same sponsor as in the Applicant's application for a 457 visa lodged on 15 October 2003. It is not sufficient for the Appellant to have satisfied cl 457.223(4)(a) alone as the word " and " makes clear. The appeal be dismissed. 2. The First Appellant is to pay the costs of the First Respondent fixed at $2,000. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | review of decision by federal magistrates court whether federal magistrate erred in finding that an applicant for a 457 visa cannot change sponsors following approval migration |
As I have decided that each application fails and the cases must therefore proceed, I will give my reasons as succinctly as possible and say as little as I can about the merits of the cases consistently with giving adequate reasons. It is convenient to deal with all cases in the one judgment. In each case, the appeal statements by both the applicant and the respondent, the Commissioner of Taxation, have now been finalised. The following abbreviated facts are not in dispute. 2 On 1 July 2002 the applicant was a wholly owned subsidiary of McDonald's Australia Holdings Ltd (Holdings). Between 1 July 2000 and 30 June 2002 Holdings was the representative member of the McDonald's Australia GST Group for the purposes of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) relating to the liability for goods and services tax (GST). On 1 July 2002 Holdings and the applicant executed an asset transfer agreement that, inter alia, dealt with the transfer of certain plant and equipment from Holdings to the applicant for a purchase price of $102,937,406. On 20 December 2002 the applicant entered into a number of transactions by which, inter alia, the plant and equipment sold by Holdings to the applicant were sold by the applicant to Lautrec (MR) Pty Ltd and leased back from Lautrec to it pursuant to equipment leases. 4 In January 2003 the applicant lodged its Business Activity Statement (BAS) for the tax period ended 31 December 2002. The net amount of GST payable was calculated as $5,279,202. That amount included a GST liability in the sum of $11,065,262 under Div 9 (taxable supplies) and a lesser input tax credit in the sum of $9,357,946 under Div 11 (creditable acquisitions) (as modified by Div 66 (second hand goods)) in respect of the creditable acquisition and taxable supply of the assets transferred from Holdings to the applicant and then on sold. On 15 February the applicant requested the Commissioner to amend its December 2002 BAS to reduce the input tax credits claimed under Div 11 to $8,990,014.34, thereby increasing the net amount payable by the applicant. 5 On 4 August 2006 the Commissioner issued a GST assessment (the first assessment) to the applicant which assessed the GST net amount payable by the applicant to be $14,269,216, being $8,990,014 higher than the net amount included by the applicant in its December 2002 BAS (as amended). On 15 September 2006 the applicant objected against that assessment, which objection was disallowed on 31 May 2007. The appeal against that disallowance is matter No NSD 1442 of 2007. 6 On 8 January 2007 the Commissioner made a declaration under s 165-40 of the GST Act purporting to negate a GST benefit obtained by the applicant in the December 2002 BAS in the amount of $8,990,014. On 2 March 2007 the applicant objected against the declaration, which objection was disallowed on 31 May 2007. The appeal against that disallowance is matter No NSD 1443 of 2007. 7 On 8 January 2007 the Commissioner issued an amended GST assessment (the amended assessment) for the December 2002 tax period pursuant to s 105-25 of Schedule 1 to the Taxation Administration Act 1953 (the Administration Act). The net amount expressed to be owing was the same as that owing under the first assessment but it was clear that the Commissioner was asserting reliance upon the declaration as well as the original rejection of the input tax credit. On 2 March 2007 the applicant objected against the amended assessment, which objection was disallowed on 31 May 2007. The appeal against that disallowance is matter No NSD 1441 of 2007. It is contended that the first assessment and the objection decision against that assessment were superseded by a wholly inconsistent and prevailing amended assessment dated 8 January 2007. It is submitted that the attempt to keep the first assessment on foot is ineffective, being contrary to the specific operation of s 105-100 in Schedule 1 to the Administration Act ( Marina Estates Pty Ltd v Deputy Commissioner of Taxation (1974) 48 ALJR 219). It is submitted that, upon being invalidated by s 105-100, the first assessment became "excessive" pursuant to s 14ZZO of the Administration Act ( McAndrew v Federal Commissioner of Taxation [1956] HCA 62 ; (1956) 98 CLR 263). In Commissioner of Taxation v Stokes (1996) 72 FCR 160 it was held that the structure of the income tax legislation did not permit inconsistent assessments to issue to the same taxpayer in relation to the same year of income. It is submitted that invalidity is not avoided in this case by the operation of s 105-30 to Schedule 1 of the Administration Act as the extent of the inconsistency covered the entire area of controversy between the parties so that the amended assessment entirely prevails over the first assessment. It is submitted that no justiciable subject matter remains to be determined ( Swartz v Commonwealth [1959] HCA 28 ; (1959) 102 CLR 340). 9 The Commissioner contends that the first assessment was amended pursuant to s 105-25 of Schedule 1 to the Assessment Act. The amended assessment was not made under s 105-5 of the Assessment Act. There is, thus, no inconsistency between assessments, rather, the amended assessment is the operative assessment. Neither s 105-100 nor s 105-30 has any relevant operation. The first assessment existed at the time of the objection decision and the appeal remains on foot by value of the statute. 10 In my opinion, the authorities cited by counsel for the Commissioner, namely Federal Commissioner of Taxation v S Hoffnung & Co Ltd [1928] HCA 46 ; (1928) 42 CLR 39 at 45 per Isaacs J, Puzey v Commissioner of Taxation [2003] FCAFC 197 ; (2003) 131 FCR 244 and Platypus Leasing Inc v Commissioner of Taxation (No 3) [2005] NSWSC 388 ; (2005) 189 FLR 441 at [47] ---[51], upheld on appeal at (2005) 61 ATR 239, establish the correctness of the Commissioner's contentions. 11 However, it follows that there is no utility in pursuing this case, because the first assessment has no independent relevance as long as the amended assessment stands. Thus, the proceeding will be stayed. It should be noted that an attack on the merits of the substantive objection decision was not pursued on this leg of the argument. In order to succeed the Court must be satisfied that the Commissioner has no reasonable prospect of successfully defending the proceeding (s 31A(1)(b) Federal Court of Australia Act 1976 (Cth)), although a defence need not be hopeless or bound to fail for it to have no reasonable prospect of success (s 31A(3)). It is clear enough that s 31A is wider than the previous regime for summary judgment had become. Counsel cited a number of decisions that have discussed this provision --- the latest being Commonwealth Bank of Australia v ACN 000 247 601 Pty Ltd [2006] FCA 1416 at [30] per Jacobson J and Hicks v Ruddock [2007] FCA 299 ; (2007) 156 FCR 574 at [13] per Tamberlin J. However, limited assistance is to be gained from other decisions. "No reasonable prospect of successfully defending the proceeding" is a statutory phrase that does not permit or require paraphrase. Whilst the bar may be lower than it was, it still requires a considerable leap. 13 Section 14ZZO of the Administration Act provides that the applicant has the burden of proving that the declaration should not have been made or should have been made differently. An application for summary judgment by a party which bears the burden of proof can be properly described as ambitious, particularly where the proceeding is at an early stage --- no evidence has been filed, there has been no discovery, no subpoenas have been issued and where there are no formal pleadings. It must also be borne in mind that the Commissioner has no first hand knowledge of the underlying facts and circumstances. 14 The applicant seeks to sidestep these problems by relying upon the Commissioner's appeal statement required by O 52B r 5 of the Federal Court Rules . It is submitted that, on the basis that all the facts asserted in the appeal statement are accepted, the applicant can demonstrate that it will carry the burden of proof of establishing that the declaration should not have been made. The applicant relies upon the decision of Sundberg J in Rio Tinto Ltd v Federal Commission of Taxation [2004] FCA 335 ; (2004) 55 ATR 321 particularly at [31] and [58] that underlines the importance of the appeal statement and the necessity for it to fully state the basis of the relevant decision, and refers to Clark v Commissioner of Taxation [2007] FCA 1426 at [37] . It is submitted for the Commissioner that an appeal statement should not be used in this way. 15 I am prepared to accept for the purposes of the argument (without deciding) that a Commissioner's appeal statement might reveal a fundamental flaw in a decision that is not capable of being cured and so provide a proper basis for summary judgment notwithstanding the burden of proof lying upon the taxpayer. However, I am not satisfied that this is such a case. 16 The anti avoidance provisions of the GST Act are contained in Div 165. Those provisions are broadly similar to Pt IVA of the Income Tax Assessment Act 1936 (Cth), the subject of much litigation, but there are important differences. Those differences arise both from the different terms of the provisions themselves and from the difference between GST and income tax. I will not set out the terms of Div 165 or endeavour to summarise its effect. 17 The applicant submits that it is quite clear that it did not get a "GST benefit" from any scheme that has been or might be identified. An entity only gets a GST benefit if the amount of GST payable by it is, or could reasonably be expected to be, smaller than it would be apart from the scheme or a part of the scheme (s 165-10(1)(a)). That requires adopting a hypothesis as to what would have occurred had the scheme not been entered into. It is submitted that the hypothesis must be reasonable and based upon the evidence ( Federal Commissioner of Taxation v Peabody [1994] HCA 43 ; (1994) 181 CLR 359 at 385; Epov v Federal Commissioner of Taxation [2007] FCA 34 ; (2007) 65 ATR 399 at 412). It is submitted for the applicant that no such hypothesis has been or could be adopted here. 18 The essence of the scheme identified by the Commissioner is the application by Holdings for deregistration at the time and on the basis upon which it was made with the result that it was not registered at the time of the sale of the assets to the applicant. The Commissioner contends that the alternative hypothesis is that such application was not made at the time it was, but was made at a time after the sale of assets to the applicant but before the on-sale to Lautrec. In my view, it is too early to rule out that hypothesis. If it were established, then the applicant would have had no basis upon which to claim an entitlement to an input tax credit arising out of the purchase of assets from Holdings to offset against GST otherwise payable for transactions including the on sale of the assets by reason of s 48-45(3) of the GST Act --- the applicant's acquisition from Holdings would have been an acquisition from another member of the same GST group --- or s 66-5(2)(a) of the GST Act --- because the supply to the applicant would have been a taxable supply or GST free. I should add that the question of quantum which was raised by the applicant would not be a proper basis for a summary judgment. 19 The applicant contends, as a separate point, that if the applicant received a GST benefit, that benefit was attributable to the making by Holdings of a choice, election or application that is expressly provided for by the GST Act and so Div 165 does not operate by reason of s 165-5(1)(b). Registration for GST purposes is governed by Pt 2-5 of the GST Act. It is submitted that application for cancellation of registration in the approved form was a choice, election or application expressly provided for by s 25-55(1)(a). Reference was made to the decision of the High Court in Federal Commissioner of Taxation v Sun Alliance Investments Pty Ltd (in liq) [2005] HCA 70 ; (2005) 225 CLR 488 at 514---515 and to the decision of Greenwood J in Walters v Commissioner of Taxation (2007) 162 FCR 421 particularly at [83]---[85]. 20 Section 25-55 is only one aspect of Pt 2-5 dealing with registration and cannot be considered in isolation. The most significant aspect of the Part is Div 23 which deals with who is required to be registered and who may be registered. Division 25 deals with how you become registered and how your registration can be cancelled. Whether or not an application to cancel registration pursuant to s 25-55(1) amounts to a choice, election or application within the meaning of s 165-5(1)(b) is a question of substance which should be determined in the light of the facts as found and with the benefit of full argument as to the operation of the GST Act. In my opinion, it is not a proper basis for summary judgment particularly where the burden of proof lies as it does. 22 I should add that the Commissioner maintains the position that the applicant cannot establish that the goods were acquired from Holdings for the purpose of sale in the ordinary course of business within the meaning of s 66-5(1). That position was the basis of the first assessment and the Commissioner continues to apply it to the amended assessment. Although no particular argument was directed to the merits of that point, it is clearly a matter of substance which should be determined at trial. I will hear the parties as to costs at some appropriate time. 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. | applications for summary judgment by applicant taxpayer whether original assessment is invalidated and rendered excessive by an amended assessment role of appeal statement whether commissioner's appeal statement reveals a fundamental flaw that is not capable of being cured whether arguable that applicant received a gst benefit from any identified scheme whether any gst benefit necessarily attributable to the making of a choice, election or application application for summary judgment by party that bears the burden of proof taxation practice and procedure |
The background to the matter is that the Commissioner of Taxation (the Commissioner) has in his favour certain costs orders. As those costs orders have remained unsatisfied, the Commissioner has issued bankruptcy notices against Mr Croker. Those bankruptcy notices, as Moore J observed in [1] of his reasons for judgment, have generated a considerable body of litigation in this Court. Mr Croker, in his application, alleged that the Commissioner had committed the tort of misfeasance in public office. This, as Moore J described at [1], was "pleaded in a number of ways in the statement of claim. " Moore J observed that Cowdroy J had heard and dismissed a similar application in the matter of Croker v Commissioner of Taxation [2006] FCA 372. Cowdroy J held that this Court did not have jurisdiction to hear a claim with respect to the tort of misfeasance in public office in the manner alleged by Mr Croker. Mr Croker sought leave to appeal against the decision of Cowdroy J. Leave was refused by Edmonds J in the matter of Croker v Commissioner of Taxation (2006) 62 ATR 519; [2006] FCA 720. Moore J concluded (at [2]) that Cowdroy J's decision and determination "at the very least" raised an issue estoppel against Mr Croker. That is, the Court had already determined that it did not have jurisdiction to hear and determine a claim in tort for misfeasance in public office in broadly the same set of circumstances relied upon by Mr Croker in the present case. In consequence, Moore J held that Mr Croker was estopped from arguing that the Court does have jurisdiction. Further, Moore J observed that irrespective of an estoppel, the principle of judicial comity meant that he would be bound to follow Cowdroy J's decision unless he thought it was plainly wrong. However, he was not of the view that Cowdroy J's decision was plainly wrong, with the consequence that Moore J dismissed the application on those two grounds. Mr Croker has come before the Court today seeking leave to appeal essentially referring to the following considerations. First, Mr Croker says that the Court does have jurisdiction to hear his claim, referring to s 56 of the Judiciary Act 1903 (Cth) and other cases in which the Court has heard and determined suits against the Commonwealth in tort. Second, Mr Croker says, and the Commissioner accepts, that the Commissioner has an obligation to act as a model litigant in accordance with the Legal Services Directions (2005) which is enforceable in accordance with ss 55ZF and 55ZG of the Judiciary Act . According to Mr Croker the Commissioner has not acted in accordance with his model litigant obligations. Third, Mr Croker says that the Court should have allowed his statement of claim to be amended if a pleading correction could have sustained a reasonable cause of action. Fourth, Mr Croker says that this Court, even if it did not have jurisdiction, could and should make an order transferring his proceedings to a court of competent jurisdiction such as a State Supreme Court. Finally, Mr Croker says that there has been a gross miscarriage of justice and that his constitutional rights have been contravened, with the result that he should be granted leave to appeal. The Commissioner submits that the relevant principles with respect to whether leave to appeal is to be granted are those established in Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 , namely, first, whether in all the circumstances the decision of Moore J is attended with sufficient doubt to warrant it being reconsidered by the Full Court and, second, whether substantial injustice would result if leave were refused supposing the decision to be wrong. According to the Commissioner, neither limb of this test is satisfied in the present case. Essentially the Commissioner relies upon the reasons of Moore J. With respect to the Legal Services Directions the Commissioner says that it is of no assistance to Mr Croker. In short, it does not in any way undermine Moore J's conclusions about issue estoppel. Nor, says the Commissioner, is s 56 of the Judiciary Act relevant. Finally and in any event, the Court should be satisfied that there would not be any substantial injustice because no reasonable cause of action was disclosed in Mr Croker's proceeding. The Commissioner said where the Court does not have jurisdiction it would not, or could not, make any order transferring the proceeding and, in any event, this was an application for leave to appeal. Finally, with respect to the other cases relied upon by Mr Croker, the Commissioner says that in those cases the circumstances were very different in the sense that the tortious claims arose in the context of federal law in respect of which this Court does have jurisdiction or by reference to related facts in the Court's accrued or associated jurisdiction. It is necessary in this application for leave to appeal for me to consider the factors referred to in Décor Corp . It seems to me to be clear that Moore J's decision is not attended by any real doubt. The circumstances of the present application which Moore J dismissed are broadly the same as, and arise from the same circumstances as, the matters considered by Cowdroy J. Cowdroy J considered the application for damages for the tort of misfeasance in public office in proceedings between the same parties in 2006. He held that this Court did not have jurisdiction. There is no basis put before me today, nor which otherwise arises on consideration of Moore J's decision, which in any way indicates that His Honour's conclusions are attended with any real doubt. At the very least an issue estoppel arises as against Mr Croker in relation to the present application. Moore J's conclusion in this regard appears plainly correct. As to the second limb of the principles established in Décor Corp , it is obvious from the facts which underlie the present application that substantial injustice would not be occasioned if leave were refused supposing the decision of Moore J to be wrong. Again, Edmonds J considered very similar circumstances and reached the same conclusion having regard to the history of the proceedings between Mr Croker and the Commissioner. Nothing has been put before me today which, in my view, supports any meaningful submission that there would be any injustice by declining the grant of leave to appeal supposing the decision of Moore J were wrong. As to the additional submissions of Mr Croker in support of his application, I accept what the Commissioner has said about other cases concerning tortious conduct turning on their own facts. They do not provide support for Mr Croker's position in this matter. I also accept what the Commissioner has said about the immateriality of Mr Croker's submissions by reference to s 56 of the Judiciary Act and the Legal Services Directions. It is no answer to suggest, as Mr Croker has done, that Moore J should have allowed the statement of claim to be amended. There does not seem to be any reference in the decision of Moore J to any application to amend the statement of claim. Be that as it may, the basis of Moore J's decision was, in effect, that Mr Croker had already argued and lost this jurisdictional point in relation to similar circumstances against the same respondent in 2006. If any different claim were to be made, then it could have been made at the time the proceedings were commenced. I also accept what the Commissioner has said about the suggestion that I might make orders transferring the application to a court of competent jurisdiction. The short answer to that is that the claim has already been dismissed. This is an application for leave to appeal. Applying the conventional principles to the determination of the application, leave should be refused. The idea that proceedings may be commenced in one court which has no jurisdiction to determine the matter in order to enliven some power to transfer proceedings to another court seems to me to be misconceived, or certainly inapplicable in the particular circumstances of this case where I propose to decline leave. For these reasons the application for leave to appeal by way of notice of motion filed on 19 March 2009 is dismissed. The Commissioner has asked that, in the particular circumstances of this case, there should not only be the usual order as to costs, but in fact Mr Croker should be ordered to pay the Commissioner's costs on an indemnity basis consistent with the approach taken by Moore J. In [4] of his decision, Moore J observed that this was one of the "rare cases" where an indemnity costs order should be made. Moore J concluded that because the proceedings were in substance proceedings of the same character that were heard and dismissed by Cowdroy J, Mr Croker should have appreciated that these proceedings were likely to be dismissed. This possibility had been adverted to at a directions hearing, as was the issue of Mr Croker being potentially liable to pay not only the Commissioner's costs but they be paid on an indemnity basis. Moore J concluded that it should have been apparent to Mr Croker that his case was, in effect, hopeless. In those circumstances, Moore J decided that costs on an indemnity basis should be ordered. Mr Croker says that because the Commissioner has not acted in accordance with the Legal Services Directions, there should be no order as to costs. It does seem to me that the circumstances of these proceedings are unusual. Mr Croker instituted proceedings in similar circumstances in 2006. He was unsuccessful on the basis that the Court said it had no jurisdiction. He sought leave to appeal against that decision and leave was refused. In the judgment of the Court at that time, Edmonds J (at [3]) observed that the draft notice of appeal contained "no arguable ground of appeal" which should not be surprising because Edmonds J was unable to identify any error in the judgment below. Accordingly, at that stage, two judges of this Court had determined that there was no jurisdiction to hear Mr Croker's application for damages for the tort of misfeasance in public office against the Commissioner. Moore J then dealt with the second application. His Honour referred to the earlier decisions, determined that there was an issue estoppel against Mr Croker, and observed that nothing had been put to him which would indicate that Cowdroy J's decision was plainly wrong. Accordingly, Moore J concluded that there was no course open other than to dismiss the application, a decision which seems to me to be plainly correct. As I have said, Moore J ordered Mr Croker to pay indemnity costs because the application was, in effect, hopeless. The Commissioner has now been brought to Court again by Mr Croker on an application for leave. The submissions of Mr Croker in support of the leave application do not seem to me in any way to address the real principles applicable on a leave application, to which I have already referred. In the context and background of this matter, it must have been known to Mr Croker that this application for leave was hopeless and doomed to fail. In these unusual circumstances, I concur with the approach taken by Moore J on the issue of costs. This is a case where the proceeding should never have been brought. Accordingly, the second order I make is that the applicant is to pay the respondent's costs on an indemnity basis. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | notice of motion for leave to appeal whether court has jurisdiction to hear a claim with respect to the tort of misfeasance in public office whether primary judge's decision attended with sufficient doubt to warrant reconsideration on appeal whether indemnity costs order should be made practice and procedure costs |
That course of action is rendered necessary, or at least desirable, by reason of orders which have the effect of suspending the entitlement of the first plaintiff to act as liquidator. I need not deal with all of the circumstances. There are only two aspects of the matter which I should mention. 2 The first is the fact that the order is sought to be made prospectively, that is, a replacement in anticipation of a pending resignation. Counsel has referred me to several authorities which provide clear authority for reading the relevant section in that way, namely, Re Application of Vouris and Anor (2004) 49 ACSR 543; [2004] NSWSC 384 ; Re Wily and Anor (2003) 49 ACSR 94; [2003] NSWSC 1260 and Re McGrath and Anor (as liqs of HIH Insurance Ltd) (in liq) (2005) 54 ACSR 55; [2005] NSWSC 506. I am satisfied that there is power to make the order sought and there being power, it is clearly convenient to do so, subject to the other aspect. 3 The second aspect of the matter is that the second plaintiff, who is proposed to be the substituted liquidator in this case, whilst a registered liquidator and an official liquidator, is a principal of the same firm of accountants as the first plaintiff and he was employed by that firm for a number of years before becoming a principal. It is contemplated that the first plaintiff will remain as a principal and, indeed, as the chairman of the firm of accountants and will continue to occupy his present premises. He will therefore be easily accessible to the second plaintiff and his staff to answer queries they may have in relation to the liquidation to ensure a smooth transition of the work. 4 It is said that there are currently no funds available for payment of liquidator's disbursements and remuneration from the assets of the company. If a new, what might be described as external, liquidator were to be appointed, there would not be sufficient funds to cover payment of that liquidator's remuneration and disbursements, particularly given the need for that liquidator to become familiar with the details of the liquidation. Plainly enough, the proposed transfer is convenient and may achieve a result which would be difficult to achieve if there were sought to be a replacement of the first plaintiff by a liquidator with no association with him. 5 On the other hand, it is clear enough that the relationship between the two plaintiffs is such that this could not be regarded as being an arm's length replacement in any real sense. Indeed, it is entirely possible that the same people will be working on the matter as were working on it previously. It is difficult to believe that the first plaintiff will not influence decisions. Indeed, his ability to be available is one of the points put in favour of the application. As against that, the second plaintiff has his own professional responsibilities which are binding upon him and he is subject to all of the discipline which is potentially applicable in the circumstances. 6 My concern in a nutshell is that the suspension of a liquidator may not achieve very much if the firm of which he is a member continues in practice, to do the work. My concern, however, is alleviated very considerably because counsel is able to point out that in the matters of both Vouris and Wily , to which I have referred, experienced corporations judges in the Supreme Court, Palmer J and Barrett J, have each permitted the replacement of one liquidator by another in very similar circumstances. Whilst there is no real discussion in those decisions of the point that troubles me, I am certain that it would not have escaped the attention of either of those judges. The fact that they made the respective appointments in question is an indication that in situations like this, because of the practical consequences, the judges have been prepared to rely upon the professional responsibility of the replacement liquidator. I am, therefore, in sound company in so doing. 7 I have amended order 1 by adding 'effective 20 December 2006' after the word 'arise'. I make order 1 as amended. | resignation and replacement of suspended liquidator order sought prospectively resigning and replacement liquidators from the same firm corporations law |
It is an interesting point which, I think I am correct in saying, has not previously come before an Australian court. The issue arises in the following way. The patents in suit (which correspond with several United States patents) were granted jointly to Angiotech Pharmaceuticals, Inc. and the University of British Columbia. Each patentee claims title to the inventions by assignment from the US inventors. In the case of UBC, it claims title from two only of several persons claiming to be inventors namely Helen Burt and John Jackson. The applicant alleges, however, that neither Burt nor Jackson was one of the inventors. So it argues that the patents must be revoked for they could only have been granted to the actual inventors or those claiming under them. 2 Assuming it can make out the facts, the resolution of the applicant's contention depends not so much on the effect of s 138(3) of the Patents Act 1990 (Cth), which permits the revocation of a patent granted to a person not entitled, but upon the proper construction of s 15 , which specifies to whom a patent may be granted. The answer to that question is, I think, to be gathered from the history of the section. 3 The patent system in England had its origins in the royal grants by which monopolies in trade and manufacture were conferred by the Crown in the exercise of the prerogative. These monopolies were granted to "any man [who] by his own charge and industry, or by his own wit or invention, doth bring any new trade into the realm": Darcy v Allin (1602) Noy 173, 182. In his Institutes , Sir Edward Coke said: "The reason wherefore such a privilege is good in law is because the inventor bringeth to and for the common wealth a new manufacture by his invention, costs and charges, and therefore it is reason, that he should have a privilege for his reward (and the encouragement of others in the like) for a convenient time": 3 Coke's Institutes 184. The monopoly could be granted not only to the inventor but also to the person who first brought the new invention into England: The Clothworkers of Ipswich Case (1615) 1 Godb 252; Shepherd's Abridgment , Pt III, Prerog, 61; Hawkins Pleas of the Crown , vol 1, c 29, s 20. 4 The first statute which regulated the grant and sole use and exercise of an invention was the now famous Statute of Monopolies, 21 Jac 1, c 3. By this statute, which was declaratory of the common law, it was provided, in the sixth section, that a patent could be granted to the "true and first inventor or inventors" of any new manufacture. The inventor was the person who made the discovery; that is, the idea for it originated in his own mind: Jones v Pearce (1831) 1 WPC 121, 124. The inventor was also the person who first introduced the invention into the realm: Edgeberry v Stephens (1693) 2 Salk 447. This was changed by the Patents, Designs, and Trade Marks Act 1883 , 46 & 47 Vict, c 57, ss 4 and 5. According to those sections, which appeared in subsequent enactments, any person could make application for a patent (s 4(1)) or two or more persons could make joint application for a patent (s 4(2)). Moreover, a patent granted to several persons was valid even if only one of them was the "true and first inventor": s 5(2). Consequently, "a capitalist [could] advance money to a needy inventor and obtain an interest in the patent from the beginning": Frost, Patent Law and Practice , 3 rd ed, vol 1 (1906) 4. 6 Shortly after the passage of the 1883 Act doubt was expressed concerning the identity of the persons to whom a patent could be granted. For example, in Brice, Patents, Designs, and Trade Marks (1885) it was suggested that under s 5(2) a person who brought an invention into the realm might not now be granted a patent. Brice wrote (at 3): "If this section were construed strictly, an importer, merely as such, plainly cannot apply for, and therefore cannot receive a grant of letters patent. " He suggested ways of getting around the problem. Some also suggested that s 5(2) had removed the ability of several persons to obtain a grant jointly if any one of them was not the inventor. 7 These doubts were removed by the Patents, Designs, and Trade Marks (Amendment) Act 1885 , 48 & 49 Vict, c 63. Section 1 provided that the Act was to be construed together with the 1883 Act. Section 5 provided that: "Whereas doubts have arisen whether under the principal Act a patent may lawfully be granted to several persons jointly, some or one of whom only are or is the true and first inventors or inventor; be it therefore enacted and declared that it has been and is lawful under the principal Act to grant such a patent. The exceptions were Victoria and Western Australia where the legislation was different in significant respects. Relevant for present purposes is the Victorian statute, the Patents Act 1889 (Vic). That Act provided that the only person who could apply for a patent was the "actual inventor" or his assigns or legal representatives (if deceased) or a person to whom the invention had been communicated by the "actual inventor" or his representatives or assigns: s 7(3). The application for the patent was required to declare that the applicant, or, if more than one, the applicants, claimed to be the "true and first inventor or inventors": s 8(2). "True and first inventor" was defined in s 3 to mean "the actual inventor of any invention" or his assigns or legal representatives, "but shall not include a person importing an invention from any other colony or country without the authority of the actual inventor". No provision was made for the grant of a patent jointly to several persons if not all were the "actual inventor". As we shall see, this approach followed the pattern of the patents legislation in the United States. 9 The first Commonwealth statute dealing with patents was the Patents Act 1903 (Cth). That enactment contained provisions concerning applications for patents that were in part modelled on the Victorian Act. In England, and in four of the Australian States, it is held, following an old decision under the Statute of Monopolies, that a person who introduces an invention is entitled to a patent. We say that that may have been a correct thing to provide at a time when the difficulty of communication between countries was very great, and when it was a matter of almost equal importance for a man to introduce the invention of another, as to discover the invention himself. We think that now that the world has grown so much smaller, because communication has been rendered so much more easy, this particular right of monopoly should be granted to the inventor, and to the inventor only. " (Commonwealth, Parliamentary Debates, Senate, 15 July 1903, 2081-2082. The object in using the word 'actual' is to get the benefit of the decisions in the United States. 'Actual inventor' is the phase [sic] used in the Act of Congress. It has a definite meaning, which it would be a pity for us to attempt to qualify. It means the person who has discovered a thing. The phrase 'true and first inventor' is held to include those who import. 'Actual' is the best word to use. " (Commonwealth, Parliamentary Debates, House of Representatives, 29 September 1903, 5508-5509. 'Actual inventor' means the person whose brains have performed the work. In the 1990 Act the principal difference is that the adjective "actual" has been dropped. This is likely to have been the result of Parliament's intention to enact legislation that is easy to read. The definitions in the back are in the form of a dictionary in a schedule ... It is a splendid piece of drafting and a Bill that is notably easy to read. First, it tends to atrophy, so you find a plethora of archaic expressions. Second, and paradoxically, language seems to proliferate without cause at times. ... I am delighted with the way this Bill attempts to counter the degenerative linguistic evolution of both kinds which has been characteristic of much legislative drafting in the past. " (Commonwealth, Parliamentary Debates, House of Representatives, 1 June 1989, 3481-3482. Broadly, a patent may be granted only to the inventor of the invention concerned or to a person deriving rights from the inventor. They are decisions which consider the Patents clause of the US Constitution , Art I SS 8 , cl 8 (giving Congress the power to secure to "inventors" the "exclusive right to their discoveries") and, in some instances, the early US patent statutes (under which a patent could be granted to the person who "hath or have invented or discovered" (1790), or had "invented" (1793), or had "discovered or invented" (1836), a new and useful art). There are three decisions of the US Supreme Court that are likely candidates. The first is Gibbons v Ogden , 22 US 1 (1824). It is a clear principle, that when the means of executing any given power are specified in the grant, Congress cannot take, by implication, any other means, as being necessary and proper to carry that power into execution. This power, then, is limited: (1) As to the persons and objects in regard to which it may be exercised: these are, 'authors and inventors, writings and discoveries. ' This enumeration excludes all right in Congress to legislate on the subject of any improvement, which is not an 'invention', either domestic or foreign. It excludes also all right to legislate for the benefit of any person who is not himself 'the inventor'. (2) As to the means of executing the power, and the time during which those means may be exercised. They are by 'securing the exclusive right for limited times. This was an action for the specific performance of an agreement to assign a patent. The defendant, however, was not the true inventor. The action failed. Justice Gray delivered the opinion of the court. He said (at 672): "The patent law makes it essential to the validity of a patent, that it shall be granted on the application, supported by the oath, of the original and first inventor, (or of his executor or administrator,) whether the patent is issued to him or to his assignee. A patent which is not supported by the oath of the inventor, but applied for by one who is not the inventor, is unauthorized by law, and void, and, whether taken out of the name of the applicant or of any assignee of his, confers no rights as against the public. It is a leading case. There is a passage in the judgment of Justice Clifford which is regarded as a classic statement of the applicable principle. First, a valid patent can only be granted to the real inventor and if there be more than one inventor it must be granted to all: Thomas v Weeks , 2 Paine 92 (1827); Barrett v Hall , 2 F Cas 914 (1818); Carter v Perry , 8 OG 518 (1875). Second, in the case of a joint invention, a patent issued to only one of the inventors is void: Ex parte Barsaloux, James and Lyon , 16 OG 233 (1878); American Electrical Novelty & Manufacturing Co v Newgold , 108 F 957 (1901) aff'd 113 F 877 (1902). Third, a patent issued in the names of joint patentees will, unless all of them are the inventors, also be void: Stewart v Tenk , 32 F 665 (1887); Hotchkiss v Greenwood , 12 F Cas 551 (1848); Welsbach Light Co v Cosmopolitan Incandescent Gaslight Co , 100 F 648 (1900). See also W Robinson, The Law of Patents , vol 1 (1890) 570-573. 15 It might fairly be said, and it often was said, that this last rule had the potential to cause injustice, particularly if there was a bona fide mistake in, say, an applicant incorrectly nominating himself as the sole inventor or inadvertently including another as one of the inventors. The potential for injustice has been overcome by the Patents Act 1951 (US), 35 USC SS 256. 16 Now it is clear that when Parliament enacted s 32 of the 1903 Act it intended that a patent would be granted only to the true (Parliament used the word "actual") inventor or a person claiming under him. In particular, "capitalists" could no longer take an interest in a patent, save as assignee. Nor could a patent be granted to the "importer" of an invention unless he had the consent of the inventor. Moreover, one necessary consequence of the adoption (with the limited exception of the importer with consent) of the US model was that a patent that was granted to one of two inventors was not granted to the "actual inventor". Nor was a patent granted to the "actual inventor" if it was granted jointly to two or more persons one of whom was not the inventor. The position must be the same under the 1990 Act for there is no material difference in language. This conclusion accords with the result in Davies Shephard Pty Ltd v Stack [2001] FCA 501 ; (2001) 51 IPR 513, although I have reached it by a different process of reasoning. 17 The respondents say that even if the grant be contrary to s 15, the patents in suit cannot be revoked. They put the argument as follows. First, the power to revoke is to be found in s 138(3). The conclusion that is then said to follow is that a patent can only be revoked under paragraph (a) if all "the patentees [are] not entitled to the patent. I accept, as I obviously must, that in the case of a joint patent it is proper to read s 138(3)(a) as covering joint patentees. Nonetheless, such a reading does not carry the respondents' argument. If one of several patentees is not entitled to the patent, then it is still correct to say (as it would be in the case where none of the patentees were entitled) that "the patentees are not entitled to the patent". 19 The respondents also contend that, having regard to the use of the present tense in s 138(3)(a), a condition precedent to a revocation order is a finding that the patentees were not entitled to the patent at the time of the application for revocation (or perhaps at the time of the hearing). I am far from persuaded that this construction is correct and it seems to be contrary to the views of Cooper J in Stack v Brisbane City Council (1999) 47 IPR 525, 536 and Crennan J in JMBV Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474 , [130]-[131]. But even if this construction were correct, the way in which I would read the section is that if a person were not entitled to the patent at the time of grant then, at least in most cases, that non-entitlement would be (as here) a continuing state of affairs. So there is really nothing in the point. 20 In any event, if s 138(3)(a) were not available to the applicant, it might rely on s 138(3)(d) and contend that if its assertions of fact are proven at trial the grant was obtained by "false suggestion or misrepresentation". As to the availability of false suggestion in the circumstances see Minter v Wells (1834) 1 WPC 127; R v Mussary (1834) 1 WPC 41; Earl of Devonshire's Case (1687) 11 Co 90. 21 The result is that the question raised under O 29 (slightly reworded) -- "If the facts particularised under paragraph 7 of the further amended first, second and third particulars of invalidity are established by evidence, does the Court have power to revoke the first, second and third patents pursuant to s 138(3)(a) of the Patents Act 1990 (Cth)? " -- should be answered "Yes". 22 This answer leaves open for further consideration (if that consideration becomes necessary) the following questions: (1) If the ground of revocation is made out, is the making of a revocation order discretionary and, if so, should that discretion be exercised; (2) Is Angiotech able to seek a declaration under s 34(1) that it is an "eligible person" in relation to the claimed inventions so that it may then take steps to obtain a grant of the patents for itself; and (3) Is the power of rectification under s 192 available in lieu of a revocation order. 23 In the meantime, it will be necessary for the respondents to pay the costs of this application. | entitlement joint patentees one patentee not claiming through the inventor validity of grant patents |
My order in favour of the respondent for the dismissal of the subject proceedings had been earlier made on 20 December 2004. 2 In the course of the hearing of the proceedings on 17 December 2004, the applicants were represented by a solicitor, Mr John Law of the firm of Law Rexstraw Lawyers. As appears from my reasons for judgment published on 20 December 2004, the proceedings were complex in nature, due to the extent of the extraordinary issues raised by the applicants in the context of their endeavours to transfer, from the Local Court of NSW to the Federal Court of Australia, proceedings brought in the Local Court by the respondent against the applicants for a relatively minor liquidated claim. I resolved the proceedings, the subject of that application, wholly in favour of the respondent. Initially, the applicants had been represented in this Court by their relative, Ms Paras, a qualified solicitor, but following upon objections raised by the respondent to her retainer by the applicants, being objections supported by a ruling made by the Law Society of NSW on 17 June 2004, her representation of the applicants ceased in the proceedings. Mr Law appeared for the applicants in her place. 3 On 11 January 2005, following upon his representation of the applicants at the hearing, Mr Law filed notice of ceasing to act as their legal representative, and no lawyer has since filed notice of any appointment to act in his place for the applicants. 4 On 9 June 2005, the solicitors for the successful respondent lodged in this Court, with a view to taxation, a detailed bill of costs totalling $15,958.85 for their professional fees and disbursements, and in addition for counsels' fees, totalling $8,525.00 payable to Mr Russell of counsel, and $220 payable to Mr Richardson of counsel, each of whom the solicitors had retained on behalf of the respondent. On 26 July 2005, the applicants filed objections to at least the majority of the items set out in that bill of costs, those objections running into numerous pages. At least most of the objections appeared to be misconceived, or else irrelevant. To assess and report upon the extensive assertions made by the applicants in relation to the respondent's itemised assessment of costs is not a task which the Court should sensibly or reasonably be required to undertake. 5 Understandably, the New South Wales District Registry of the Federal Court of Australia did not undertake any such assessment. Instead, on 11 July 2005, the Registry notified the parties to the litigation that '... the estimate made of the approximate total for which, if the Bill were to be taxed, the certificate of taxation would be likely to issue, is $20,900.00'. Attention was drawn by the Registry in that context, to Order 62 Rule 46(3) of the Federal Court Rules . The Registry also informed the parties that a fee of $1,381.00 would be payable for taxation of the bill of costs. We note however, that the Respondent has claimed costs in the sum of $15,958.85. A copy of that notice of motion, together with an affidavit in support sworn by Mr Gregory Leather on 14 September 2005, was sent by pre-paid post to the address for service of the applicants on 27 October 2005. The Respondent's position, as better detailed in the Notice of Concessions and Specific Replied (sic) to Applicant's Notice of Objections, is that the Applicants' Notice of Objections is replete with unfounded allegations, incorrect references to legislation and references to irrelevant authorities in lower jurisdictions. The objections are numerous, with the entire bill in dispute. Taxation of the bill in accordance with the Federal Court Rules will likely be lengthy and, given the litigious nature of the Applicants as is apparent from the history of this matter and related proceedings, is likely to be drawn out by the Applicants to the fullest extent possible under those regulations. In the circumstances, it is the Respondent's position that Order 62, rule 4(2)(c) should be applied in order to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation. Nor was any motion taken out by the applicants, as Ms Paras had threatened to do in her letter of 18 July 2005, and Ms Ualesi had also threatened to do in her letter of 27 October 2005. I therefore confirm that the taxation hearing on 10 November 2005 will be vacated and subject to any other order of the Court relisted on application by the parties after determination of the motion. Any suggestion as to the need for evidence in support of a bill of costs would misconceive the procedure traditionally implemented on taxation. Of course, the successful party having the benefit of a costs order, must support or justify items bona fide challenged in the course of taxation as excessive or as involving unjustified work purportedly undertaken. In any event, no such foreshadowed notice of motion on the part of the applicants for 'dismissal of your client's bill of costs' eventuated. 11 The hearing of the respondent's application by notice of motion for an order that the Court fix a gross sum in relation to its indemnity costs, concerning the proceedings the subject of my reasons for judgment of 20 December 2004, came on for hearing on 22 November 2005. There was no appearance for or by the applicants. The question arose as to whether the hearing should proceed in the absence of the applicants. A solicitor in the employ of the respondent's retained firm of solicitors Barringer Leather Lawyers, (being Mr Andjelkovic) testified as to the sending of his firm's abovementioned correspondence of 27 October 2005 addressed to 'Anastasia Ualesi, First Floor, 1 Melville Street, Ashbury, NSW 2193' and as to enclosing a copy of the notice of motion and the affidavit of Gregory Leather sworn 14 September 2005 by 'guaranteed next day delivery through Australia Post', and further as to the absence of any notice or other indication subsequently having been received from the applicants to the effect '... that the letter has not reached its destination. ' Mr Andjelkovic also testified to the effect, that there had occurred unsuccessful attempts on five successive occasions to transmit to the applicants by fax the same letter of 27 October 2005 and its accompanying documentation on or about the same time as sending that letter. 12 One other evidentiary matter to which I should draw attention, albeit of a hearsay nature, but which in the present context may additionally be taken into consideration, is that Mr Andjelkovic related a conversation between himself and Ms Heather Sare of the New South Wales Bar Association, and the manager of its Legal Assistance Scheme, to the effect that the applicants '... had approached the Bar Association for representation in this matter. I will therefore now address the substance of the respondent's present application. 14 My attention was drawn by counsel for the respondent to Order 62 Rule 4(2)(c), and to the observations of von Doussa J in Beach Petroleum NL v Johnson (1995) 57 FCR 119 concerning the evident purpose of the Court's power to make costs orders of the kind here presently sought by the respondent, that being to avoid an ongoing counter productive dispute, in the interests of achieving finality, subject always to the need to ensure that unreasonable amounts of costs are not pursued and awarded. I have not approached the task of assessment akin to that of a detailed 'taxation', which cannot sensibly be the judicial task set by the Court Rules, but rather from the perspective of an overview of the nature and extent of the relating broad issues which fell upon me for resolution, being misconceived issues nevertheless of some complexity, raised unsuccessfully by the applicants for resolution at the final hearing of the proceedings. I refer of course to what appears in the detailed reasons apparent in my reasons for judgment of 20 December 2004. 15 Judgment should clearly enough be entered in principle in favour of the respondent and thus adversely to the applicants, in relation to the totality of its legal costs reasonably incurred. My conspectus of the amount of those costs, broadly undertaken in the light of the nature and extent of the issues raised by the applicants in the principal proceedings, leaves little room for any reasonable quantum of adjustment downwards of the assessment of professional costs and disbursements which has been assembled in the material in evidence before me. Adopting a broad approach generally in line with that taken by von Doussa J in Beach Petroleum , albeit that the size of the proceedings there involved was incomparable to that litigated before me, yet nevertheless taking into account the degree of complexity of the proceedings occasioned by the purported issues raised by the applicants, I would assess the costs and disbursements of the respondent broadly in the sum of $20,400 inclusive of counsel's fees, that sum being of course not far short of the total amount claimed, but nevertheless taking into account the respondent's concession. In reaching that figure, I have also considered the submissions of the applicants contained in their notice of objections to the respondent's bill of costs, those being the only submissions before me from the applicants on the costs sought. 16 That leaves unresolved the costs of the present interlocutory proceedings commenced by the respondent by notice of motion filed on 21 October 2005, in relation to which, as I have already recorded, there was no appearance by the applicants. The conduct of the applicants since the conclusion of the hearing, which I have briefly outlined, renders it inevitable that a further adverse order as to the costs of the present application must be made in principle in favour of the respondent, as is sought in its notice of motion filed on 21 October 2005. I say ' in principle ' for the further reason that it is traditional for a successful party to receive on taxation, an award of costs and disbursements incurred in the course of the taxation process, and it was I think reasonable in the circumstances for the respondent to have sought recourse to Order 62 rule 4(2). | proceedings commenced in local court for $11,923.17 for services rendered unsuccessful application for transfer of those proceedings to federal court adverse order for costs following that event made on indemnity basis unsuccessful party gave notice of intention to have successful party's bill of costs 'dismissed' but did not appear on any such application order made by federal court in favour of successful party for fixed sum for costs in lieu of need for taxation of those costs order 62 rule 4(2) legal costs federal court rules |
The first is to set aside the orders dismissing the proceedings on 17 August 2007 if the security for costs orders made on 14 February 2007 were not met by that date, and the consequential costs orders (Orders 1 and 4 made on 17 May 2007). The motion refers to those orders as being "the security for costs orders", but the submissions confirmed that it refers to the "sunset orders" dismissing the proceedings in certain events. In the light of the motion, the time for payment of the security for costs has been further extended until judgment is delivered on the motion. The second set of orders seeks to further extend the time for the applicant to appeal against the security for costs orders (Orders 3 and 4 made on 14 February 2007 and Order 4 made on 19 February 2007). Its claim against the respondents arises out of matters leading up to the Federation Internationale de Football Association (FIFA) World Cup 2006 conducted in Germany in mid 2006. The World Cup provided FIFA with the opportunity to market FIFA endorsed products. In Australia, as a result of negotiations, ISMA was appointed the agent of Deumer Asia Ltd to market and sell FIFA endorsed key rings. The agreement between Deumer Asia and ISMA granted exclusivity to ISMA to promote and sell FIFA endorsed key rings in Australia in that period, on the basis that ISMA took a minimum order of 500,000 key rings with a wholesale value of about $3.75 million. The claim arises because (the applicant alleged) an officer of the first respondent on 25 May 2006 informed clubs affiliated with it that the merchandise being promoted by the applicant was not endorsed by it or by FIFA, and that the applicant was not licensed to distribute and sell FIFA endorsed key rings. The second respondent, on one version of subsequent events, adopted and promoted that view. The applicant claims that conduct caused it significant loss and damage. 3 As a result of information provided by the parties, it was anticipated that the hearing would take about five days. The hearing commenced on 29 January 2007. Prior to that date, on the application of each of the respondents, an order had been made that the applicant provide security for the costs of the first respondent in the sum of $40,000, and for the costs of the second respondent in the sum of $25,000, those amounts being quantified by reference to the anticipated costs to the first day of the hearing. 4 The applicant ordered 50,000 key rings on 27 February 2006 and, after paying for them, received them at the start of April 2006. I will call that the first tranche. The balance of 450,000 key rings (the second tranche) also had to be bought by the applicant under its contract with Deumer Asia. In fact, it ordered a further 300,000 key rings on 12 April 2006 and was notified on 22 May 2006 that they were ready for shipment. They were invoiced at $1,281,443. The applicant did not pay for those key rings and they were never delivered. It did not have the funds to do so, other than perhaps by borrowing them. Nor did it on 22 May 2006 have the funds in hand to meet the shipping customs and storage costs of those key rings. The balance of 150,000 key rings were never ordered or delivered or paid for. By the time of the allegedly wrongful conduct on the part of the respondents or one of them on 25 May 2006, less than half of the first tranche of key rings had been sold. At that time, it had become apparent that the hearing was likely to take more than the five days set aside for it, having regard to the number of affidavits filed as proposed evidence on behalf of all parties and the evolving clarification of the issues. The course of evidence during the first week of the hearing confirmed that to be the case. The principal witness for, and a director of the applicant, Suzanne Watson, gave evidence over a period of almost four of those five days, and three of the other proposed witnesses gave evidence (one incomplete) in the time allowed. The adjournment, necessary because further time had not initially been set aside for the hearing, also enabled the applicant to indicate that it proposed to call further witnesses beyond those upon which it had opened its case, including Dean Cosenza who was also closely involved in the transactions giving rise to the claim, and whose evidence is likely to take several days. There was in addition, of course, the evidence then to be adduced by the respondents. 6 The respondents' application for further security for costs was deferred from time to time during the first week of the hearing whilst the applicant's principal witness gave evidence. That was because her instructions were necessary for the applicant to address the proposed further claim for security for costs, and it was inappropriate to interrupt the course of her evidence, particularly during cross-examination, for her to do so. 7 On 14 February 2007, I made orders, inter alia, that the applicant provide to the first respondent security for costs in the further sum of $60,000 and to the second respondent further security for costs in the sum of $40,000 (Orders 3 and 4). I adjourned for further hearing the issue as to how those amounts should be paid. On 19 February 2007, I gave the applicant leave to appeal from those orders. The reasons for the further security for costs orders are contained in Cosdean Investments Pty Ltd v Football Federation Australia Limited (No 2) [2007] FCA 163. I also ordered on 19 February 2007 that the proceeding itself be stayed until 5 April 2007, that being the date by which the further security for costs was to be paid, and that if the amounts ordered to be paid by way of security for costs were not by then paid, that the proceedings be permanently stayed (Order 4 of 19 February 2007). There was no application for leave to appeal from that order. No appeal was brought from the security for costs orders (Orders 3 and 4 made on 14 February 2007) within the time permitted by O 52 r 15 of the Federal Court Rules 1976 (Cth). 8 The further security for costs as ordered was not paid. The respondents then applied, as they had been given leave to do on 19 February 2007, for the proceeding itself to be dismissed once it had become permanently stayed, as it had pursuant to Order 4 of the orders made on that date. On 17 May 2007, I ordered that, if the further security for costs to be paid had not been paid by 17 August 2007, the proceeding be dismissed. That in effect gave the applicant a further three months to pay the further security for costs. It is Order 1 of the orders made that day. I also ordered that the applicant pay the respondents' costs of and incidental to their notices of motion of 17 and 26 April 2007 respectively (the motions by which Order 1 of the orders made on 17 May 2007 came to be made). The costs order is Order 4 of 17 May 2007. The reasons for the orders made on 17 May 2007 are contained in: Cosdean Investments Pty Ltd v Football Federation Australia Limited (No 3) [2007] FCA 766. 9 For reasons which are there set out, I gave the applicant liberty to apply for Orders 1 and 4 (and others) to be varied or discharged, provided such application was filed and served with supporting affidavits by 23 July 2007. The present motion was instituted on that date. As noted above, I have extended the time by which the security for costs should have been paid from time to time, thereafter pending the hearing and determination of the present motion. After referring to the original orders for security for costs, she refers to having paid a substantial sum in part payment of the fees of the solicitors of the applicant to date and says that there is a very substantial sum for those fees still outstanding, which is "secured by way of mortgage over my home and investment properties". She then says that, following the further orders made on 14 February 2007, Dean Cosenza made inquiries of Deumer Asia about that company's willingness to assist the applicant in these proceedings by way of costs contribution or an indemnity for its costs. The reason for her reference to Deumer Asia was because I had taken into account that, if the applicant's claim succeeded, at best it would recover about $3 million damages and it would have to pay Deumer Asia in excess of $1.8 million of that sum for the key rings which it had contracted to acquire from Deumer Asia and which it had not received. Cosdean Investments requested Deumer to assist it with its proceedings in the Federal Court of Australia against FFAL and Soccer New South Wales, including by way of contribution or indemnity with respect to costs of the proceedings. The basis for the request by Cosdean Investments was that Deumer would be entitled to recover amounts owing by Cosdean Investment to Deumer in the vicinity of A$1.3M if the proceedings were successful, but would otherwise be unlikely to recover any such debt. In giving the matter full consideration, Deumer cannot accede to the request by Cosdean Investments but will be forced to write off the debts. The losses Deumer suffered due to the outcome of the FFAL and Soccer New South Wales project have endangered the financial situation of Deumer to the greatest extent. Its extent, or any medical verification of its effect upon her, is not shown or offered. She then consulted on 3 June 2007 a fresh firm of solicitors which, on 11 July 2007, agreed to act for her to "request confirmation of its position from Deumer Asia Ltd". The letter quoted above was received as a consequence. 13 Ms Watson asserts further that the applicant is unable to satisfy the further security for costs orders made on 14 February 2007 and has no other means of providing security for the costs so ordered to be paid. She adds that the applicant accepts that the consequence of the letter from Deumer Asia, which she described as a "waiver of its debt", is that the applicant's claim for damages against the respondents is substantially less than previously claimed. 14 On 2 August 2007, at a directions hearing for the motion, the applicant was given a further opportunity to adduce additional affidavit material at the hearing. The opportunity was not taken up. Also, at the hearing, assertions were made on behalf of the applicant as to Ms Watson's lack of awareness of the orders made on 17 May 2007. I noted at the time that there is no evidence either way as to whether Ms Watson was personally aware of the motions of the respondents of 17 and 26 April 2007, or of the hearing of 17 May 2007, so I do not infer that she was aware of those things before 17 May 2007. On the other hand, there is nothing to indicate that the applicant itself was not aware of those motions or of that hearing. Indeed, it is clear enough that the motions, including the return date for the motions as issued, were properly served upon the applicant, even if Ms Watson did not then personally become aware of them. The applicant was also given a further opportunity to make such written submissions on the motion as it considered appropriate in addition to what it had put through senior counsel on 6 September 2007. It took up that opportunity and the respondents have also replied in writing. That is that the position of Deumer Asia according to its letter represents a substantial change in circumstances directly relevant to the security for costs orders made on 14 February 2007. 16 The second point is to assert that in any event the applicant's entitlement to damages in respect of the first tranche of key rings imported should be assessed in the vicinity of $330,000, and in respect of the subsequent tranches which it was obliged to import that its potential profit should be assessed in excess of $1 million. The consequence is said to be that the applicant has a good prospect of recovering quite substantial damages against one or both of the respondents, so that it should be permitted to maintain its claim without being obliged to pay further security for costs. The third of the points raised in written argument concerns the availability of funds to purchase the additional 450,000 key rings which the applicant was obliged to acquire from Deumer Asia. It is argued, based in part upon contested evidence in the case upon which there has been no adjudication and in part upon proposed evidence as expressed in witness statements (including of a director of Unique Finance Pty Ltd), that funds would have been made available upon certain terms (including interest at the rate of 60 per cent per annum) to meet the shipment of the balance of key rings so that it could have acquired the additional 450,000 key rings and (as asserted in its second point) would have onsold them at a large profit. Hence, it is said, the interests of justice direct that the relief sought should be granted. Although generally the power to set aside a judgment or order should be sparingly exercised (see Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 at 550-552), I think the power is more readily exercised in the case of an interlocutory order where the public interest in the finality of litigation does not weigh so heavily in the scales. 18 However, this is not a case where the applicant can assert that it has not had a proper opportunity either to address the applications for further security for costs or, those orders having been made, to address the applications that the proceeding be dismissed for it having failed to pay the further security for costs ordered. That it did not participate in the hearing on 17 May 2007 was a matter for it. Even in respect of that hearing, it does not profess inadvertence or ignorance (although Ms Watson herself may not have known of that hearing): see e.g. Metwally v University of Wollongong [1985] HCA 28 ; (1985) 60 ALR 68 at 71; Wentworth v Woollahra Municipal Council [1982] HCA 41 ; (1982) 149 CLR 672 at 684. 19 The applicant has not sought to explain its non-participation in the hearing on 17 May 2007. It has not sought to explain why it did not appeal within the time permitted from the further security for costs orders made on 14 February 2007. Such an appeal would then have been instituted before the respondents applied by motion for the proceedings to have been dismissed for failure to pay the further security for costs. The respondents may not then have made those applications and incurred the costs of so doing. Yet the applicant proffers no explanation for its tardiness, nor makes (or, on its evidence, could make) any compensatory gesture to the respondents for that loss caused by its delay if its current motion is successful. Nor has the applicant sought to explain why, apparently, it took some four months to contact Deumer Asia notwithstanding that the position of Deumer Asia as its principal, if not its only creditor and so the potential primary beneficiary of any success of the applicant in the proceeding, was one substantial reason for the further security for costs orders. 21 There is presently no application to set aside the two orders for further security for costs made on 14 February 2007. Rather, there is an application for an extension of time within which to appeal from those orders. There is no evidence explaining why the applicant did not appeal within the time allowed, having been granted leave to appeal on 19 February 2007. The applicant was represented at the time those orders were made. As I have said, there is no explanation for the very lengthy delay. Nor is there any suggestion in the submissions as to why the orders made were wrong, or even why there is any real prospect of them being set aside on appeal. 22 In my view, in addition to the unsatisfactory and unexplained delay in securing any response from Deumer Asia, the letter from Deumer Asia does not have the effect for which the applicant argued. 23 In that context, it is appropriate to refer to the letter from Deumer Asia of 15 July 2007. One of the reasons why the further security for costs orders were made on 14 February 2007 was that the applicant had not indicated that it could or could not get the support of Deumer Asia to maintain the proceedings, even though Deumer Asia would be likely to be the principal, if not the only, beneficiary of any award for damages if the applicant succeeded in its claim. At some unspecified time, but I infer in the weeks preceding 15 July 2007, the applicant apparently requested Deumer Asia to support the applicant by contribution or indemnity with respect to costs. There is no indication that the support sought was limited only to meet the orders for further security for costs, that is an additional $100,000. There is no indication that Deumer Asia was given any information as to the prospect of success or as to the likely award of damages. All that is apparent is that Deumer Asia was told that it would recover amounts owing by the applicant to Deumer Asia in the sum of $1.3 million if the proceeding was successful, but would otherwise be unlikely to recover any such debt. The applicant has not chosen to expose what it conveyed to, or sought from Deumer Asia other than that it "assist" with the proceeding. I am not prepared to infer that Deumer Asia was asked only to provide $100,000 to cover the amounts of the further security for costs orders of 14 February 2007. Nor am I prepared to infer that Deumer Asia was given such appropriate information upon which it could make an informed commercial decision. 24 Moreover, Deumer Asia simply responded that it cannot accede to the request but will be forced to write off "the debts". In other words, if the proceedings do not proceed, it acknowledges that it will be unable to recover its debt from the applicant. It does not say that if the proceedings continue and the applicant is successful it will waive the debt. I reject the contention that there is a substantial change in circumstances revealed by the letter from Deumer Asia to the effect that the applicant could proceed to recover damages based on potential sales of the 450,000 key rings without having now to account to Deumer Asia, or in any other way. 25 In my view, apart from it becoming clearer that Deumer Asia would not generally fund proceedings, the applicant has not shown that it has made a cogent and sensible approach to Deumer Asia for it to support the proceedings by presenting a limited claim for financial support (sufficient to meet the requested security for costs only), and by explaining anything about the nature of the action or its prospect of success. 26 Importantly, for the purposes of the application for a further extension of time within which to appeal, I do not think that a letter of such generality without more is sufficient to indicate that Deumer Asia has received a detailed and properly constructed request for financial assistance and has declined it so that the principal creditor who will mainly benefit from the proceeding, if it is successful, has declined to support the proceedings and as a result the proceedings will be stultified. Its letter is far too general for that. Moreover, even if such a request had been made and declined, the position would be that Deumer Asia (which stands to gain principally, if not exclusively, from the proceeding depending upon the amount of damages recovered if the applicant succeeded) would not be prepared to support the further prosecution of the claim even to the relatively modest amount of the further security for costs orders in relation to the quantum of the claim. That reinforces one of my reasons for making the further security for costs orders on 14 February 2007. 27 Accordingly, subject to considering the applicant's second and third contentions, I am not persuaded that it should be granted a further extension of time within which to appeal from the further security for costs orders made on 14 February 2007. In brief, it has not explained the delay satisfactorily at all. It has not demonstrated any relevant significant change in circumstances, even if the Deumer Asia letter of 15 July 2007 were to be permitted to be adduced in evidence on the appeal (as to which see e.g. Council of the City of Greater Wollongong v Cowan [1955] HCA 16 ; (1955) 93 CLR 435 at 444). It has not explained, in any event, why that letter could not have been procured much earlier. It has not sought to have the security for costs orders discharged. It is clearly, and admittedly, unable to pay the further security for costs orders and will be unable to meet any costs of the respondents if the matter proceeds to hearing and the applicant is unsuccessful. 28 Nor has any reason been identified of any substance as to why the orders of 14 February 2007 for further security for costs might be set aside on appeal. There is no draft notice of appeal, nor anything identifying error. 29 The second matter argued by the applicant relates to matters taken into account when the further security for costs orders were made. It is not a new argument. It is discussed in Cosdean (No 2) [2007] FCA 163 at [12] --- [14]. 30 Both the second and third matters argued by the applicant go beyond the evidence on the motion and rely upon certain evidence at the hearing and certain proposed evidence. It is fundamental to those contentions that the applicant, in the period 1 April 2006 to about 30 July 2006, would have been able to pay for the second tranche of key rings from sales of the first tranche of 50,000 key rings, and/or from other resources, and would have been able to sell by retail or wholesale most of the key rings. It is not at all clear that either of those premises is correct. The evidence showed that the applicant had sold under half of the first tranche of 50,000 key rings in the period 1 April 2006 to the commencement of the conduct complained of on 25 May 2006, despite its very extensive efforts to do so. The sales to that date had not generated anywhere near sufficient funds to pay for the second tranche (or some of it). It had no other funds, other than borrowed funds, to do so. The fact that its sales had been so low, and that there was a significant period between payment and delivery was likely to mean that the further key rings would have been available for sale only in about mid-June 2006, even if the applicant could have paid for the 350,000 key rings which had been ordered and which, by about 21 May 2006, were ready for dispatch. Having regard to the sales to 25 May 2006, even allowing for increasing public interest as the World Cup became closer and occurred, the prospect of a very dramatic upturn in sales in that period is not immediately attractive. That is the more so having regard to the evidence about the efforts to market the key rings through member or associated clubs of the respondents prior to 25 May 2006, and that the interest of such clubs was neither consistently positive nor likely to generate large sales of key rings, at any one particular club. On the evidence, the sales strategy of the applicant through member or allied clubs of the respondents was close to its last ditch plan after several other plans had been tried and had not resulted in significant sales. 31 Moreover, the contention asserts that sales of the first tranche would in part have funded the balance of the key rings. As the sales of almost half of the first tranche to 25 May 2006 had not put the applicant in a position to do so, it must be referring to the balance of the first 50,000 key rings. On its best case, those sales would have taken place in June 2006. The surplus funds generated may, therefore, not have been available to fund the second tranche or the part of it comprising 350,000 key rings at a point in time which was early enough to ensure the availability of that second tranche or part of it at the critical time prior to and during the World Cup. The balance of the second tranche, namely 100,000 key rings had not been ordered and, as the evidence showed, with a considerable period between order and availability of the first tranche and of that part of the second tranche comprising 350,000 key rings, it may be doubted that they would be available at or before the World Cup. 32 The alternative asserted funding source of finance is supported only by a statement of a proposed witness. It is a conditional rather than an absolute offer of finance. It is not clear that the requirements of the potential financier would have been satisfied. It was at a usurious rate of interest. The applicant also asserts the willingness of Deumer Asia to provide the applicant with "as much assistance as was reasonably possible", based upon the witness statement of Johan Conze of Deumer Asia. The nature of that assistance is not identified. The decision of Deumer Asia regarding the provision of assistance in relation to this proceeding, so far as it is apparent on the material on the motion, is discussed above. 33 In my view, the second and third matters raised by the applicant may be seen as errors asserted by the applicant in the making of the further security for costs orders on 14 February 2007. Otherwise, they are simply an attempt to re-argue matters which have already been argued. I shall also therefore consider whether those matters might demonstrate some arguable prospect of success if an extension of time to appeal from those orders were granted. I do not think these matters demonstrate a relevant mistake of fact in considering the potential award of damages, in considering the capacity of the applicant to fund the second tranche of key rings as discussed in Cosdean (No 2) [2007] FCA 163at [12] --- [14]. Nor do I think that they otherwise provide an arguable basis for error from the discretionary judgment to impose the further security for costs orders upon the applicant: See House v The King [1936] HCA 40 ; (1936) 55 CLR 499 at 504 --- 505. 34 For those reasons, I do not consider that the applicant should be granted a further extension of time within which to appeal from the further security for costs orders made on 14 February 2007, or from the order presently staying the proceeding until the further security for costs was paid, made on 19 February 2007. 35 I am further of the view, having regard to the conclusion I have reached that there should be no extension of time within which to appeal from the further security for costs orders, and having regard to the accepted inability of the applicant to comply with those orders by providing further security for costs, that the orders made on 17 May 2007 should not be discharged. The applicant is faced with further orders for security for costs. It cannot satisfy them. It acknowledges that. The proceedings have been permanently stayed. In those circumstances, nothing has been shown to indicate that the orders dismissing the proceedings against each of the respondents were inappropriate in the first place, or should now be discharged. 36 For those reasons, the orders sought on the applicant's notice of motion of 23 July 2007 are refused. The applicant should pay to each of the respondents their costs of that motion. I also now discharge the order which I made further extending the time to a date to be fixed by which the further security for costs should be paid, pending the hearing and determination of the applicant's motion. Out of an abundance of caution I will further extend the time by which the applicant should pay the security for costs specified in Order 1 of the order of 17 May 2007 to 30 November 2007. The intent of that order is that, if the further security for costs is not then paid by that date, the proceedings against each respondent will be dismissed. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | motion to set aside order dismissing application where security for costs not paid motion to extend time in which to appeal from security for costs order where no explanation as to delay in appealing whether purported change in circumstances would support appeal where insufficient evidence to support purported change in circumstances practice and procedure practice and procedure |
For clarity here, some elements of the procedural history are worth setting out again. 2 The applicant appeals from a decision of the Administrative Appeals Tribunal ('the Tribunal') given on 21 August 2006. He complained to the respondent about the manner in which controllers and liquidators of an unsecured creditor of Antal Air discharged their functions. In letters to Mr Bittmann dated 22 September 2003, 14 June 2004 and 14 June 2006 the respondent stated that it did not intend to take any action on his complaint. The Tribunal decided that it did not have jurisdiction to determine the application that the applicant sought to make, because it was unable to identify any other statutory basis permitting it to review the decisions that the applicant attributed to the respondent. 3 The applicant appeals from the Tribunal's decision that it does not have jurisdiction to review the respondent's decisions that are the subject of the applicant's complaint. Appeals to this Court from the Tribunal can only be brought on questions of law: see s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ('AAT Act'). The appellant appeals from the whole of the decision of the Tribunal (G.D. Friedman, Senior member of the Administrative Appeals Tribunal No. V2006/566) given on 21 st August 2006. The grounds for the appeal are based on the following. The respondent, ASIC is a body corporate and their officers made a commercial decision not to support the Corporation Act's objective contained in Part 5.3A, Section 435A. The application for review was based on Section 1317B(1) (a), (b) and (c). The Directors of ASIC have used their position in defeating creditors and shareholders of companies that they control. By virtue of point 3, 4 and 5, I ask the Court to re-affirm the Administrative Appeals Tribunal's jurisdiction to review decisions granted under the Act, Part 9.4A. I ask the Court to grant leave to make application pursuant to Section 1317 (1) (a). Such further or other orders as the Honourable Court deems appropriate. That power is conferred to the Court. (ASIC's submission to the Tribunal on 21 August 2006 was misconceived re S 536. The matter came before me for directions on 12 October 2006. On that date, I ordered (amongst other things) that the respondent's motion be adjourned for hearing to 13 November 2006 and that the respondent file and serve a short outline of submissions. Jessup J kindly heard the motion on that date, as I was engaged in another hearing. 7 In written submissions filed prior to the hearing before Jessup J, the respondent referred to s 44 of the AAT Act. The respondent noted that a question of law must arise from the decision of the Tribunal from which the applicant appeals and that O 53 r 3(2) of the Federal Court Rules ('the Rules') requires that the question of law be set out in the notice of appeal. Additionally, the notice of appeal must set out the orders sought and the grounds relied upon in support of the orders. The notice of appeal filed by the applicant, so the respondent said, did not state a question of law and contained irrelevant assertions and argument. 8 On 13 November 2006, counsel for the respondent sought to rely on O 9 r 7 of the Rules in support of the strike out motion. In so doing, counsel relied on a decision of Ryan J in Australian Telecommunications Corporation v Lambroglou (1990) 12 AAR 515 (' Lambroglou '): see Bittmann v ASIC at [11]. As Jessup J noted subsequently, Lambroglou did not assist the respondent on the application of O 9 r 7, which, as his Honour noted, is directed towards setting aside originating process in circumstances where there is some procedural deficiency or irregularity: see Bittmann v ASIC at [11]-[12]. Here, the respondent does not point to any procedural defect in the notice of appeal. Instead, it seeks to have the notice of appeal struck out on the ground that it fails to identify a question of law that might form the subject of the appeal. In the result, Jessup J ordered that the respondent's motion be dismissed, but that the respondent have leave to make further application in relation to the applicant's notice of appeal: see Bittmann v ASIC at [13]. 9 Pursuant to the orders made by Jessup J on 17 November 2006, the respondent has brought a further motion, notice of which was given on 28 November 2006, which seeks to have the notice of appeal struck out pursuant to O 20 r 2 of the Rules, alternatively O 53 r 15, alternatively s 23 of the Federal Court of Australia Act 1976 (Cth) ('Federal Court Act'). 10 At the hearing yesterday, counsel for the respondent reiterated the submission that the applicant's notice of appeal was fundamentally defective because it failed to state a question of law. I accept the respondent's submissions as to the deficiency of the notice of appeal. The notice of appeal does not state any question of law that is to be the subject of appeal. 11 The requirement that a notice of an appeal from the Tribunal state a question of law has been considered in numerous cases. As Gummow J pointed out in TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175 at 178, "[t]he existence of a question of law is now not merely a qualifying condition to ground the appeal, but also the subject of the appeal itself. " Order 53 r 3(2) of the Rules requires that the question of law to be raised by the appeal and the grounds relied on in support of the order sought on the appeal be stated separately: compare Birdseye v Australian Securities and Investments Commission (2003) 38 AAR 55 at 60 per Branson and Stone JJ, with whom Marshall J relevantly agreed at 67; Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244 ; (2003) 133 FCR 290 at 300-301 per Branson J; and Ergon Energy Corp Ltd v Commissioner of Taxation [2006] FCAFC 125 ; (2006) 153 FCR 551 at 563-565 per Sundberg and Kenny JJ and 570-571 per Gyles J (dissenting). 12 I also accept that, as the respondent submitted, the Court may make the orders that it seeks by way of its motion. In McGregor v Chief Executive Officer of Centrelink [2000] FCA 701 at [17] , Spender J expressed the view that there was power under O 20 r 2 of the Rules to dismiss an appeal purportedly under s 44 of the AAT Act on the basis that it stated no question of law and thus disclosed no reasonable cause of action: see also Zoia v Administrative Appeals Tribunal [2003] FCA 303 at [6] per Carr J and Barghouthi v ING Custodians Pty Ltd [2003] FCA 1272 at [15] per Allsop J. In Lambroglou , Ryan J expressed the view (at 519) that O 53 r 15(1) of the Rules conferred a power sufficiently broad to allow the Court to strike out the whole or part of an appeal under s 44 of the AAT Act. Whatever the correct analysis of the Rules, s 23 of the Federal Court Act confers broad power on the Court to make orders of such kinds as it thinks appropriate. I accept that, pursuant to s 23, the Court has power to strike out a notice of appeal in reliance on s 44 where the notice does not state a question of law: compare also Lambroglou at 519-520. 13 Amongst other things, the applicant submitted yesterday that, because of O 35 r 4(2) of the Rules, the respondent had only 14 days in which to serve its new notice of motion; and that it had run out of time when it served the notice on 6 December 2006. The applicant asserted that this is a proper basis for dismissing the motion. I reject this claim. The orders made by Jessup J on 17 November 2006 did not require the respondent to do any act; and O 35 r 4(2) has no present application. His Honour merely granted leave to the respondent "to make such further application in relation to the Notice of Appeal as it may be advised". There can be no valid objection to the respondent's present motion, notice of which was filed on 28 November 2006. 14 The applicant asserted that there were other deficiencies in the respondent's preparation of its motion, including the lack of supporting affidavit, which he said deprived him of the opportunity to answer the respondent's strike out motion. I reject these submissions; and, in particular, I note that the respondent previously explained the basis for its first strike out motion in written submissions, which took the place of a supporting affidavit. It is immaterial that there is another motion now on foot, as this second motion seeks the same relief; and, indeed, the respondent again relies on these same written submissions. Further, I observe that the applicant has attended court on two prior occasions, when the respondent explained the basis for its application to strike out the notice of appeal. 15 Although the applicant has already had sufficient opportunity to amend his notice of appeal to state a question of law and has not done so (see Bittmann v ASIC at [4] and [8]-[10]), I did at one stage of the hearing entertain the possibility that he might yet be granted further leave to amend. This was because, in discussion with the applicant, it emerged that the question he unsuccessfully sought to raise was a jurisdictional one: namely, whether or not the jurisdiction of the Tribunal to review the decisions that he challenged was properly located in s 1317B of the Corporations Act 2001 (Cth) (' Corporations Act '). The applicant submitted that the Tribunal had wrongly accepted the respondent's submission that it had acted under s 11(4) of the ASIC Act in making its decisions that it did not intend to take any action on the applicant's complaints. The applicant apparently accepted that the Tribunal could not review an exercise of power under s 11(4). If amended properly, the applicant's notice of appeal could support an appeal on a question of law. 16 The respondent opposed the grant of further leave, however, substantially because the appeal, if amended to raise the jurisdictional question, was manifestly hopeless. The respondent submitted that before s 1317B of the Corporations Act could apply, there must be "a decision made under [the Corporations Act ]" and that the applicant had identified no such decision. 17 The applicant submitted that the respondent's submission should not be accepted because he had raised a question concerning the applicability of Pt 5.3A of the Corporations Act . The case that he sought to make to ASIC (and to the Tribunal and to this Court) was that Pt 5.3A applied to all receiverships and other external administrations, which included the receiver and manager of a company or companies in which he had an interest and about which he also made complaint. The respondent had rejected the applicant's submissions concerning the applicability of Pt 5.3A and stated that there was no basis for regulatory intervention. No question presently arises as to the merits of either party's position in this regard. The only matter that presently falls for consideration is whether the applicant has identified a decision made under the Corporations Act that would support an application to the Tribunal under s 1317B. As I said to the applicant at the hearing yesterday, at most he has identified a decision made about the scope of Part 5.3A , as well as the need or lack of need for regulatory intervention. He has not identified a decision made under the Corporations Act , as he must do, in order to attract s 1317B. That is, it is not his case that the decisions that he attributes to the respondent were made under the Corporations Act in the sense that they were made in exercise of a power conferred by that Act. Yesterday (as it seems on earlier occasions) the applicant specifically stated that he did not rely on s 536 of the Corporations Act . 18 I am compelled to accept the respondent's submission that, even if the applicant were granted further leave to amend his notice of appeal, the question of law that he would seek to raise is bound to be determined against him. I would not therefore make the grant of further leave. 19 I mention, lest it be thought I had overlooked the matter, that the applicant supplied the Court with further material this morning prior to my delivering judgment, including a short written submission and copy letters. Assuming (without deciding) that I may have regard to this material, it would not lead me to reach a different conclusion. Whatever the merits of the applicant's complaints, the Tribunal could not consider them unless it had jurisdiction to do so; and it would not have jurisdiction under s 1317B if the decision the subject of application was not a decision under the Corporations Act . Nothing in the Tribunal's decision or in the material that the applicant presents to the Court raises the possibility that the application to the Tribunal was made in respect of a decision under the Corporations Act . 20 The notice of appeal is plainly defective. Accordingly, I would order that the appeal be struck out. The usual order is that a successful party will have its costs paid on a party and party basis by the unsuccessful party. Costs have been reserved at least twice in this proceeding (that is, on 12 October 2006 and 17 November 2006). These costs were largely attributable to the respondent's first motion, notice of which was dated 10 October 2006. Since the respondent failed on that motion, it would in the ordinary course be liable to pay the applicant's costs. Having regard to the applicant's self-represented status, however, these costs are likely to be negligible or slight. The respondent has succeeded on the motion heard yesterday. Bearing in mind the procedural history of this matter, the most appropriate course is, in my view, to order that the applicant pay the respondent's costs of the hearing on 20 December 2006 fixed in the amount of $1,200, which is the figure that the respondent's counsel nominated upon my inquiry. Save for this, I would order that each party bear its own costs, including reserved costs. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | appeal from administrative appeals tribunal appeal must be brought on question of law notice of appeal failed to state question of law court's power to strike out notice of appeal notice of appeal struck out court's discretion to award costs practice and procedure |
It owns intellectual property associated with an acrolein-based polymeric antimicrobial developed as an alternative to antibiotics for the prevention and control of intestinal bacteria diseases in intensively reared livestock (the Chemeq Product). The technology underlying the Chemeq Product has other possible applications including inorganic sunscreens, preservatives in cosmetics and human pharmaceuticals. 2 On 22 December 2004 the Australian Securities and Investments Commission (ASIC) commenced proceedings in this Court against Chemeq. ASIC sought declarations and penalties against the company because it had contravened the Corporations Act 2001 (Cth) (the Act) by failing to disclose to the ASX information material to the price of its shares. 3 Following various interlocutory steps and discussions between ASIC and Chemeq, the number of contraventions alleged was reduced to two. The first of these concerned what might broadly be called cost overruns in the construction of a facility for the manufacture of Chemeq's product at Rockingham. A figure of $25 million known to the market increased between February 2003 and April 2004 to $35 million, then $45 million, then $50 million without market disclosure. 4 The Second Contravention related to the effect of a patent obtained in the United States relating to a process for formulating the Chemeq product. The patent had no commercial significance, a fact which was not disclosed to the market in a material trading period between 6 and 7 October 2004. 5 Chemeq has admitted these contraventions of the Act. ASIC and Chemeq both submitted that penalties of $150,000 for the First Contravention and $350,000 for the Second Contravention are appropriate. The maximum penalty for which the law provides increased between the time of the first and second contraventions from $200,000 to $1 million. So although the First Contravention was the more serious of the two, the penalty proposed is lower because the maximum penalty applicable is significantly lower. 6 For the reasons that follow I am satisfied that it is within the power of the Court to make declarations that the contraventions alleged did occur. On the Statement of Agreed Facts submitted by the parties, those contraventions are established. I am also satisfied, having regard to the relevant sentencing principles, that the penalties proposed are appropriate and will make orders accordingly. Chemeq will also have to pay ASIC's costs of the proceedings agreed at $170,000. The facility, located 40 km south of Perth at East Rockingham, is being built and financed in stages. The plant, on an 8-hectare site, will produce all requirements to 2006/7 and is being built to internationally approved US Food and Drug Administration (FDA) Standards. Sales world wide would follow. The Chemeq product was one of those which it was said would be manufactured at the proposed facility. 9 On 2 August 2002 Chemeq made a announcement to the ASX to the effect that it had raised approximately $8 million. The company expressed its optimism that the additional $8 million in options would be substantially taken up. The eight-hectare site for the manufacturing facility has been granted all regulatory approvals for plant construction of total output 250 tonnes per annum. Currently, Chemeq is constructing infrastructure for 250 tonnes per annum output, including offices, laboratories, amenities, warehousing and formulation areas. At this stage of construction, flooring, concrete slabs including hydraulic and electrical services in the entire offices, laboratories, amenities, warehousing and formulation areas have been completed; except for the formulation areas, all walls have been completed and roofing structures begun. Construction is to FDA standards for veterinary manufacture. FDA regulations limit scale-up rate to 10-fold expansions between successive plants; on this basis, Chemeq is currently constructing a 20 tonne per annum process output --- with 200 tonne per annum planned to immediately follow. This additional manufacturing capacity will be majorly funded by cashflows from the 20 tonnes per annum facility. The manufacturing facility is being built on an 8-hectare site, to internationally approved US Food and Drug Administration (FDA) standards. Australia, Asia and other international markets were to follow. The potential global market was estimated to be worth AUS$10 billion. 12 A meeting of the directors of Chemeq was held on 10 February 2003. The minutes of that meeting record a discussion about Chemeq's relationship with Transfield, the contractor building the East Rockingham facility. Construction, already designed to FDA standards for veterinary pharmaceuticals --- has now been up-graded for potential manufacture of human pharmaceuticals. Commissioning, during August to October 2003 (saleable product is anticipated during this period). The infrastructure in the facilities had been upgraded to accommodate future productive increases of the 20 tonnes per annum process plant to 750 tonnes per annum. 15 On 25 June 2003 Chemeq announced that it had raised '... $25 million to fund upgrades and expansion of its manufacturing facilities'. The money came from a placement of new ordinary shares at $5.35 to institutions and sophisticated investors. Upgrade from Food and Drug Administration (FDA) standards for veterinary pharmaceuticals to manufacturer of human pharmaceuticals. On page 2 of this document there appeared a statement that the forecast final cost of the facility was $45,561,000 of which $22,561,000 had been expended. It reported that occupancy of infrastructure areas within the company's manufacturing facility had taken place and that validating and pre-commissioning of facilities had commenced on schedule. 18 On 5 November 2003 Chemeq told the ASX that it had exercised a right to purchase the land upon which its manufacturing facility was constructed for AUD$2 million. Construction of all the infrastructure to accommodate a production rate equivalent to 750 tonnes of active ingredient per annum was complete. This infrastructure would support and formulate 20 tonnes per annum of active ingredient from manufacturing plant 1 and 200 tonnes per annum from manufacturing plant 2. 19 On 12 December 2003 Chemeq announced that it had raised $20 million from its share purchase plan. 20 Chemeq's half year report for the half year ended 31 December 2003, submitted to the ASX, disclosed that the book value of its property, plant and equipment was $37.3 million and its total assets were approximately $72 million. It identified its prime activity during the half year as the ongoing construction of its manufacturing facility. Its loss to 31 December 2003 of AUD$4.169m represented a direct investment into supporting the construction activities and building the company's '... unique future as an Australian manufacturer and seller of its own patented, synthetic pharmaceutical drugs'. 21 In a quarterly cashflow report for the quarter ended 31 March 2004 published to the ASX on 30 April 2004, Chemeq stated that in the quarter ended 31 March 2004 it had made cash payments to the order of $13 million for the acquisition of physical non-current assets. 23 Patents protecting the Chemeq Product comprise seven families. The PCT application was within one of those families and related to a specific method of improving the efficacy of the Product and its antimicrobial function by preparing it in certain alcohols through a series of steps involving particular temperatures and times. The PCT application was filed with the United States Patent and Trade Marks Office on 8 November 2001. The term of patent protection in the United States, as provided in s 154 of Title 35 of the US Code, is 20 years from the date of filing the application for the grant of a patent. 24 On 10 December 2003 Chemeq made an announcement in the media and to the ASX in relation to its patent approvals. This gives Chemeq additional monopolies in manufacture and marketing of their antimicrobials. Market uses of these compositions. The approval processes on all patents pending are progressing satisfactorily and if approved, would give additional monopolies considerably beyond 2020. These processes which generally take in the order of six years in many countries are well progressed by Chemeq. In the meantime national and international patent applications protect our position during the examination processes. Chemeq has more than 175 patents pending which, if granted, will take potential manufacturing and marketing monopolies beyond the year 2020. Chemeq's key patents are comprehensive and cover molecules, syntheses, compositions and uses. All intellectual property is 100% owned by Chemeq. The term of the patent was to be 20 years from 16 February 2000. 27 On 6 October 2004 Chemeq issued 8,478,155 fully paid ordinary shares under its non-renouncable rights offer which closed on 27 September 2004. The number of its fully paid ordinary shares on issue thereby increased to 101,737,865. On the same day, Chemeq made an ASX media release under the headline 'PATENT GIVES PROTECTION TO 2020 AND DISTRIBUTION BEGINS'. [H]as been granted an additional US patent (previously pending only), which extends the company's exclusive protection in manufacture and marketing of its veterinary products in this country, to the year 2020. Already, Chemeq has been given expedited review status for the approval process of its drug (for pigs) in the US market. The safety and efficacy of Chemeq's technologies have been established over several years, in registered independent international laboratories and successful R & D and commercial field trials in a number of countries. In a nutshell, to have these exclusive rights in the most important market is obviously a very big achievement and an important milestone. It came into effect on 11 March 2002. Amendments to its provisions came into effect on 1 July 2004. Prior to its enactment the continuous disclosure provisions were found in ss 1001A, B, C and D of the Corporations Law. These imposed a prohibition against intentional, reckless or negligent non-disclosure which are no longer elements of the prohibition. Their removal reflects a widening of its scope. 36 Part 9.4B of the Act deals with the civil consequences of contravening civil penalty provisions. in a way that best promotes the principles on which the listing rules are based. Among the materials it placed before the Court, was an ASX publication entitled 'Continuous Disclosure The Australian Experience' published on 20 February 2002. That report gives a useful overview of some of the relevant history and principles underlying the development of the continuous disclosure regime. 43 In 1991 the Australian Companies and Securities Advisory Committee concluded that a statutory system of continuous disclosure would promote confidence in the integrity of Australian capital markets and provide benefits to market participants and management in various ways. encourage greater securities research by investors and advisors. ensure that equity and loan resources in the Australian market are more effectively channelled into appropriate investments and that funds are withheld or withdrawn from poorly performing disclosing entities. reduce the time and costs involved in preparing takeover and prospectuses (sic) documents. The Corporate Law Reform Bill 1993 contained provisions which enhanced periodic reporting requirements, and imposed disclosure obligations. The disclosure regime so introduced was described by the ASX as 'co-regulatory' on the basis that it relies upon the statutory application of the ASX Listing Rules in relation to disclosure. 45 The legislative policy behind continuous disclosure was set out in the Second Reading Speech of the Minister for Administrative Services introducing the Corporate Law Reform Bill (No 2) 1992 into the Senate on 26 November 1992. Knowledge that such conduct will be quickly exposed to the glare of publicity, as well as criticism by shareholders and the financial press, makes it less likely to occur in the first place. That is not to say that elements of intention or recklessness or negligence will not be relevant to the penalty to be imposed. A statement of claim was filed with the application. Chemeq filed an appearance on 4 February 2004. Lee J made directions on 4 March 2005 for the filing of Chemeq's defence and any counterclaim. The time limits were extended by consent orders on 19 April 2005. A defence was filed by Chemeq on 27 May 2005 together with a cross-claim for declarations that Chemeq was 'excused' from the various contraventions alleged against it. An amended statement of claim was filed on 17 June 2005. Chemeq gave discovery of documents in August 2005. ASIC was directed to give limited discovery in December 2005. Other pre-trial directions were then given. In February 2006 the time limits for variation of these steps were extended. 48 In the event the parties reached a compromise. ASIC filed a further amended statement of claim reducing the number of contraventions alleged to two, the first relating to non-disclosure of cost overruns on the construction of the Rockingham facility and the second relating to incomplete disclosure of the commercial relevance of the US patent rights obtained in relation to the Chemeq Product. Chemeq admitted these contraventions. In respect of the first contravention, 75% of the relevant maximum, being $150,000. In respect of the second contravention, 35% of the relevant maximum, being $350,000. Chemeq accepts that these are appropriate penalties. This period was referred to in the agreed statement of facts as 'The Trading Period'. By 31 December 2003 that had increased to approximately $474 million. These figures come from its half yearly reports released 24 February 2003 and 11 February 2004 respectively. 62 The Chemeq annual report for 2002 disclosed that as at 12 September 2002 the company had 3,119 shareholders of whom 2,045 held less than 5,000 shares. The annual report for 2003 shows that as at 29 August 2003, it had 5,573 shareholders, of whom 4,234 held less than 5,000 shares. It appears from the annual report of 2004, that as at 23 September 2004, Chemeq had 7,807 shareholders, of whom 5,964 held less than 5,000 shares. 63 Relevantly to the Rockingham Cost Increase Information, Chemeq had 78,342,085 fully paid shares on issue on 10 February 2003. He left the company in December 2004. He left the company in April 2005. Mr Mangano commenced as Company Secretary in May 2005. (f) Mr Ben Ritchie was Financial Controller between October 2002 and May 2005 and Interim Company Secretary between April and May 2005. He left the company in June 2005. Ms Colleen Baillie commenced as Financial Controller in July 2005. Mr Bosch was the Chairman of the Standards Australia Committee on Corporate Governance in 2002 and 2003. He was asked by Chemeq's solicitors to provide independent expert evidence for the proceedings in this Court on the practices and principles adopted by Chemeq in the context of its general continuous disclosure obligations. 69 In his report Mr Bosch reviewed the Statements of Corporate Governance Practices adopted by the Board of Chemeq in 2002, 2003 and 2004 together with extracts from the Annual Reports of the company for those years and other documents relating to its governance practices. The history of Chemeq's governance statements and practices was outlined in the report. It showed something of an evolution. 70 On 5 February 2002 the Board of Chemeq adopted a Statement of Corporate Governance Practices. Among the key obligations of that Committee was the requirement that it assist the Board where appropriate to discharge its responsibility to exercise due care, diligence and skill in relation to compliance with applicable laws and regulations. The Board also decided to take a number of steps to minimise risks which included reporting and internal controls, monitoring of compliance activities and establishing and monitoring 'policies directed to ensuring that CHEMEQ complies with the law and conforms with the highest standards of financial and ethical behaviour'. 71 The Annual Report of Chemeq for 2002 included a Corporate Governance Statement. This reflected the practice and policies set out in the statement adopted on 5 February 2002. 72 In 2002 the ASX established a Corporate Governance Council consisting of the major business groups. In March 2003 that Council produced a detailed Statement of Principles of Good Corporate Governance and Best Practice Recommendations. 73 On 25 August 2003 Chemeq's Corporate Governance Committee met and reviewed its Statement of Corporate Governance Practices to ensure that they complied with current laws and recommendations and that the practices were being adhered to. The Committee was satisfied with the practices and their adherence. On the same day, the Board adopted a new Corporate Governance Statement which later appeared without significant change in its 2003 Annual Report. It differed substantially from that adopted in 2002 and indicated, in Mr Bosch's opinion, that the Board had taken account of the ASX principles and recommendations published five months before. The statement outlined 'Corporate Governance Practices of Chemeq' and made clear that many but not all of the 28 recommendations in the ASX statement were being followed. 74 Chemeq reviewed its Standard Operating Procedure concerning ASX announcements on 10 October 2003. This covered the procedures to be covered if it became necessary to make an ASX announcement but did not identify the process by which a decision was to be made as to whether, and when, to make an announcement. 75 The Audit and Risk Management Committee of Chemeq met on 27 September 2004 noting the update of the Corporate Governance Statement for the annual report. It received advice that a consultant had been appointed to assist Chemeq with corporate governance issues. Part of that assistance was a review of the Audit and Risk Committee Charter. 76 On 26 October 2004, the Chemeq Board met and approved a Corporate Governance Principles and Practices Manual which comprised a number of separate documents. One of them set out policy and procedure for continuous disclosure and ASX announcements. Several statements made in the separate documents comprised in the Corporate Governance Principles and Practices Manual deal with the company's continuous disclosure obligations. They appear in the Board Charter, the Guidelines Covering Board Operation, the Board Code of Conduct and, of course, the Continuous Disclosure and ASX Announcements --- Policy and Procedure. 77 A copy of the Continuous Disclosure & Communications Policy was annexed to Mr Bosch's report. external communications such as analyst briefings and responses to shareholder queries. the names of any in-house or external advisers involved in the matter. Exceptions to ASX disclosure obligations were set out in par 3.3. The circumstances in which contravention could arise were set out in par 5, together with a statement of the penalties for such contraventions which could be imposed upon the company and its officers. He said that from 2001 to 2004 the resources available to the company for considering fast changing governance matters or establishing and maintaining increasingly complex compliance procedures were very limited. He expressed the opinion that the company's compliance and governance performance had to be considered against that background. 81 Mr Bosch described the statement adopted by the Board on 5 February 2002 as a valuable step forward in the circumstances of the time particularly considering the size of the company. The minutes of the meeting of the Corporate Governance Committee of 25 August 2003 demonstrated a continuing attention to corporate governance matters and the desire to comply with the new ASX principles and recommendations. He described the Corporate Governance Statement adopted on 25 August 2003 as 'a substantial improvement in the governance of the company'. 82 Mr Bosch pointed to the review of the Standard Operating Procedures concerning ASX announcements in October 2003 as a demonstration of Chemeq's concern about compliance in the area of continuous disclosure. In my opinion they are thorough and detailed and, allowing for Chemeq's size and nature, cover the matters in the ASX Recommendations appropriately. While not fully complying with all the 28 Recommendations of the ASX they set out a high standard of corporate governance. The statement "Continuous Disclosure & ASX Announcements --- Policy and Procedure" makes clear the Board's commitment to compliance, the responsibilities of individuals and the processes to be followed. The statement on continuous disclosure in the Annual Report was 'clear, reflected appropriately the Company's obligations, and was likely to give confidence to shareholders and potential investors. 85 The Court will consider the form and content of the policies and procedures and also the measures adopted by the corporation to ensure that they are understood and applied. A well drafted set of policies and procedures will mean little if there is no follow up in terms of training of company officers (including directors) and, where appropriate, refresher training. In the present case there is provision for induction training but no clear evidence of follow-up and refresher training. 86 Compliance policies and procedures will not be effective unless there is, within the corporation, a degree of awareness and sensitivity to the need to consider regulatory obligations as a routine incident of corporate decision-making. This kind of general sensitivity to the issues underpins what is sometimes called a 'culture of compliance'. It does not require a risk averse mentality in the conduct of the company's business, but rather a kind of inbuilt mental check list as a background to decision-making. This may be more difficult to achieve where, as in the present case, there is a positive obligation that is not related to any particular decision. The conduct of corporate business may involve consideration of the many shifting circumstances that make up a dynamic business environment. To identify those matters, including changes in circumstance, which attract the obligation of continuous disclosure, may not always be a straightforward exercise. There will be clear cases, and not so clear cases. There should be some process for ensuring that changes in circumstances or market information requiring disclosure are identified. Absent a positive monitoring mechanism, the company's compliance system may leave open the risk of non-disclosure by oversight. 87 It must be accepted that there will be differing opinions in particular instances about what requires disclosure and what does not. From the point of view of proper risk management against the possibility of contravention, a conservative approach which favours disclosure is to be preferred. Certainly those who play calculated risk games of non-disclosure in the shadow of the Rules cannot expect indulgence from the courts if their assessments are not accepted. It may be however that consideration should be given to some mechanism for providing internal early warning to officers of the company of material information or change in circumstances that may require disclosure. Their character is not adequately described by the rather anodyne term 'protective' --- Rich v Australian Securities and Investments Commission [2004] HCA 42 ; (2004) 220 CLR 129 at [35] --- [37], [41] --- [43] and [99]. Consistently with the characterisation as punitive the object of the penalties is general and specific deterrence. That is the deterrence of those who might be tempted not to comply with the law and the deterrence of the particular contravenor who might be tempted to re-offend --- Australian Securities and Investments Commission v Donovan (1998) 28 ACSR 583 at 608 (Cooper J), Australian Securities and Investments Commission v Adler (2002) 42 ACSR 80 at 114 (Santow J). 91 In Donovan Cooper J was concerned with the application of penalties under s 1317EA(3)(b). Nor does rehabilitation, but for different reasons. Those who view retribution as an appropriate theory of punishment hold that the offender must be given some punishment because he "ought" to be punished: the "an eye for an eye, a tooth for a tooth" approach to criminality. The proponents of this view see some social satisfaction in a "just" punishment, perhaps because it can be regarded as repayment to society for the violation. It might also be justified as suppressing acts of private vengeance. However, society is moving away from using a punishment for retribution even in purely criminal cases and, to my mind, it has no role to play in relation to the punishment of a corporation. One difficulty is that if punishment is to be regarded as an exercise of morality, presumably there must be some relationship between the harm intended by the criminal act and the harm inflicted on the offender. But as there is no measurable relationship between the two types of harm, there is no reasonable basis for choosing a particular penalty. Rehabilitation is a concept that has no useful role to play regarding corporations for one cannot rehabilitate a legal fiction. So, if the purpose of antitrust laws is to define certain socially intolerable conduct, deterrence must be the means by which a corporation is to be hindered from engaging in that conduct. That is relevant to particular deterrence. When a corporation takes a calculated risk by intentionally or recklessly failing to disclose material information to the market, it may be inferred that there is a corporate culture which encourages or, at least, tolerates or permits decision-making which expressly or implicitly weighs the benefit of non-compliance against the risk if non-compliance is detected. For such deliberate conduct, the risk associated with re-offending must be set at a high level by high penalties. It is not necessary or useful to tread upon the shifting sands of moral denunciation in having regard to issues such as intention or recklessness in fixing penalty --- cf however, the helpful and comprehensive discussion of the issue, albeit with a different perspective, in the context of competition law penalties by Yeung K in Securing Compliance :A Principled Approach (Hart Publishing, 2004, at Chapter 4). 94 Where non-disclosure conduct amounts to fraud by the deliberate non-disclosure of information calculated to affect decision-making by potential investors or creditors, the Court should not hesitate, as an incident of its penalty fixing process, to identify the unacceptable character of such conduct. However the continuous disclosure obligation imposes a duty not limited to abstention from intentional breach, or the avoidance of recklessness or carelessness. Its possible contraventions will cover a wide range of conduct. In such a case it is preferable to find a common principle applicable to the full range of conduct by reference to considerations of deterrence rather than super-added qualitative considerations of uncertain provenance relating to the morality of the particular contravenor's actions. The greater the seriousness of the contravention when measured by reference to those elements, the greater the harm that will be done if like re-offending should occur and the higher the penalty that should be imposed to minimise that risk. Issues of deliberation, recklessness and negligence are also relevant to risk of recurrence and what is necessary to deter such conduct by the particular company and others in the future. 96 The presence or absence of compliance systems is of importance. It is desirable also that the Court, in fixing penalty, is made aware of the reasons for the contravention. This may enable it to determine whether there were inadequate compliance systems or whether the contravention involved aberrant disregard by an individual of relevant policies and procedures. The seniority of those in the company who were involved in the contravention is also relevant because it goes to the risk of recurrence and the extent to which their conduct is likely to be noticed by subordinates within the company and by others in the wider corporate community. The degree of damage, if any, inflicted on the market by the non-disclosure is relevant as part of the exercise of assessing the seriousness of the contravention and so the level of risk associated with re-offending. 97 The acknowledgment by a corporation that it has contravened the law, its cooperation with the regulator in that regard, the steps it has taken internally to avoid repetition and relevant changes in the composition of the board or senior management should also be taken into account in the kind of risk assessment that informs a deterrent approach to punishment. 98 It may also be relevant to consider the impact, if any, on shareholders when a penalty is sought against a corporation. Penalties imposed on officers of the corporation for their part in such contraventions affect those officers alone. Penalties imposed on the corporation may affect shareholders including those who have become shareholders on a set of assumptions induced by the very non-disclosure complained of. In some cases it is possible also that creditors may be affected. Who then is being deterred when only the corporation is penalised? I am not sure that there is a satisfactory answer to this concern within the present statutory scheme. One might imagine that if a penalty is to be significant to a corporation it will also be significant to its shareholders in its impact on the capital which backs their shares. In a company with capitalisation as high as that of Chemeq, the impact on individual shareholders may be insignificant. The penalties that count most are likely to be those imposed on the responsible individuals. Nevertheless the law as presently framed requires the assumption that the contravening corporation is a person distinct from its shareholders and that it can be deterred by the imposition of appropriate penalties. 99 From the preceding discussion I extract the following factors relevant to the level of penalty for contravention of the continuous disclosure provisions. The extent to which the information not disclosed would have been expected to and (if applicable) did affect the price of the contravening company's shares (s 674(2)(c)). 2 . The extent to which the information, if not generally available, would have been discoverable upon inquiry by a third party (s 676(2)). 3 . The extent (if any) to which acquirers or disposers of the company's shares were materially prejudiced by the non-disclosure (s 1317G(1A)). 4 . The extent to which (if at all) the contravention was the result of deliberate or reckless conduct by the corporation. 5. The extent to which the contravention was the result of negligent conduct by the corporation. 6. The period of time over which the contravention occurred. 7. The existence, within the corporation, of compliance systems in relation to its disclosure obligations including provisions for and evidence of education and internal enforcement of such systems. 8. Remedial and disciplinary steps taken after the contravention and directed to putting in place a compliance system or improving existing systems and disciplining officers responsible for the contravention. 9. The seniority of officers responsible for the non-disclosure and whether they included directors of the company. 10. Whether the directors of the corporation were aware of the facts which ought to have been disclosed and, if not, what processes were in place at the time, or put in place after the contravention to ensure their awareness of such facts in the future. 11. Any change in the composition of the board or senior managers since the contravention. 12. The degree of the corporation's cooperation with the regulator including any admission of contravention. 13. The prevalence of the particular class of non-disclosure in the wider corporate community. Courts are frequently asked to play their part by accepting formal undertakings or making orders by consent which prohibit parties from certain conduct or require them to do certain things. Sometimes they are asked to impose agreed pecuniary penalties. In carrying out those functions, courts are conscious of the public interest in the settlement of cases. They must also be conscious, however, that the laws they apply are public laws. It is in the public interest that, in considering agreements between parties requiring orders of the court, the court does not act as a mere rubber stamp. What is proposed must always be scrutinised to determine whether the undertakings or consent orders are within power and are appropriate. When corporations acknowledge contraventions, very lengthy and complex litigation is frequently avoided, freeing the courts to deal with other matters, and investigating officers of the Australian Competition and Consumer Commission to turn to other areas of the economy that await their attention. At the same time, a negotiated resolution in the instant case may be expected to include measures designed to promote, for the future, vigorous competition in the particular market concerned. These beneficial consequences would be jeopardised if corporations were to conclude that proper settlements were clouded by unpredictable risks. A proper figure is one within the permissible range in all the circumstances. The Court will not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure, or except in a clear case. While acknowledging that both the ACCC and Colgate had accepted that the figure proposed was in no way binding upon the Court, his Honour could not find a single instance when the Court had not in the past endorsed such a figure. As the authorities presently stand, the Court is bound to impose an agreed pecuniary penalty, save in such circumstances. He was bound by those principles and the well-established line of authority to accept that the Court would not depart from an agreed figure merely because it might otherwise have been disposed to select some other figure. The Court may be seen, perhaps not altogether incorrectly, to act as a 'rubber stamp' in simply approving a decision taken at an executive level by a body charged with investigating and prosecuting contraventions of the Act, but having no role in actually imposing particular sanctions for those contraventions. Negotiated settlements are an important vehicle for resolving complex matters such as those involving the present case. It must be borne in mind, however, that there is a public interest in ensuring that corporations that engage of behaviour of the kind that occurred in this case are dealt with appropriately, and that proper recognition is given to the need for specific and general deterrence. There are important parallels between the fixing of a pecuniary penalty under s 76 , and the ordinary sentencing process which is quintessentially a matter for the courts. A submission couched in those terms could assist in achieving a measure of certainty and consistency of treatment with other like cases. 103 I agree, with respect, with the remarks of Weinberg J. In the end, however, no 'agreed penalty' can bind the Court. Consistently with NW Frozen Foods the Court will apply a principle of judicial restraint in deciding whether or not to make orders in the terms proposed by the parties. But that principle of judicial restraint is not a self imposed constraint equating the role of the Court to one of judicial review of a sentencing discretion. Such a self imposed limitation could amount to an abdication of the duty that the Court has to exercise the jurisdiction which is invoked and the powers conferred upon it by the Parliament. NW Frozen Foods does not, in my opinion, confine the Court to the imposition of a penalty differing from the agreed penalty only where the agreed penalty would be outside the range of penalties which could be imposed in the proper exercise of a sentencing discretion. The restraint which is applied by the Court to regulatory settlements is informed by practical considerations which differ from the principles and criteria informing its judicial review function or the exercise of its appellate jurisdiction in relation to discretionary judgments. 104 In this case, ASIC and Chemeq have proposed that certain penalties would be appropriate. Such a proposal, in my opinion, leaves it open to the Court to determine that some other penalty might be more appropriate. In so deciding, the Court would apply the restraint principle to which I have already referred and not lightly come to a different outcome. It pointed to the significance of the construction of the Rockingham facility to Chemeq's principal activity. That activity is the production and sale of the Chemeq Product. Chemeq could not produce commercial quantities of the product and therefore achieve sales until it had completed the construction. Moreover, its main physical asset was at all material times the Rockingham facility. 106 ASIC submitted that Chemeq specifically represented to the market the expected costs of construction of the 20 tonne facility in April 2002 as being $25 million and in September 2003 as being $35 million. As at 31 December 2002 its total assets were approximately $16 million and as at 31 December 2003 its total assets were approximately $72 million. ASIC submitted that Chemeq's market capitalisation combined the value attributed by investors to its intellectual property, its physical assets and its ability to sell the Chemeq Product at a profit in the future. During the relevant period Chemeq announced its intention to upgrade the facility. It continued to make announcements about the progress of construction. However, it did not announce the increased costs of the 20 tonne facility despite the statements regarding the costs of the facility referred to earlier. 107 The statement to the market in September 2003, referred to in the statement of agreed facts, was incomplete and failed to fully inform the market of the true position at that time. ASIC submitted that, by way of contrast, during the relevant period, Chemeq frequently used ASX announcements to provide positive news for the market. In the result, investors were informed of the potential value of the Chemeq Product and of its plans for the future but not of substantial cost overruns in the Rockingham facility. They were serious and involved an increase in cost to build the facility from 40% to 100% over the amount previously announced to the ASX. 108 The cost incurred in building facilities before Chemeq could start producing commercial quantities of its product were important factors that investors needed to know when deciding whether to acquire Chemeq shares. That cost represented the initial investment required which investors needed to weigh up against the expectation of a future income and the risks associated with that expectation. Moreover, ASIC submitted, the fact that Chemeq was experiencing significant cost overruns would have been relevant to investors' assessment about its ability to deliver on key milestones and on its planning and management capabilities. The consequence was that the price of Chemeq shares during the relevant period may have been higher than it would have been if the information had been disclosed. The uninformed market in Chemeq shares lasted for a period of approximately fourteen and a half months. 109 ASIC pointed out that during his period Chemeq raised approximately $40 million from investors for the purpose of funding upgrades and expansion of its manufacturing facilities. 32,389 trades were executed on ASX from 10 February 2003 to 40 April 2004 with a total of 39,978,393 shares traded. Chemeq had and has few, if any, institutional shareholders but attracted many small shareholders as investors. 110 ASIC submitted that to give full effect to principles of specific and general deterrence the contravention required a penalty at or close to the maximum amount provided by the law in force prior to 1 July 2004. It demonstrated a disregard of the requirements of the ASX Listing Rules and s 674(2). It was submitted that it is appropriate to demonstrate to Chemeq and to other listed companies that such disregard of their obligation will not be tolerated. 111 It was submitted on behalf of Chemeq that it was reasonable to infer that at least some of the trading in its shares at least since its admission to the S & P ASX 200 Index was index driven rather than because of any appreciation of its individual situation. There was no allegation that Chemeq or any of its directors or officers acted dishonestly or sought to profit or gain from the contravention. Chemeq has not previously been found to have contravened the Act. Its failure to appreciate that it should have disclosed the construction cost overrun was said to be one of a lack of understanding, rather than a calculated attempt to deceive the market. The information not disclosed would have been expected to significantly affect the price of Chemeq's shares. 2. The information was not readily discoverable upon inquiry by a third party and a fortiori by small investors of the kind that make up the bulk of Chemeq's shareholding. 3. There is a reasonable risk that acquirers of the company's shares were materially prejudiced by the non-disclosure, although that risk is not quantified. 4. The contravention was not the result of deliberate or reckless conduct by the corporation. It cannot however be dismissed as mere carelessness. The directors and officers of Chemeq during the relevant period were kept informed of the cost overruns. It simply does not seem to have occurred to them that this was a matter which required disclosure. This suggests that at the time the Board of Chemeq had a serious lack of appreciation of its obligations. 5. During the relevant period there do not seem to have been in place effective compliance systems in relation to the disclosure obligation. However, those which have been put in place subsequently, whilst not beyond improvement, represent a substantially increased commitment by the company to meeting its obligation in this respect. 6. Responsibility for the contravention is to be located at the most senior levels of the company. 7. The composition of the Board and senior managers of Chemeq has changed substantially since the contravention. 8. Chemeq has cooperated with the regulator and has admitted the relevant contravention. 9. There is no evidence as to the prevalence of the particular class of non-disclosure in the wider corporate community. Given the absence of any dishonesty, the cooperation of the corporation with ASIC, the review of its compliance systems and the change in composition in the Board and senior management, I am satisfied that the penalty as proposed, fixed at 75% of the applicable maximum, is appropriate. 114 In relation to the Second Contravention, ASIC submitted that it ought to be considered as 'moderately serious'. ASIC submitted that the disclosure obligation arose as a result of Chemeq's own announcement of 6 October 2004 overstating the significance of the relevant US patent. That overstatement can be seen by comparing the admitted facts as to the commercial significance of the patent with the message conveyed by the 6 October announcement. There was a significant increase, in the order of 58% in the market price of Chemeq's shares and the overstatement was likely to have contributed to that increase. 115 Chemeq was required to make the announcement of 7 October 2004 in order to clarify the true position about the significance of the US patent. It only made that announcement after a query from the ASX on 7 October 2004. It did not immediately seek to rectify the position despite the obvious market response to its first announcement. 116 ASIC pointed out that the Second Contravention continued for almost two full trading days. During that time about 7,000 trades were executed and 26,821,595 shares were traded. By way of contrast, on 5 October only 522,680 Chemeq shares were traded. Following Chemeq's announcement on 7 October 2004 its share price fell substantially in the order of 15%. 117 ASIC submitted that the principles of specific and general deterrence required a penalty at, or close to, 50% of the maximum amount provided by the law in force after 1 July 2004. It submitted that the events of 6 and 7 October demonstrated a continuing carelessness by Chemeq with respect to the accuracy and completeness of its disclosures to ASX. It demonstrated a slowness to correct misapprehension of the significance of the grant of the US patent. 118 Chemeq submitted that in considering the effect of the information on the market value of its shares it was necessary to take account of the fact that it had finalised the issue of 8,478,155 new shares on 6 October 2004 and that share price volatility commenced prior to the contravention. There was also other information contained in the 6 October 2004 announcement. Nevertheless Chemeq accepted, for the purposes of these proceedings, that some trading may have occurred as a result of its failure to promptly tell the market the US patent information. Chemeq also pointed to the absence of dishonesty in relation to the announcement and its admission of the contravention. It responded to the ASX query regarding the US patent within the timeframe stipulated by the ASX, which response 'cured the contravention'. 119 In my opinion, the matters referred to by ASIC in its submissions, which I accept, has justified a penalty at the level for which it contends. The same mitigating factors to which I referred in relation to the First Contravention apply in relation to the Second Contravention. In the circumstances, a penalty for the Second Contravention of $350,000, being 35% of the relevant maximum is appropriate. The Chemeq cross-claim will be dismissed. There will be an order that Chemeq pay ASIC's agreed costs of $170,000. I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | continuous disclosure obligations contravention failure to disclose cost increases in construction of major production facility failure to disclose lack of commercial significance of publicised grant of patent in the united states admission of contraventions agreed proposed orders agreement as to appropriate penalties purpose of continuous disclosure requirements principles informing penalty discretion factors relevant to penalty in non-disclosure contraventions approach by court to agreements as to appropriate penalties principle of judicial restraint not to be equated to limitations in judicial review effect of contraventions on market for company shares lack of dishonesty absence of adequate compliance systems post contravention establishment of detailed compliance system cooperation with regulator admission of contraventions substantial change to composition of board of directors and senior management relevance of effect of penalty on shareholders induced by non-disclosure to acquire shares or not dispose of them declarations made penalties imposed in terms proposed corporations |
On 16 November 2004 he lodged an application for a protection (class XA) visa. On 2 August 2005 a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs refused the application. The appellant lodged an application for review by the Refugee Review Tribunal ('the RRT') on 28 August 2005. On 24 November 2005 the RRT handed down its decision affirming the decision of the delegate to refuse to grant a protection visa. 2 On 12 December 2005 the appellant lodged an application for judicial review in the Federal Magistrates Court. That application was dismissed with costs by Lindsay FM on 11 September 2006. An appeal to this Court was lodged on 25 September 2006. 3 The appellant's written submissions before me are a confusing mix of generalised assertions that jurisdictional error has been committed by the RRT. Most reduce themselves to an allegation of lack of procedural fairness but they are garnished with a sprinkling of allegations to the effect that the RRT rejected the appellant's claims without paying regard to his oral evidence, was preoccupied, acted illogically and relied on information from secondary and fallacious sources. No detail is provided to support the allegations. 4 The Notice of Appeal is shorter but equally unhelpful. It suggests, directly or by inference, bad faith and prejudice on the part of the RRT, failure to reveal information the RRT proposed to rely upon and that the appellant was misled by the RRT. No particulars or specific examples are provided. 5 Lindsay FM also observed that the submissions to him were 'put forward in a somewhat formulaic fashion'. 6 I have read the decision of the RRT to see whether, despite Lindsay FM's consideration of the appellant's arguments on the earlier occasion, there is some reason to suspect jurisdictional error. At the hearing, when the appellant gave oral evidence, the RRT read to the appellant a summary of his claims, prepared by the RRT, which the appellant is recorded as accepting as 'a fair summary of his situation and claims'. You lived there between January 1994 and May 2004, when you went to Thailand. You had your own business between 1998 and 2004. Police reluctantly agreed to investigate the attack on you, but when you also reported the burning of your shop they refused to help you and threatened that they would charge you with an offence. The doctor who wrote a report for you was threatened and he asked you to return the report to him. Someone stabbed you but the police did nothing. You could not get treatment locally, so you went to another town. Then you went to Delhi, but not long afterwards, Hindus in Delhi came to know of what happened in Tamil Nadu, and you were forced to leave there. You went to Madras, where someone you knew arranged for you to go to Thailand to work for him. You returned to India on business a few times. Then someone threatened your friend and forced him to make you leave. Someone else you met arranged for you to come to Australia. It is not necessary to recount the detail. 9 The decision of the RRT to affirm the decision of the delegate to refuse a protection visa was based on findings of fact. The findings of fact involved conclusions adverse to the credit of the appellant. They were made in circumstances where the RRT appeared to appreciate the necessity to make an adverse finding on a material issue only if confident about the finding. He claims their enmity originated because of his Muslim religion but has continued because, when they attacked him for refusing to pay increased contributions towards a Hindu temple, he fought back and, in particular, bit one of them on the ear. He claims they are looking for him all over India, and tried to pressure his boss in Thailand to return him to India. This may involve an assessment of the credibility of the applicant. When assessing credibility, the Tribunal should recognise the difficulties often faced by asylum seekers in providing supporting evidence and should give the benefit of the doubt to an applicant who is generally credible but unable to substantiate all of his or her claims. However, it is not required to accept uncritically each and every assertion made by an applicant. Further, the Tribunal need not have rebutting evidence available to it before it can find that a particular factual assertion by an applicant has not been made out. Nor is it obliged to accept claims that are inconsistent with the independent evidence regarding the situation in the applicant's country of nationality. See Randhawa v MILGEA (1994) 52 FCR 437 at 451, per Beaumont J; Selvadurai v MIEA & Anor (1994) 34 ALD 347 at 348 per Heerey J and Kopalapillai v MIMA. If the Tribunal were to make an adverse finding in relation to a material claim made by an applicant but were to find itself unable to make that finding with confidence, it must proceed to assess the claim on the basis that the claim might possibly be true. (See MIMA v Rajalingam (1999) FCR 220). In particular, the RRT accepted that unless it could, with confidence, find adversely to a material claim made by the appellant it should 'proceed to assess the claim on the basis that the claim might possibly be true'. (Examples were given. However, that scar could have resulted in a variety of ways, including a simple surgical operation. The applicant said that he had "plastic surgery" on the site after the alleged stabbing. Whatever the cause, the Tribunal accepts that the applicant has had an operation on a site close to his navel. He claimed that a friend gave him a job there and he only returned to India to report to his boss and, on those occasions, stayed only one or two weeks to report to his boss and remained in a hotel room the entire time. In his oral evidence, he said he did this "once or twice" and, in his written statement he said "2, 3 times. From that, the Tribunal infers hat he was not in fear of persecution on any of the occasions when he returned to India. As he has made no claims of any incident after March 2002 which would have caused Hindu fanatic groups to wish to single him out, the Tribunal finds that he does not have a fear of persecution in India. Therefore the applicant does not satisfy the criterion set out in s.36(2) of the Act for a protection visa. 15 At the hearing of the appeal the appellant's oral submissions, through an interpreter, did not address any jurisdictional question or alleged error in the judgment of Lindsay FM. However, the appellant sought to tender two documents. The first purported to be a medical certificate alleging a reason for the death of the appellant's brother who died, apparently, on 22 February 2006, after the decision of the RRT. Lindsay FM records in his judgment that material related to the appellant's brother's death is irrelevant to an examination of jurisdictional error on the part of the RRT. I agree. I declined to receive the 'medical certificate' in evidence. The second document was a letter from India, which, it was said, would assist in rebutting a conclusion by the RRT that a certain letter before it, purporting to be from a mosque, should be given little weight. I declined to receive the second document also as, in my view, it was not capable of bearing upon any consideration of jurisdictional error. She submitted, however, that the question was correctly, and in accordance with authority, decided against the appellant by Lindsay FM. 18 Before Lindsay FM there was a complaint by the appellant that the RRT had relied upon an analysis of the contents of his passport to make the findings I set out earlier about his visit to Thailand and the length of times he lived in India. The passport was provided by the appellant to the RRT at the hearing. 19 Lindsay FM followed Full Court authority in this Court in concluding that, by virtue of s 424A(3)(b) of the Act there was no obligation on the RRT to alert the appellant to the fact it might use what appeared in his passport in making a decision (see SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 and Minister for Immigration and Multicultural Affairs v Al Shamry [2001] FCA 919 ; (2001) 110 FCR 27). 20 This matter was not specifically referred to in the Notice of Appeal or written or oral submissions before this Court. However, it deserves some attention. It is a part of the decision that follows the account of the hearing itself and it is clear that the analysis, which is revealed by this part of the decision, occurred after the hearing had concluded. The passport was issued in Tiruchirappally in April 2001. After the hearing the Tribunal analysed the entries in the passport. Not all the entries in the passport are clear, and it appears that some records of entries or exits may have been omitted or covered by subsequent visas. However, from the entries which are evident, the Tribunal has deduced that the applicant entered Thailand six or seven times, and returned to India on five occasions. His visa stated "employment prohibited. " He left Thailand and entered Singapore on 20 November on a visa which also prohibited employment, and stayed there for two days, before returning to India on 22 November. He entered Thailand again on 23 January 2003, so presumably left India on either 22 or 23 January (again no exit stamp is obvious). His visa for this entry also stated "employment prohibited. " He left Thailand and returned to India on 5 February 2003. He entered Thailand a third time on 3 August 2003, so presumably left India on 2 or 3 August. His visa for this entry also stated "employment prohibited. " He returned to India on 10 August 2003. The applicant left India for the fourth time on 27 September 2003 and arrived in Thailand the following day. His visa for this fourth entry to Thailand also stated "employment prohibited. " He left Thailand on 11 October, and travelled to Singapore (his visa prohibited employment) before returning to India on 14 October. Again, both visas prohibited employment. He left India on 12 March, and entered Thailand the following day. He returned to India on 11 April. He again obtained a Thai visa ("employment prohibited") from the Thai Embassy in New Delhi on 27 April 2004. It is not clear when he used that visa, but there is an entry dated 30 June 2004, which indicates that a further application to remain in Thailand was refused and that he was required to leave Thailand (the entry says "the Kingdom") by 7 July. He obviously did so, as he re-entered the country on 2 July with a visa valid until 29 September 2004. He did so on 3 October, and travelled to Australia. His first five visits were of seven, thirteen, seven, thirteen and twenty-nine days respectively. It is not possible to determine the duration of the sixth visit to Thailand, but it could have been no more than sixty six days. After his first departure from India, the applicant returned there for periods ranging between one and six months or so. However, it is appropriate to set it out again. He claimed that a friend gave him a job there and he only returned to India to report to his boss and, on those occasions, stayed only one or two weeks to report to his boss and remained in a hotel room the entire time. In his oral evidence, he said he did this "once or twice" and, in his written statement he said "2, 3 times. The overall impression given by the applicant's evidence, both written and oral, was that, in the period of two years after he first left India in October 2002, he worked in Thailand and returned for extremely brief visits to India. However, the evidence of his passport, submitted at the hearing is diametrically opposed to that. Section 424A(1) , is engaged with respect to information that is a part of the reasons for deciding the application adversely to the appellant. Ms Allars argued two bases for concluding that the information was not required to be given to the appellant pursuant to s 424A. One was that the RRT did not use the information as a part of its reasons. Rather, in her submission, the passages extracted in paras 21 and 22 above were part of a subjective appraisal or thought process. 24 The law as to what constitutes 'information' for the purposes of s 424A has recently been addressed by a Full Court in NBKT v Minister for Immigration and Multicultural Affairs [2006] FCAFC 195. Information is that of which one is told or apprised; it is knowledge communicated concerning some particular fact, subject or event: The Complete Oxford English Dictionary (2 nd Ed 1991). 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 at [24] or knowledge which has come to, or has been gained by, the Tribunal: Paul at [95]. The concept of information does not extend to identified gaps, defects or lack of detail or specificity in evidence or to conclusions arrived at by the Tribunal in weighing up the evidence by reference to those gaps: WAGP of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 266 ; (2002) 124 FCR 276 at 282 [26] - [27] . The distinction between 'information' that is part of the Tribunal's reason on one hand, and 'subjective appraisals', 'thought processes' and 'determinations' of the Tribunal on the other hand, may be plain in some cases, but in other cases it may prove to be very fine, if not elusive: Paul at 428 [95]; VWFP and VWFQ v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 231 [36] ('VWFP') . It was information upon which the appraisal and thought processes operated but this does not mean that the objective material, or information, is subsumed in the subjective appraisal, thought process or determination. In my view the information in question fell clearly within s 424A unless within the exemption in s 424A(3)(b). 26 Ms Allars' second proposition was that it was within the exemption. Lindsay FM concluded that it was when a similar issue was raised before him. There are a number of aspects to be considered. 27 First, doing the best I can with the RRT's description of how the passport came under examination, it appears it was provided at the request of the RRT to be copied. 29 In M55 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 131 Gray J considered the use by the RRT of visa information in a passport. Her Honour was wrong in holding that the provision of the passport for the purposes of the protection visa application must be taken to have been also for the purposes of his application to the Tribunal. By means of the written submission of his counsel to the Tribunal, the appellant relied expressly on the terms of his protection visa application. He informed the Tribunal that the detail of the claims was set out in the protection visa application and his earlier statements. He thereby invited reference to the copy passport, which was attached to the application form. There can be little doubt that the appellant intended that the Tribunal should look at this material. In my view, he thereby provided the passport, and the information to be derived from it, to the Tribunal for the purpose of the application for review. This was sufficient for the appellant to have been taken to give the information contained in the copy passport to the Tribunal for the purpose of his application for review, and therefore for that information to fall within s 424A(3)(b) of the Migration Act . This provision operated to exclude the copy passport from the Tribunal's obligations pursuant to s 424A(1) and (2). In any event, it did canvass with him the crucial issue, which was how the appellant managed to renew his passport at a time when he was, according to his account, in hiding. It also canvassed with him the fact that he had managed to leave Sri Lanka lawfully, through the airport, at a time when he claimed that he was wanted by the authorities. Nor did it deny him procedural fairness in relation to that information, or in relation to any issue on which it found against the appellant on the basis of that information. The material was not advanced directly or indirectly by the appellant in the written statement he made to the RRT. It appears to have been before the RRT solely at its request. 31 That factual distinction may not have legal significance however. In SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 five cases concerned with the application of s 424A were considered by a Full Court. One of these cases --- Appellant SZEEZ - involved consideration of visa information in a passport. The visa information was one of five, or possibly six, pieces of information suggested to fall within the requirements of s 424A. Two members of the Court (Moore, J dissenting) were agreed that certain material in the application for a protection visa was required to be given to the appellant under s 424A and was not exempted by s 424A(3)(b). This was enough to establish jurisdictional error. It was not necessary, therefore to decide whether the visa information in question fell within s 424A(3)(b) or not. 32 Moore J, however, as part of his analysis concluding that none of the information in question was required to be provided under s 424A , dealt with the visa information in the passport, concluding it had been given to the Tribunal by the applicant at the hearing. Ultimately, the tender was not opposed and leave should be given to tender a copy of the relevant page of the passport into evidence. The Minister submitted that it can be inferred that the appellant was asked by the Tribunal to bring his passport to the hearing (having regard to a letter sent to the appellant on 25 May 2004 making that request) and the appellant did so (because the Tribunal mentions in its reasons having seen the passport at the beginning of the hearing). Accordingly, it was submitted, the information (that the appellant had a visa to enter the PRC) was not information derived by the Tribunal from the original application for a protection visa but rather information known to the Tribunal because it sighted the passport at the hearing. While no analogue of the best evidence rule operates in the Tribunal, plainly the primary source of its knowledge that the appellant had a visa to enter the PRC arose because it saw the visa in the appellant's passport. Accordingly, it constituted information provided by the appellant for the purpose of the application for review and is thus caught by s 424A(3)(b). Argument took place in relation thereto, and Moore J has dealt with them. Therefore I will state my views briefly. Although, strictly speaking, not part of the ratio decidendi of the case, and therefore not binding upon me as a matter of judicial precedent, I do not feel I should take a different approach to the application of s 424A(3)(b) expressed by Moore J and Allsop J on an issue so closely related in point of principle. 35 I confess to some disquiet about the notion that material or information brought to hearing at the request of the RRT, sighted or copied by the RRT, analysed later and then used to reject important parts of an applicant's claims, can be said to be information given by the applicant to the RRT for the purpose of the application for review so that the RRT is relieved of an obligation to put it squarely before the applicant and give him a chance to comment. Nevertheless, judicial comity and respect for the authority of the Full Court decision in SZEEU , which dealt comprehensively with a range of issues concerning the application of s 424A , compels me to conclude that the visa information in the appellant's passport was exempted by s 424A(3)(b) from any requirement falling upon the RRT under s 424A(1) or (2). 36 This was the only matter which, in my view, provided any potential to reveal a jurisdictional error on the part of the RRT and, for the reasons I have given, no jurisdictional error is disclosed. Accordingly I find there was no error in Lindsay FM's conclusion that no jurisdictional error was established in the proceedings before him. The appeal must be dismissed. It is appropriate to dismiss it with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | protection visa passport and visa information whether within s 424a(3) judicial comity no jurisdictional error migration |
The applicant commenced proceedings on his own behalf and on behalf of other persons ('group members') who fell ill and suffered physical injury or financial loss after consuming food contaminated with salmonella bacteria prepared or sold by the respondent in the period from 23 December 2003 to 7 January 2004. 2 The applicant has reached agreement with the respondent to settle the representative proceedings. Section 33V of the FCA Act provides that representative proceedings cannot be settled or discontinued without the Court's approval. Consequently, the applicant applied to the Court for approval of the proposed settlement agreement by notice of motion dated 28 March 2006. On that day, after hearing submissions from counsel, I adjourned the application to 7 April 2006. It is convenient to summarise the issues raised at the hearing on 31 March 2006 because they inform the subsequent actions taken by the parties, and the reasons why I am now prepared to approve the settlement of the proceeding. 4 At the hearing on 31 March 2006, I raised two main issues concerning the form of the proposed settlement agreement, and invited counsel to make further submissions about those matters in due course. The first issue concerned a provision in the proposed settlement agreement which contemplated amendment to the statement of claim after Court approval to finalise the list of group members. The provision set out the circumstances in which the Court may add or delete persons from that list. However, the addition or deletion of persons to or from the said list may be effected at any time by the Court if it is satisfied that the omission or inclusion of the person on the said list was the result of a slip by the Applicant's Lawyer or the Court. In that case, Moore J considered the question whether the Court should make an order finalising the class of group members and, in particular, whether the Court should be able to add or delete persons from the final list of group members in circumstances other than those resulting from some kind of slip or mistake. His Honour considered that the Court should reserve a power to add or delete group members in 'other circumstances', and he so ordered: at [7]. 5 The second matter I raised with counsel on 31 March 2006 arose from my consideration of Finkelstein J's decision in Lopez v Star World Enterprises Pty Ltd (1999) 21 ATPR 41-678 (' Lopez' ). In that case, Finkelstein J was concerned with an application for approval of a settlement agreement under which an expert would determine the quantum of damages to which each group member would become entitled. The settlement agreement provided that the expert's determination would not be subject to review. His Honour expressed some reservation as to whether the Court's jurisdiction to supervise the settlement process could be ousted in that fashion: at 42,671. 6 In the present case, the proposed settlement agreement is similar to that considered by Finkelstein J in Lopez, in that it provides for a process whereby the quantum of damages of group members' claims is to be assessed and determined by agreed counsel. The agreed counsel is to act as an expert. 7 In Lopez, Finkelstein J resolved the issue by reserving liberty to any group member to apply to the Court to challenge the validity or enforceability of any of the provisions of the settlement scheme. In the light of Lopez , I wished to consider whether the Court needed to take any, and if so what, steps to preserve its supervisory jurisdiction, and whether the device of reserving liberty to apply provided a completely satisfactory mechanism for doing so. 8 Another issue raised at the 31 March hearing concerned the notice requirement imposed by s 33X(4) of the FCA Act. Section 33X(4) provides that unless the Court is satisfied that it is just to do so, an application for approval of a settlement under s 33V must not be determined unless notice has been given to group members. The applicant sought to dispense with that requirement in the present case. Notwithstanding that notice of the proposed settlement agreement had not been given to group members, counsel for the applicant, Mr Armstrong, submitted that it was appropriate to approve the proposed settlement for essentially two reasons. First, Mr Armstrong contended that the cost of advertising was expensive and was not warranted in this case. Secondly, he contended that the notice requirement was unnecessary in the circumstances, having regard to the process in the proposed settlement agreement for notifying group members of the settlement of the proceeding, and giving them an opportunity to immunise themselves from the effects of the settlement agreement if they so desired. 9 Mr Armstrong submitted that the notice requirement was designed to ensure that group members are not bound by a settlement agreement of which they have not been given notice. He pointed out that the proposed settlement agreement contained a process whereby group members were to return claim forms in order to access the benefit of the settlement agreement, and any group member who did not want to be bound by the settlement could achieve that result by not returning the claim form. Counsel also submitted that notice of the proposed settlement was unnecessary because the present case lacked 'an element of compromise' of the value of the group members' claims. This was not a case where the parties had agreed on a lump sum that was to be distributed in a way that involved any form of discounting of the value of each group member's claim. Rather, the respondent had effectively agreed to pay each group member's claim in full in accordance with the assessment process set out in the proposed settlement agreement. 10 Having considered these submissions, I was not persuaded to dispense with the notice requirement on 31 March 2006. I was conscious that group members may wish to raise issues concerning the form, content and finality of the proposed settlement arrangement before the Court approved it. Accordingly, I ordered that on or before 4 April 2006, the applicant cause a notice in the terms annexed to the orders to be published in one of The Age, Saturday Age or Sunday Age newspapers, and one of The Herald Sun, Saturday Herald Sun or Sunday Herald Sun newspapers. I adjourned the application for approval of the proposed settlement agreement to 7 April 2006 so as to allow notice of the settlement and notice of the application to the Court for its approval to be advertised in accordance with section 33X(4) of the FCA Act. 12 Pursuant to the orders I made on 31 March 2006, the applicant placed the required advertisements in The Age and The Herald Sun newspaper on 4 April 2006. Following those advertisements, no group member came forward to object to any of the provisions of the proposed settlement agreement. 13 On 3 April 2006 the applicant and the respondent entered into an agreement to vary the proposed settlement agreement in order to address the matters I raised at the 31 March hearing. The consolidated settlement agreement that is now before me incorporates these variations. The applicant moves the Court for approval of the consolidated settlement agreement. 14 The variations to the proposed settlement agreement were threefold. First, cl 1.1(g) of the proposed settlement agreement was amended to widen the Court's power to add or delete members from the final list of group members. It now provides that the Court may add or delete members from the final list of group members not just in the case of error by any party, its representative or the Court, but also in 'other circumstances'. This reflects the language which Moore J included in the settlement agreement in King . 15 Secondly, cl 5.12 of the proposed settlement agreement was amended to provide that the determination of the quantum of damages of any claim by agreed counsel should be subject to the right of the claimant to apply to the Court on a question of law arising from the determination. 16 The third amendment provides a mechanism by which the Court can maintain an ongoing supervision of the process for assessment and determination of group members' claims. Indeed, the applicant has gone one step further to ensure that the interests of group members are protected: Maurice Blackburn Cashman, the solicitors for the applicant, has given a written undertaking to the Court that it will advise the Court of any group member aggrieved by the procedure for assessment of damages by agreed counsel. 18 I have carefully reviewed the proposed settlement agreement in the light of the relevant authorities: see Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 4) [2004] VSC 466 ; Williams v FAI Home Security Pty Ltd (No 4) (2000) 180 ALR 459 (' Williams'); King; Lopez . I am satisfied that the consolidated settlement agreement represents a fair, reasonable and appropriate settlement of the claims made in this proceeding and that it should be approved by the Court: Williams at 465 [19]. Of its nature, the settlement is one which is readily susceptible to Court approval. In effect, the terms of settlement provide for the admission of liability in respect of claims advanced by group members and set out a simplified process for the assessment of the quantum of damages on each claim by agreed counsel. In my view, this is an appropriate means of ensuring speedy, efficient and fair determination of the quantum of the claims. 19 The consolidated settlement agreement is supported by the opinions of Mr Murphy of Maurice Blackburn Cashman, a very experienced solicitor in the field of class actions, and by experienced senior and junior counsel acting for the applicant. In their opinions, the consolidated settlement agreement is fair, reasonable and appropriate and there are no reasons why the Court should not approve it. 20 For the forgoing reasons, and upon the undertaking of the solicitors for the applicant referred to above, I propose to approve the settlement of the proceeding on the terms contained in the consolidated settlement agreement dated 5 April 2006. | representative proceeding settlement agreement approval of settlement by court whether proposed settlement is fair, reasonable and appropriate requirement to give notice to group members of application for approval of settlement whether right of review should be preserved where quantum of damages to be assessed and determined by agreed counsel whether appropriate grounds for addition or deletion of group members by court following approval of settlement amended settlement agreement approved practice and procedure |
The applicant claims that a decision made by the Tribunal on 28 February 2007 is unlawful and invalid. This Court has jurisdiction by reason of s 476A(1)(b) of the Migration Act 1958 (Cth) ("the Act ") and that jurisdiction is the same as the jurisdiction of the High Court under paragraph 75(v) of the Constitution . 2 On 1 June 2005, a delegate of the Minister (at that time, the Minister for Immigration and Multicultural and Indigenous Affairs) decided that the applicant had not satisfied him that he passed the character test under s 501 of the Act and the delegate exercised the discretion in s 501(2) of the Act to cancel the applicant's visa. The applicant made an application for a review of that decision to the Tribunal. On 12 January 2006 the Tribunal affirmed the delegate's decision. However, that decision was set aside, and by reason of a consent order made by this Court, the application for review was remitted to the Tribunal to be heard and decided again with the hearing of further evidence in accordance with the directions of the Court. The application for review remitted to the Tribunal was heard by it in November 2006 and, on 28 February 2007, the Tribunal affirmed the decision under review. The applicant contends that in making that decision the Tribunal committed a jurisdictional error. He is not a citizen of Australia. The applicant obtained a bachelor of economics degree from the University of Southern California. 4 In 1994 the applicant came to Australia to visit a friend and, for that purpose, he obtained a Tourist (Short Stay) (Sub-class 670) visa. In 1994 or 1995, the applicant met Ms Carolyn Brough, who was an Australian citizen. He commenced a relationship with her and, on 6 September 1999, they were married. As a result of that marriage, the applicant was granted a Spouse (Sub-class 801) visa. The applicant and Ms Brough were divorced on 25 August 2004. 5 The applicant's father has never been part of his life and he has met him on only two occasions and that was when he was a child. The applicant's mother and two sisters reside in the United States. 6 In May 1996, the applicant was hospitalised for a period of approximately three days. At about that time, he commenced using cocaine on what the Tribunal member described as "a part-time, casual basis", which the applicant said was as a result of the people he was associating with at that time. In 1997 the applicant moved from New South Wales to Brisbane to be with Ms Brough. Between 1999 and 27 March 2002, the applicant established and operated a business involving the spraying of concrete over bitumen surfaces and engraving bitumen surfaces. 7 The applicant committed a number of offences between 1998 and 2002. He was arrested on 27 March 2002. The monies obtained from the Commonwealth Government, banks and other institutions totalled $644,390.65. On November 2003, the Queensland District Court convicted the applicant of numerous offences to which he had pleaded guilty. On the same date, 13 November 2003, he was convicted by the Queensland District Court of those counts, and sentenced to six years' imprisonment on each count, with a recommendation that he be considered eligible for post-prison community-based release after serving two years. In addition, the applicant has appealed to this Court against the convictions referred to in (a) and (b) above. The appeal has not yet been heard. The Tribunal member noted that the appeal does not involve any challenge to what he called the legality of the convictions or sentences imposed. Furthermore, the Tribunal member said that the convictions referred to in paragraphs (d) and (e) above are not challenged. 9 On any view, the applicant fails the character test in s 501 of the Act and he did not suggest the contrary. 10 As I have said, the applicant was arrested on 27 March 2002 and he was sentenced on 13 November 2003. It seems that he was released from prison on parole on 7 October 2004 to live with a Ms Renea Fraser at her home at Yeronga in Queensland. The applicant had commenced a friendship with Ms Fraser prior to his arrest. 11 Ms Fraser has three sons, Jhaycob, Izaak and Jedidiah, all from different relationships. I will refer to Jedidiah as "Jedi". He is the applicant's son and he was born on 20 July 2005. 12 The Tribunal member said that there was an argument between the applicant and Ms Fraser in November 2004 and, as a result, the applicant left Ms Fraser's home. There was a further argument in December 2004. In February 2005 Ms Fraser applied for a domestic violence order against the applicant but on 22 February 2005 she withdrew that application. 13 The applicant gave evidence before the Tribunal. He called as a witness a Mr R Tuddenham, who is the president of the South Australian Lone Fathers' Association. Mr Tuddenham said that he had experience in commenting on the best interests of a child of a relationship and the relevance of the father's role in the life of that child. The applicant also called as a witness a Mr C Courtney who gave his occupation as a computer designer and who said that he was the only director of Tessa Corporation Pty Ltd. The applicant had started working with Tessa Corporation in February 2005. 14 The applicant also called as a witness a Mr T Watson-Munro, who is a registered psychologist. He said that he had extensive experience in the assessment of people charged with criminal offences and he gave evidence as to the link between the applicant's drug addiction and his offending. 15 The respondent called Ms R Fraser. Her evidence was in conflict with the applicant's evidence in a number of respects. Generally speaking, the Tribunal member preferred her evidence to that of the applicant. Furthermore, there were other aspects of the applicant's evidence which the Tribunal member did not accept. The direction is Direction No 21 --- Visa Refusal and Cancellation under Section 501 --- No 21. I will refer to it as "the direction". Section 499(2A) provides that a person or body must comply with a direction under subs (1). The direction provides that the other considerations are generally to be given less individual weight than that given to primary considerations. 19 Subject to a submission that the Tribunal member misunderstood the nature of the discretion he was exercising, the applicant did not suggest that the Tribunal member erred in his consideration of the first two primary considerations. The Tribunal member's reasons in relation to them can be mentioned briefly. The offending and criminal conduct of the applicant were very serious. The offences were of a kind regarded by the Government as very serious. The offences were "significant in number and the applicant's conduct was blatantly fraudulent affecting, as Mr Prince submitted, the Australian tax-paying community and Australian financial institutions". In the applicant's case there was a significant risk of recidivism. There was no evidence that the general deterrence effect would be significant if the cancellation of the appellant's visa was confirmed and accordingly, little weight would be placed on this matter. 22 In relation to the expectations of the Australian community, the Tribunal member, after considering a range of matters, considered that the Australian community would be very concerned that a non-citizen should engage in the fraudulent offending of the kind and extent committed by the applicant, and he said that in the circumstances, he considered that the Australian community would, on balance, favour the cancellation of the visa. 23 I turn now to summarise the Tribunal member's reasons in relation to the third primary consideration. There is a strong attack by the applicant on those reasons. 24 The Tribunal member commenced his examination of the third primary consideration by summarising the relevant paragraphs in the direction. He noted that the applicant's submissions focused on the best interests of his son, Jedi. At the time of the hearing before the Tribunal, he was 16 months old. The applicant submitted that he was being denied access to his son, and that if his visa was cancelled, there would be virtually no way in which future access or contact could be made. The applicant gave evidence that he wanted to remain in Australia so that he could form a meaningful relationship with his son. He submitted that his son would be disadvantaged if he grew up without a father. He referred to the evidence of Mr Tuddenham and he submitted that he was African American and that it was his desire to share his cultural background with his son. The Tribunal member referred to certain observations of Gray J in Rocca v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 87 ALD 529. The Tribunal draws no adverse inferences from the fact that Ms Fraser so consented. Nor does the Tribunal accept the applicant's submission that, by granting the contact orders by consent, the Court was articulating that the best interests of the child would be served by allowing him to have contact with his father. The orders made on 29 May 2006 were interim orders made by consent and until final order. The orders made on 25 September 2006 were final orders. The orders deal with the relationship between Jedi and each of his parents, namely, the applicant and Ms Fraser. The orders are set out below [32]-[33]. 26 The Tribunal member then referred to the evidence of Mr Tuddenham and the evidence of Mr Courtney. In relation to the evidence of Mr Tuddenham, he said that Mr Tuddenham did not bring any formal qualification to the hearing of the matter and he concluded that his views did not greatly assist him. In relation to Mr Courtney, he found him to be "a most unimpressive witness". 27 The Tribunal member then said that the applicant had referred to amendments to the Family Law Act 1975 (Cth) ("FLA") but he said that he did not find the amendments to be of assistance to the applicant. 28 The Tribunal member said that he accepted the proposition that it is in the best interests of the child to remain with his or her parents. However, in considering the best interests of Jedi, he said that he took into account that the boy was only about 19 months old and that the applicant had been separated from him since the date on which he was taken into immigration detention, that is to say, a date in October 2005. The Tribunal member said that there was no established relationship between the applicant and Jedi. However, the Tribunal cannot overlook the fact that his prospects for developing such a relationship with Jedi would be jeopardised by his estrangement from Ms Fraser. Although the relationship between Ms Fraser and the applicant displayed during the course of the hearing may not have been hostile, it was certainly strained and at times bordering on being argumentative. Given the circumstances, the Tribunal considers that the prospects of the applicant developing a close relationship with his son in the future are doubtful. As mentioned previously in these reasons, the Tribunal also considers that there is a significant risk of recidivism which, if it were to materialise, would be harmful to Jedi's upbringing. The Tribunal finds that, for the reasons given, and in the best interests of the child, the applicant's visa should be cancelled. He said that the "relevant" factors were largely not relevant to the applicant's situation and, in his view, "none of the factors would constitute a significant ground for exercising the Tribunal's discretion in the applicant's favour". He said that the applicant's immediate family all reside in the United States and therefore there was no issue relating to hardship to any immediate family members in Australia with the possible exception of hardship to Jedi, "already canvassed above". The Tribunal member noted that there was no suggestion that if the applicant returned to the United States he would be placed in a situation where relevant rights under international obligations would be violated. The applicant did not appear to have any connection in Australia beyond his association with Mr Courtney. The Tribunal member was not satisfied that the relationship with Mr Courtney would give rise to any serious or ongoing offer of employment and therefore he concluded that the applicant had no ties either to business interests or commercial interests in Australia. 30 The Tribunal member said that having considered all the material and all the relevant considerations in the direction, he had decided that it was appropriate to exercise the discretion under s 501(2) of the Act to cancel the applicant's visa. The Tribunal member misunderstood the orders made by the Federal Magistrates Court or, he did not take them into account. 2. The Tribunal member misunderstood the nature of the discretion he was exercising. He considered or may have considered that it was a discretion to decide not to cancel the applicant's visa. 3. The Tribunal member failed to take into account a number of other considerations. That the child, JEDIDIAH MARCUS EZEKIEL FRASER, born July 20, 2005 reside with the mother. 2. That the mother have sole responsibility for the day to day and long term care, welfare and development of the child. 3. Each alternate Saturday for 2 hours at a supervised contact centre as agreed (but failing agreement, at Lutwyche Children's Contact Centre, Lutwyche Queensland). That the cost of contact be shared equally between the parties. That upon the child reaching the age of three (3) years, the father be at liberty to provide the mother with letters and photos for the child and the mother shall deliver and read such letters to the child. 5. That the mother provide the father with photographs of the child every three months. 6. That the father undertakes a parenting course as soon as possible and provide the certificate of completion to the mother. 7. That should either party change address or contact details from those already available to the other, then he or she (as the case may be) shall as soon as possible notify the other of the new details. 8. That the case be transferred to the Brisbane Registry of this Honourable Court. That there be leave to apply. That the orders dated 29 May 2006 be made final. 2. This order authorises any treating medical practitioner to release the children's medical information to the other parent. c. provide the other parent a copy of any medical report in relation to any medical condition or any significant health issues suffered by the Child. The first limb involves a submission that the Tribunal member did not take into account the fact that those orders allowed for a degree of contact between the applicant and Jedi. It was submitted by the applicant that the Tribunal member could not have concluded as he did that the prospects of the applicant developing a close relationship with his son were doubtful if he had taken proper account of the orders made by the Federal Magistrates Court. The second limb involves a submission that the Tribunal member misunderstood or misinterpreted the provisions of the FLA in rejecting the applicant's submission that in making the contact orders by consent the Federal Magistrates Court was articulating that the best interests of the child would be served by allowing him to have contact with his father. I refer to the passage of the Tribunal member's reasons set out in [24] above. The steps in this particular submission were as follows. The Federal Magistrates Court was required by law to regard the best interests of Jedi as the paramount consideration in making a parenting order and a parenting order can include a contact order. That was the case at the time of the interim orders (s 65E) and at the time of the final orders (s 65AA) and it was the case even if the orders were made by consent, although the FLA gave the Court a discretion as to whether it considered certain matters in the case of consent orders (see s 68F at the time of the interim orders and s 60CC(5) at the time of the final orders). Although the Federal Magistrates Court could order that there be contact between the applicant and Jedi, its orders at least allowed for it and it must be taken that the Federal Magistrates Court considered that contact between the applicant and Jedi was in the best interests of Jedi. The Tribunal member was considering the best interests of Jedi and the fact that another court or tribunal had, at least by implication, conveyed a view on that matter was a relevant consideration. Although the Tribunal member did not say why he rejected the applicant's submission that weight could be placed on the orders made by the Federal Magistrates Court, it must have been because he misunderstood the provisions of the FLA. In any event, he either made an error of law going to jurisdiction or he failed to take into account a relevant consideration giving rise to jurisdictional error. These then are the steps in the applicant's submission. 38 I reject the first limb of the applicant's submission. The Tribunal member was clearly aware of the consent orders and it was open to him to reach the conclusion he did having regard to the terms of the orders. The orders provide for contact if the applicant is in Queensland and not incarcerated and, absent agreement, for a low level of contact, namely 52 hours per year. It is not inconsistent with that level of contact to conclude that the prospects of the applicant developing a close relationship with Jedi were doubtful. 39 The second limb of the submission requires a more detailed analysis. The first step the applicant must establish is that by rejecting the applicant's submission the Tribunal member was concluding that the orders did not reflect a view by the Federal Magistrates Court about the best interests of Jedi. As I understand it the first respondent accepted that proposition and that, in so concluding, the Tribunal member erred. In other words, the first respondent accepted that the Federal Magistrates Court would only have made the orders if satisfied that they were in the best interests of Jedi. 40 It is not possible to determine the precise views of the Federal Magistrate who made the orders because not surprisingly he did not deliver reasons for making the orders. Although some of the affidavit material filed in the Federal Magistrates Court was before the Federal Magistrate and is before me, it would be impossible and, in any event, inappropriate to speculate as to the reasoning of the Federal Magistrate. 41 It being common ground that the Tribunal member erred, the question which arises is whether it was an error going to jurisdiction. 42 The first way in which the applicant seeks to characterise the error is to claim that it is an error of law going to jurisdiction because the Tribunal member must have misinterpreted the provisions of the FLA. Other than a passing reference to amendments to the FLA, the Tribunal member did not refer to relevant provisions of the FLA and he may have in fact relied on some evidence given by Mr Tuddenham and referred to earlier in his reasons. At all events, in my opinion, even if the error came about because the Tribunal member misinterpreted the provisions of the FLA that did not constitute an error going to the jurisdiction he was exercising. The Tribunal member was exercising the jurisdiction or power conferred by s 501(2) of the Act and more particularly he was considering whether to exercise the discretion to cancel the applicant's visa. Subject to my consideration of the applicant's second submission, there is no basis upon which to conclude that he misunderstood the scope or ambit of the statutory jurisdiction or power. He was required to comply with the direction. There is no basis upon which to conclude that he misunderstood any of the statements or directives in the direction. In particular, he addressed the best interests of the child and there is nothing to suggest that he misunderstood that part of the direction. 43 The second way in which the applicant sought to characterise the error was to claim that it led the Tribunal member to fail to take into account a relevant consideration, namely, the Federal Magistrates Court's views as to the best interests of Jedi. In my opinion, there are two answers to this submission. First, it is clear that the Tribunal member was in no way bound by the views of the Federal Magistrates Court. The relevant consideration was the best interests of the child, not the view of the Federal Magistrates Court as to the best interests of the child. At best, the latter was an item of evidence that may be relevant to that consideration ( Li Shi Ping v Minister for Immigration, Local Government and Ethnic Affairs (1994) 35 ALD 225 at 236-237). Secondly, even if the implicit view of the Federal Magistrates Court was a relevant consideration it is a consideration the Tribunal member was permitted but not bound to take into account. The Tribunal member was bound to make up his own mind about the best interests of Jedi having regard to the matters in the direction and his inquiry involved an examination of the range of matters referred to in the direction. 44 For these reasons, I reject the applicant's first submission. 45 The applicant also referred to the presumption of equal shared parental responsibility introduced by the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth). It does not provide for a presumption about the amount of time the child spends with each of the parents (this issue is dealt with in section 65DAA). (4) The presumption may be rebutted by evidence that satisfies the court that it would not be in the best interests of the child for the child's parents to have equal shared parental responsibility for the child. It is not entirely clear to me how the applicant puts his argument in relation to these provisions. In any event, it is clear that the Tribunal member did not overlook them, and his conclusion that they were not of assistance to the applicant was open to him on the evidence and in light of his task under s 501(2) of the Act . 2. It is true that he did appear to misstate the nature of the discretion in that part of his reasons which I have summarised above ([29]) but his reasons must be read as a whole and not with an eye keenly attuned to error: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 271-272. The Tribunal member was clearly alert to the nature of the discretion he was called upon to exercise. At the beginning of his reasons he said the only issue before him was whether the discretion to cancel the visa should be exercised and he concluded his reasons by saying that he had decided that it was appropriate to exercise the discretion under s 501(2) of the Act to cancel the applicant's visa. Furthermore, throughout his reasons, and, in particular when addressing the three primary considerations, the Tribunal member referred to a particular factor as one favouring a decision to cancel the applicant's visa. 48 I do not think that the Tribunal member misunderstood the nature of the discretion. 3. The fact that the applicant was not warned that if he committed serious offences he may jeopardise his visa. The direction states that these are matters which "may be relevant". The list of matters is not exhaustive. It seems to me that the terms of the direction are such that it is primarily up to the decision-maker to determine if any of the listed matters or, indeed, any other matter is relevant in a particular case. The Tribunal member said that the matters in paragraphs 2.17 to 2.24 inclusive of the direction were largely not relevant to the applicant's situation. The Tribunal member considered the effect on the applicant's family noting that other than Jedi who he had already considered, the applicant's immediate family resided in the United States. He considered the applicant's business ties to the Australian community and he said that he was not satisfied that the applicant's association with Mr Courtney would give rise to any serious or ongoing offer of employment. He referred to his previous discussion about the applicant's rehabilitation and his conduct since his incarceration. That is a matter referred to in the direction (paragraph 2.17(h)). It is clear that the Tribunal member has considered the matters in clause 2.17. 51 The Tribunal member also considered the matters appearing in the direction under the heading "Other International Obligations". His conclusion was that there was no suggestion that if the applicant was returned to the United States "he would be placed in a situation where relevant rights under international obligations would be violated". 52 I do not think the Tribunal member was obliged to consider the International Covenant on Civil and Political Rights or the Convention on the Rights of the Child either at all, or in the case of the Covenant, any further than he did. It must be remembered that he gave careful consideration to the interests of Jedi and he considered the position of the applicant's immediate family. 53 I do not think the Tribunal member was bound to consider hardship to the applicant himself. It is possible that in any event he did so when considering the best interests of Jedi, but even if he did not, he did not err in law in not doing so. Nor do I think the Tribunal member erred in not considering the absence of a prior warning. The fact that prior warning has been given may be relevant (paragraph 2.17(k)), but the absence of a prior warning is either irrelevant or, at most, a consideration of only permissive, not mandatory character. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | application for constitutional writs where minister cancelled applicant's visa pursuant to s 501(2) migration act 1958 (cth) where administrative appeals tribunal affirmed decision where case involved parental relationship between child and applicant where direction given under s 499 migration act 1958 (cth) that best interests of child be a primary consideration where contact orders made by consent in federal magistrates court providing for contact between applicant and child where tribunal rejected applicant's submission that contact orders reflected federal magistrates court's view of best interests of child where common ground that tribunal's characterisation of contact orders rested on misinterpretation of family law act 1975 (cth) whether error of law going to jurisdiction whether tribunal misunderstood nature of its discretion whether tribunal failed to consider relevant consideration administrative law |
The order of the Court is that the appellant shall pay the costs of the first respondent of and incidental to the appeal. The present application seeks to quantify those costs in an amount. An affidavit of Nicola Johnson sworn 25 August 2008 is read in support of the application for costs fixed in an amount. Having considered the content of that affidavit, I order that the costs, the subject of order 2 of the orders published today, be fixed in the amount of $1,900.00. 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 an application for costs of the appeal migration |
He provided his services as Chief Executive through his private company, Martech International Pty Ltd (Martech). Mr Brand's resignation as Chief Executive in November 2001 gave rise to proceedings in which his company, Martech, made a variety of claims against Energy. One of the claims was for a shortfall of remuneration following a unilateral but temporary reduction in the fees payable to Martech under a service contract for the period from 1 March 2000 to 30 September 2000. That shortfall was claimed in the amount of $71,663.65. Martech also claimed a substantial termination payment in excess of $800,000 which, it said, was due under the contract by reason of a change in Mr Brand's status from Managing Director to Executive Director and the associated change in his duties. Claims for damages for misleading or deceptive conduct were also made. 2 Energy and its subsidiary, Australian Energy Equity Pty Ltd (AEE) cross-claimed against Martech and Mr Brand by reason of a "milestone" payment made in respect of a power station development in India known as the Vypeen Combined Cycle Power Project. Their complaint was that Mr Brand authorised the payment despite the fact that a condition of a sale and purchase agreement, under which the payment was to be made, had not been satisfied. The relevant condition was that approvals had been obtained from the Indian Government for the importation of condensate fuel for use as an interim fuel in the proposed power station. A clearance from one ministry of the Indian Government was later contradicted by another. Energy and AEE alleged that Mr Brand failed in his duty to them by authorising the payment without taking reasonable care or exercising due diligence to ensure that it was due. 3 On 4 August 2006 I delivered judgment in both the claim and the cross-claim. Martech was awarded the sum of $71,663.65 representing the shortfall in fees for the period from 1 March 2000 to 30 September 2000. Its claim for a termination payment in excess of $800,000 was dismissed. So too were the other claims for damages for misleading or deceptive conduct. 4 The Energy and AEE cross-claim against Martech and Mr Brand was also dismissed. The costs order made on the cross-claim was that the cross-claimants were to pay the cross-respondents' costs of the cross-claim to be taxed if not agreed. 5 I directed that the parties to the Martech claim file written submissions as to pre-judgment interest and costs following the judgment. They have done so. It acknowledged that where a litigant has succeeded on some issues but failed on others, an apportionment may be appropriate. That is a matter for discretion for the trial judge. It was submitted that the Court's power to order a successful applicant to pay the costs of an issue on which it has failed ought to be exercised only where the Court, on a consideration of all the circumstances, has concluded that the raising of that issue by the applicant was so unreasonable that it is fair and just to make the order. Reliance was placed upon Mok v Minister for Immigration (No 2) (1993) 47 FCR 81 at 84D. 7 Martech submitted that while the pleadings in its claim raised a number of causes of action there were two broad issues pursued by it. The forbearance affecting the level of remuneration. 2. The termination payment. Martech submitted that it was wholly successful in relation to the forbearance but acknowledged that it was unsuccessful in relation to the termination payment. The latter claim failed essentially on the proper construction of cl 8.6 of the consultancy agreement. Energy put in issue whether the consultancy agreement was terminated on 29 September 2000 and a significant amount of evidence was directed to that point. On that point, Martech succeeded. The forbearance issue was also one to which significant evidence was directed. There were other issues of fact on which Martech did not succeed. Martech submitted that it should have one third of its costs. It also pointed out that the first cross-claim was discontinued by leave on 20 September 2005 with costs reserved and that there was no reason why the respondent should not pay its costs of the first cross-claim. 8 On the matter of interest on the judgment sum, Martech submitted that interest was usually ordered for the period between the cause of action arising and judgment. It correctly pointed out that the usual practice is to award interest at the rate applied in the Supreme Court of the State where the court is sitting unless there is evidence that those rates are penal and not commercial: Namol Pty Ltd v AW Baulderston Pty Ltd (1993) 119 ALR 187; GEC Marconi Assistance Pty Ltd v BHP Information Technology Pty Ltd (2003) 201 ALR 55. Martech submitted that the cause of action arose in respect of the judgment sum on 10 December 2001 when Mr Brand first wrote to Energy advising that Martech's forbearance had ceased. Alternatively it was put that interest should run from 6 November 2003 when a further demand was made by Martech and, alternatively, 24 March 2004 when the application was commenced. A calculation of the judgment sum with interest applied from those three dates was appended to the submission. 9 Energy submitted in response that Martech was unsuccessful in seven of the eight causes of action and claims. It did not obtain the principal commercial objective of the proceedings, which was the termination payment in excess of $800,000. It referred to New South Wales Dairy Corporation v Murray Goulbourn Co-operative Co Ltd (1989) 14 IPR 75 at 79. 10 Energy argued that the claim for unpaid fees was a distinct and separate cause of action for an amount well within the jurisdiction of the District Court of Western Australia. Had the claim been brought separately it may well have been settled commercially between the parties. It submitted that the costs should follow the event and the respondent should be entitled to the costs of the proceedings. In the alternative Martech should be ordered to pay costs in respect of the unsuccessful aspects of its case. An appropriate apportionment would be that Martech pay 90% of Energy's costs of the action. 11 Energy argued that the claim for unpaid fees occupied a relatively small amount of time at trial, both in terms of evidence and submissions. Martech adopted a "shotgun" approach to its claims for a termination payment, none of which succeeded. The claim based on implied terms required the Court to consider extensive evidence including expert evidence about allegations of non-disclosure and breaches of the Corporations Act 2001 (Cth). These proved to be false issues as Martech did not establish the implied terms. In addition it did not succeed in establishing the claim for unpaid fees as pleaded. The Court held that Martech was entitled to the unpaid fees as there was no consideration for the variation pleaded by Energy. The issue of lack of consideration or uncertainty was not pleaded in reply, nor was it put in closing submissions. 12 In respect of the interest claim, Energy submitted that Martech did not, prior to the commencement of the proceedings, make a specific request for the unpaid fees for which judgment was awarded. The tax invoice of 10 December 2001 for $483,026 was in the nature of an ambit claim. In the circumstances, it was submitted, no pre-judgment interest should be awarded and, alternatively, it should be awarded from the date of the commencement of the proceedings. 14 The "jurisdiction" conferred upon the Court by s 43 is in truth a power in aid of jurisdiction. It is not confined by any presumption about the manner of its exercise. a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law. 15 The primary claims pursued by Martech related to the termination of its service contract and its entitlement to payment of a termination fee. It also claimed termination payments on alternative bases including Energy's breach of an implied term in its contract arising from a failure to publicly disclose the Withdrawal Notice of its subsidiaries' interests in the PY-1 gasfield. 16 A substantial part of the evidence led at trial related to claims in which Martech was unsuccessful. The trial of the action took three days although much of it was documentary. 17 This is a proper case for apportioning costs on the application. Mathematical precision is not possible in so doing. It is largely a matter of impression. In my opinion, Martech's limited success should not be reflected in an apportionment greater than 30% of its costs of the application. This should be further reduced by the costs to which Energy was put unnecessarily by having to defend the balance of the application. There was a degree of evidence common to all causes of action. In the circumstances, in my opinion, it is proper that there should be no order as to the costs of the application. 18 I accept that Martech should have the costs of the first cross-claim which was abandoned by Energy. I do not think that can be simply dismissed as an ambit claim. That component which was owing should have been paid. For that reason pre-judgment interest at the rate of 6% per annum will be awarded from 10 December 2001. The figure is $20,002.95. Energy is to pay Martech's costs of the first cross-claim which was abandoned and pre-judgment interest in the sum of $20,002.95. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | apportionment parties successful on one issue unsuccessful on others mathematical precision not possible no order as to costs pre-judgment interest rate date from which calculated date of demand costs interest |
That decision affirmed a decision of a delegate of the first respondent ('the Minister') refusing an application for a protection visa. On 31 May 2005 the appellant lodged an application for a protection visa. A delegate of the first respondent refused the application for a protection visa on 2 June 2005. On 3 June 2005 the appellant applied to the Tribunal for a review of that decision. 3 On 27 June 2005, the Tribunal affirmed the delegate's decision. On 22 September 2005, the Federal Magistrates Court made orders by consent, quashing the decision and remitting the matter to the Tribunal. On 1 December 2005, the Tribunal again upheld the delegate's decision, but the Federal Magistrates Court set aside this second Tribunal decision on 29 September 2006. On the remittal, the Tribunal upheld the delegate's decision for the third time and the appellant appealed to the Federal Magistrates Court. His appeal was unsuccessful. This appeal is concerned with the last-mentioned decision of the Federal Magistrates Court and, less directly, the third decision of the Tribunal. 4 Before the Tribunal, the appellant claimed to fear persecution in Bangladesh on the ground that he has a well-founded fear of persecution on the ground of his homosexuality. Other persons also gave evidence for him. 6 The Tribunal considered the history of the appellant's claims. It was not satisfied that the appellant was homosexual. The Tribunal accepted that the appellant did not experience any discrimination or difficulties in the twenty years that he lived in Bangladesh. It accepted that, since his release from immigration detention, the appellant had been closely involved with an organisation called 'Community Action Against Homophobia' ('CAAH'), but found that there was no evidence that since the second decision of the Tribunal, on 1 December 2005, the appellant had been in any homosexual relationship. The witnesses that he called had known him only since November 2006 and, although they gave evidence of his involvement in CAAH, none said that he had been in a homosexual relationship with the appellant. 7 The Tribunal found that the history of the appellant's immigration status in Australia indicated that he sought protection as a refugee only after other efforts to remain in Australia failed. It stated that, if the appellant had a well-founded fear of persecution in Bangladesh on account of his homosexuality, the appellant would have applied for a protection visa when he first became aware of his sexual orientation and he did not do so. The Tribunal found that the appellant was not a credible witness and that he had manufactured his claim to be homosexual. It followed, so the Tribunal said, that it did not attach any weight to earlier evidence provided to the Tribunal by witnesses who claimed involvement in sexual relations with him. 8 The Tribunal found that the appellant's activities "recently embarked upon" (particularly since his release from detention and the invitation to attend a third Tribunal hearing) were undertaken to strengthen his refugee claims and therefore could be disregarded under s 91R(3)(b) of the Migration Act 1958 (Cth) ("the Act "). Amongst other things, the Tribunal considered that the psychiatric reports indicated several reasons for his mental state and did not attach any weight to the appellant's claimed fears in the counselling sessions. Further, the Tribunal was not satisfied that the distribution of the magazine, for which the appellant had given an interview about homosexuality, would result in a real chance of persecution. It was satisfied that it would be reasonable for the appellant to relocate within Bangladesh and that state protection was available. 12 The Tribunal was therefore not satisfied that the appellant was a person to whom Australia owed protection obligations under the Refugees Convention. Accordingly, the appellant did not satisfy this criterion for a protection visa. 14 The Federal Magistrate was not persuaded that the Tribunal's "findings and its general conclusions were not open to it on the evidence, or could be characterised as so unreasonable as to display a Tribunal which was not performing its statutory duty to review the delegate's decision". His Honour held that the Tribunal did not fall into error by taking into account the appellant's failure to claim protection earlier than May 2005. It also held that the Tribunal did not fail to consider the opinions of the psychiatrists and psychologist and was not obliged to treat as conclusive their acceptance of the appellant's claim to feel shame and guilt concerning his sexuality. 15 His Honour held that the Tribunal did not make findings about the general situation in Bangladesh in relation to homosexuals without any support in the evidence. Further, according to his Honour, the Tribunal did not fail to consider the practicalities of relocation. Indeed, his Honour held that the Tribunal did not fail to consider any material evidence and did not implicitly expect the appellant to avoid persecution by modifying his behaviour. This original notice of appeal essentially repeated the review grounds agitated in the Federal Magistrates Court. His Honour committed an error of law in dismissing the appeal from a decision of the Second Respondent in circumstances where the Second Respondent constructively failed to exercise jurisdiction in that it was manifestly unreasonable for the Tribunal to make adverse findings about the applicant's sexual orientation by (i) giving excessive weight to a matter of no great importance (viz., failure to lodge protection visa application upon arrival), (ii) failing to give adequate weight to a matter of great importance (viz., corroborative medical and lay evidence going directly to applicant's sexual demeanour and about [sic] his sexuality). The Tribunal committed jurisdictional error of law by failing to consider material corroborative of the appellant claims [sic]. The Tribunal accepts this country information. However, the Tribunal also accepts that from this material it is clear that while homosexual intercourse is illegal in Bangladesh under the laws dating back to the British Raj, these laws are rarely enforced and the instances of persecution under them is extremely rare. Moreover, the Tribunal also accepts that a variety of non-traditional sexuality is frowned upon in Bangladesh society which remains conservative in sexual matters, and in this respect the Tribunal does not accept that homosexuals are the particular targets of serious harm amounting to prosecution in Bangladesh but rather accepts that, as this independent country information makes it clear, the overt demonstration of sexual affection applies across-the-board in Bangladesh and is frowned upon, whether it is between same-sex or opposite sex couples. In this context, the Tribunal has not been able to satisfy itself that the across-the-board discouragement of such overt sexual affection is repression or indeed is serious harm amounting to persecution for a Convention reason. Put another way, the appellant submitted that the Tribunal failed to consider whether he would be persecuted because of his imputed membership of the social group that was the subject of his claim. If the Court accepted this submission, it would establish relevant error: see Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 ; (2003) 216 CLR 473 (" S395/2002 ") at 486 [31] per McHugh and Kirby JJ. 19 The appellant also maintained that the same passage showed a second error, because, as their Honours said in S395/2002 at 491 [46], in considering the very same law, "the Tribunal was obliged to go on to consider the other implications of the existence of the law in respect of possible persecution". He submitted that the Tribunal failed to do so. The appellant also contended that his Honour not only erred in failing to appreciate this but also "by finding that the Tribunal found that the appellant could live in Bangladesh 'without being imputed with homosexuality'". The appellant argued that the Tribunal made no such finding and merely found that "persecution on that ground would not constitute persecution for a Convention reason based on the flawed reasoning" to which he referred. The appellant augmented these arguments at the hearing. 20 Following these submissions, the appellant was granted leave to file an amended notice of appeal, which included two further grounds. His Honour erred in finding that the Tribunal's decision was not affected by jurisdictional error in that the Tribunal failed to consider the applicant's claims to fear persecution because of his likely imputed membership of a Particular Social Group being gay men in Bangladesh. His Honour erred in finding that the Tribunal's decision was not affected by jurisdictional error in that the Tribunal failed to consider whether gay men (imputed or actual) as a Particular Social Group were the subject of persecution in Bangladesh for the purposes of the Convention as modified by the Act . I reject the assertion implicit in ground 1 of the appellant's notice of appeal that the Federal Magistrate erred in holding that it was not irrational or unreasonable for the Tribunal to give weight to the consideration that the applicant made no claim to fear persecution in Bangladesh as a homosexual prior to May 2005. The appellant's delay in lodging a protection visa application was one factor that the Tribunal was entitled to take into account and to give such weight as the Tribunal thought appropriate in all the circumstances of the case. The Federal Magistrate did not err in this regard. Further, the Federal Magistrate did not err in his consideration of the Tribunal's treatment of the opinions of the psychiatrists and psychologist, or other lay witnesses. The Tribunal plainly considered both expert and lay witnesses' evidence and it was entitled to treat their evidence as it did. The Tribunal was not obliged to accept the evidence of expert opinion but was entitled to evaluate it as it did. The Tribunal specifically referred to earlier lay witnesses who claimed to have had sexual relations with the appellant, saying it did not "attach any weight" to their evidence because it found that the appellant had manufactured his claims to be a homosexual. It was open to the Tribunal to approach their evidence in this way. The appellant submitted that this approach was illogical, but illogicality on its own, even if demonstrated, does not establish jurisdictional error: see Re Minister for Immigration and Multicultural Affairs; ex parte Applicant S20/2002 (2003)198 ALR 59 (" Applicant S20/2002 ") at 60-64 per Gleeson CJ. The appellant's argument at this level was very largely "an emphatic way of expressing disagreement" (to use the words of Gleeson CJ) with the Tribunal's fact finding: see Applicant S20/2002 at 61. The ground is not made out. The Tribunal applied the relocation test, as set out in SZATV v Minister for Immigration and Citizenship [2007] HCA 40 ; (2007) 237 ALR 634 and SZFDV v Minister for Immigration and Citizenship [2007] HCA 41 ; (2007) 237 ALR 660. It inquired as to whether it was reasonable, in the sense of practicable, for the appellant to relocate, given the circumstances of his case, including his personal circumstances relating to education, language ability, family situation and work prospects. In its reasons for decision, the Tribunal referred to, discussed and, therefore, plainly considered the medical reports, which were said to be corroborative, as well as the evidence given by other witnesses on his behalf. In substance, under this ground, the appellant restated his disagreement with the Tribunal's evidentiary assessment and its findings of fact. This disagreement does not disclose jurisdictional error on the Tribunal's part or relevant error on the part of the Federal Magistrate. The Tribunal "did not accept that the appellant had been subject to serious harm amounting to persecution ... because he is gay and is a member of a particular social group (homosexual)". 3. The Tribunal found that the appellant was not a credible witness. The Tribunal was satisfied that the appellant "has manufactured his claim to be a homosexual ... in order to obtain a protection visa". 4. The appellant's activities since 6 October 2006 were done in order to strengthen his refugee claim and were to be disregarded under s 91R (3) (b) of the Act . 5. Notwithstanding (4) above, the Tribunal accepted that the appellant had been associating with homosexuals on social occasions and through his participation in CAAH meetings and activities, and that it was possible that he may through these activities have a homosexual demeanour imputed to him. The Tribunal accepted the country information provided by the appellant's adviser in her submissions of 22 January 2007 about the treatment of homosexuals and others in Bangladesh, which led it to reject that homosexuals are "the particular targets of serious harm amounting to persecution in Bangladesh" and to accept that Bangladesh society "frowns on" "the overt demonstration of sexual affection ... across the board .... whether same-sex or opposite sex couples". The Tribunal was not satisfied that "the across the board discouragement of such overt sexual affection is repression or indeed is serious harm amounting to persecution for a Convention related reason". It was not satisfied that "the cultural or social norms and attitudes to such public displays of sexuality in Bangladesh, which applies to both same-sex and opposite sex couples, is serious harm amounting to persecution. It was satisfied that "the different approach to sexuality in Bangladesh is not directed at the [appellant's] actual or imputed particular social group (homosexuality) but applies across all elements and sectors of society in Bangladesh no matter what the couple's gender". 7. The Tribunal was not satisfied that the distribution of the magazine containing an interview with the appellant about his sexuality even if it were known in Bangladesh would result in there being a real chance that he would be subject to serious harm amounting to persecution because of his homosexuality. 8. The Tribunal was not satisfied that "just because of" his publicly associating with homosexuals and being "involved in various gay activities" in Australia, there was a real chance that the appellant would be "subject to serious harm amounting to persecution on this or any other Convention related basis if he returned to Bangladesh". 9. The Tribunal was satisfied that since he had undertaken the activities to enhance his protection visa claims, "he would not continue to be involved in such activities on his return to Bangladesh". 10. The Tribunal also found that whilst "several people either suspect or think they know he is a homosexual, and others may read about him in the article in [the] magazine, the Tribunal was not satisfied that this would be of such significance or import that simply because of it and his involvement with the gay community in Australia, he would be subject to targeting, discrimination, or abuse if he returned to Bangladesh from the Bangladesh government, members of the society, or any other source for a Convention related reason". That is, the Tribunal did not accept that knowledge of his sexuality in Bangladesh would become known, and even if it was, that because of this he would be subject to serious harm amounting to persecution". The Tribunal referred to "the unlikely event that because of his involvement with the gay community in Australia ... he would be shunned because of his imputed homosexuality". 11. The Tribunal accepted that Bangladesh was at the time of decision "experiencing severe political disruption and turmoil, and there is some politically orientated violence", but found no evidence that homosexual males, or people who might have "a gay demeanour or association imputed to them", were subject to persecution at the time because there was a breakdown in effective state protection for this particular social group. The Tribunal was satisfied that there was no "real chance that [the appellant] would be subject to serious harm amounting to persecution for a Convention reason (including his particular social group, actual or imputed) because of the current political difficulties in Bangladesh". The Tribunal plainly rejected the appellant's claim to be homosexual. At the same time, it allowed for the possibility that a homosexual demeanour might be attributed to him in Australia on account of his involvement in the CAAH and his association with homosexuals in Australia. It held, however, that it was unlikely that his involvement in CAAH or his association with homosexuals in Australia would result in a homosexual demeanour being attributed to him in Bangladesh. It also held that it was unlikely that he would continue activities of this kind on returning to Bangladesh (since they were done in Australia to enhance his refugee claim). Notwithstanding this, however, in accordance with Minister for Immigration and Multicultural Affairs v Rajalingam [1999] FCA 794 ; (1999) 93 FCR 220 (" Rajalingam ") at 62-63, the Tribunal went on to consider the appellant's situation in what it saw as the unlikely event that this attribution or imputation was made in Bangladesh. In this regard, the Tribunal was not satisfied that the appellant would "be subject to serious harm amounting to persecution". 28 If the passage set out at [17] above is understood in this way, it is apparent that no error of the kind for which the appellant contends has occurred. That is, in the Tribunal's reasons, the passage can be read as intended to support the proposition that there is no real chance of serious harm befalling a person in Bangladesh on account of overt (and a fortiori covert) homosexual behaviour. 29 Another passage towards the conclusion of the Tribunal's reasons, on which the appellant relied, must also be read in the light of the findings and in the entirety of the Tribunal's reasons. In this passage, the Tribunal referred first to the provision of country information by the appellant's adviser and to her submission about a lack of state protection. Accordingly, in view of all the above and its earlier findings, the Tribunal does not accept this claim and is satisfied that there is not a real chance that the Applicant would be subject to serious harm amounting to persecution for a Convention reason (including his particular social group, actual or imputed) because of the current political difficulties in Bangladesh. When this passage is read in the context of the Tribunal's entire reasons, as indeed the Tribunal expressly invited the reader to do, it is clear that this is not so. In this passage, the Tribunal was doing no more than responding to the appellant's adviser's submission concerning effective state protection upon the basis required by Rajalingam. That is, it was considering the appellant's position in what it saw as the unlikely event that an imputation of homosexuality was made in Bangladesh. In this regard, the Tribunal was not satisfied that there was a real chance that the appellant would be subjected to serious harm amounting to persecution for a Convention reason. 31 When the Tribunal's actual findings are stated, it is apparent that the Tribunal gave consideration to the appellant's claims to fear persecution because of "his ... imputed membership of a Particular Social Group being gay men in Bangladesh" (compare ground 4), although it considered the imputation in Bangladesh to be unlikely. In this latter regard, ground 4 misstates the Tribunal's finding. The Tribunal gave this question consideration in accordance with its obligation as outlined in Rajalingam . Ground 4 is therefore not sustainable. Similarly and on the same basis, the Tribunal gave attention to the question "whether gay men (imputed or actual) as a Particular Social Group were the subject of persecution in Bangladesh for the purposes of the Convention as modified by the Act ". Ground 5 also fails. Examination of the Tribunal's reasons and the appellant's submissions shows that the appellant's real argument is with the merits of the Tribunal's decision. This is not, however, a matter that properly falls for consideration in the Federal Magistrates Court on judicial review or in this Court on appeal. 32 This case is different from S395/2002 , because in this case the Tribunal found that: (1) the appellant was not in fact homosexual; (2) the appellant had fabricated his claim to be homosexual in order to support his protection visa application; (3) although a homosexual demeanour might be attributed to him in Australia (on account of his activities here) it was unlikely that these activities or subsequent activities in Bangladesh would result in a homosexual demeanour being attributed to him in Bangladesh; and (4) even if such a demeanour were attributed to him, he would not be subjected to serious harm amounting to persecution for a Convention reason. In contrast to S395/2002 , this is not a case where the Tribunal made a decision adverse to an applicant upon the basis that he could avoid persecution by modifying his customary behaviour. 33 Thus far, I have not found it necessary to refer to the guiding principle, that the reasons of the Tribunal are to be read fairly and as a whole, and not "with an eye attuned to the ready perception of error": see in Zhang v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 30 (" Zhang ") at [14] per Moore, Mansfield and Dowsett JJ, citing Minister for Immigration and Ethnic Affairs v Wu Shang Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 271-272 and 291. This principle confirms that the Tribunal's reason should be read in their entirety, without undue emphasis on individual expressions that, by themselves, can take on a meaning different from that clearly intended when regard is had to their proper context. The appellant's argument, it seems to me, paid insufficient regard to this principle. 34 For the reasons stated, I would dismiss the appeal, with costs. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | appeal from decision of federal magistrate no appealable error shown migration law |
Fig Tree has for some years provided management services in Australian retirement villages. The respondent (Prime) owns retirement villages in several States. Fig Tree and Prime are both public companies listed on the Australian Stock Exchange (ASX). Prime has appointed Fig Tree and others over the years to manage its facilities. This litigation relates to the management contracts for Prime's appointment of Fig Tree at 12 aged care facilities. The 12 facilities are in Queensland, New South Wales and South Australia. Those facilities are Village Life Hackham 1 in South Australia, Village Life Hackham 2 in South Australia, Village Life Evanston (Gawler) in Evanston, South Australia, Village Life Elizabeth Vale at Elizabeth Vale in South Australia, Village Life Christie Downs located at Christie Downs in South Australia, Village Life Grafton located in Grafton, New South Wales, Village Life Townsville 1 and Townsville 2 at Wulguru and Thurangowa respectively in Queensland, Village Life Maryborough located in Maryborough, Queensland, Village Life Hervey Bay located in Scarness in Queensland, Village Life Gladstone in Gladstone, Queensland and Village Life Earlville located in Earlville, Queensland. As a result of that process, it pursued negotiations to assign the rights and obligations it then had in respect of a number of facilities, including Prime' s 12 retirement villages, to SCV Group Ltd (SCV). The rights and obligations with Prime were set out in each instance in agreements known as Wholesale Management Services Agreements (WMSAs). As the evidence has unfolded, there has been a debate about the extent to which Fig Tree made known to Prime, or Prime otherwise discovered or knew of, the nature, extent and ramifications arising from the proposed assignments from Fig Tree to SCV. Prime's case is that the assignment agreement and related conduct constituted a repudiation of Fig Tree's contractual obligations. Fig Tree, on the other hand, says that there has been no repudiation and stresses that the assignment was at all times conditional on Prime giving its consent. Fig Tree also contends that although it was not in breach, Prime had sufficient information to elect whether or not to affirm its contracts under the WMSAs with Fig Tree. Fig Tree says Prime did so affirm. Prime denies this. On the affirmation plea, Prime's knowledge as to the detail of the terms and practical effect of the assignment has been of central importance. Prime has not pleaded that Fig Tree deliberately withheld information or misled it. Any evidence as to information that Fig Tree held but did not pass onto Prime was not admissible as to Fig Tree's intent. It was, however, relevant to demonstrate Prime's lack of knowledge of some relevant facts concerning the assignment. The essential disputed issues in the case come down to these: Did Fig Tree's proposed or actual assignment or any of its other related conduct (as pleaded) constitute a repudiation of the WMSAs? If Fig Tree did repudiate the WMSAs or was otherwise in breach of the WMSAs, did Prime nevertheless affirm the ongoing continuation of those contracts by its conduct (as pleaded)? Depending on the answer to these questions, what is the appropriate relief, if any, for either party? The Village Life model was developed by Fig Tree prior to 2006. The content of the Village Life model is something that Fig Tree jealously guards. It maintains that it is the embodiment of a great deal of specialised experience and endeavour. Fig Tree contends, and Prime accepts, that aspects of the Village Life model are confidential. The Village Life model involves physical design features as well as operating systems. The operating systems are in turn described as the 'Village Life System'. The physical design contemplates separate accommodation units close to and linked by covered walkways to a communal facility; and then a communal dining facility serviced by a commercial scale kitchen. It contemplates only limited kitchen facilities in residents' individual units. A major element of the Village Life System is the quality and nature of delivery of food to residents. Other fundamental elements of the Village Life System, according to Prime, were the remuneration and conditions of the on-site managers and the terms of residency enjoyed by the occupants of the villages. In late 2005, Prime investigated an opportunity to acquire 12 of the villages then operated by Fig Tree. Prime says that Fig Tree's Village Life Model was a major factor in its decision to purchase the 12 villages and to enter into the WMSAs with Fig Tree. This factor, however, is not a matter which arises on the pleadings in the sense of being related to any warranty, condition or representation. As the case requires an objective assessment as to the significance of certain contractual terms, no weight can be given (on the pleaded case) to Prime's subjective reaction to the Village Life model. The WMSAs are all in substantially similar terms. (Some of the owners of aged care facilities with whom Fig Tree dealt were described as retail owners. However Prime was a 'Wholesale owner' and was described as such by Fig Tree. ) Relevantly to the case, each of the WMSAs: The termination provision in each instance provided that Prime 'may terminate this agreement by notice to [Fig Tree] at any time if the return to [Prime] reflects an occupancy rate of less than 50% for any continuous 6 month period'. Fig Tree would let the various tenancies comprising the village, charge rent; make certain payments to Prime and receive certain payments from Prime. It would account to Prime in a prescribed manner. Restrictions were imposed on Prime's ability to dispose of or review its interest in a retirement village. No express restriction was placed on Fig Tree but any assignment of a WMSA required the consent of Prime. The WMSAs expressly adopted the Village Life System. That system was defined in part by '[Fig Tree's] operations and standards manual, as amended by it from time to time and any other manuals substituted by [Fig Tree] throughout the Term'. Those orders were made originally by Collier J on 28 November 2007 on an interlocutory basis. The orders (with necessary variations), were renewed at trial by consent. At the request of Fig Tree and with the consent of Prime, to the extent that the evidence touched upon the detail of the Village Life System, I was asked to close the Court to the public. After hearing argument on that submission and on the basis of discussion referred to below I acceded to that course during such time only as there was evidence about the specific detail of the Village Life System. It is clear from s 17(1) of the Federal Court of Australia Act 1976 that, in general, it is obliged to exercise its jurisdiction in open court. This provision gives statutory force to the principle that justice must be administered publicly in open court and gives recognition to the weight of public interest which attaches to that principle. Under s 17(4) the public or some of the public may be excluded where the Court is satisfied their presence would be "contrary to the interests of justice". We are all familiar with cases where this would be so. Thus, it is common to exclude persons who are to give evidence, lest they be led to trim their evidence. Again, where demonstrators or rioters would disrupt the proceedings, it may be in the interests of justice to exclude them. The categories of cases where exclusion will be proper are not closed. It will lie in the discretion of the judge, bearing in mind the injunction contained in s 17(1) and taking into consideration the interests of justice referred to in s 17(4). Cases which deal with the course a court should follow where there are no sections corresponding with ss 17 and 50 , although illuminating and helpful, are not decisive for a court constituted by an Act containing those sections. Such a court has the slightly different task of interpreting and applying the statute which governs it. The section refers to preventing "prejudice to the administration of justice". This is not a reference to the need to preserve open justice. It is, as I have already suggested, a reference to another public interest, that is, the public interest that the Court should endeavour to achieve effectively the object for which it was appointed: to do justice between the parties. There was also oral evidence about such aspects. The sense in which the material is said to be confidential may not be immediately apparent. Clearly some of it was not. However, I am satisfied that the request of the parties for me to continue the confidentiality orders originally made by Collier J was appropriate. The material when taken in its entirety represents a system of operations which has clearly been developed with substantial care over a period of time. To the extent that such intellectual property has afforded Fig Tree any market advantage or good will, such benefit may be at risk if the operational system were to be in the hands of a competitor by its being public. I was persuaded by the parties (and the evidence supported the conclusion) that aspects of the system were sufficiently unique such that access to the confidential elements of it by competitors could be substantially prejudicial to Fig Tree. In a confidential annexure to these reasons (Appendix B), I have summarised and included in substantially greater detail than in the publicly available reasons, the confidential material. The confidential annexure, Appendix B will be available to Judges of this Court and otherwise, only on a limited basis in accordance with specific orders. Fig Tree seeks to be retained as manager of the 12 villages. In general terms, Fig Tree relies upon the terms of the Assignment Agreement of 30 May 2007, including conditions precedent by which the consent of Prime was to be obtained. It also relies upon its announcement of the Assignment Agreement to the ASX. It relies upon the various steps taken in relation to giving effect to the Assignment Agreement. It asserts that Prime had the requisite knowledge of the ASX announcement and many other aspects of the assignment. In support of that assertion, Fig Tree relies upon a detailed analysis of events to which I refer below. It says on the proper construction of those agreements, Fig Tree was entitled to discharge its obligations under them by servants or agents or by subcontractors or delegates including SCV. It also says that on their proper construction the WMSAs entitled Fig Tree to assign its rights and benefits under them without obtaining Prime's consent. In any event, on proper construction of the Assignment Agreement, Fig Tree contends that it had not purported to assign its right, powers and responsibilities without first obtaining the consent of Prime. In the alternative, Fig Tree argues that Prime, by reason of its knowledge of and participation in a range of activities connected with the assignment, has affirmed the WMSAs even if there was any breach of them which would have otherwise entitled Prime to terminate. It seeks consequential relief. It advances that claim on the following contentions. Prime says that Fig Tree was not able to assign its performance obligations under the WMSAs without first obtaining Prime's consent which was not and never has been given. It says that Fig Tree by entering into the agreement repudiated the WMSAs. It says that Fig Tree in fact and in substance purported to assign its performance obligations to SCV and, by that conduct, repudiated the WMSAs. Prime says that Fig Tree, whether by an effective assignment or by the actual fact of installing SCV as an agent manager or both, repudiated the WMSAs as Fig Tree ceased to perform all or substantially all of the management functions in the villages. Further, Prime says that Fig Tree implemented new permanent arrangements inconsistent with the Village Life System in relation to food provided to residents, in the manner in which food was prepared and served, in the terms of engagement of on-site managers and in the conditions of tenancy for residents at the villages. By these acts Prime asserts that Fig Tree manifested an intention no longer to perform its obligations under each of the WMSAs or, at least, not in accordance with all the terms of the WMSAs and, in particular, in accordance with the Village Life System. Prime also says that none of its conduct could amount to an affirmation of the WMSAs so as to have disentitled it to rely upon any of Fig Tree's repudiatory conduct to justify Prime's termination. In particular, Prime points to the fact that it did not have sufficient relevant knowledge in order to have affirmed nor did it ever communicate that it had affirmed. Finally, Prime says that in the alternative if Fig Tree is held not to have repudiated the WMSAs and is further to be entitled to remain at the villages as manager, the conduct of Fig Tree is such that it should be required by an order for specific performance to meet its obligation to manage the villages in accordance with the Village Life System. In summary, Prime says that the nature and impact of the changes introduced during the period of SCV's management were significant and in relation to the areas discussed above, they showed, first, in connection with food: on-site managers being required to buy pre-cooked frozen meals from a single supplier rather than to prepare freshly cooked meals on-site; communal eating areas being closed for evening meals. Residents were required to collect frozen meal packs at lunchtime for reheating privately in the units each evening; there was no protocol to ensure the residents stored or reheated their food packs in a safe manner; SCV did not set minimum nutritional requirements nor did it confirm whether the meals provided to residents met the nutritional requirements previously set by Fig Tree. Those features being: As to the third area, namely, the terms of the residential agreements with residents, Prime says that SCV: On those pleadings, these reasons necessarily examine a comparison of services under SCV with services under Fig Tree. It must be emphasised that SCV is not a party to this litigation. Any comparison of the nature of the services arises only in the context of determining whether the services supplied by SCV were the same as or similar to those which Fig Tree was contractually obliged to supply to Prime. Such documents have not, it seems, been created with an eye to the pleaded issues that arise in the case but rather to the actual events as they were occurring. A key date is 30 May 2007. On that date Fig Tree and SCV entered into the Assignment Agreement under which Fig Tree agreed either to assign or to transfer to SCV its rights under each of the WMSAs. The essential operative provision of the Assignment Agreement was cl 3 which relevantly provided that Fig Tree agreed to assign or transfer and SCV agreed to take the assignment or transfer of what was described as each of the 'Remaining Assets'. These Remaining Assets were Fig Tree's rights and benefits under the WMSAs. Fig Tree appointed SCV during the Transition Period to provide operational services as an independent contractor. SCV was to receive payment by Fig Tree of all fees that Fig Tree was entitled to collect pursuant to the WMSAs. Fig Tree stresses that in addition to the structure of the conditions precedent to the assignment, the nature of the Transition Period provided for (by cl 6 of the Assignment Agreement) meant that there was no assignment to SCV of Fig Tree's rights under the WMSAs during the Transition Period and before completion. Fig Tree agreed to pay SCV fees it obtained under the WMSAs as distinct from assigning or purporting to assign to SCV Fig Tree's own right to collect the fees from Prime. Both prior to and subsequent to execution of the Assignment Agreement of 30 May 2007, events are described in contemporaneous documents to which Fig Tree (predominantly) has referred. Fig Tree contends these events demonstrate Prime's sufficient awareness of and communication about the Assignment Agreement and the events surrounding it so as to constitute an affirmation of the WMSAs even if there were any breach of them. The first event to which Fig Tree points precedes the Assignment Agreement. It is the establishment of the Prime Trust Due Diligence Committee (DDC) in respect of which there are minutes of 14 November 2006. The DDC included Prime Directors, Messrs Wooldridge and Lewski and its company secretary, Mr Krishnan. The DDC was formed to undertake the preparation of a Product Disclosure Statement (PDS) and for related activities in respect of the potential listing of Prime Trust Units on the ASX. These minutes establish the constitution of the DDC and refer to the solicitors engaged to prepare the material contracts section of the PDS. As will be seen in the ultimate edition of the PDS produced on 6 July 2007, that document records that each of the then directors of Prime agreed with the contents of the PDS. The PDS discusses the assignment to SCV. On 28 February 2007, Fig Tree published its half yearly financial reports for the year ended 31 December 2006 to the ASX. The directors reported that after careful consideration of the company's financial position, the board had resolved to assign its management agreements with its retail, syndicate and ILF Villages, to SunnyCove for a cash consideration of $14 million subject to shareholder approval and other relevant consents. (SunnyCove was another name by which SCV was known). The report also refers to entry into a heads of agreement with SCV on 27 February 2007, to assign the management agreements between Village Life and the owners of the retail syndicate and ILF Villages. Again, it referred to consents and approvals being obtained. Fig Tree makes the point that this was a public announcement and a potential source of knowledge which Prime could have had. There is no evidence that Prime was aware of these particular passages. On 14 March 2007, Fig Tree made an ASX announcement to the effect that the Board of Directors of Fig Tree had called the extraordinary general meeting (EGM) of shareholders to consider the proposed assignment to SCV. It would be held on 24 April 2007. Again, this was a public announcement. Again, there was no evidence that Prime was aware of it at that stage. On 20 March 2007 the notice of the EGM with an explanatory statement was published on the ASX. Again, this was a public announcement but there was no evidence of Prime's awareness of its existence. On 2 April 2007 an early draft of the Prime Trust PDS was prepared. In that draft there is a reference to Village Life as one of the entities associated with Prime and while there was no mention of SCV, that position was to change shortly after that draft was prepared. On 16 April 2007, a further draft of the Prime PDS was prepared. It included the first version of what eventually appears in section 6.3 of the final PDS. This Agreement was initially entered into (sic-with) Village Life Ltd, but in April 2007, the shareholders of Village Life approved the sale of these Management Agreement to SCV. There is no ownership relationship between Prime Trust (and APCH) and SCV. The rent charged to residents is the aggregate of a percentage of the Commonwealth government aged pension and 100% of the Commonwealth government rent assistance to pensioners. It is also contended that the draft person of the PDS anticipated that the properties would be managed by SCV. That is also a reasonable inference. (The draft person was not called to give evidence). At this stage the EGM of Fig Tree had not yet been held. It may be inferred that the draft person of the early edition of the PDS was anticipating the outcome of the EGM. On 20 April 2007, there was a further meeting of Prime's DDC, the minutes of which suggest that drafts of the PDS were being circulated to members of the DDC for their perusal and comment. I will not refer to every draft of the PDS. I am satisfied that the evidence establishes that the content of the final PDS was certainly available for the members of the Committee and Prime's directors to examine. Of course whether in fact they did absorb every word of it is another question. On 24 April 2007, Fig Tree published an announcement to the ASX confirming approval by shareholders at the EGM in relation to the assignment to SCV. There is no evidence that Prime was aware of the actual announcement, but again, this is not of major importance. On 26 April 2007 there was an addition to the relevant section of the PDS in the following terms: 'Prime Trust can terminate the agreement if the return reflects an occupancy rate of less than 50% for any continuous 6 month period'. There was further reference to the properties being managed by SCV. There was an email exchange between the personal assistant of Mr Mark Roberts of SCV at 4.54 pm on 26 April 2007. It purports to record the content of a phone message which Mr Roberts had received from Mr Kim Jaques of Prime. Fig Tree contends and I accept, this is objective proof of high level contact between Prime and SCV in April 2007 regarding the plans to meet to discuss 'ideas moving forward'. On 14 May 2007 the PDS again referred to SCV. There was an amendment to the section dealing with properties operated by SCV. These amendments referred to the Transition Period relating to the formal transfer of the agreements. There is no direct evidence as to how Prime knew of the Transition Period. Fig Tree suggests that one possibility is the contact between Mr Jaques and Mr Roberts referred to in the email exchange. Neither person gave evidence as to whether such a meeting took place and if so, what was discussed. There was an announcement by Fig Tree to the ASX 29 May 2007 confirming that on 28 February 2007 Fig Tree had announced entry into the heads of agreement with SCV to assign its management rights in all the relevant Village Life villages conditional on certain approvals being obtained. It recorded that the date for satisfaction of those conditions expired on 28 May 2007. It also recorded that Fig Tree had agreed with SCV to extend the date for satisfaction of the conditions until 31 May 2007 with a view to agreeing the final form of the Assignment Agreement. There is no evidence that Prime was aware of this announcement or its contents. Two days later, on 31 May 2007, Fig Tree made a further announcement to the ASX confirming entry into a formal Assignment Agreement with SCV in relation to the assignment of the management rights in all of the Fig Tree villages for $14 million. It also referred to several conditions precedent and a phased settlement program to occur progressively over the next three to six months as conditions relating to villages were satisfied. Prime did know of this public announcement. Prime contends, however and I accept, that the information in the public announcement was certainly not sufficient to require it to elect whether or not to affirm or terminate. On a more practical note, however, in email exchanges between 6 and 12 June 2007 the personal assistant for Mr Lewski of Prime emailed Mr Roberts, Managing Director of SCV following an earlier telephone conversation seeking a copy of the Village Life Operations and Standards manual. What was specifically sought was that part of the Village Life manual identifying the 'Management Services' which Fig Tree agreed to provide. Mr Lewski's personal assistant concluded in the final email in this exchange by advising that the inquiry for the relevant sections of the Operations manual was urgent and indicated that if the relevant sections of the manual were not provided, Prime would instruct its lawyers to attend Fig Tree's offices to view it. On 7 June 2007, Mr Darryl Watherston of Fig Tree emailed Mr Roberts of SCV advising that 'no information is being sent out due to a legal determination that the [Fig Tree] brochures misrepresent the current services provided'. In other words, the information that the Fig Tree brochures described about the retirement villages did not reflect the services actually being provided by SCV at this stage. There is no reason to infer that Prime was aware of the decision to withhold brochures or the reason for it. On 12 June 2007, Mr Stuart Lummis, an executive of Fig Tree emailed Mr Lonie of Fig Tree concerning the Vacating Unit Advices saying that as discussed with him last week 'SCV are destroying our business'. This information also, was not conveyed to Prime. Prime points to the fact that it was unaware that there was a view within Fig Tree to that effect. Prime argues that this information would be particularly relevant to the question of whether it had sufficient information in order to affirm. On 12 and 15 June 2007 two of Prime's Directors (Messrs Jaques and Butler) exchanged emails on the broad topic of the ability to assign property and the need for consents and opportunities which might arise from that process. Fig Tree suggests that this exchange illustrates that Prime was conscious of a potential for commercial advantage arising in the context of its consent to assignment being sought and obtained. An example of this advantage is indicated 3 days later in communications on an insurance premium. There was a further draft of the PDS on 15 June 2007. It included at section 6.3 which is headed 'Properties Operated by SCV Group', an amendment to delete the reference to the Transition Period referred to in the 14 May 2007 draft and to record the fact of the public announcement made on 31 May 2007 of the commencement of operational management of the villages by SCV. There was also now in this draft of the PDS a reasonably extensive summary of the obligations of SCV under the management agreements at the villages. Again, in the context of termination, there was reference to Prime having the power to terminate if the occupancy rate fell below 50% for a continuous period of 6 months. No other basis for termination is indicated. Yet a further draft of the PDS was circulated three days later without significant changes. There was an exchange of emails on 18 and 19 June 2007 between Mr Jaques of Prime and Mr Roberts of SCV in which Mr Jaques raised the question of a collaboration between Prime and SCV in order to obtain a better insurance premium. Reference is made to having raised the issue previously with Fig Tree but without any satisfactory outcome. Fig Tree stresses that this exchange not only shows that Prime knew SCV was replacing Fig Tree but that Prime was seeking to obtain a commercial advantage (rather than a detriment) consequent upon that exchange occurring. While this submission may be correct, it is peripheral to the pleaded issues insofar as the practical impact of the proposed assignment is concerned. On 21 June 2007, Fig Tree's Managing Director reported to the Board of Management 'it is now likely that SCV will transition the business processes to Maroochydore by the end of July 2007, which will see the end of the business office operations apart from a skeleton team'. Prime was unaware of and had not been informed of such a plan or the subsequent implementation of it. On 26 June 2007 Prime held its final DDC meeting. Consent letters by each of the then directors of Prime concerning the content of the PDS were tabled. Fig Tree contend that the totality of the numerous drafts and the final version of the DDC's PDS lead to the conclusion that Prime through its directors and company secretary knew that Fig Tree had entered into the Assignment Agreement with SCV. Those persons knew that the effect of the agreement, so far as Prime was concerned, was that Fig Tree was replaced by SCV in relation to the performance of the WMSAs. Fig Tree also contends that it should be inferred that Prime was prepared to accept such a replacement as a satisfactory status quo regardless of formalities and that the status quo was sufficiently certain to warrant Prime taking the step of telling the market about it in its own PDS. Importantly, Fig Tree contends, it shows that Prime knew that SCV had commenced operational management of the villages. I accept these submissions subject to the reservation that clearly Prime was not accepting that SCV could operate as it saw fit. On this critical topic I note that Fig Tree has not adduced any evidence as to how it intended to and did ensure that SCV would provide the very important food service in a manner which conformed with the Village Life System. There is no evidence that it did do so. Rather, as will be seen, it simply left things to SCV. The 25 June 2007 minutes of a Fig Tree Board meeting confirmed that it was agreed that as Fig Tree had 'assigned its management rights to the SCV Group Limited for a consideration of $14 million, it was now appropriate that the Directors compensation and fees be restored as was previously anticipated'. Prime says it was unaware at the time of any of these facts or that Fig Tree's financial constraints were a driving factor behind the Assignment Agreement. I accept that submission. The underlying suggestion in this and related submissions is that there was an anxiety within Fig Tree to divest itself of the obligations under the WMSAs sooner rather than later with a view to becoming sufficiently liquid to enable 'Directors compensation and fees' to be 'restored as was previously anticipated'. On the day following the final PDS, 27 June 2007, Mr Roberts received an email from his personal assistant conveying a telephone message from Prime's company secretary, Mr Krishnan concerning changes in reporting and management requirements. It is said to be a precursor for a 30 July 2007 SCV letter to Mr Jaques of Prime which identified changes in management requirements and also the eventual transmission on 10 August 2007 of the July audit reports which formed the background to a meeting on 15 August 2007 with SCV. Fig Tree says these communications when taken together, fully informed Prime of all information it would need to enable it to elect whether or not to affirm. As will become evident, I disagree. I do not accept that this information put Prime on notice as to the practical effect in the villages of the proposed assignment. On 3 July 2007 there was an email from Mr Lonie, Managing Director of Fig Tree to Mr Dubery of Fig Tree. It concerned the transition timetable (which had commenced on 1 July 2007) saying ' our only ambition now is to collect the $14 m ASAP and get away from SCV ' (emphasis added). Prime would say that this email highlighted what, at least at that stage, was Fig Tree's 'only ambition' --- 'to collect the $14 m ASAP and get away from SCV'. Prime says this was a very significant factor unknown to it. I was not specifically addressed on whether it was appropriate to attribute this content to an objective assessment of the conduct of Fig Tree in relation to the assignment. It would be a significant step to accept this content alone as evidencing a renunciation by Fig Tree. But it is, nevertheless, consistent with the absence of any effective steps on the part of Fig Tree to ensure that SCV delivered the Village Life System. There were two communications by Fig Tree of some importance on 13 July 2007. ING Management Limited as responsible entity of the ING Real Estate Community Living Fund, the owner of 33 villages managed by Village Life, has already consented to the assignment of the management rights over those villages to SCV and completion of that assignment is anticipated to take place within approximately three weeks. Village Life is in the process of seeking the consents of the owners of all other Village Life villages and completion of the assignment of the management rights of those villages will occur progressively as consents are obtained and conditions precedent relating to each village are satisfied. We will point out any such change to you in the information that will be provided to you with the new documents. We anticipate that they will be dispatched to your (sic-you) in the next week so please look out for them and, if you have any query, please do not hesitate to call the telephone number that will be provided to you to answer any question that you may have in regard to these new documents in the package. There does not appear to be any serious argument advanced as to non-receipt of the letter or any reason for non-receipt. Fig Tree places a deal of emphasis on the two invitations in the letter to raise any queries which Prime might have. Fig Tree contends that it could hardly be that an objective third party could conclude renunciation by Fig Tree either of the contract as a whole or of a fundamental obligation under it unless the party had contacted Fig Tree to ascertain what its intentions actually were. However, the ultimate essential complaint of Prime relates to what was actually occurring at the villages as it eventually became known to Prime. Prime says it did not become aware of the significant practical ramifications of the changes arising from SCV assuming management until much later. No details concerning the villages were set out as they had been taken over by SCV at that stage. On 25 July 2007 in an email from Mr Dubery to Mr Buckner each of Fig Tree, Mr Dubery confirmed that Fig Tree had given notice to its remaining staff of the termination of their employment. Prime says that it was unaware of the 'key argument' view. It was also unaware of the redundancy of staff either being proposed or when it eventuated. On 30 July 2007, the Managing Director of SCV, Mr Roberts wrote to Mr Jaques at Prime confirming that Prime would be receiving from Fig Tree shortly, information regarding the legal documentation relating to the assignment of the management rights. He also indicated that as part of the transition and pending issue of the legal documentation to the owners, it was agreed between Fig Tree and SCV that SCV would commence the transition of the management of the Fig Tree portfolio from 1 June 2007. The Managing Director also informed Mr Jaques that the staging of that transition allowed for the administration and rent collections to be still undertaken by Fig Tree with SCV commencing management operations in the day to day activities at community level. In this communication under the heading 'Key Objectives Transitional and Operational Requirements' there was a reference to audit reports being finalised over the next fortnight and becoming available to investors. There was also reference to the business model of SCV supporting direct employees as opposed to independent contractors. Under the heading 'Human Resources and Training' there was reference to Fig Tree independent contractors being provided 90 day contracts with SCV on the same terms and conditions. The SCV Group have over the years trialed numerous methods of delivering food to the residents which have ranged from cooked fresh to cook chill systems. SCV have found that the best method of ensuring consistency and quality over a wide geographic area is the cook freeze method. This is not the case. This provides consistency in the food and quality across communities. The frozen components are only those of protein and no different to what you may prepare at home. Suppliers of the food are all HACCP and ANZFS compliant and comply with all state requirements and utilise nutritionists and dieticians in consultation with the SCV Group Catering Manager to assist in the formulation of recipes and menu's (sic). The benefit of the SCV catering service and system is the Residents can be offered two choices for lunch, up to five choices for the evening meal and can meet residents special dietary needs. The benefit to the resident is the consistency of the catering service and the benefit investor (sic) higher resident retention and higher occupancy. I am pressed by Fig Tree to draw an inference that Mr Jaques' evidence on this topic would not have been of assistance to Prime's case. In my view this raises a question of onus on the affirmation issue. I will revert to that issue in due course. On 30 and 31 July 2007 there was an exchange of emails between the personal assistant to SCV's Managing Director and the personal assistant to Prime's Managing Director advising that Mr Roberts had been speaking with Mr Jaques and they had requested that a meeting be arranged: 'Could you please liaise with Kim and advise availability for tentative appointment time of Monday, 6 th August 2007 at 2.30 pm in your office (level 2, 613 St Kilda Road, Melbourne, VIC, 3004)'. In a response confirming the meeting it was stated that the Managing Director of Prime, Mr Lewski would also attend. While there is no direct evidence of the meeting of 6 August 2007, Fig Tree suggests that surrounding evidence including emails on 7 and 10 August 2007 suggests that the meeting occurred. On 7 August 2007 there was an email from Mr Roberts of SCV to Mr Jaques of Prime confirming arrangements for the meeting with SCV's operations and marketing team on 15 August 2007. It indicated that he looks forward to 'meeting again'. On 10 August 2007 there were three emails from Mr Roberts of SCV to Mr Lewski and Mr Jaques of Prime (via their personal assistants) referring to a previous meeting and a request for clarification of investor income and expenditure. Fig Tree contends that when these communications are read together with the July Community Summary Reports, there is a strong basis for the conclusion that prior to the meeting on 15 August 2007, Prime by at least Mr Jaques and Mr Lewski knew: Fig Tree also relies on the fact that Mr Lewski accepted in cross-examination that he became aware of this proposition at about the time he received the reports. Fig Tree says it is clear, taking these written communications together, that SCV had told Prime that SCV was intending to implement the cook freeze method which was described in its 30 July 2007 letter referred to above. It is also clear, according to Fig Tree, that SCV informed Prime that SCV proposed a maintenance and refurbishment program and also intended to implement a system for national suppliers which would involve transfer and termination of the supplier and service provider contracts with a transfer of those contracts over to SCV. Again, Mr Lewski accepted that he was aware of this information at the time he received the reports. Mr Lewski also confirmed that at the time he received the reports he was aware that SCV had proposed changes in the way in which the community managers would be employed including that they be employed by signing a new contract and also that SCV had issued 90 day transitional contracts in many cases. In an email exchange on 10 August 2007 between Mr Roberts of SCV and Mr Jaques of Prime and Mr Lewski via his personal assistant, reference is made to the 'previous meeting'. The suggestion is that the 6 August 2007 meeting which had been proposed did in fact take place. I accept that there can be little doubt that by mid-August Prime was receiving a deal of information of a practical nature concerning management issues which it now contends were of significant importance to the question of whether it had sufficient information to elect. There are further questions, however, of whether it had sufficient information of the practical ramifications of proposed changes. In this regard Prime, in contrast to Fig Tree, points to the significant practical information that it did not have until September or October 2007. On the day preceding the above communication (9 August 2007) in an email between SCV and Mr Jaques of Prime, SCV requested approval for expenditure on a replacement clothes dryer for Elizabeth Vale 2. Mr Jaques raised a question concerning the expenditure and gave a direction in relation to a replacement machine. On 13 August 2007 there was a similar communication concerning taps sets; and also a similar communication on 14 August 2007 concerning hot water systems. These communications support conduct consistent with constituting affirmation according to Fig Tree. There was also a significant report dated 15 August 2007. Investor reports for the month of August 2007 were prepared on Village Life letterheads but signed by SCV 'managing on behalf of Village Life Ltd'. In those reports, two pages concerning the villages at Hackham 1 and Hackham 2 expressly referred to poor press over recent times due to troublesome residents attempting to create issues with 'SCV's new system and processes. This has resulted in some residents leaving the Community because of the media attention'. There was reference to new residents moving in and confidence concerning the impact of marketing campaigns. There was additional reference in these reports to food changes yet to be implemented. Fig Tree asserts that this documentation shows continued knowledge by Prime concerning SCV managing the villages and of changes to the food system. Fig Tree also argues that it provides additional support for the proposition that such knowledge was being received in circumstances which alerted Prime to the possibility of the existence of alternative rights in the sense contemplated by an election. I will address this submission below in the Analysis. On that day (15 August 2007) there was a meeting attended by Messrs Lewski and Jaques on behalf of Prime and by SCV's Managing Director, Mr Roberts, Christopher Bassett, chief operations officer and Mr Buckner, then SCV's chief financial officer and two other representatives of SCV. There is very little direct evidence of this meeting other than the contents of notes apparently prepared by Mr Buckner. He was called to confirm he created the notes but neither he nor anyone in attendance could give detailed evidence as to what was discussed at the meeting. There are topics recorded on Mr Buckner's notes. They include 'Landlord's right of termination', 'convert to retirement villages', 'new residency agreements not to disadvantage existing residents', 'SCV assignment doc-include prov re-home care', 'caretaker's training for RV compliance assessment', 'legal representatives swap details', 'Prime Trust will produce own PID' and a variety of other matters. Mr Lewski's evidence as to the meeting of 15 August 2007 was that to the best of his recollection 'we discussed the contents of the Community Summary Reports'. He said that he informed Mr Roberts that the reports did not contain any significant content relating to the villages of which he had not been previously aware and that Mr Roberts agreed with that observation. Fig Tree says that the diary note of the meeting provides incontrovertible objective evidence that other topics were discussed at the meeting. If that submission is intended to suggest that any or each topic on the diary note was discussed, I cannot accept it. It is not clear whether this was a list of topics which might form an agenda for discussion or an aide-memoire, or whether or not the discussion on those topics actually ensued. Again, Fig Tree relies on the fact that Mr Jaques, who may have been able to corroborate the evidence of Mr Lewski if it were true, was not called. Fig Tree strongly contends that the evidence of Mr Lewski should be disbelieved. Mr Lewski referred to the fact that at the 15 August 2007 meeting there was a brief discussion but not in any detail, on the reports relating to each of the Prime villages; that there was no discussion of any changes to the Village Life System; that SCV did refer to incomplete negotiations between it and Fig Tree; he stated that if the commercial arrangements were resolved then SCV would seek Prime's consent for an assignment of the WMSAs. On this topic, Mr Lewski gave evidence that he expressly reserved Prime's rights on the assignment question pending further information. Although Fig Tree contends that Mr Lewski's evidence on this topic (amongst several) should not be accepted, he was not challenged in cross-examination on this evidence. This was obviously a very important issue as it went, amongst other things, to the question of whether or not at this stage Prime was conveying to SCV either directly or as Fig Tree's agent that Prime would agree to the assignment, thereby electing to affirm. In my view the absence of cross-examination of Mr Lewski's evidence on this topic means that Fig Tree's submission is not open. To the contrary, and in any event, I consider that his evidence should be accepted, it being inherently plausible. At no time had Prime formally or informally done other than keep its position open. It was clearly still gathering information. It knew its consent would be needed when it had that information. There is no evidence at all of Prime in any sense, internally or externally, saying that it would consent to the assignment. Fig Tree also submits that Mr Lewski's evidence that he does not recall other aspects of the discussion at the meeting should be rejected. I disagree. I note that even the author of the diary note had no recollection of the content of the meeting. This is not particularly surprising. Nor is it so in relation to Mr Lewski. Further, it is unclear what it is that Fig Tree asserts was conveyed to Prime at this meeting which gave Prime the requisite knowledge to elect. In all the circumstances described above, Prime submits it was not at any time, prior to or during August 2007 provided with sufficient information regarding the changes which as a matter of fact had already been implemented as between Fig Tree and SCV. Alternatively, it was not informed of the further changes that were expressly proposed, especially regarding food services, so as to require a conclusion that Prime had been put to its election whether or not to accept those changes. The difficulty for Fig Tree is that it had effectively stepped out of the picture and had been able in significant measure to achieve the objective internally expressed by one of its managing directors, to 'get away from SCV'. Specifically in relation to the communications between 15 and 16 August 2007, there was no evidence that Fig Tree was aware of any of the content of the communications between Prime and SCV on those dates. There is, therefore, no evidence of any direct communication to Fig Tree by Prime of an affirmation and accordingly even if anything associated with the 15 August 2007 constituted an affirmation by Prime, the absence of unequivocal communication by Prime to Fig Tree would preclude that contention succeeding. There is no evidence of any other communication from Fig Tree or SCV to Prime prior to 13 September 2007. On the day after the meeting (16 August 2007), emails were exchanged between SCV and Mr Jaques of Prime. SCV requested approval for expenditure at the villages. In a letter from SCV on the same day, there was reference to the 15 August 2007 meeting; reference to further expenditure and costing; reference to the residential tenancy agreement; and to the electronic version of the report, presumably of the day before. However, the pragmatic position is that SCV is operating the villages and imposing its systems as was intended and , in so doing, taking full responsibility for the day to day management of the villages, as was contemplated by the Assignment Deed. (emphasis added) Once again, Prime points to the fact that this information was not conveyed to it. Prime says it expected the Village Life System to apply not that SCV would operate the villages and 'impose its own system as was intended'. There were further requests for expenditure on each of 27 and 31 August, 4 and 6 September, 3 and 7 September, 10 September and 18 and 19 September 2007. It is unnecessary to go into the detail but in each instance the requests were approved by Mr Jaques. Fig Tree asserts that it is unequivocal conduct by Mr Jaques of Prime knowing and permitting SCV to perform the WMSAs and thereby communicating that fact to Fig Tree's agent, SCV. These were small matters. Taken in context, even taken collectively with all other pieces of information Prime had received, its knowledge at this stage as to the manner in which SCV would apply or was applying the Village Life System fell well short of comprehensive understanding of the changes in the villages likely to be effected by the assignment. There is also an indication in the 10 September 2007 expenditure request for a larger waste bin that in Mr Jaques response he asks the question whether the need for the bin was due to the change in the way that SCV is providing food. Fig Tree contends this shows clearly that Prime, through Mr Jaques, was aware of a change in the way that SCV was providing food. Prime, on the other hand, contends in its pleadings that it first became aware of the nature and extent of changes in the food system in late October 2007 after Mr Bosel reported observations he had made and received to Mr Lewski and Mr Jaques. It would certainly seem that Mr Jaques at least at this stage, 10 September 2007, had knowledge of some of the changes in the way that SCV was providing food at least in the Maryborough village. However, a communication about expenditure on bins at one village is hardly the way in which Prime would be informed of significant and broad ranging changes to the food system to apply universally in all villages. On 13 September 2007 Fig Tree wrote to Prime proposing that the existing WMSAs be terminated and replaced by Prime entering into new agreements with SCV. It enclosed a proposed new agreement and invited Prime to consult with its professional advisors and to contact one or other of the two named senior executives in the event there were any questions. The proposed agreement did not suggest any relevant change to the obligations owed by Fig Tree under the WMSAs. In particular, the proposed new agreements with SCV still provided for all of those obligations and notably there was no change to the provisions which provided that the villages would be managed in accordance with the Village Life System. Fig Tree contends that the effect of the agreement and the Assignment Agreement was that SCV would be obliged to continue to manage the villages in accordance with that system. Although the proposed new agreement still contemplated that manuals and therefore the Village Life System could be altered, notably the power to alter that system would still lie with Fig Tree and it was not proposed that power be transferred to SCV. But it is necessary again to focus on Prime's complaint that its concern was not confined to what was required under the WMSAs. Rather, its main concern developed on learning of the changes that were actually taking place in purported performance of the WMSAs subsequent to execution of the Assignment Agreement. On the following day, 14 September 2007, there were monthly investor statements identifying the date of payment as 14 September 2007. The documents were on SCV letterheads addressed to Prime. It revealed the amounts accounted for on the statements for August 2007 were received by Prime's bank and accordingly that business was continuing in the usual way concerning accounting and banking receipts. Accordingly, Fig Tree argues, this reflected continuation of the mechanism as to how Prime performed its obligation to pay various accounts, that is, by permitting relevant amounts to be deducted from what was otherwise due to it, conduct which Fig Tree argues is consistent with or constitutes affirmation. On 23 September 2007, again, in the Fig Tree Managing Director's report to the Board of Management prepared by Mr Lonie about the assignment of management rights it was recorded 'operationally, SCV is managing the villages on a day to day basis ... however the pragmatic position is that SCV is operating the villages and imposing its system as was intended'. Once again, Prime complains that it was unaware of this fact --- indeed it was inconsistent with the obligations under the draft assignment agreement to operate the villages in accordance with the Village Life System. On 25 September 2007 the minutes of a Fig Tree Board meeting note the failure of SCV 'to explain the changes in their operating systems in comparison to Village Life'. Once again, Prime complains that it was unaware of this fact --- indeed it was inconsistent with the obligations under the draft assignment agreement to operate the villages in accordance with the Village Life System. On 28 September 2007, Prime's solicitors wrote to Fig Tree seeking further information and advising that they were reviewing the documents and would revert in due course. However, on 3 October 2007, Prime purported to terminate the WMSAs and required Fig Tree to make arrangements to surrender management control and possession of each village to Prime by 17 October 2007. Prime in this communication relied on two grounds to justify its purported termination. The first was that 'by purporting to assign its rights' Fig Tree had repudiated the WMSAs. The second was that 'by delivering management control and occupation of the villages to SCV Group', Fig Tree had repudiated the WMSAs. As pointed out above, the letter was sent without any further communication occurring between Prime and Fig Tree, notwithstanding the invitation expressed in the 13 September 2007 letter from Fig Tree to Prime. It does, however, accord with the case Prime now advances and does not sit easily with arguments advanced by Fig Tree. Fig Tree was critical of Prime's witnesses. I have not accepted those criticisms. There were many objections raised to the content of witness statements and other documents. To have dealt with all of those objections in the course of the trial would have been cumbersome and would have substantially delayed witnesses. In most instances I reserved rulings on objections and took the evidence of witnesses subject to the ruling on the objections. The objections and my rulings on them are collected as an annexure to and at the end of these reasons in Appendix A. Generally speaking, the oral evidence for each of the parties was given by witnesses in one of four categories. Each of the parties called company officers. In the case of Fig Tree, those officers were Mr Stephen Lonie, the company Managing Director; Mr Robert Dubery, the Company Secretary; and Ms Anne Kratzke, the Field Manager and Food Standards officer. In relation to Prime, it was Mr Bill Lewski, the Managing Director and Mr Michael Bosel, the General Manager who commenced in September 2007. Evidence was also given by officers of SCV, specifically the Chief Financial Officer and Company Secretary, Mr Glenn Buckner and the National Business Manager of SCV, Mr Ian John Minett. The second category of witnesses was the category of managers of the various villages. Finally, there were expert witnesses giving opinion evidence on the manner in which the villages were managed at various times in relation to the various topics referred to above and the consequences of such management. The nature of the food changes was addressed in the evidence of the on-site managers called by Prime, namely, Mrs Donnelly, Ms Hodgson and Mr McLean. It also came from the evidence of Ms Kratzke and Mrs Nash called by Fig Tree. Evidence was given by Mrs Christine Nash, the on-site manager in Hervey Bay. Mrs Nash said that as an independent contractor of Village Life Hervey Bay she was required to adhere very closely to Village Life's procedures manual which set out the content of the Village Life System. Important features of that system as it operated between 2002 and 2006 included the requirement that residents of the village would be provided with three meals per day prepared by the on-site managers from fresh ingredients. She said that the Village Life System also required that lunch be provided to residents in the communal area. Residents were encouraged to come from their rental units to the communal dining area to dine with other residents. The communal dining arrangements allowed on-site managers to assure themselves of the wellbeing of the residents through the meal book, a diary displayed in the communal dining room so that residents could notify village managers in advance of missing a meal and requiring their meal to be put aside for them. Mrs Nash noted that if a resident did not appear for a meal without recording their name in the book that she or her husband who was the other on-site manager of Village Life, Hervey Bay would check on that resident. From 2006 Fig Tree permitted on-site managers to prepare takeaway meals for residents two nights a week so long as they did not do so on consecutive nights. Fig Tree also permitted the managers to prepare one takeaway lunch per week. Those meals were still prepared by the on-site managers from fresh ingredients and the managers were required to inform Fig Tree (or Village Life as it then was) of the particular days on which takeaway meals were provided to the residents. This system continued in operation until SCV assumed management of the villages in around September 2007, according to her evidence. In particular, the way in which lunches and dinners were prepared changed insofar as the protein component of those meals, that is, meat, eggs and vegetable proteins were typically ordered from outside suppliers and delivered on a frozen basis to the village. Although residents continued to eat lunch meals in the communal dining areas, they were required to collect their evening meal in takeaway plastic containers from the communal dining area at lunchtime after the meals had been thawed for one to two days beforehand. Under the SCV system residents retained the option to leave their evening meal in the communal fridge and to eat in the communal dining area at a time convenient to them although in practice, no resident ever did that in the experience of Mrs Nash. Evidence was given by Ms Dean, one of the village managers, that under the new food system introduced by SCV, she as a manager could only give the residents precooked roasts. She could not go to a butcher and buy the fresh roasts if she wished to. Secondly, under the new SCV food system, the food came in plastic containers similar to typical rectangular Chinese takeaway style containers and the managers were restricted to dealing with food suppliers including local butchers who were nominated by SCV. She said that in addition to the prepared food being delivered by the food suppliers, they were to be heated and plated by Ms Dean and her partner but also served with vegetables and fruit. The lunch was always either precooked or pre-prepared and the evening meals were a combination of pre-prepared food and other food, although most of it was prepared and came in prepared. Ms Dean gave evidence that on Christmas day she and her partner resumed serving fresh food, that is, buying in fresh meats from their own supplier because notwithstanding the fact that they were still working for SCV, she received a phone call to return to the village urgently to deal with what staff described as a riot in the dining room. Residents had taken the evening meals from the fridge, thrown them everywhere, banging on the door and saying they had had enough. Ms Dean says she was unable to contact SCV to have variations made to the set menu so took matters into her own hands. Ms Dean gave evidence that she could recall being informed by residents who were leaving the villages that they were leaving because they were not used to eating this type of food and they had been under the impression when joining the villages that there would be managers on duty all the time, that dinner could be eaten in the dining room and those matters were not followed through. There was not much evidence of this in the written complaints. Ms Dean said that she would ask the residents to write down their concerns of that nature but the general response was that they did not want to cause any trouble and they just wanted to forget about it. Another manager, Ms Marilyn Mausolf, gave evidence that under the SCV system she would be cooking the vegetables and reheating the 'protein' for lunch. She said that SCV dinners were put into containers and put into the community fridge for the residents to take home to their units. Initially SCV sent food to the village at Christie Downs by way of its supplier which was referred to as a 'starter pack' but the food was insufficient to feed the residents of the village and she received bad feedback from the residents in relation to the food that was introduced. She explained in cross-examination that she would not be prepared to live on the food which was supplied by SCV. Mrs Christene Hodgson, another village manager, gave evidence that at the Gladstone Village the communal dining room did not have a microwave. She said that if she had not received an item that had been ordered from SCV's food supplier, she was not able to get a similar item from a local supplier. She also gave evidence that she had been informed in Bundaberg (at a SVC forum) that she would be doing things a lot differently with SCV than she had been with Village Life. In particular, she was told that she would not be required to cook any longer under SCV but that 'we would just be regenerating protein and preparing side salads and vegetables that we would have previously ordered [from SCV Group's food supplier]'. Evidence was also given by Mrs Donnelly who was the on-site manager of Village Life, Earlville. Her evidence was that SCV directed her to manage Earlville in accordance with the provision of her contract of employment with SCV rather than in accordance with the Village Life System. She said that when SCV took over the management of Earlville, she no longer referred to the Village Life manuals for guidance about the management of the village as the SCV model was quite different from the Village Life System. She said that Earlville changed from the Village Life System of food preparation and delivery to the SCV food system on 31 October 2007. She was instructed by SCV that she and her husband were permitted to serve only one meal per day in the communal dining area. She said that residents had an option of eating their take home meal in the communal dining area when it was open, although there was no microwave in that area so residents could not reheat a take home meal from there. Under SCV, Mrs Donnelly and her husband were paid for no more than three hours work per day. She said that prior to 31 October 2007, when the SCV system of food service was introduced, the only frozen food which Mr and Mrs Donnelly served to residents of Earlville were frozen peas, frozen beans and corn cobbs. In contrast to this, Mrs Donnelly said that she was required to prepare and serve the frozen ready prepared food provided by the supplier nominated by SCV both at lunch and for the evening meal. Her evidence was that it was permissible for her and her husband to supplement the SCV meals with desserts which they had prepared. Mr and Mrs Donnelly did not have time, however, to prepare dessert within the three hours per day for which they were paid by SCV. Ms Brenda Jackson, a resident of Village Life, Christie Downs gave evidence. Her evidence was that since it opened up in around 2003, residents prior to SCV's management of the village had never taken more than one takeaway lunch meal and never more than two takeaway evening meals. Another resident, Mr Jack Hirst said that he left the Evanston Village in November 2007 after the SCV food had been introduced 'because of the quality of the food that we was (sic-were) getting deteriorated'. He could only experience the SCV food system for a month prior to leaving the Evanston Village. It was said that month was enough for him to make his decision. Fig Tree says that Prime was informed of the involvement of SCV and the nature of that involvement particularly in relation to the division of management tasks and responsibilities allocated as between SCV and Fig Tree. Fig Tree contends that Prime knew that SCV had an obligation to operate the Prime villages in accordance with the Village Life System; that Fig Tree's intention was that Prime would receive legal documentation from Fig Tree within a short period of time after 30 July 2007; that SCV were completing audit reports of the villages which were the subject of the Assignment Agreement to be made available to Prime and other village owners; that SCV had engaged former Fig Tree managers on 90 day contracts to allow adequate time for Fig Tree's independent contractors to assess the SCV employment contract and finally that SCV having over the years trialled several methods of delivering food to residents ranging from 'cooked fresh' to 'cooked chill' systems, found the 'cook freeze' method to be the best method and that the frozen components of the SCV meals were 'no different to what you may prepare at home'. What Prime stresses, however, is that there was crucial information not communicated to it or otherwise known by Prime which was relevant to Prime's election to affirm or terminate. Prime points to the fact that there is no evidence of any communication from Fig Tree to Prime before the end of July 2007 which provided details of the Assignment Agreement, its implementation, or changes that SCV had either already made or were to make to the Village Life System. A dominant consideration in this regard is that the 30 July 2007 letter from SCV to Prime addressed in some detail the food delivery system which SCV proposed to use, however, according to Prime the representations made in the letter stand in stark contrast to the evidence from the managers regarding the food actually delivered under the SCV system. Prime contends and I so find that the innocuous language of the communications from Fig Tree or SCV to Prime in the May, June and July 2007 period was not notification to Prime of the full nature of the changes in respect of the management of the Prime villages. Prime was assured that there would be no changes to its current contracts, being the WMSAs. I find that as at 21 June 2007, Prime was unaware that it was the view of Fig Tree officers that SCV's poor management of the villages was 'destroying [Fig Tree's] business' and that SCV's management of the transition of responsibilities in respect of the villages had been 'nothing less than poor' (see the Managing Director's Report to the Board). Also by this date, Prime was unaware that Fig Tree's operations would be reduced to 'skeleton staff' and be relocated to SCV's offices in Maroochydore by the end of July 2007; that cash flow was a key issue for Fig Tree and the immediate critical issue for Fig Tree was to get the new WMSAs signed off by the owners so that Fig Tree could settle the remaining $13.5 million as soon as possible; that SCV had altered the terms of engagement of on-site village managers from an independent contract to a contract of employment; that SCV proposed variations of the Village Life System to suit its own purposes; and that SCV had failed to provide Fig Tree with any transition plan. On and after 24 July 2007, Prime was unaware that Fig Tree planned for all Fig Tree on-site managers, human resources and other personnel other than some accounting and administration staff to be made redundant by 24 August 2007. Notice of termination to staff was given on 25 July 2007 effective 24 August 2007. Fig Tree emphasises for the purpose of the affirmation case, that the events in 2007 illustrate that Prime had ample knowledge. The point is made that Prime did not call most of its Board members, its company secretary, its solicitors, other senior executives, members of the DDC to deal with the question of Prime's knowledge. In particular emphasis is placed on Prime's failure to call Mr Jaques who was the director to whom the 30 July 2007 letter was sent and whom had several meetings with SCV and email exchanges with SCV. Fig Tree contends that in accordance with Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298 the unexplained failure to call any of these witnesses, particularly Mr Jaques, should lead to an inference that the uncalled evidence would not have assisted Prime's case. In my view this submission overlooks the fact that Fig Tree has the onus on the affirmation point. I would need to be satisfied that Fig Tree had established on the balance of probabilities that Prime had sufficient relevant knowledge. If Fig Tree does not get to that point, the rule in Jones v Dunkel cannot be used to fill gaps in Fig Tree's case: Jones v Dunkel [1959] HCA 8 ; 101 CLR 298 at 308, 312 and 320-321. Fig Tree has not discharged its onus of proving that Prime did have knowledge of the significant matters that Prime has emphasised. However this is a threshold issue in relation to whether Prime has established a repudiation by Fig Tree. For Prime's part it places significant emphasis on the Village Life model. It contends that prior to 2006, the model which Fig Tree had developed involved physical design features and operating systems which I have described. In the confidential annexure I have focussed on some particular features of the system which Prime submits were of importance and why that was so. To give these reasons some context, confidential detail aside, it is necessary to discuss the evidence albeit at some level of generality. In saying this I do not consider that it was insignificant or insufficient. Prime contends that even if the Assignment Agreement had no effect because conditions precedent to it had not been satisfied, it was nevertheless clear on the evidence, particularly the evidence of the on-site managers and Fig Tree's own admissions that Fig Tree had in fact ceased to perform its obligations under the WMSAs. Accordingly, it had in practical terms effected an assignment of its performance obligations to SCV. Prime says this is a natural conclusion suggested by steps actually taken by Fig Tree and SCV including the fact that Fig Tree released the on-site managers from their contracts and SCV entered into fresh contracts. Those new contracts were not expressed to be conditional. Secondly, SCV introduced longer term rental contracts to which SCV was named a party, requiring a bond to be paid and signing direct debit facilities to be paid to SCV not Fig Tree. Additionally, from June 2007, SCV instructed on-site managers to use SCV documentation as the villages were being 're-branded'. Finally, by correspondence delivered to on-site managers from SCV, it was clear that SCV considered that they had taken over exclusive operational management of the villages. Prime says that on any view, whether by effective assignment or by installing SCV as an agent manager, Fig Tree ceased to perform all or substantially all of the management functions at the villages. Fig Tree implemented new permanent arrangements inconsistent with the Village Life System in relation to food provided to residents and the manner in which it was prepared and served, engagement of on-site managers and conditions of tenancy for residents. Prime argues Fig Tree manifested an intention to no longer perform its obligations under the WMSAs or at least, not in accordance with all the terms of the WMSAs and in particular the Village Life System. In relation to this issue, Prime contends that the food changes went well beyond anything that might be considered a variation or modification of the Village Life System. The food changes on Prime's argument were fundamentally at odds with the Village Life System. Prime points out that there is no tenable suggestion that the changes were not intended to be permanent and had Prime not intervened they would have been permanent. At [33]-[37] above, I summarised the factual assertions made by Prime in the three areas it pleads. The evidence on those topics is analysed further below. For present purposes, however, I record that in my view, on the evidence, Prime has made good most of its complaints --- particularly in relation to food. It must be emphasised that by no means all of the complaints were specifically proven at each village. Indeed far from it. The complaints, however, comprise a collection of changes to be introduced (or which had already been introduced) at all of the villages. It was a new management system across the board. ... may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. The High Court reached its decision not upon the ground of breach of an essential obligation, but upon application of the doctrine in relation to intermediate terms. The contractual obligations with which Sanpine failed to comply were inessential. On the true construction of the contract, not every breach would justify a termination. The obligations were intermediate terms, but the breaches of the respondent were in a number of respects gross and their consequences were serious. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words. The answer to whether there has been repudiation by a sufficiently serious breach of a non-essential term may be influenced by whether the breach will give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he or she should obtain from the contract. Identification of the benefit is therefore important. It is to be considered in light of the language of the contract and the circumstances in which the parties contracted. To complete this topic, regard should also be had to other aspects of the legal analysis by the majority in Koompahtoo (citations omitted). What Jordan CJ said as to substantial performance, and substantial breach, is now to be read in the light of later developments in the law. What is of immediate significance is his reference to the question he was addressing as one of construction of the contract. It is the common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and (in a case such as the present) the commercial purpose it served, that determines whether a term is "essential", so that any breach will justify termination. The second relevant circumstance is where there has been a sufficiently serious breach of a non-essential term. In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd , the English Court of Appeal was concerned with a stipulation as to seaworthiness in a charterparty. Breaches of such a stipulation could vary widely in importance. They could be trivial or serious. The Court of Appeal held that to the accepted distinction between "conditions" and "warranties", that is, between stipulations that were in their nature essential and others, there must be added a distinction, operative within the class of non-essential obligations, between breaches that are significantly serious to justify termination and other breaches. This was a recognition that, although as a matter of construction of a contract it may not be the case that any breach of a given term will entitle the other party to terminate, some breaches of such a term may do so. Diplock LJ said[14] that the question whether a breach by one party relieves the other of further performance of his obligations cannot always be answered by treating a contractual undertaking as either a "condition" or a "warranty". Of some stipulations "all that can be predicated is that some breaches will and others will not give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend upon the nature of the event to which the breach gives rise". In this way Diplock LJ set the policy of the law favouring certainty of outcome through the classification of terms as conditions against that which encourages contractual performance and favours restriction of the right to terminate to cases where breach occasions serious prejudice. However, Hongkong Fir was decided in 1961 and has long since passed into the mainstream law of contract as understood and practised in Australia. It may be true that this Court has yet to accept Hongkong Fir as an essential element in the grounds for decision in any particular case. However, in Ankar Pty Ltd v National Westminster Finance (Australia) Ltd , Mason ACJ, Wilson, Brennan and Dawson JJ referred to Hongkong Fir with evident approval and said that the concept of the intermediate and innominate term brings a greater flexibility to the law of contract. With that in mind, it was entirely appropriate for Campbell J to proceed with an analysis of the facts in which Hongkong Fir was applied. The practical utility of a classification which includes intermediate terms, and the consequent greater flexibility of which the Court spoke in Ankar , appears from several consequences. First, the interests of justice are promoted by limiting rights to rescind to instances of serious and substantial breaches of contract. Secondly, a just outcome is facilitated in cases where the breach is of a term which is inessential. As will appear later in these reasons, we rest our decision in the appeal not upon the ground of breach of an essential obligation, but upon application of the doctrine respecting intermediate terms. Fig Tree contends that the promise to manage in accordance with the Village Life System could not possibly be an essential term. Fig Tree argues that such a promise is a classic example of an intermediate or innominate term. For reasons discussed in the next section, I accept that submission. Fig Tree contends that at its highest, Prime's case would only reveal that during the transition period provided for in the Assignment Agreement, Fig Tree failed to prevent SCV from departing from the Village Life System in certain respects. Accordingly in those respects it may be argued that Fig Tree had broken its promise to manage in accordance with the Village Life System. Fig Tree says that the highest Prime's evidence comes in relation to that alleged breached is in the following respects: As addressed below, I consider that this summary significantly understates the impact of the SCV changes. As a point of principle, Fig Tree contends that the benefit to which Prime was entitled under the WMSAs is the maximisation of its financial return from the properties over a 25 year term. A central plank of Fig Tree's case on repudiation is that Prime and its witnesses have exaggerated the alleged seriousness of the breach and the inadequacy of damages as a remedy. In relation to the question of damages, Fig Tree argues that Prime's own business records tendered during cross-examination reveal that on 28 February 2008, Prime published to the ASX its Financial Report and made other public announcements, none of which suggested that any material loss had been suffered by Prime as a result of Fig Tree's actions. Although Mr Lewski explained this on the basis of a materiality threshold, Fig Tree says that his explanation was unconvincing for a number of reasons. First, despite Mr Bosel conceding that in April and May 2008, Prime had commissioned CB Richard Ellis to conduct valuations for eight out of the 12 villages in the Fig Tree portfolio, no evidence was led from those valuers nor sought to be tendered. On the basis of Jones v Dunkel [1959] HCA 8 ; 101 CLR 298 , it was submitted it should be inferred that their evidence would not have assisted Prime's case. Further, Fig Tree submits that when on 14 July 2008, Prime released to the market its Directors' assessment of the outlook for the financial year ended 30 June 2009, the reference to the valuations in that release revealed only a 'small downward movement on the Fig Tree Portfolio'. It attributed that small downward movement to increases in discount rates since the previous valuation rather than any actions of Fig Tree. Fig Tree also argues that the expert opinion evidence called by Mr Ludlow did not take into account and was not based on any of the material in relation to the valuation reports. It is argued that while there has been some diminution in occupancy rates of the villages, there is no admissible evidence as to causation of that diminution. Fig Tree objected to Mr Ludlow expressing an opinion about the causal nexus and while I allowed the evidence subject to objection, I have concluded that Mr Ludlow's evidence is admissible for reasons expressed in Appendix A. Fig Tree also contends that Prime's evidence 'is unreliable and exaggerated', first, as to the severity of the damage to Prime as a result of the departure from the Village Life system and, secondly, on the basis that there was nothing intrinsically wrong with the systems which SCV sought to introduce according to the evidence of Professor Capra. Professor Capra gave evidence as to the advantages of serving pre-prepared food of the kind offered under the SCV food system. Her evidence was to the effect that such food is not shown to be less nutritious than freshly prepared products. There was also evidence from Ms Dorrett as to the advantages of the pre-prepared food of the kind manufactured by Prepared Foods Australia which was the predominant supplier of the prepared food under the SCV system. Ms Kratzke also said that one of the advantages of pre-prepared food was that the quality of the meal became less dependent on the cooking skills of the on-site managers. Significantly, Fig Tree suggests that the only evidence which exists and is uninfluenced by the litigation is the contemporaneous business records. It says those records tell a very different story from the evidence adduced by Prime. From that source, it is evident, according to Fig Tree, that: As to all of these submissions I observe that the fact that the extent of damage may not either have been significant or then known to be significant does not mean that a breach may not be serious. The law permits termination for repudiation when a serious breach of an intermediate term has occurred. Terminating may prevent significant damage being sustained in the future as a result of a serious breach of an intermediate term. If consent were not obtained, the contemplated assignment would have no force and the WMSAs between Prime and Fig Tree would continue. Fig Tree could not force Prime to give consent. However, by cl 9.1 of the Assignment Agreement, Fig Tree bound itself to attempt to obtain Prime's consent to assignment or novation in favour of SCV or to terminate each WMSA and enable SCV to enter into new contracts with Prime. Both options led to the result that Fig Tree could no longer perform. Fig Tree contends that the only way this could work as a renunciation was if cl 9.1 were interpreted such that if consent or a new agreement were not forthcoming, Fig Tree was nevertheless unequivocally promising SCV that it would terminate. Fig Tree says this would be a 'ridiculous construction'. I agree that this is not the preferred construction even though Fig Tree was keen to obtain payment and walk away swiftly. The better construction to be given to cl 9.1 is that Fig Tree would use its best reasonable endeavours. Such a clause would be implied at law in any event. Fig Tree contends that given the value which the Assignment Agreement attributed to the WMSAs, namely, a sum in excess of $3.5 million, SCV could be taken to be unwilling to proceed unless the conditions were satisfied. I accept Fig Tree's submission. Taken in isolation, I do not consider that entry into the Assignment Agreement constituted a repudiation of the obligations under the WMSA by Fig Tree. Without Prime's consent, no assignment would be valid. (No consent has been given). On a different argument, Fig Tree also contends that it may subcontract its obligations under the WMSAs without Prime's consent. I do not agree. A contract may expressly or impliedly prohibit vicarious performance, the question being one of construction in each case. However, given the particular purpose for which the contract and its terms are being construed, implicit in the question of construction are, ordinarily, issues of characterisation and of inference in which the significance to be attributed, variously, to identity, to the qualities or attributes one or both parties are expected to exhibit and to the character of the parties' relationship, can loom large. Of course, the legal barrier to assignment of rights is very much lower than the legal barrier applicable to assignment of obligations under a contract. As to the proper construction to be given to the question of whether performance can be vicarious, Fig Tree contends that the focus of the terms is on the mode of performance, namely, that the villages be managed in accordance with the Village Life System rather than on any particular person or attribute of Fig Tree. I agree that the focus is on the Village Life System. However, Fig Tree places very considerable store in the intellectual property that it has developed in the Village Life System. The Village Life System for all practical purposes is synonymous with Fig Tree. That is at the essence of the concerns which Prime has about the assignment to SCV of the obligations under the contract in circumstances where retention of reliable performance of the Village Life System cannot be guaranteed. If there is one aspect of the WMSAs which is central to the relationship between the parties, it is the performance of the Village Life System or more accurately, Fig Tree's Village Life System. (That does not mean that each component of the Village Life System is an essential term). That the parties contemplated that the WMSAs could be assigned is a relevant consideration in deciding whether that assignment could be without consent of Prime. Objectively viewed, what would have been in the minds of Fig Tree and Prime at the time of execution of the WMSAs was that if all of the services provided under the WMSAs and, in particular, in the context of the provision of Fig Tree's Village Life System could be substantially guaranteed, in effect, on assignment of the contract, then there would be no proper reason for objection to the contract being assigned. But the contractual requirement for consent was the very means of ensuring those objectives were attained. I accept Fig Tree's submission that it is necessary to have regard to the wide range of tasks involved in managing the villages such that it would be improbable that the parties intended that Fig Tree would carry out those tasks through its employees only and through no other means such as by engaging independent contractors. Clearly the evidence reveals that Fig Tree has always delegated the task of on-site management to husband and a wife management teams engaged by independent contracts. However, the question is not whether some tasks such as changing a light fitting can be delegated to independent contractors but whether the performance of the Village Life system necessarily entails that it be performed, at least in a supervisory sense, by Fig Tree rather than (in a supervisory or other sense) by some other third party whom Prime has not had the opportunity to confirm can and will manage in accordance with the Village Life System. Once it can be seen that there is a personal component of each of the WMSAs, namely, the provision by Fig Tree of the Village Life System, it is clear in my view that Fig Tree cannot assign the entirety of its obligations under the WMSAs without Prime's consent. The fact that it may seek to assign its rights becomes a different but academic issue. While Fig Tree emphasises that the WMSAs contain no term prohibiting assignment, it does not follow that the WMSAs contemplate that assignment is permissible without consent being obtained. Fig Tree contends that cl 22.2(f) in providing that a reference to a party includes the successors and permitted assigns of the party means 'permitted assigns' in the sense of permitted under the contract not permitted by Prime. In light of the personal nature of the obligations of Fig Tree under this contract, a proper construction of the agreement requires that 'permitted assigns' be permitted by Prime. These are each commercial contracts of substantial value as far as Prime is concerned. It was entitled to protect its position by refusing assignment unless there was a guaranteed performance of the Village Life System. The return is dependent, Fig Tree says, entirely on occupancy rates. Fig Tree says that the parties must be taken to have identified what would be a substantially unacceptable occupancy rate in cl 1.3 by providing that if occupancy falls below 50% for a continuing six month period, Prime will have the right to terminate. Fig Tree says that it is significant that the only fall in occupancy rates which Prime thought were serious enough to warrant the expression of a termination right was if the rate fell below 50% for a continuous six month period. Accordingly, Fig Tree says that Prime's argument that the benefit to which it was entitled was the benefit of having Fig Tree manage the villages in accordance with the WMSAs is unacceptable because it is clear that the WMSAs were about money. I have considerable difficulty with this argument. There is an obligation to manage in accordance with the Village Life System under the WMSAs. Each contract specifically identifies at the outset that compliance with that obligation is the very means by which Prime will maximise its investment. It is clear that the parties have not expressly identified the promise to manage in accordance with the Village Life System (or any other promise) as being an 'essential term'. Moreover the nature of the promise is one which is referable to a variety of other documents which fall within the definition of the Village Life System. Those documents cover many matters, some of which are important and some of which are trivial. The WMSAs themselves do contemplate that departures might occur and set out a regime to deal with them. The contract also contemplates that there will be modification of the Village Life System and it appears to me that this is an important consideration. In relation to potential breaches, Fig Tree relies on seven references in the WMSAs to possible breaches taking place. (These are set out in Annexure B). Fig Tree relies on four references in the WMSAs to modifications of the Village Life System. These are also set out in Annexure B. The WMSAs were very long term arrangements. Prime is described as an investor and Fig Tree is described as the manager. Clearly it was expected that Fig Tree would handle problems which might arise from time to time in operations. It would also seek a maximised return for the investor over a period of time. It is improbable, in my view, that the parties would have contemplated that each and every operation or compliance difficulty, no matter how trivial and how brief, could give rise to the possibility of termination. Identification of anticipated small potential breaches and provision of a regime for dealing with them, and provision for modification appear to me to be valid arguments which on balance, lead to a conclusion that the promise to manage the villages in accordance with the Village Life System was an important but not an essential term. Prime contends that the several departures from the Village Life System which were outlined in its pleading are to be regarded as evidence of renunciation by Fig Tree and as being sufficiently serious breaches of a non-essential term of the WMSA which justify termination by Prime. (Prime also contends that the failure to manage in accordance with the Village Life System is a breach of an essential term but I am not satisfied that the term is essential). A significant feature of Fig Tree's case is that it was not required to obtain Prime's consent to any amendment to its Village Life System. Fig Tree contends that the fact that the WMSA has contemplated that Fig Tree could unilaterally amend the content of the documents which defined the Village Life System was of particular significance when it comes to applying the legal test for repudiation in relation to any alleged departures from the system. The documents falling within the definition of the system cover a wide range of matters. Some of them are clearly less important than others; some of them are quite detailed. Fig Tree contends, correctly, that some of the clauses self evidently could not amount to promissory terms. The promise to manage in accordance with the Village Life System would be better characterised as an intermediate term, albeit an important one. This does not mean that Prime has no remedy in the case of breach of such a term. Its protection in the event of such a breach may be found in its ability to terminate pursuant to cl 1.3 if the occupancy rates fall low enough for long enough. Equally, in circumstances where there is a sufficiently serious breach of an intermediate term, Prime may be able to treat that breach as constituting a repudiation. Fig Tree accepts that in relation to the description concerning food in the Village Life System Manuals, there were many pages devoted to the issue. As to this, the essence of Prime's complaint was that SCV required managers to order frozen food supplies from external contractors using a common menu nominated by SCV. There is no dispute that the frozen food supplies related to some components of some but not all lunch and evening meals. This could only be relevant, argues Fig Tree, if it was demonstrated that the residents were not served a diet under SCV which did meet their nutritional requirements. Fig Tree argues that Prime did not adduce evidence of such a case and Prime withdrew reliance on Mr Bosel's evidence to the extent of complaints about nutritional value. This essentially replicated the complaint in (a), although it was also pleaded that SCV 'did not permit' managers to prepare fresh cooked meals but required them to use frozen food supplies which they were then required to regenerate and make available to residents. Again, Fig Tree, accepts on the evidence that the frozen food supplies comprised part but not all lunch and evening meals and that the procedure described related to evening meals only. Again, Fig Tree accepted that this was a reference to the five extra take home evening meals. Read in the context of what was required under the Village Life System as a whole in relation to food, it is submitted that these two departures were trivial. Breakfast which was one third of the meals offered to the residents was unchanged. It is accepted that the two changes did not comply with the Village Life System but Fig Tree does not accept that those changes were sufficiently serious as to justify termination. Another reason the introduction of the pre-prepared food was not a significant departure from the Village Life System according to Fig Tree was that it was something which Fig Tree itself had considered doing at some stage. Secondly, the on-site managers of the Prime villages could and did serve pre-prepared or frozen food under the Village Life System albeit not from a source nominated by Fig Tree. Fig Tree argued that the system had many uncontested advantages such as enabling the choice to be offered in situations for the evening meal, being able to ensure consistently high quality food, reduction of costs associated with meal production, less wastage, reduction of the likelihood of food poisoning, reduction of energy consumption, reduction of costs associated with maintaining equipment used in preparing food and less dependency on the cooking ability of the on-site managers. Fig Tree argued that it was an acceptable option for a food service which must cater to the residents at a facility such as the Prime villages within a limited budget. In this context Fig Tree emphasised that the residents of the Prime villages were not paying significant sums to stay at those villages. Fig Tree argued that for what they paid, they received housing, laundering of some items and three meals a day. The expectation of what could be provided by way of food in such circumstances had to be measured by reference to what was paid by the residents. Fig Tree accepts that a number of residents and some managers were generally dissatisfied with the changes. But as to this, Fig Tree argues that the residents of the villages were elderly and undoubtedly resistant to change. It will never be known whether given time and further training of the on-site managers as to techniques in relation to the preparation and presentation of the pre-prepared food, the changes to the food would have been regarded as acceptable. Fig Tree pointed to the fact that there was evidence of other residents not being unhappy with the changes. Mrs Nash, for example, gave evidence that the residents at the Hervey Bay Village liked choosing their evening meal and liked having the flexibility of being able to have their evening meal in their units. As to this submission, I would observe that to their credit, many elderly residents would attempt to see 'the glass half full' and adjust to deleterious changes in their conditions. This does not mean that in the longer term Prime's investment would not suffer if the changes imposed were sufficiently serious departures from the Village Life System. As to these arguments, the question will always come back to an analysis of the seriousness of the breach or breaches, if any. Prime has never argued that trivial departures could constitute serious breaches entitling termination for repudiation. If there is a contractual method of supplying food which is objectively viewed as a matter of central importance to the contracting parties and to elderly people in retirement villages, the 'expectation' of what should be provided should be measured by what the contract itself provides. The totality of the evidence on the food changes established that while there were no material changes to the breakfast arrangements, there were the following changes in relation to lunches and the evening meal. Those meals were no longer prepared on site. Those meals were described by SCV in relation to their protein component. This was the title given in SCV's internal literature and some correspondence. The combined meal would be served to residents in the community dining rooms. However, in the case of the evening meals, those meals would be thawed and would be added to salad or vegetables and then made available at lunchtimes for residents to collect and to take back to their units in order to reheat them and to eat them. Fig Tree contends that the residents were, in theory, able to leave their dinner meals in the community rooms or to bring them back to the community rooms in the evening for the evening meal and to reheat them and eat them there. This is clearly an impractical, inconvenient and unseemly practice which is probably why, as pointed out by Fig Tree's witnesses, the residents did not exercise that theoretical option. In any event, the microwave ovens in the community rooms were not always designed for such purposes, if they had them at all. The concept of the residents queuing to share the use of a small domestic microwave so as to dine together would be a significant departure from the previous food delivery system under the Village Life System. Mr Bosel of Prime in his report in connection with Hervey Bay recorded that food presentation viewed for lunch was extremely poor. He recorded that meals were provided in plastic containers which had been raised by the management team as a very poor process for their residents. He said that comments by family or residents spoken with on the day gave rise to concern as it appeared that residents no longer have a satisfactory main meal served during the day. In relation to Gladstone, in discussions with the managers it was reported that both managers had commented that residents and family were very concerned as to the food quality and service given that all meals were now prepared and sent from Brisbane. Of the two residents with whom he spoke, both expressed their regret that the 'family' daily lunch had now been replaced with 'plastic food'. Mr Bosel expressed the opinion that unless there was a significant change in the focus of the village, that vacancy levels would continue to fall. In relation to Earlville, Mr Bosel recorded that the new food system was to be introduced at the end of the month and 'was causing a great deal of resentment from both the residents and the management team'. In relation to Townsville 1 --- Wulguru, it was noted that the changeover to the new system had caused similar issues to be raised. In relation to Townsville 2 --- Condon, Mr Bosel reported that there was little incentive for the relief management team to increase occupancy and both had confirmed that they would not be working with the operator beyond the next few months due to the unsatisfactory changes that had occurred in the villages, particularly around the new catering arrangements. Mr Bosel also explained in his cross-examination that his concern about the possible adverse effect on Prime's investment in the 12 villages had been ameliorated by the fact that the food service under the Village Life System had been reintroduced. However, he said that the impact in the changeover at the time that SCV was managing was traumatic especially in relation to two villages and especially in relation to reputation. He says that he did have concerns about significant damage to the value of the villages and he reported those concerns to Mr Jaques. Nevertheless, he did agree with senior counsel for Fig Tree that Prime's financial reports for the half year ended December 2007 did not reflect any material loss to Prime or any loss of value in relation to the Fig Tree portfolio. But he went on to say that there was no mention of any material loss or value in relation to the Fig Tree portfolio at that stage because Prime did not have the valuations then. However, it is true that there was a small amount of reduction only, in July 2008. The method of provision of food by SCV was a significant and serious departure from the method described under the Village Life System and which had been operated by Fig Tree prior to the assignment. A change of such significance without consultation with the owner of the villages, was predictably bound to cause significant repercussions. I would not infer that the food changes were insubstantial simply because Prime did not react to them earlier than it did --- nor would I infer that Prime accepted them. In my view the changes both as to the nature of the food and the system for the delivery of food to the residents was very substantial. To raise this issue for the first time in the SCV letter of 30 July 2007 and in the community summary reports sent by SCV to Prime in August 2007 was inadequate. I accept Prime's submission that the references in the documents were ambiguous and buried amongst other information. As Mr Lewski observed, there was no detail and substance in the reports and he certainly did not pick up any significant impact that they may or may not have suggested. Prime's submission is that in fact it did not know about the nature of the food changes proposed or ultimately implemented until mid-October 2007. The period from mid-September to mid-October was the time at which Prime engaged the new General Manager (Aged Care & Retirement Operations), Mr Bosel. It was early October 2007 when Mr Bosel toured the Prime villages. I have previously indicated that I accept the evidence of Mr Bosel as to what he found and I also accept his denial that his tour was exclusively or predominantly for the purpose of gathering information to be used as evidence against Fig Tree. His evidence was that his initial purpose was to familiarise himself on his recent appointment with the Prime village operations. Nevertheless, of course, as the tour unfolded he became aware of and concerned about the changes to food delivery and manager's conditions which he observed and which were reported to him. He prepared reports for Mr Lewski who at that stage was overseas. In those reports, Mr Bosel expressed his concerns at the standard of food service under SCV and he described the reports that he had received from managers and residents concerning the changes in food service. It also recorded Mr Bosel's concerns arising from the change to the managers' conditions and, in particular, to the reduced financial incentives to maintain the performance of managers and occupancy at the villages. Fig Tree's own literature as to the importance of food unsurprisingly coincides with the importance placed on that aspect by Prime and more importantly, objectively viewed, the importance of the food system under the WMSAs. The parties to the WMSAs worked on the premise that food was probably the single most important aspect of managing a Village Life site. I have separately recorded in the confidential annexure the details which Fig Tree had focussed on in its literature on this topic. In light of the confidentiality, I do not propose to repeat that detail in these reasons. In my view, the totality of the evidence called by Prime in particular does give rise to the conclusion that the nature and the impact of the changes introduced by SCV led to deep concern and dissatisfaction amongst managers and occupants of the villages concerning the reduced quantities of food (Jackson, Donnelly and Hirst); the reduced quality of the food in terms of edibility (Jackson, McLean, Donnelly and Hirst); concern at the residents' capacity to safely store and reheat the food in their units which were not designed for the purpose (evidence of Dean, Donnelly, Hodgson and Hirst); and concern at the reduction in the scope for communal dining and social interaction. I should indicate that insofar as there was a reference to safety in this aspect of the evidence, I treat that evidence only as being a departure from the previous system insofar as the location of delivery of food was concerned. Although Fig Tree contended that such breaches would have to be established in relation to every one of the 12 villages before there could be a conclusion as to repudiation of obligations under each of the WMSAs, in my view that is not so or at least not in the sense of requiring detailed evidence to be called on all topics from all villages. The obligation contained in the Assignment Agreement for SCV to manage in accordance with the Village Life System appears to be a matter of lip service only. The reality is reflected in Fig Tree's internal documents. It was always intended that SCV would manage in accordance with its own system. The significant impact of SCV being permitted to do that is also evident from Fig Tree's own internal documents. Importantly, the evidence of Ms Kratzke and Mr Lonie was that the changes that had occurred reflected initial stages of implementing a new system that would be applied across all of the villages. The changes in the nature and delivery of food and in the managerial system were intended to apply at all of the villages. Is that correct? --- It was intended, yes, but that didn't occur. She also explained that the new method for preparing and serving food to residents started to be introduced in the different villages from about the dates that the managers at each of the villages signed the new permanent employment agreements with SCV and that was typically mid to late September and then continuing through the balance of September and October 2007. She also explained that the new permanent employment contracts for the on-site managers under the SCV model only paid the managers for 38 hours per week per couple even though they were required to do whatever work was necessary to complete the tasks. Ms Kratzke accepted that if a manager at a village prior to, for example, May 2007 had adopted the kind of arrangements concerning food and management that applied under the SCV model, it would not have been regarded (operationally, I infer) as compliance with the Village Life System. Prime did not know at this time that Fig Tree was seriously disappointed with the performance of SCV; that Fig Tree expected that SCV would simply introduce its own system rather than apply the Village Life System and Prime was not aware at that stage of the extent of difficulties being occasioned by the departures that SCV were implementing from the Village Life System. Nevertheless, in my view, Prime is entitled to rely upon all matters which have now become apparent to it. That includes the matters discovered by Mr Bosel on his tour and his report, the matters unearthed in the course of discovery given by Fig Tree in the litigation as well as Prime's own preparation for the litigation in proofing managers and occupants of the villages concerned. The principle flowing from Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21 ; (1931) 45 CLR 359 is that the termination of an agreement may be justified by proof of circumstances existing prior to such termination but of which the party terminating the agreement was unaware of until a later time. If there were, in fact, any circumstances in existence at the time of the termination of the agreement which could have justified the respondent in so terminating it, then it may justify the termination by subsequent proof of those circumstances (Smith's Law of Master and Servant, 5th ed., p. 107; Taylor v. Oakes Roncoroni & Co. (1922) 27 Com. Cas. 261 at p. 266; Swale v. Ipswich Tannery Ltd. (1906) 11 Com. Cas. 88 , at p. 98). Although Prime must justify an election to terminate by reference to a legal right to do so it may justify it on any ground available at the time of the election: Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 ; Shepherd v Felt [1931] HCA 21 ; 45 CLR 359 ; Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66 ; (1938) 61 CLR 286 at 305; per Latham CJ; Sunbird Plaza Pty Ltd v Maloney [1988] HCA 11 ; (1988) 166 CLR 245. There is no need for it to prove that at the time of the election there was knowledge of the ground which ultimately justifies the election: Thompson & Morgan (UK) Ltd v Erica Vale Australia Pty Ltd (1995) 31 IPR 335 at 347. It is not restricted to that ground, Rawson v Hobbs [1961] HCA 72 ; (1961) 107 CLR 466. The residents were accustomed to a style of food preparation and delivery which Fig Tree itself clearly contended was of pivotal importance to the Village Life System. It was entirely foreseeable and reasonable that elderly residents as Fig Tree describes them would indeed be seriously resistant to change from a system of delivery of food upon which central importance was placed by Fig Tree in the Village Life System. Whether or not there was an effective assignment or whether it be by installing SCV as its agent to manage the villages, the WMSAs were repudiated by Fig Tree by ceasing to perform all or substantially all of its management functions in the Prime villages. It did this by permitting or directly implementing new arrangements which were intended to be permanent and which were inconsistent with the Village Life System in relation to the nature and delivery of food provided to the residents and in connection with the engagement of on-site managers. Taken alone, I would not regard the changes in conditions of tenancy for residents as being a significant departure but taken with the other breaches is supportive of the conclusion that Fig Tree was renouncing or repudiating its obligations under the WMSAs. It was a renunciation in the sense described in Koompahtoo [2007] HCA 61 ; 233 CLR 115 that it evinced Fig Tree's intention to no longer be bound by the contract or to fulfil it only in a manner substantially inconsistent with obligations under it. Equally, the conduct constituted a repudiation in the sense described in Koompahtoo of each WMSA as being a sufficiently serious breach of an intermediate term. In my view it is clear that the WMSAs cannot be assigned without the consent of Prime first being obtained. The fact that the WMSAs refer to others who may replace Fig Tree has no bearing on the proper construction of the agreement on the consent point. There is a critical difference between assigning contractual rights on the one hand and assigning contractual burdens. There may be no need to obtain consent for the assignment of the benefit of the contract but the obligation to perform a contract can rarely be assigned without consent from the other party first being obtained ( Pacific Brand Support & Leisure Pty Ltd [2006] FCAFC 40 ; 149 FCR 395 at [32] . I also consider that the WMSAs are in the nature of a contract for personal performance for the reasons I have explained. The Village Life System was guarded carefully by Fig Tree. It was only Fig Tree's system. The performance of the WMSAs in accordance with the Village Life System was at the heart of the bargain constituted by the WMSAs. Fig Tree may have had the right to amend the Village Life System but the factual evidence was that it had not done so in any significant way until entry into the Assignment Agreement. To the contrary, it had adhered to that system. The only reasonable inference is that Fig Tree believed the Village Life System to be the superior method of managing villages. Clearly Prime shared that belief. Prime further refers to and repeats the particulars as to the changed conditions regarding food preparation work set out under subparagraphs 39(a) to (c) inclusive above. Fig Tree argues that some of the on-site managers were unhappy with the changes to their conditions because they perceived that they were being paid less to do the same job (even though they were now receiving benefits such as paid leave which they did not have before and it was not intended that they would perform certain work such as the laundry). Again, in my view, it was entirely foreseeable and reasonable that on-site managers would be far less satisfied with the engagement conditions and the limited amount of pay they received on the change from the Village Life System to the SCV system. Because an overwhelming number of on-site managers and residents did not give evidence about their perception of the changes, Fig Tree says this should lead to an inference that most of them were satisfied. I would not be prepared to draw that inference. An inference of the nature described in Jones v Dunkel [1959] HCA 8 ; 101 CLR 298 is not one that the Court must draw. In my view, the changes to the food system in particular and to a lesser extent, the engagement system, were so obvious that one needed to hear from only a handful of people to express the entirely reasonable and foreseeable concerns about the effects of introduction of such changes. Such evidence as there was, it is said, eventuated out of the efforts of Mr Bosel who went to the villages shortly after the termination with the express goal of 'digging up dirt on Fig Tree'. Again, I am not persuaded by the submission of Fig Tree that Mr Bosel's express denial that he was digging up dirt on Fig Tree was disingenuous. Given the position in which he was placed and the concerns which were emerging at that stage, it would be essential to review the existing portfolio of villages in order to ascertain whether the areas of concern and non-performance by the operator would lead to a decline in value of the investment by Prime. There is no evidence that the changes which occurred diminished Prime's return from the properties let alone deprived Prime of substantially the whole benefit of the WMSAs. However, while this may be so, it was early days. Prime should not be required, in my view, to stand by idly watching significant non-compliance with an aspect of the WMSAs which on any reasonable view could have the capacity to diminish the extent of occupancy in due course. In relation to Townsville 2 --- Condon, Mr Bosel reported that there was little incentive for the relief management team to increase occupancy and both had confirmed that they would not be working with the operator beyond the next few months due to the unsatisfactory changes that had occurred in the villages, particularly around the new catering arrangements. Fig Tree contends that there is no evidence that these changes diminished the on-site managers' package. Although the changes may or may not have diminished the package, they became employees of SCV rather than independent contractors of Fig Tree. In that way they became entitled to statutory conditions such as paid superannuation contributions, four weeks annual leave and sick leave as well as access to relief staff during their four weeks leave and food paid for and provided by SCV. Further, Fig Tree argues that the alteration of the on-site managers' package was a matter between Fig Tree/SCV and its on-site managers and only became relevant to Prime if the packages diminished the return to Prime. In any event according to Fig Tree, those alterations were not established as having been made prior to 3 October 2007 except in relation to Gladstone and Hervey Bay. As to Hervey Bay, Fig Tree says that the change occurred just over two weeks before the date of the purported termination on 3 October 2007 and in the case of Gladstone, the change occurred barely ten days before 3 October 2007. Fig Tree argues that there was no requirement under the Village Life System that the on-site managers be engaged on the terms pleaded relating to the number of hours for which the on-site managers would be paid or the ability to perform services such as laundry other than engage an external service provider. If they are capable of being regarded as breaches of the WMSAs which Fig Tree does not accept, they could not be regarded on Fig Tree's argument as being breaches of such seriousness as would justify termination. I accept this submission. In relation to the food delivery system, I have concluded that the breaches were sufficiently serious (in relation to an important intermediate term) such that taken alone, the breaches warranted termination by Prime. There seems to be little challenge and, in any event, I accept that it is established that the departures from the circumstances in which managers would be employed (as pleaded and set out above) was established. Fig Tree's argument is that although there were changes, there is no indication that the changes caused any damage at all to Prime and in fact that the changes may have been for the better. I do accept that there was departure from the Village Life System of some substance in relation to the engagement of managers but I do not consider that taken alone, the changes would constitute a sufficiently serious breach of an important or intermediate term such as to justify termination. The least serious of the three breaches of the Village Life System in my view was the change in residency arrangements in respect of occupants of the villages. The evidence appeared to establish that there had been a departure from previous arrangements but it could not be said on the evidence that the departure was a serious breach of the obligation to manage the villages in accordance with the Village Life System. The breach concerning residents, taken alone would not, in my view, warrant termination of the contract. The elements of affirmation do not appear to be controversial ( Wallace-Smith v Thiess Infraco (Swanston) Pty Ltd [2005] FCAFC 49 ; (2005) 218 ALR 1 at [85] - [86] . The three elements required are: Affirmation does not depend on intention to maintain the contract, notwithstanding a breach. Rather it is '... an effect which the law annexes to conduct which would be justifiable only if an election had been made' ( Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55). Prime stresses that words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it was consistent only with the exercise of one of two sets of rights and inconsistent with the exercise of the other ( Sargent v ASL Developments Ltd [1974] HCA 40 ; (1974) 131 CLR 634 at 646 per Stephen J referred to with approval in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27 ; (1993) 182 CLR 26 at 38). The consequences of election may be serious for the party electing. Generally it involves abandoning a right that is available ( Immer at 39 per Deane, Toohey, Gaudron and McHugh JJ). These points were reiterated recently in Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57 ; (2008) 83 ALJR 196 at 50 and 59. It is also essential that to constitute an election to affirm rather than an election to accept a repudiation, the conduct must be consistent with the continued existence of the contract ( Carr v JA Berriman Pty Ltd [1953] HCA 31 ; (1953) 89 CLR 327 at 348). Continued performance, however, does not constitute affirmation when there is a reservation of the rights to terminate ( Wallace-Smith [2005] FCAFC 49 ; 218 ALR 1 at [87] - [89] , [151] and [330]). In this regard the evidence of Mr Lewski which I accept concerning the reservation of Prime's position at the 15 August 2007 meeting (albeit the meeting was with SCV not Fig Tree) is relevant. Where knowledge is necessary to make an election effective, it must be knowledge of facts giving rise to the right to elect not simply knowledge of the right itself. Fig Tree's position appears to be that the effluxion of time establishes affirmation. But given the number of villages involved, the complexity of the issues, the reality is that the time concerned was relatively brief. The first occasion on which Prime was asked by Fig Tree to make a decision was on 13 September 2007 when Prime received replacement WMSAs and was asked to sign them. Prime at that time was never confronted with the opportunity to choose between two alternatives before it. Even if this were not so, mere delay alone cannot constitute conduct sufficient to amount to an affirmation: Ellison v Lutre Pty Ltd [1999] FCA 399 ; (1999) 88 FCR 116 at [55] per von Doussa, Mansfield and Goldberg JJ. It is an important consideration, in my view, that delay alone cannot 'itself constitute conduct sufficient to amount to affirmation': Ellison at [55] per von Doussa, Mansfield and Goldberg JJ referring to Elders Trustee & Executor Co Ltd v Commonwealth Homes & Investment Co Ltd [1941] HCA 31 ; (1941) 65 CLR 603 at 618 and Sargent [1974] HCA 40 ; 131 CLR 634 at 656. See also Hoy at 226 per Rares J and The Law of Rescission (O'Sullivan et al, Oxford University Press, 2008) at 23.55. The non-defaulting party is certainly entitled to time within which to decide what its response will be to the breach of the contract. Nothing prior to September 2007 started time running from Prime's perspective for the purposes of any delay assessment. Prime contends in this regard that nothing about its conduct unequivocally or even on the balance of impressions conveyed its approval of an assignment of the kind that Fig Tree in fact proposed. Nothing about Prime's conduct unequivocally or even on the balance of impressions conveyed its approval of an assignment of the kind Fig Tree had conditionally implemented. On the affirmation case, Fig Tree contends that the evidence of Mr Lewski should be rejected unless it is corroborated by other reliable evidence. According to Fig Tree, not only was there no corroboration of Mr Lewski's evidence in relation to reserving Prime's position but it was not supported by the only objective evidence as to what occurred at the meeting. Fig Tree places reliance on Mr Buckner's notes and the letter sent the following day. If it is not already clear, in my view, neither of these documents displaces the evidence of Mr Lewski as to reserving Prime's position, which evidence I accept. The topic may not have been an issue which Mr Buckner thought was of particular concern to him. It may have been an issue which Mr Buckner sought not to highlight in his notes or the letter. He cannot recall what was discussed. I also do not accept Fig Tree's argument that it was unnecessary to put to Mr Lewski that his evidence about reserving the position of Prime was incorrect. I do accept the legal submission that if the witness is otherwise generally impugned, that it is not necessary to put every single proposition of falsity to the witness. The test is one of fairness. The reservation of rights point, in my view, was such a significant point, that Mr Lewski should have been tested on it if it was proposed to contend as Fig Tree have now done that much of Mr Lewski's evidence should be rejected as he was an unreliable witness. Fig Tree also argues that even if the reservation of rights in the terms it was described by Mr Lewski was made, it is a very narrow statement and applied only to the proposed future conduct of Prime's consent for assignment being sought by Fig Tree or SCV. Fig Tree contends that no reservation was made about the conduct which had occurred before 15 August 2007 or about the changes of which Mr Lewski and Mr Jaques were aware. Fig Tree contends that the reason no reservation was made was because they have by their conduct at that stage communicated affirmation in relation to those matters. I do not accept this submission. In my view there is no evidence to support the contention that there was unequivocal conduct of Prime constituting affirmation with knowledge of the facts said to constitute the repudiation. This is for two reasons. First, there was not sufficient knowledge at that stage to constitute affirmation and secondly, there was simply no unequivocal conduct affirming the contract. Fig Tree contends that the evidence of Mr Lewski in relation to the reservation of Prime's position rested on the foundation of Mr Lewski's 'false evidence' that the alleged conversation with Mr Roberts from SCV was 'the first time anyone had directly told (Mr Lewski) of Fig Tree's intention to seek an assignment of the WMSAs'. I do not accept this submission. Fig Tree submits that Mr Lewski's statement that '... the first time anyone had directly told me of Fig Tree's intention to seek an assignment of the WMSAs' is a 'ridiculous one' and 'utterly inconsistent with the objective evidence', in particular, 'the final PDS and its various previous iterations'. I do not accept this submission. The evidence given by Mr Lewski was of being 'directly' informed of Fig Tree's intention. While it is true that the professional advisors made reference to assignment in the PDS which he approved, I take Mr Lewski's evidence on this topic to mean that no one from Fig Tree had directly told him of the intention to seek an assignment of WMSAs. That indeed is what he said. There is no evidence inconsistent with such a statement. When it is understood in that way, the evidence is entirely plausible. Fig Tree also attacks Mr Lewski in relation to his understanding following the 15 August 2007 meeting. Specifically, Fig Tree point to the evidence of Mr Lewski that it did not occur to him following the 15 August 2007 meeting that SCV would change the way in which the villages were operated. Referring to his state of mind at 13 September 2007 (almost a month later), he said that he 'did not realise that SCV Group also proposed to change the village arrangements regarding how food was to be prepared, the terms and roles of the on-site managers ...'. Fig Tree contends that these propositions cannot stand given Mr Lewski's 'concessions' during cross-examination that he had received, prior to the 15 August 2007 meeting, the community summary reports. However, this overlooks the fact that the community summary reports both in the view of Mr Lewski and in objective fact did not descend to the detail in relation to the breaches of which Prime complains and their effect. Mr Lewski said that the 13 September 2007 letter was the first correspondence which made him think that Fig Tree intended no longer to perform the WMSAs and that it confirmed to him that SCV had been in operational control for some time. Fig Tree contends that these statements are 'utterly disingenuous' when compared with the objective evidence of the final PDS. In my view, once again, Fig Tree misses the point which has been made by Mr Lewski. It is a big leap from the minor disclosure on which Fig Tree seizes to a clear revelation of the matters which constituted the breaches. Mr Lewski himself, in my view, clarified these matters and not in a manner as contended for by Fig Tree which was 'unintelligible' although I do accept that it was slightly confusing. It was reports as to the actual manner of implementation which was also the subject of complaint by Prime. Mr Lewski repeated this again in a different way in cross-examination speaking about the middle of October being the first realisation of what was ' physically being implemented in the Fig Tree villages operationally ' (emphasis added). I reject Fig Tree's submission that Mr Lewski's evidence should only be accepted if it is relevantly corroborated by other reliable evidence. Mr Lewski did not profess a perfect memory. Nor did he present as an advocate for Prime's cause. His evidence was plausible and in my view, candid. Similar attacks were made on Mr Bosel. Again, I consider that Mr Bosel, like Mr Lewski, gave credible and plausible evidence which I accept. Fig Tree pleaded affirmation. Fig Tree, accordingly, has the onus of proving it. The onus of demonstrating that the non-defaulting party is precluded from relying on the breach to terminate the contract rests on the party that is in default --- Cockerill v Westpac Banking Corporation Ltd (1996) 142 ALR 227 at 279 per Cooper J. My view is that Prime never had sufficient knowledge to be put upon its election; that it was never confronted with two inconsistent alternatives; that it never unequivocally adopted the WMSAs by its own actions; and that it never communicated any affirmation of the WMSAs notwithstanding the breaches. Fig Tree relies on a chain of documents in the months leading up to the purported termination by Prime. It says those documents taken together clearly demonstrate that Prime had sufficient knowledge to be put upon its election. I have also indicated why I do not believe that is so but insofar as knowledge is concerned, it is not sufficient in my view for Fig Tree to say that Prime's witnesses should not be believed and a Jones v Dunkel inference should be drawn in relation to those whom it did not call. Even in relation to knowledge, the onus is on the party in default who relies on the pleaded affirmation. The innocent contracting party must be 'confronted' with two mutually exclusive courses of action between which it must in fairness to the delinquent party make a choice --- Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [224] - [225] . There cannot be a confrontation of that nature unless the innocent party has knowledge on which to elect. It has been said that the quality of that knowledge must be 'full knowledge' --- Sargent [1974] HCA 40 ; 131 CLR 634 at 642. The majority of the High Court said in Immer (No 145) [1993] HCA 27 ; 182 CLR 26 at 39 that 'the consequences of election may well be serious for the party electing; in particular, election involves the abandoning of a right that is available'. Knowledge is required not only of the facts but of the circumstances surrounding the facts: Sargent at 642. It has also been said election is not to be lightly inferred. Rares J in Hoy Mobile Pty Ltd [2008] FCA 810 at [257] indicated that there must be 'full and frank disclosure' before a party can be put in a position where an election was necessary. While Prime does not advance a case that Fig Tree has not been frank in its disclosure, it has certainly pointed to significant matters of which Fig Tree was aware but which were not conveyed to Prime. They are matters of which Prime was not aware and matters of which Prime would need to be aware in order to have the necessary knowledge in order to elect. The proper inference on the evidence from Fig Tree's own perspective was that it would not have treated Prime as having actually communicated its approval until it had signed the WMSAs enclosed in the 13 September 2007 letter. This evidence was contained in the cross-examination of Mr Dubery but quite plainly there was no act which could clearly constitute communication of the affirmation at any point. At no time prior to late September 2007 did Prime have knowledge of the true nature of the changes contemplated by the Assignment Agreement. During June and July it was told that legal documentation would be provided later. The documents were in fact provided in late September 2007. The documents reveal that Prime was expected to contract with SCV with whom it never proposed to bargain. I have concluded that Prime's complaint in part is made out. Fig Tree asserts and seeks a declaration that Prime's media release to the ASX on 4 October 2007 was misleading and deceptive conduct in trade and commerce in breach of s 52 of the Trade Practices Act 1974 (Cth). While that assertion might be considered to fail if the repudiation argument is made good, it is still necessary to examine the actual complaint about and content of, the media release. This is to be done against a background of my conclusions on repudiation. It is necessary to examine the text of the media release which Prime forwarded to the ASX on 4 October 2007. These properties represent a relatively small component (circa 6%) of gross income flows to Prime Trust. Earlier this year Village Life Ltd announced it had sold its management rights to SCV Group Ltd and shortly thereafter SCV Group Ltd announced that it had taken operational control of these premises . It is not the intention of Prime Trust to consent to the assignment and we consider each WMSA to be repudiated. Similarly, no adverse impact on returns to Prime Trust unitholders from this action is anticipated. There is a merger of two concepts in the complaints raised by Fig Tree. One is the complaint that the media release wrongly suggests that there was a repudiation by an unconditional assignment agreement. I have already held that entry into the Assignment Agreement alone was not, in my view, a repudiation because on a proper construction of the Assignment Agreement, it was subject to obtaining the consent of Prime. While I recognise that Prime advances an argument that under the Assignment Agreement Fig Tree was implicitly obliged to assign the rights in any event whether or not consent was obtained, I do not accept that this is the better construction of the agreement. As indicated, in my view, there was an obligation for Fig Tree to use its reasonable best endeavours to obtain Prime's consent but it is most unlikely that SCV would have considered itself bound to proceed with the Assignment Agreement if the consent was not obtained. However, insofar as the media release is concerned, I do not believe that it does suggest that Fig Tree assigned its rights and responsibilities without obtaining consent. First, it refers to Fig Tree making an announcement of its sale of rights and then it refers to Prime informing Fig Tree that it could not do so without obtaining consent. It then says that Prime will not consent and it goes on to say 'we consider each WMSA to be repudiated'. All of that is correct until the last quoted portion which is clearly a statement of opinion in any event. But it would be artificial to assert that the media release represents that by entry into the Assignment Agreement alone, without first obtaining consent, was a repudiation. The emphasised words '... and shortly thereafter SCV Group Ltd announced that it had taken operational control of those premises', make it clear that the release as a whole and taken in context is directed to the actual events at the villages, not simply the sale of rights. It was true that SCV had taken operational control, it was true that SCV made an announcement to that effect and significantly, it was the taking of operational control by SCV, that is to say, by Fig Tree relinquishing operational control (particularly in relation to the food component of the Village Life System) to SCV which constituted the repudiation. It was the practical operational control being relinquished by Fig Tree to SCV in a manner which failed to ensure that the villages would be managed on an ongoing basis in accordance with the Village Life System which constituted a renunciation or a repudiation. Accordingly, the content of the media release was correct. Prime seeks an order for specific performance to enforce that requirement. Prime argues that Fig Tree must be held to the terms of the WMSAs and be required to reinstate all of the arrangements which were presented as constituting the Village Life System prior to July 2007. The same factual issues are reiterated in support of this submission. In this context, it is irrelevant that Fig Tree in February 2008 purported to 'take back' or 'resume' its management of the villages. As was held by Barwick CJ in Ogle v Comboyuro Investments Pty Ltd [1976] HCA 21 ; (1976) 136 CLR 444 at 452-453, a repudiation cannot unilaterally be withdrawn. The Chief Justice followed that observation with the remark that only a consensual act could do so. In support of these contentions Fig Tree says that Prime, in seeking that the pre-July 2007 practices be reinstated and remain in place for some 20 years is seeking a dangerously unrealistic order. Fig Tree says that it may be presumed that there will be changes to health and hygiene issues, food service and other aspects of managing a retirement style village in the future. Some of those changes may be imposed by legislation. Others may arise because of an increased knowledge and understanding in the areas of medicine and food research, especially nutrition. Further, as it is entitled to do, Fig Tree argues, Fig Tree itself might determine that modifications to the Village Life System will improve the services it can offer Prime as manager. Prime's order proposes that Fig Tree not be permitted to modify the Village Life System to take into account any of those matters and remain fixed for the next 20 years in 2007. Fig Tree contends that such an order would be dangerous because it would have the capacity to expose Fig Tree to penalties or, indeed, to expose residents to health risks that could have been avoided had Fig Tree not been so restricted. Secondly, such an order for specific performance would give rise to uncertainty on the part of Fig Tree as to precisely what would be permitted and what would not be permitted. Would it be permitted to modify the Village Life System at all in accordance with the existing WMSAs? Fig Tree argues that a good example of uncertainty which Fig Tree would face arises in relation to the conditions of tenancy. Fig Tree argues that a critical deficiency in Prime's approach to the application for specific performance lies in the lack of articulation of the practices which it says must be reinstated and must remain in force for the duration of each WMSA. Although it is unnecessary to resolve the issue in light of my conclusion that Fig Tree has repudiated the WMSAs, if I am wrong on that conclusion, I record that I would accept Fig Tree's submissions and I would not have ordered specific performance for the reasons advanced. As the media statement by Prime was, as I have found, accurate, it is unnecessary to consider this additional defence. In the recitals to each of the WMSAs, Prime's objective is recorded as being to obtain the benefit of maximising the return on its investment by having each village managed under the Village Life System. This passage makes it clear, objectively, that Prime made a decision to contract with Fig Tree because it would manage in accordance with the Village Life System. It chose to do that not simply to ensure that rental income would not fall below the minimum level at which it could terminate but rather to ' maximise the return on its investment ' by having the villages managed under the Village Life System (emphasis added). By causing the significant changes to the food delivery services to be implemented, Fig Tree manifested an intention, regardless of the terms of the Assignment Agreement to no longer be bound by its obligations under the WMSAs to manage the villages in accordance with the Village Life System. Fig Tree's conduct in practically handing over the management of these food services to SCV amounted to a serious breach of an important intermediate term (to manage the villages in accordance with the Village Life System). Insofar as delivery of food to residents in the villages was concerned, the breach of the obligation to manage the villages in accordance with the Village Life System was a serious breach. It was a serious breach of an intermediate or innominate term. This conduct entitled Prime to treat Fig Tree's breach as constituting a repudiation. Its acceptance of the repudiation and thus terminating the contract was justified. My analysis of the facts as presented by the evidence is that whatever the contractual obligations under the Assignment Agreement, Fig Tree in reality was simply walking away from its obligation to manage the villages in accordance with the Village Life System. It was handing over control to SCV in a manner which precluded Fig Tree having any practical ability to deliver management of the villages in accordance with the Village Life System. Because the Assignment Agreement required Prime's consent to the assignment, entry into the Assignment Agreement taken alone, was not the renunciation but walking away from its obligations after entry into the Assignment Agreement and before the consent of Prime was obtained and in a manner in which no capacity to deliver management in accordance with the Village Life System was maintained, indicated an intention to no longer be bound by the obligation under the WMSAs to manage the villages in accordance with the Village Life System. Accordingly, Prime is entitled to the declaratory relief it seeks. Fig Tree's claim must be dismissed. (b) Subject to subparagraph (a), the Confidential Annexure to these reasons is not to be shown or released to any person by the parties or their advisers. (c) The parties have liberty to apply within 21 days to vary the terms of these confidentiality orders. The application be dismissed. The cross-claim is allowed in part. Unless any other order is made within six weeks, and subject to receipt of written submissions from the parties to be filed and served within 21 days, the applicant is to pay the costs of the respondent to be taxed if not agreed. Orders 2, 3 and 4 be stayed for a period of 14 days. I certify that the preceding two hundred and eighty-nine (289) numbered paragraphs and the following paragraphs [290]-[312] Rulings and Objections and paragraphs [313]-[322] Confidential Annexure B are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Witness gives direct evidence of operation of the system in one Village: provides a basis for inference as to operation of system generally. Objection withdrawn Ruling unnecessary Paragraph 3 Relevance. Breach of the hearsay rule as to the 3 rd sentence. Relevant to establish importance of food service (see also eg., Independent Contractors' Manual, Module 8). Not hearsay: direct evidence of making of statement, not relied on as evidence of truth of the contents. Objection maintained The statement that Village residents would be provided with three fresh meals each day and all their laundry would be done cannot be evidence as to the truth of the statement being hearsay. The fact that the statement was made nevertheless can be admitted as going to the importance of the food service to a resident and to the managers. That is capable of being relevant to the seriousness of any breach and/or the importance of the term requiring compliance with the Village Life System. The second sentence has been struck out by consent. The balance of the paragraph is simply an expression of a state of mind, belief or opinion which is neither admissible or relevant. Paragraph 5 As to the third sentence: relevance and impermissible means of the proof of the contents of documents. Direct evidence of reading and source of documents. Objection maintained The objection is upheld on the basis that it is secondary evidence of the contents of a document. The brochures are in evidence and it is an obvious inference that they are used to promote the services which Village Life were offering. Whether those services include the services to which the witness deposes is simply a matter of reading the document. The contents of this paragraph express the views of a retirement village manager. The views are on the topic of the consequences of the alleged breach. That is an issue which is capable of going to the seriousness of the term said to be breached if the term is an intermediate term. First two sentences: Direct evidence of quality of food. So far as opinion, legitimate lay opinion. Third sentence: direct evidence of seriousness of impact of SCV changes. Objection maintained Objection disallowed. The opinion on the quality of the food and the consequences of the food which was served, in my view, can be expressed by a village manager who is the person charged with the responsibility of that issue. Paragraph 9 Breach of the opinion rule and breach of the hearsay rule. And, as to the material which refers to un-named residents leaving because they had researched unidentified media reports relating to SCV, relevance. Since this objection was taken, the respondent has served a notice pursuant to section 67 Evidence Act in relation to the hearsay evidence contained in this paragraph of the Dean affidavit. The applicant does not press the objection insofar as it relates to the hearsay evidence in this paragraph but otherwise, maintains its objections. Objection is maintained other than in relation to hearsay evidence; no submission has been made by Prime to support admission of evidence The hearsay objection having been withdrawn, the objection on the basis of opinion will be disallowed for reasons previously expressed concerning par 8. As to the material referring to un-named residents leaving because they had researched unidentified media reports relating to SCV, there is an objection on the grounds of relevance. Given the identification of that particular topic within par 9, the passage '... and also because of media reports relating to SCV which they had researched. ' will be struck out of par 9 on the grounds that it is not relevant to any pleaded issue. Paragraph 10 Relevance; breach of the hearsay rule. Strike out paragraph Paragraph struck out by consent No ruling necessary. Paragraph 13 Relevance [ erroneous reference: affidavit stops at par.10 ] This was an erroneous reference; it should have been paragraph 13 of the first Dean affidavit. A response from the respondent's counsel has been sought to the objection to paragraph 13 of the first Dean affidavit but none has been provided. This is an incorrect reference and was raised in relation to par 13 of the first Dean affidavit on which I have ruled above. There was objection to the balance on the grounds of relevance. I will take into evidence the first, second and fourth sentences which in my view are relevant to the pleaded issues. In relation to the remainder of the paragraph concerning the garden and the linen service the objection on the grounds of relevance will be allowed. Paragraph 11, from the words "On or around 3 September 2007" onwards Relevance Relevant to show Fig Tree conduct in transferring responsibilities (including responsibility for engagement of managers) to SCV. Objection maintained The passage 'On or around 3 September 2007' onwards contains material which is irrelevant to the pleaded issues except to the extent that it establishes that Fig Tree had transferred management responsibilities, specifically the responsibility for the engagement of managers to SCV. However, as that is well established by other evidence including Fig Tree's own evidence, I would allow the objection on the grounds of relevance. Paragraph 12 to 22 As to the entirety: relevance. Strike out last two sentences of paragraph 12 Last two sentences of paragraph 12 struck out by consent. Objection is maintained to remainder of paragraph 12 and to paragraphs 13 to 22; subject to below, no submission has been made by Prime to support admission of remainder of paragraph 12 or paragraphs 13 to 22 The last two sentences of par 12 have been struck out by consent. I would have allowed the objection in relation to that material. As to the balance of these paragraphs, Prime has made no submission to support the admission of the remainder of the material in par 12 or in pars 13-22. The objection is raised on the grounds of relevance only. I consider that the first sentence in par 12 is relevant. I consider that the balance of par 12 is relevant to the pleaded issues, as is pars 13 and 14. Paragraphs 15 and 22 have been struck out by consent. I consider that the balance of the paragraphs to 22 are relevant to the pleaded issues, namely the nature of the food delivery service. There are additional objections on different grounds raised in relation to some of those paragraphs. Paragraph 15 Relevance; breach of the hearsay rule. Strike Paragraph struck out by consent No ruling necessary Paragraph 16 Relevance; breach of the hearsay rule; breach of the opinion rule. Strike out first sentence and last three sentences of paragraph 16 First sentence and last three sentences of paragraph 16 struck out by consent. Objection is maintained to remainder of paragraph; no submission has been made by Prime to support admission of remainder of paragraph The last three sentences of par 16 have been struck out by consent. Objection is maintained on the grounds of relevance on which I have ruled, breach of the hearsay rule and breach of the opinion rule in relation to the balance of par 16. There is no obvious hearsay as such. It is on the face of the matter a statement of observation and then a legitimate expression in accordance with my previous ruling as to an opinion. The exception to this is the expression of belief that the residents are especially vulnerable to food poisoning. To the extent that there is an expression of belief as the vulnerability of food poisoning, the objection will be upheld as a breach of the opinion rule. There is no expertise in health science established as would be necessary. Paragraph 17 Relevance Direct evidence of effect of SCV food changes. Direct evidence of making of statements; not relied on for truth of contents. Objection maintained See 24. above Paragraph 22 Relevance and breach of the opinion rule Strike out paragraph: see cross-examination of Kratzke & Nash to same effect. Paragraph struck out by consent No ruling needed Paragraph 26 Relevance; impermissible means of the proof of the contents of documents; breach of the opinion rule Strike save for last two sentences (direct evidence of effect of changes to managers' conditions; witness is qualified by training and experience to opine on matters important to morale and culture at Village). Objection maintained to last two sentences; remainder of paragraph struck out by consent All but the last two sentences of this paragraph have been struck out by consent. The last two sentences read 'as Ron and I are not paid by SunnyCove on a per unit basis, there is no incentive for us to try to maintain full occupancy of the village. Arguably it is in Ron's and my interest to allow occupancy levels to decrease as we will need to do less work to earn our weekly salary, however, I believe that it is important for the morale and culture of the village that it remain full'. The objection will be allowed. Paragraphs 29 - 32 Relevance Relevant: see eg., Prime Defence par.39(d) at particulars (iv) Objection maintained The objection in relation to par 29-32 is that it is not relevant to a pleaded issue. Technically, in my view, the evidence is relevant to pleaded issues specifically the Prime defence at par 39(d), particular (iv). On the other hand, the evidence is fairly peripheral to the main case advanced by Prime. The weight to be awarded to the evidence would be limited but the objection will be disallowed. Paragraphs 7(c) to 7(e) Relevance and breach of the opinion rule. As to the third sentence in 7(e) breach of the hearsay rule. Since this objection was taken, the respondent has served a notice pursuant to section 67 Evidence Act in relation to the hearsay evidence contained in paragraph 7(e) of the second Donnelly affidavit. The applicant does not press the objection insofar as it relates to the hearsay evidence in paragraph 7(e) but otherwise, maintains its other objections on the grounds of relevance and breach of the opinion rule. Objection is maintained other than in relation to hearsay evidence; no submission has been made by Prime to support admission of evidence Consistently with earlier rulings as to relevance and opinion, the evidence will be allowed and the objection disallowed. Paragraph 16, second sentence Relevance; breach of the opinion rule Relevant to show effect of changes to managers' conditions. Direct evidence of witness' understanding of conditions under SCV. Contents of document are in evidence separately. Objection maintained The evidence cannot be tendered as to the truth of the belief or the correctness of the understanding of the legal effect of the contract but it is permissible as to the managers' understanding of the obligations held under SCV. Paragraph 17 Relevance Evidence of SCV role in managing Villages Objection maintained The evidence is not relevant to a pleaded issue and the objection will be allowed. Paragraph 24 Relevance Strike Paragraph struck out by consent Ruling not required. Paragraphs 37, 38 and 40 Relevance Strike par.37. In par.38, strike first three sentences and last sentence. As to par 38, this evidence will only be treated as going to the methodology of preparation of food. On that limited basis it will be allowed and the objection disallowed. Paragraph 40 has been struck out by consent. Paragraph 39 Relevance Strike out paragraph Paragraph struck out by consent No ruling required Paragraph 42 Relevance; breach of the opinion rule Evidence of SCV role in managing Villages. Direct evidence of witness' observations and understanding as to responsible entity. Objection maintained This evidence is in effect a statement of to whom the manager reports in practice and to whom the manager considers that she is answerable in practice. On that basis, the evidence will be allowed. Paragraph 5 Relevance; breach of the hearsay rule; breach of the opinion rule Strike out paragraph Paragraph struck out by consent No ruling required. Objection maintained This evidence is relevant to the importance or otherwise of food delivery and provision in the village. The objection is disallowed. Paragraph 10, final sentence Breach of the hearsay rule Strike out final sentence of paragraph 10 Final sentence struck out by consent. Objection is maintained in relation to balance of paragraph; no submission has been made by Prime to support admission of evidence The final sentence of par 10 has been struck out by consent. No ruling is required. Paragraph 12 and "JH-4" Breach of the hearsay rule Since this objection was taken, the respondent has served a notice pursuant to section 67 Evidence Act in relation to the hearsay evidence contained in this paragraph of, and this exhibit to, the Hirst affidavit. The applicant does not press the objection in relation to this paragraph and this exhibit. Objection withdrawn No ruling required. The applicant does not press the objection insofar as it relates to the hearsay evidence in this paragraph and these exhibits but otherwise, maintains its objection on the grounds of relevance. Objection is maintained other than in relation to hearsay evidence; no submission has been made by Prime to support admission of evidence The hearsay objection has been withdrawn. The objection to relevance is maintained. The evidence is relevant. It goes to the circumstances in which the managers reported matters to Mr Bosel. Fig Tree has challenged Mr Bosel's credit on the basis that it is asserted that the information he gathered was gathered purely for the purposes of litigation. This evidence goes to the circumstances of the information gathering and the reliability of the information gathered by Mr Bosel. The applicant does not press the objection insofar as it relates to the hearsay evidence in this paragraph and this exhibit but otherwise, maintains its objection on the grounds of relevance. Objection is maintained other than in relation to hearsay evidence; no submission has been made by Prime to support admission of evidence The hearsay objection has been withdrawn. The objection goes only to relevance. If the objection is only to relevance, it is disallowed. The evidence is relevant to the food issue. Paragraph 23 Relevance Relevant: see Prime Defence par.39(d) at particulars (iv) Objection maintained The objection is on the grounds of relevance. In my view, this is evidence capable of being relevant to the Prime defence par 39(d), particular (iv). Paragraph 24 Relevance and breach of the hearsay rule Strike out paragraph Paragraph struck out by consent No ruling required. Paragraph 7 Relevance Strike out second to fifth sentences ("I did not... expired"). These sentences were objected to on the grounds of relevance. These sentences appear to go to a suggestion that SCV misled managers at the forum conducted by SCV in the sense that managers were informed they would be paid on the same basis as they were paid with Village Life. I do not understand that to be part of Prime's pleaded case. Prime has not advanced any other argument as to the relevance of the particular passage. The objection will be allowed. Paragraph 9 Relevance Strike out paragraph Paragraph struck out by consent No ruling required. Paragraph 12 (except for first sentence) Relevance Relevant to show Fig Tree's role in passing management responsibility to SCV and facilitating permanent changes of managers' conditions to match SCV requirements. Objection maintained The evidence is very peripheral. It would only support, as the response to the objection suggests, the argument that SCV had taken over management control. It would appear to be clear on all the other evidence including Fig Tree's internal documentation that that is clearly so. The objection will be allowed. Also please note that pages 1157 to 1201 of volume 3 are in yellow when they should not be. Relevance; Breach of the hearsay rule Relevant: see Prime Defence par.39(d) Objection maintained The evidence is capable of going only to Prime's defence, par 39(d), (i) and (ii). On that basis the evidence will be allowed and the objection disallowed. Paragraph 15 Relevance Strike out paragraph Paragraph struck out by consent No ruling required. On the latter basis the last two sentences of par 18 have been struck out by consent. Prime has made no submission to support the admissibility of the evidence. In my view, the evidence is relevant to the food issue and the objection will be disallowed. There was detail about the complaint set out in par 13. In my view the evidence is clearly relevant. The objection on the grounds of relevance will be overruled. There is also an objection on the grounds of hearsay. This is a Prime business record. It is admissible as a business record. Paragraphs 14 and 15 have been objected to on the grounds of relevance and breach of the opinion rule. In my view there is no doubt that Mr Bosel is fully entitled to express his opinion on these topics. He has approximately 20 years experience working in aged care residential operations and management in the United Kingdom and in Australia. He has been the managing director of companies operating a number of aged care facilities in the United Kingdom in recent years. He has sat on several industry boards associated with the aged care industry. He sets out other details which fully qualify him to express the opinions contained in pars 14, 15 and 17. That material is relevant to a fundamental issue in the case as to whether or not the Village Life System is being maintained by Fig Tree or SCV and, if not, what level of importance that attracts in the contractual relationships between Prime and Fig Tree. Paragraphs 20 and 21 are objected to on the grounds of relevance. This evidence is relevant to the food issue. It is asserted that the whole of the affidavit seeks to prove the existence of facts about the existence of which the opinion was expressed (s 76 of the Evidence Act ). Mr Ludlow is a senior valuer engaged on behalf of Prime to provide an independent expert opinion. I disallow the objection on the grounds of relevance. While it is true that Prime is not claiming damages, the question of the materiality or importance of the compliance with the Village Life System is central to the question of whether, if there is a departure from that system, the departure constitutes a repudiation of the contract. Mr Ludlow's evidence goes to the question of whether or not the events which are said to have taken place at the various villages are significant or otherwise to Prime. I would accept that it is not open to an expert ordinarily to base his opinion on hearsay information received as a result of discussions held at the various villages. However, if the content of those discussions is otherwise proved in evidence, then it is open to him to express a view in relation to those facts on the assumption that the facts exist. I do not consider that Mr Ludlow's expert evidence can be taken as being evidence of facts which underlie the opinion in any way. The facts which were put to Mr Ludlow, hypothetically for his opinion were the facts pleaded by Prime in pars 39(a)-(f) of Prime's further amended defence and cross-claim. Mr Ludlow has not purported to prove that those facts have existed but he has expressed a view as to whether those changes would have a bearing upon the capacity of a retirement village to attract and retain residents. It is open to Mr Ludlow to express those views as an expert. The objection is disallowed. In doing so I make clear that I do not regard anything Mr Ludlow has said as constituting evidence of facts as distinct from expressing a view based on the assumption that the pleaded changes occurred. Should Prime fail to prove that the pleaded changes occurred, the opinion will fall away with that failure. Objection withdrawn (p 313 of transcript). Opinion not wholly or substantially based on specialised knowledge of the witness for s 79 of the Evidence Act 1995 (Cth). Paragraphs 5.1-5.3 Irrelevant: opinion evidence and not admissible under s 76 of the Evidence Act 1995 (Cth). Opinion not wholly or substantially based on specialised knowledge of the witness for s 79 of the Evidence Act 1995 (Cth). There are common directors between SCV and SCV No 1. The records of the two companies are held in the same location. Mr Minett was subpoenaed to produce documents pertaining to Prime concerning the matters at issue in this litigation. On 28 July 2008 he produced a document entitled 'SunnyCove file memo conference Prime Trust' dated 15 August 2007. Various initials appear on the top of the file memo. The file memo has been marked for identification. Mr Minett confirmed that the file memo was taken from a file called Prime Trust which is located in SCV's central office. He was unable to identify the handwriting on the document (subsequently it has been identified). Fig Tree seeks to tender the document pursuant to s 48(e)(i) of the Evidence Act as a part of business records. The tender of the document is opposed for a variety of reasons, not least of which is that there is nothing on the face of the document which would indicate that its content was communicated to anyone, let alone to Prime. It is submitted for Prime that the document could quite as easily be some internal notes of topics which the unidentified author was considering raising but never raised. As against that, Fig Tree point to the content of a letter which is in evidence dated 16 August 2007, the date after the file memo. That letter is from Christopher Bassett, Chief Operations Officer of SCV (which embraces SunnyCove) and is addressed to Mr Lewski at the Prime Retirement & Aged Care Property Trust. The initials at the top of the file memo include MR (consistent with Mark Roberts) CB (consistent with Christopher Bassett) GB, J and D. It also refers to Kim Jaques (to whom the 16 August letter was copied) and Bill (consistent with the addressee of the 16 August letter). The file memo also notes in its first line, consistent with the 16 August letter 'sample copy of tenancy agreements to Prime Trust'. It also notes on the first page of the memo 'Eliz Vale, 1 Report to Prime Trust'. In the case of a business record, authenticity may be proved in different ways. It may be proven by the evidence of a person who participates in the conduct of the business and who compiled the documents. Authentication is straightforward in the case of an author who is called, but in this instance the author is not identified. On the other hand, there is other evidence and in particular there is the evidence of the 16 August 2007 letter the contents of which are consistent with the notes contained in the file memo being prepared by an officer of SunnyCove. I am satisfied that the record is a legitimate business record for the purpose of s 48(e)(i). In expressing that view, I express no view as to the probative value of the document. The observations as to the parallels between the file memo and the letter sent the following day are drawn upon only in order to establish authenticity. As observed by Austin J in Australian Securities and Investments Commission v Rich [2005] NSWSC 417 ; (2005) 216 ALR 320 at [131] once such documents are adduced in evidence it is open for the defendants (as they were in that case) to show that they have no probative value, for example, by establishing that they were drafts not acted upon or that they were based on assumptions or scenarios not widely held within the company. As observed by Austin J, the law does not overload the authenticity requirement by including within it an obligation for the tendering party to rebut all such possibilities. Issues going to the ultimate probative value of the documents cannot be assessed and do not bear on authentication. MFI A5 will become exhibit 5. It is accepted that the Professor is a highly qualified nutritionist. Objection, however, is taken to parts of the contents of a report which she has prepared on instructions from Fig Tree. Objections were taken to a number of paragraphs on several grounds but predominantly objection is on the ground of relevance and expertise. As to expertise, s 79 of the Evidence Act entitles a person who has specialised knowledge based on the person's training, study or experience to express opinions on matters substantially based on that knowledge. Prime says that the Professor's opinions are not based on specialised training or expertise, that her opinions extend beyond her area of expertise and are not, in some instances, relevant. The Professor's experience is extensive. Apart from her formal qualifications, the Professor has supervised the professional practices for food service management for 20 years in numerous facilities. The thrust of the Professor's evidence is to comment upon the different types of food service systems, how they are described and how they are implemented and how certain expressions are used in the industry. It is not uncommon in technical fields for words which may have a common meaning in ordinary usage to take on a more particular meaning within that industry. Whether or not the views so expressed by the Professor will ultimately establish this is a different question. In my view she is qualified to express the views on those topics which are set out in her report. As to the objection on the basis of relevance, one of the issues in dispute is whether Fig Tree has breached its obligation to implement the Village Life System in relation to the provision of food and food services at the villages owned by Prime. There are several issues such as whether there is a breach, whether it is a serious breach, what is the nature of the term which has been breached and what are the legal consequences which follow from a combination of some or all of those factors. It is clear from the pleadings and the cross-examination that Prime wishes to emphasise both the practical and legal importance of compliance with the Village Life System in the context of food services. The evidence of the Professor in my view is relevant to the issue of the degree of compliance that was necessary and the degree of compliance and manner of performance which might in a practical setting be reasonably expected. The proper construction of the contract will always be a matter for the Court but I consider her evidence on those topics may be relevant. The weight to be attached to it will be a matter for submission in due course. | applicant engaged to manage retirement villages under service contracts obligation to manage villages in accordance with a defined method known as the 'village life system' identifying key elements of system applicant purported to assign contracts whether consent of respondent required whether contracts had been repudiated whether breach of essential term or serious breach of an intermediate term whether applicant evinced an intention to no longer be bound by contracts whether serious breach of an intermediate term constituting repudiation whether specific performance an appropriate remedy whether affirmation of contracts by respondent whether respondent had sufficient knowledge to be put on election whether media release asserting repudiation was misleading or deceptive contract trade practices |
He arrived in Australia on 26 October 2004. On 24 November 2004 he lodged an application for a protection (class XA) visa. On 7 December 2004 a delegate of the first respondent refused the application for a protection visa. 2 On 24 December 2004 the appellant applied for a review of the delegate's decision to the Refugee Review Tribunal ('the RRT'). In a decision handed down on 9 March 2005 the RRT affirmed the decision of the delegate not to grant a protection visa. On 31 March 2005 the appellant applied to this Court for judicial review of the decision of the RRT. On 20 April 2005 Emmett J transferred the proceeding to the Federal Magistrates Court. The Respondents have not considered the evidence which is in favour of Applicant. They have only considered the evidence which is not in favour of Applicant. I say that such denial of natural justice has seriously deprived me of my chance of success to be recognized as a refugee that Australia has a duty to protect. He said he was detained on 26 February 2003, beaten and interrogated. He was, he said, forced to sign a statement that he would not be involved in unregistered religious activities. The detention was said to be the consequence of a police raid upon the home church of 'Priest Zhao' with whom the appellant and his parents were accustomed to worshipping in the Christian faith. Fifteen people, he said, were arrested. Priest Zhao was sent to a labour camp. 5 None of this information was supported by any other material. An assessment of the appellant's claims depended, therefore, on an assessment by the RRT of both the ingredients of the appellant's claims and his overall claim to be in danger of religious persecution if he returned to China. The RRT summarised the discussion it had with the appellant about his claimed Christian faith, his detention and interrogation, a suggestion he made that he was required to report daily to the police and any steps he had taken to practice the Christian faith in Australia in the atmosphere of religious tolerance which he claimed he sought. 6 The RRT concluded that his claims should not be accepted. It was not satisfied he was a Christian by faith. It was not satisfied he had been detained for three days and beaten. It remarked that there was no claim that in the 20 months since February 2003 there was any further instance of detention, or that his wife (who with his children remained in China) had been questioned about him. The RRT also made findings that the appellant had embellished his claims and was not a credible witness. It was not satisfied that the appellant was a person to whom Australia owed protection obligations under the Refugees Convention. 7 The RRT is obliged by s 430 of the Act to give reasons for its decision, set out its findings on any material questions of fact and refer to the evidence on which the findings of fact are made, but findings as to credibility (whether generally or as to particular matters) and as to satisfaction that a claim for refugee status should be accepted are matters for the RRT, unless some jurisdictional error is shown. The merit aspects of such findings are not judicially reviewable (see Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1 ; (2000) 74 ALJR 405). 8 Lloyd-Jones FM dismissed the appellant's application for judicial review upon the foundation that the particulars in ground 4 of the amended application did not identify any legal or procedural errors. The respondents denied my natural justice by not considering the context in which I will face persecution and serious harm for being an underground Christian church member in China. The respondents have not considered the evidence which is in favour of me. They have only considered the evidence which is not in favour of my application. The Tribunal breached s 422B of Migration Act 1958 ('the Act') and the rule of natural justice in connection with the making of the decision. RRT's decision is in breach of s424A and s441A of the Act. The Tribunal cited a couple of Country Information and made decision based on these information. But the Tribunal failed to give me the important information, completely and clearly, before the hearing which have been used as the reason or part of the reason, for affirming the decision that is under review, by one of the methods specified in s441A of the Act. The Tribunal failed to ensure me to well understand why the information, is relevant to my review. It is because of the reason mentioned above that it is impossible for me to have a fair chance to comment on the above information before and after hearing in writing or during the hearing verbally. The Tribunal used my personal particular information which I gave to the Tribunal, as the reason, or part of the reason, for affirming the decision that is under review. But the Tribunal did not comply with s424A of the Act to ensure me, as far as is reasonably practicable, to understand why it is relevant to my review. The Tribunal failed to invite me, by one of the methods specified in s441A of the Act, to comment on such personal particular information. Also, the Tribunal has obviously ignored the fact that it is almost impossible for the interpreter, at the hearing, to accurately and clearly translate relevant Independent Country Information or the information used by the Tribunal to assess my review application with special religious terms; it is definitely impossible for me to make a complete comment on such information without a full and good understanding. I say that there are procedural errors in Tribunal's decision constituting an absence of natural justice. 11 I shall deal briefly with the allegations of error by the RRT set out in the grounds of appeal as filed. They each fail to address the central difficulty for the appellant; namely, that he was not believed about his individual or overall claims. 12 Grounds 1 and 7 were assertions of procedural unfairness. They do not disclose any matter of substance. 13 Ground 2 should not be accepted. It is clear that the RRT did not accept the appellant's claims but there is no basis to suggest it did not consider them. 14 Ground 3 misconceives the effect of s 422B of the Act, which is to codify the requirements of natural justice in relation to hearings of the RRT. 15 Grounds 4, 5 and 6 wrongly state the effect of s 424A and s 441A of the Act. Section 424A does not require that an applicant be given general country information for comment, nor be invited to further comment on material advanced by the applicant to the RRT in support of claims. Section 441A had no role to play in these circumstances. 16 Prior to the hearing of the appeal the appellant filed a document, entitled 'Applicant's Outline of Submission'. Aside from formal parts it was relevantly indistinguishable in its content from grounds 3-5 of the amended application for judicial review which was dealt with by Lloyd-Jones FM. Like the grounds in the notice of appeal filed in this Court, no allegation of error in the judgment of Lloyd-Jones FM was advanced. On 15 July 2005, the applicant filed an amended application in accordance with the orders made by Emmett J on 20 April 2005. The Respondents have not considered the evidence which is in favor of Applicant. They have only considered the evidence which is not in favor of Applicant. At least, the network is still able to help a PSB wanted people to obtain a passport traveling overseas, because it is a short-term action, which usually will not be found out by authorities. In respect of particulars (i), (ii), (vi) and (ix), the applicant contends that the Tribunal's reference to country information constituted a failure to comply with s.424A(1) of the Act. Mr Jordan submits that this contention must be rejected because the country information falls within the exception in s.424A(3)(a): Minister for Immigration v NAMW [2004] FCAFC 264 ; (2004) 140 FCR 572 at [66] --- [74], [125] --- [138]; WAJW v Minister for Immigration [2004] FCAFC 330 at [43] --- [46]; QAAC v Refugee Review Tribunal [2005] FCAFC 92 at [20] --- [30]. Particulars (vii) and (viii) claim that the Tribunal failed to ensure that the applicant understood the relevance of the above mentioned country information during its hearing, which led to him not having a chance to comment on that information. This complaint does not identify a jurisdictional error. In relation to the disclosure of country information relied upon by the Tribunal, s.424A of the Act satisfies the natural justice hearing rule as pursuant to s.422B of the Act. Section 422B came into effect on 2 July 2002 and applies to applications for review lodged after that date pursuant to Schedule 1, Item 7 of the Migration Legislation Amendment (Procedural Fairness) Act 2002 (Cth). The application for review in this matter was lodged with the Tribunal on 24 December 2004: see Minister for Immigration v Lay Lat [2006] FCAFC 61 ; (2002) 151 FCR 214 at [66] --- [70]. Mr Jordan submits that the country information and its relevance were squarely raised by the Tribunal during its hearing: CB 59. Particulars (iii) and (xii) assert that the country information was too old to be relied upon by the Tribunal and therefore out of date. Mr Jordan submits that this assertion cannot be sustained because there is no evidence to suggest a change in circumstances in the PRC which affects the relevance of the information. Moreover, a failure to find and obtain the most up to date factual information available does not constitute jurisdictional error. The circumstances of this case are not comparable to those considered by the High Court in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 ('Peko-Wallsend'). In that case the Minister had ignored material, of which he had actual or constructive knowledge, that might have had a direct bearing on the justice of the decision that the Minister was required to make. Peko-Wallsend is not an authority concerning the failure to seek or find material supportive of an applicant's case. Particulars (iv) and (v) traverse the merits of the Tribunal's decision and, as such, do not articulate any jurisdictional error. A merits review is not available in these proceedings . Nor is it the task of this Court to conduct a rehearing of the merits. This has been explained on numerous occasions, in particular by Allsop J in SZDFO v Minister for Immigration [2004] FCA 1192 and NARE v Minister for Immigration [2004] FCA 554 and by the Full Federal Court in NAAH v Minister for Immigration [2002] FCAFC 354. Particular (x) complains that the Tribunal ignored the fact that it is almost impossible for an interpreter, at a Tribunal hearing, to accurately and clearly translate country information. This complaint is without basis because there is no evidence to suggest that the Tribunal's reference (during the hearing) to short extracts of the country information presented any difficulty for the interpreter. The Tribunal hearing record is silent on this issue and a transcript of the hearing was not filed as evidence in this Court. The absence of a transcript makes it extremely difficult for the applicant to sustain this ground of review. Particular (xi) asserts that procedural errors affecting the Tribunal decision which constitutes a denial of natural justice. Mr Jordan submits that in the absence of further particulars, and in light of s.422B of the Act, there is no basis for this assertion. I accept the submissions made by Mr Jordan that the Tribunal's findings were open to it for the reasons it gave and do not disclose any legal or procedural errors. In particular, the obligation under s.424A(1) did not arise because the Tribunal's findings were based upon information advanced by the applicant for the purposes of his application to the Tribunal, comprising his evidence at the hearing (CB 58-60) and the contents of his passport (CB 40, 60.9). Therefore, the exception in s.424A(3)(b) of the Act applied. 19 I see no error in the way Lloyd-Jones FM dealt with the appellant's arguments. None was specifically suggested by the appellant. 20 I accept the submission made by Mr Reilly, who appeared for the first respondent, that each of the matters relied upon by the appellant as set out in the written submission were dealt with by Lloyd-Jones FM and that each of his contentions must be rejected for the reasons given by his Honour. 21 As no error in the judgment of Lloyd-Jones FM is established and no jurisdictional error in the RRT decision is established the appeal must be dismissed. It should be dismissed with costs. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | protection visa no denial of natural justice no failure to provide an opportunity to comment on material no jurisdictional error migration |
2 Early cases, such as Richardson v Hastings (1884) 7 Beav 354 and Reynolds v Godlee (1858) 4 K & J 88, state that discovery may be refused unless the party gives an undertaking that the documents would not be used for any purpose other than the action then proceeding. The principle was stated in Bray on Discovery (1 st ed, 1885) at 238: "A party who has obtained access to his adversary's documents under an order for production has no right to make their contents public or communicate them to any stranger to the suit ... nor to use them or copies of them for any collateral object ... If necessary an undertaking to that effect will be made a condition of granting an order ...". An express undertaking is not now required. It is to be implied in every case: Alterskye v Scott [1948] 1 All ER 469. The modern statement of the rule is to be found in Harman v Secretary of State, Home Department [1983] 1 AC 280. 3 What is the reason for the rule? The purpose for compelling discovery is to enable the court to get at the truth. This is more important than the right to privacy. But, privacy is only to be overridden for the limited purpose of the action. Privacy still requires protection against the use of documents otherwise than for the action in which the documents are disclosed. 4 At first sight, the application of the rule seems to be clear. On closer examination, however, the boundaries of it are somewhat uncertain. In this case, for example, the plaintiffs were not sure whether they could produce discovered documents to IMF and approached the court for the necessary permission. 5 The purpose for providing the documents to IMF is as follows. IMF is in the business of funding litigants. Under its agreement with the plaintiffs, IMF is required to pay the plaintiffs' costs and disbursements reasonably incurred in commencing and prosecuting the action and to pay any costs orders made against the plaintiffs. IMF is, however, entitled to terminate its obligations upon seven days notice. IMF's investment protocols provide that a claim should not be funded or funding continued unless it considers that the claim has sufficient prospects of success. Hence it keeps funded cases constantly under review. It is not, however, possible for IMF to properly review any case (or at least many cases, of which this is one) unless it has access to discovered documents. The question is whether the use of documents for that purpose is for a purpose that is foreign to the action. 6 The view that I take is that the implied undertaking does not prevent absolutely a party giving discovered documents to a non-party. There are circumstances in which a party has a legitimate interest in disclosing discovered documents to a non-party. Obvious examples include showing a discovered document to an actual or prospective witness or to an expert non-witness. Of course that is permissible; because in each case the document is being used for the action. There are also cases where a non-party has a legitimate interest in seeing discovered documents. I have in mind, for example, a parent company whose subsidiary is involved in litigation to which the parent is not a party. Or take the case of an insured person whose insurer has not assumed the conduct of an action and the insured wishes to keep his insurer informed of what is going on in a case where he claims to be indemnified. I have never heard it suggested that in those instances it would be wrong to hand the documents over. No doubt this is what occurs every day, without anyone believing that it is necessary to approach the court for permission. The reason permission is not required is that the provision of the documents is not for an ulterior or foreign purpose. Another way of putting it is that the non-party is not a true stranger to the action. 7 The private interests of the opposite parties are not affected if the documents are handed over. This is because the implied undertaking will bind any person to whom the documents are given ( Distillers Co (Bio-Chemicals) Ltd v Times Newspapers Ltd [1975] 1 QB 613; Sofilas v Cable Sands (WA) Pty Ltd (1993) 9 WAR 196, Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316) at least once he is aware that the documents have been obtained by way of discovery (P Matthews & H Malek, Disclosure (2 nd ed, 2000) at [13.09]). 8 IMF is not a stranger to the action; it has a sufficient interest to be provided with discovered documents, at least those documents it needs to assess the merits of the action. In any event, were I wrong in this conclusion, I would have granted the plaintiffs leave to make the documents available. | discovery implied undertaking not to use discovered documents for a collateral or ulterior purpose whether discovered documents may be provided to a person funding the action practice and procedure |
In this proceeding the Corporation challenges the decision of the Tribunal on review of one of those determinations. The relevant decision of the Tribunal was to set aside a determination of the Corporation, made on reconsideration of an earlier determination, that the Corporation had no present liability to pay compensation to Ms Barry under s 16 and s 19 of the SRC Act. 2 For the reasons set out below the decision of the Tribunal to set aside the determination of the Corporation will itself be set aside and the matter to which the decision relates will be remitted to the Tribunal for further consideration. On 24 October 2003 she signed a claim for rehabilitation and compensation in respect of an injury that she claimed occurred on 20 October 2003. She asserted that she injured her back when a pannier bag on her motorcycle caught on a tree while she was delivering mail. On 10 November 2003 the Corporation 'accepted liability under section 14(1) of the SRC Act 1988 for acute left sided low back pain (mechanical). Ms Barry sought reconsideration of that determination under s 62 of the SRC Act. On 9 September 2005, following reconsideration of the determination, the determination was affirmed. The decision made on 9 September 2005 was a decision which the Administrative Appeals Tribunal had jurisdiction to review on the application of Ms Barry (s 64 of the SRC Act). The Tribunal did not have jurisdiction to review the decision made on 17 August 2005. 5 Ms Barry applied to the Tribunal for review of the decision made on 17 August 2005. It appears, however, that all concerned have treated this application as an application to review the decision made on 9 September 2005. Part II of the Act, which is comprised of s 14 --- s 33, contains the principal provisions concerning liability to pay compensation. 7 Section 14 creates a liability in Comcare to pay compensation in accordance with the Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment. It appears that Australian Postal Corporation has accepted the liability under the SRC Act which would otherwise fall on Comcare for payments in respect of injury, loss or damage suffered by its employees (s 98A). 8 Section 4 of the SRC Act defines 'injury' to mean, relevantly, an injury suffered by an employee arising out of, or in the course of, the employee's employment. The same section defines 'impairment ' to mean '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. 10 Section 19 provides for an employee who is incapacitated for work as a result of an injury to be paid an amount of compensation calculated as required by the section. There are certain employees who are excluded from the operation of s 19 and relevantly covered by other sections of the SRC Act. However, Ms Barry is not an employee who is excluded from the operation of s 19. 11 Section 24 gives an employee an entitlement to compensation in respect of an injury where the injury results in a permanent impairment. The Corporation challenged Ms Barry's credibility generally. It also challenged the reliability of the accounts given by her of how she sustained an injury on 20 October 2003 and of the symptoms which she thereafter experienced. The Corporation placed reliance on apparent discrepancies between Ms Barry's evidence that she has limited physical capacity and her ability to engage in a wide range of activities as shown by a surveillance video. 13 The Tribunal published a single set of reasons for decision in respect of the three determinations reviewed by it. The Tribunal made no express finding as to Ms Barry's credibility. The reasons for decision do not always differentiate between Ms Barry's evidence and the Tribunal's factual findings. Moreover, the reasons for decision do not demonstrate a clear appreciation of the distinction between ' incapacity ' and ' impairment '. However, I think that it must be assumed that the Tribunal accepted Ms Barry's evidence of what happened to her on 20 October 2003. 14 The Tribunal reviewed the relevant medical evidence. The Tribunal noted that Dr Maxwell, an orthopaedic and spinal surgeon, and Dr McGill, a rheumatologist, were both satisfied that Ms Barry showed no degree of ' incapacity ' in the surveillance video. It also noted that Dr Zicat, an orthopaedic surgeon called by Ms Barry, agreed after being shown parts of the surveillance video that, in effect, Ms Barry's presentation on the video was inconsistent with her presentation to him on 6 October 2004. The Tribunal additionally noted that the most recent medical report dealing with the degree of Ms Barry's ' impairment ' was Dr McGill's report of 28 July 2005. Dr McGill had concluded in his report that, so far as her lumbar spine was concerned, Ms Barry's degree of ' impairment ' was 'nil' . The Tribunal observed that this assessment 'has been confirmed by viewing the video evidence. ' Yet it immediately thereafter recorded its satisfaction that Ms Barry 'has minimal impairment from her lumbar disc prolapse. ' It may be that the Tribunal meant thereby to express a satisfaction that Ms Barry had minimal, if any, impairment from her lumbar disc prolapse, as it went on to record a finding that 'any current impairment is not permanent' . This ambiguity in the reasons for decision of the Tribunal need not be resolved in this proceeding. 15 After reviewing the medical evidence the Tribunal found that the incident on 20 October 2003 made a material contribution to the later prolapse of a disc in Ms Barry's back; that is, that Ms Barry had suffered an injury as defined by s 4 of the SRC Act. 16 The reasons for decision do not include a finding that there was at any relevant time medical treatment in respect of Ms Barry's injury that it was reasonable for her to obtain in the circumstances (s 16). Nor do they include a finding that Ms Barry was at any relevant time incapacitated for work as a result of an injury (s 19). 20 Nothing in the reasons for decision of the Tribunal suggests that it gave consideration to whether the medical expenses in respect of which Ms Barry sought compensation under s 16 related to treatment that it was reasonable for her to obtain in the circumstances. It is plain that no concession was made in this regard by the Corporation. Its case before the Tribunal was that the incident on 20 October 2003 was nothing more than an aggravating incident and that, as from 18 August 2005, any disc prolapse had re-absorbed. Nothing in the reasons for decision of the Tribunal suggests that it gave consideration to whether Ms Barry was incapacitated at the relevant time for work as a result of the injury suffered by her on 20 October 2003. Again it is plain that no concession was made in this regard by the Corporation. Its case before the Tribunal was that Ms Barry's physical condition did not prevent her from returning to work. I see no reason to conclude that the Tribunal was not aware of its statutory obligation to include in its written reasons for decision its findings on material questions of fact and a reference to the evidence or other material on which those findings were based (s 43(2B)) of the Administrative Appeals Tribunal Act 1975 (Cth)). The failure of the Tribunal to include in its written reasons for decision consideration of, and findings in respect of, issues critical to the validity of its decision suggests that it overlooked the materiality of those issues. 24 For the above reasons, I conclude that the Tribunal decided to set aside the determination of the Australian Postal Corporation without having addressed the correct legal questions. Its decision thus involved errors of law (see s 5(1)(f) of the Administrative Decisions (Judicial Review) Act 1977 (Cth)). 25 I observe incidentally that it is a salutary discipline for every statutory decision-maker to refer to the terms of the relevant statutory provisions and to identify each element of the statutory cause of action. Had the Tribunal in this case set out or paraphrased in its reasons for decision the terms of s 16 and s 19 it is unlikely that it would have overlooked their critical elements. As a successful litigant the Corporation has a prima facie entitlement to a costs order. Although Ms Barry took no active part in the hearing she did not concede the Corporation's entitlement to relief. 27 However, there are circumstances which suggest that the Corporation may not be entitled to recover all of its costs. It filed an amended application at the commencement of the hearing which invoked, for the first time, the Court's jurisdiction under the Administrative Decisions (Judicial Review) Act . It was represented by senior and junior counsel when the proceeding was arguably of limited difficulty or complexity. Nonetheless, I must take into account that Ms Barry chose to take no active part in the hearing. In particular, while she was on notice that the Corporation proposed to seek leave to file an amended application, she did not instruct her legal representative to seek the usual order that she have her costs thrown away by reason of the amendment. In the circumstances, it seems fair to assume that she did not have any such costs. Nor did I receive the benefit of submissions on her behalf on the question of whether the proceeding was suitable for senior and junior counsel. 28 In the circumstances I propose to order that Ms Barry pay the Corporation's reasonable costs and leave it to the parties, or if necessary a taxing officer, to resolve the extent of the Corporation's reasonable costs. As Ms Barry advanced no submissions to the Court, and it is not clear beyond argument that the Court's jurisdiction under s 44(1) of the Administrative Appeals Tribunal Act was properly invoked (see Comcare v Etheridge [2006] FCAFC 27 ; (2006) 227 ALR 75), I prefer to make orders under the Administrative Decisions (Judicial Review) Act . The decision, including the order as to costs, of the Administrative Appeals Tribunal given on 2 June 2006 in Sydney concerning matter N2005/1246 be set aside with effect from 2 June 2006. 2. The matter be remitted to the Administrative Appeals Tribunal to be heard and decided again. 3. The first respondent pay the applicant's reasonable costs of its application to the Court. | safety, rehabilitation and compensation act 1988 (cth) appeal from administrative appeals tribunal employee suffered an injury while delivering mail australian postal corporation accepted liability to pay compensation but later determined the employee had no current entitlement to compensation under s 16 and s 19 of the act determination affirmed on review by the corporation but later set aside by the tribunal whether the tribunal erred in setting aside the corporation's determination that it had no present liability to pay compensation to the employee held: the tribunal set aside the determination of the corporation without having addressed the correct legal questions workers' compensation |
The nature of those decisions and the basis upon which they were challenged by the appellant, first in the Federal Magistrates Court of Australia ('the FMCA') and then in this Court, will be explained further. 2 Shortly before the hearing of the appeal the parties forwarded draft consent orders to the Court asking that the appeal be upheld and the matter be remitted to the RRT for further attention. A 'Statement of Matters Justifying Consent Orders' was filed in accordance with Practice Direction 26 at the same time. The point upon which the parties appeared then to be agreed had not been identified by the appellant, who had presented written submissions on her appeal on a different footing altogether. Those arguments were not addressed in writing initially by the Minister. The suggestion was based upon recent decisions of this Court but they did not seem to me to be directly in point. In those circumstances I indicated that I was not prepared to make the orders sought by the parties jointly without further argument. 6 Arrangements were then made for the hearing of the appeal to be adjourned until 26 August 2008 and for the jurisdictional question to receive further consideration and be the subject of further written submissions by the Minister. I also directed that the substance of the appeal be the subject of written submissions by the Minister. In the period thereby allowed, the Minister withdrew the concession that jurisdictional error had been committed and submitted that the appeal should be dismissed. 7 I agree that no jurisdictional error was committed by the RRT. In order to explain why that is so it will be necessary to refer to the judgment of a Full Court of this Court mentioned in the joint 'Statement of Matters Justifying Consent Orders' and examine how the principles applied in that judgment were said initially to relate to the alleged breach by the RRT of ss 424(3) and 424B of the Act when it sought some further information on 22 May 2002. Before that is done, however, I will explain why I see no error in the decision under appeal given by the FMCA where the error initially suggested did not arise for consideration because the proceedings in, and decision of, the FMCA predated the judgment of the Full Court at first relied upon by the parties. Then it will be necessary to give further attention to the question whether, as the parties initially agreed, there is an independent foundation to conclude that the RRT committed some jurisdictional error. 8 The appellant was born in, and is a citizen of, Georgia in the former USSR. She arrived in Australia on 12 April 2001 and made an application for a protection visa on 7 May 2001. On 1 August 2001 her application was refused by a delegate of the Minister. On 27 August 2001 she applied to the Refugee Review Tribunal ('the RRT') for a review of the delegate's decision. Similar applications for review had been made by two other persons who, like the appellant, claimed to have been actively involved in and affiliated with the Jehovah's Witness religion in Georgia. The RRT conducted a hearing in relation to all three applications for review at the same time. They reside at the same address in Sydney and are all represented by the same migration agent. They claim to have been employed by the one company in Georgia, and all obtained visas to come to Australia with the stated aim of attending a "Global Greens" conference, having previously applied for a tourist visa giving a different reason, and having been refused. The claims of all three are similar. They claim to fear persecution because of their Jehovah's Witness faith. The first and second applicant claim to have been introduced to the Jehovah's Witnesses while on a business trip to the USA in 2000. The third claims to have become a Jehovah's Witness in Georgia in early 2000. Because of the interrelated nature of the claims, the Tribunal elected to consider the three cases together, with their consent and with the approval of their migration agent. They said they wished to come to Australia and stay between 20 December 2000 and 18 January 2001. They all said that they were employed by a firm in Tbilisi, Georgia, and accompanying material indicated that the firm was called "Georgian Technologies Ltd." Company letterheads (some of which were in English) indicated that its address was at 142 Tsereteli Avenue Tbilisi, and that its telephone numbers were "23 04 66" and its fax number was "22 17 79. " The applications for tourist visas were refused, as the applications and supporting material indicated that the applicants were intending to conduct business for their firm whilst in Australia. Each was advised of the refusal on 30 November 2000. On 21 March 2001, each lodged an application for a business visa, indicating that the nature of their business was to attend a "Global Greens" conference in Australia between 14 and 16 April 2001, and that they intended to remain in Australia for 8 days. Their applications were accompanied by supporting documentation from the Australian organisers of the proposed Conference. These applications were approved. The RRT also referred to information it had sought from 'a senior official of the Jehovah's Witnesses in Russia, who was in contact with the church in Georgia' without identifying the applicants by name. As will be seen, a subsequent departure from preserving the anonymity of the present appellant lies at the heart of matters which have led to her appeal. 11 The RRT conducted a hearing on 21 May 2002. It took evidence from each of the applicants. Sometimes the other applicants were present and sometimes they were not. There was discussion with each of them about inconsistencies and contradictions in the evidence. It is not necessary that this detail be analysed for the purpose of the present appeal. The matters of significance arise from things which occurred while all three applicants were present and after their evidence had been taken. Therefore, the issue for it to decide in these cases was whether or not applicants were genuinely involved in the Jehovah's Witness religion in Georgia. It noted that, at their earlier interviews and at the hearing, they had displayed some knowledge of the religion and of relevant events in Georgia. However, that knowledge did not necessarily prove that they are Jehovah's Witnesses just as the Tribunal's knowledge of these matters did not make it a Jehovah's Witness. The Tribunal indicated that, when it had first examined their claims, it had been a little sceptical about how close the individual circumstances in which they claimed to have become Jehovah's Witnesses were, as the coincidences seemed unlikely. The closeness of the circumstances did not mean that the claims were necessarily false, but they did seem unusual to the Tribunal. The Tribunal had wished to have the hearing to see if it could find more information which could be checked with Jehovah's Witnesses in Georgia, they having given their individual approval for it to make detailed inquiries about them. To date, it had not disclosed their identities to anyone. It had however sought information about the existence of a congregation in the Svaneti district of Tbilisi led by a "Gogi Beridze" and which had a "Kakha Amiranashvili" among its members. It said that it had been advised by an authoritative source that leaders of Jehovah's Witness congregations were accorded the title "Presiding Overseer. " The applicants said the leader was called "senior member" or "Supervisor. " More importantly, the Tribunal said, it had been advised that there was a congregation called "Marjanishvili" in that district, but had no such people as Beridze and Amiranashvili associated with it. The Tribunal indicated that there was also a "Mestia" congregation in the Svaneti region, but those people were not associated with it either. The Tribunal said it wished to go back to its source and provide details of their names and backgrounds and asked if the applicants could provide any other information which would assist in having their claims confirmed. The Tribunal said that, if the applicants could provide any further information with which the Tribunal could approach its source again, it would do so, together with personal details about applicants. However, no such submissions were made in two months which followed. It is this communication, of 22 May 2002, which was initially said to represent a breach of jurisdictional requirements of the Act. I will return to it later. For the moment it does not affect the examination of the original foundation for the present appeal. 13 A reply to the communication of 22 May 2002 was received on 1 July 2002 saying that the three applicants were unknown to members of the congregation and providing other information which was not consistent with what the applicants had said. On 4 July 2002 the RRT wrote to each of the applicants, with copies to their migration agent, raising these inconsistencies for their comment. The Tribunal told you at the hearing, that it had received advice that the Jehovah's Witness congregation, called "Marjanishvili," in the Svanetsubani district of Tbilisi was not led by a man named "Gogi Beridze," and did not include a member called "Kakha Amiranishvili. " Since the hearing, the Tribunal wrote again to the Administrative Centre of Jehovah's Witnesses in Russia, providing personal details about you and your two colleagues. A copy of the Tribunal's letter is enclosed. The reply received by the Tribunal, a copy of which is also enclosed, confirms the earlier advice that you are not known to the members of the congregation in question, and puts forward a logical explanation for its name. As mentioned at the hearing, if the Tribunal were to accept this information, which contradicts information provided by you and your two colleagues, it could conclude that you were not associated with Jehovah's Witnesses in Georgia. The Tribunal invites your comments on this point. They made no complaint about the disclosure of their personal details but made comments about other aspects of the letter. It follows that the Tribunal rejects their claims about experiencing mistreatment in Georgia because of such an involvement. At the beginning of the last hearing I was informed that all information would be treated as confidential. It appears, however, that the Tribunal did not comply with its obligations under the Privacy Act. According to the Tribunal's decision, "The Tribunal made further inquiries with its sources in the Jehovah's Witnesses organisation in Russia, giving personal details of the applicants, referring to their comments". The reply, received by the Tribunal on 1 July 2002 also confirmers [sic] that my personal details and the fact that I applied for protection in Australia were given to Georgians. It said, "herewith we would like to provide you with further information per your request in connection with refugee applicants from Georgia. There is a congregation of Jehovah's Witnesses located in the Svanetisubani region of Tbilisi. Congregations do not keep any record of attendance by individuals at meetings, however the refugee applicants name in your facsimile of May 22, 2002 are unknown to members of this congregation". The inference I can draw from the reply is that my name and surname were mentioned during Jehovah's Witnesses' meetings. I wish to assure you that I am a Jehovah's Witness, however, I believe that not all Georgians attending meetings in Georgia are genuine Jehovah's Witnesses. I believe that there might be police informants. I believe that namely because of the inquiry the fact that I had applied for protection in Australia became known to Georgian authorities. I believe that namely this inquiry resulted in my mother's being intimidated by local militia. I also believe that because of the inquiry I will face imminent persecution by Georgian authorities if I will be removed from Australia. I am going to provide the Tribunal with evidence that my relatives have been targeted by Georgian authorities (police) because I had applied for protection in Australia. In a decision handed down on 19 December 2007 ('the second RRT decision') the RRT concluded that it did not have jurisdiction to deal with the matter further because the decision of the delegate refusing a protection visa had already been reviewed and affirmed. It referred to Jayasinghe v Minister for Immigration and Ethnic Affairs [1997] FCA 551 ; (1997) 76 FCR 301 ( 'Jayasinghe') and SZIIV v Minister for Immigration and Multicultural Affairs [2006] FMCA 322 (which followed Jayasinghe ). It is convenient to note, at this point, that unless the first RRT decision was vitiated by jurisdictional error the conclusion in the second RRT decision was clearly correct (see Minister for Immigration and Multicultural Affairs v Thiyagarajah [2000] HCA 9 ; (2000) 199 CLR 343 at [30] ). 18 On 11 January 2008 the appellant made an application for judicial review of the second RRT decision to the Federal Magistrates Court of Australia ('the FMCA'). At the hearing (at previously constituted Tribunal) I was informed that all information contained in my visa application would be treated as confidential in accordance with the Privacy Act . The Tribunal failed to comply with obligations under the Privacy Act . The Tribunal ought to take into account its failure to comply with the Privacy Act (resulted in disclose of my personal information) and accept my second review application. The decision of the Refugee Review Tribunal that it has no jurisdiction in relation to previous decision to be set aside. As already indicated, a challenge limited in this way had no prospect of success. However, it would appear that on 6 February 2008 the FMCA directed the appellant to indicate whether she was seeking to review the first RRT decision or the second RRT decision. In a response dated 12 February 2008 the appellant indicated that she was seeking to review both of those decisions. 20 The FMCA accordingly treated the application filed on 11 January 2008 as one which, in reality, challenged the first RRT decision as well as the second. As the most recent written submissions for the Minister have pointed out, transitional arrangements associated with the introduction of time limits imposed by s 477 of the Act preserved a right to challenge the first RRT decision at least until the date of the application to the FMCA (see also Minister for Immigration and Citizenship v SZKKC [2007] FCAFC 105 ; (2007) 159 FCR 565). 21 The application for judicial review was rejected on 30 April 2008 ( SZLWQ v Minister for Immigration & Anor [2008] FMCA 486). It is against that decision that the present appeal was brought. 22 Before the FMCA the appellant relied upon Information Privacy Principle 11 under the Privacy Act . Where personal information is disclosed for the purposes of enforcement of the criminal law or of a law imposing a pecuniary penalty, or for the purpose of the protection of the public revenue, the record-keeper shall include in the record containing that information a note of the disclosure. A person, body or agency to whom personal information is disclosed under clause 1 of this Principle shall not use or disclose the information for a purpose other than the purpose for which the information was given to the person, body or agency. It is unnecessary to resolve these potentially difficult questions. That is because the applicant consented to the disclosure of the information in issue. The first Tribunal in its decision records that it contacted a senior official of the Jehovah's Witnesses in Russia for information without identifying any of the then three applicants. At the hearing conducted by the first Tribunal the applicants were invited to provide further information about their Jehovah's Witness adherence which the Tribunal could put to its source in Russia again, together with personal details about the applicants. The Tribunal advised the applicants that it would make further inquiries, giving personal details about them and further information which had been provided by them in seeking advice as to whether the use of the names of congregations was a recent innovation. The first Tribunal in its decision then records its further approach to its source in Russia giving personal details of the applicants and inquiring about the particular congregation they claimed to be members of. The Tribunal records the response received and a request to comment about the inquiry and response made pursuant to s.424A of the Migration Act . The Tribunal's approach to its source in Russia providing personal details of the applicants is dated 22 May 2002 and is reproduced at CB 65 and 66. Before that, on 30 April 2002, and presumably in response to the discussion that occurred at the Tribunal hearing, the applicant gave a written authority to the Tribunal to make inquiries about her to US immigration authorities, a firm known as Georgian Technologies and officials of the Jehovah's Witnesses. Given the discussion that occurred at the Tribunal hearing the applicant must have known, in giving that authority, that personal information about her would be disclosed to officials of the Jehovah's Witnesses in Russia. In my view, in giving that authority, the applicant consented to the disclosure in the letter reproduced at CB 65 and 66. If she had been in any doubt as to what had occurred, that doubt was removed when copies of that letter and the response received were provided to her with the s.424A letter dated 4 July 2002. It is noteworthy that in her response to the request to comment on the information received from Russia, the applicant made no complaint about the disclosure of her personal information. Indeed, she and the other applicants expressed gratitude at the opportunity to comment on the information received from Russia in response to the disclosure. It was not until 18 July 2007 that the applicant raised the issue of disclosure with the Minister in the context of her request for his consent to make a fresh protection visa application pursuant to s.48B of the Migration Act . In the following month the applicant made her second application to the Tribunal. In the light of the discussion that occurred at the first Tribunal hearing, the applicant's lack of complaint in her response to the s.424A invitation when presented with the details of the disclosure made and the five year delay before any complaint was made to either the Minister or the Tribunal, her assertion that she did not consent to the disclosure lacks credibility. I reject that assertion and find that the disclosure made by the Tribunal was made with the applicant's consent. It follows that exception (b) to Information Privacy Principle 11 applies and the challenge to the validity of either or both Tribunal decisions must fail. The Privacy Act 1988 provides protection for personal information. The Tribunal disclosed my personal information as well as information set out in my protection visa application to "another party". At the beginning of the hearing the Tribunal guaranteed that the hearing would be strictly confidential and that my personal information would not be passed to other party. In its "Finding and Reasons" the Tribunal said, "the Tribunal made further inquiries with its sources in the Jehovah's Witnesses organisation in Russia, giving personal details of the applicants, referring to their comments". The Tribunal did not make me aware that it was going to pass my personal information to a Georgian organisation. The Tribunal did not seek (and did not obtain) my consent to the disclosure. His Honour should have concluded that the Tribunal failed to comply with Principle 11 of the Privacy Act 1988 . There was no evidence to support those allegations and the present appeal would, in any event, have been an inappropriate forum in which to seek to lead such evidence. The present appeal provided an opportunity for the appellant to identify error in the judgment of the FMCA but it did not provide an opportunity to mount a collateral factual challenge about events in 2002 which was not argued in the RRT or the FMCA. 26 I have already mentioned the fact that the appellant and her colleagues made no protest about the RRT's indication that it proposed to identify them when it sought further information. In addition, in [31] of the decision of the FMCA reference is made to an authority provided to the RRT by the appellant. That authority was given prior to the RRT hearing on 21 May 2002 (not, as the FMCA thought, 'in response to the discussion that occurred at the Tribunal hearing' ). The authority was dated 30 April 2002 and was stamped as received in the RRT on 1 May 2002. The letter was dated 22 April 2002. However, it is not yet certain that the Tribunal will need to do this. Moreover, the Tribunal would prefer to have your permission to make such inquiries, which most likely will require disclosing your name to outside persons. If you are prepared to give permission, will you please sign and return the enclosed authorisation form. The complaint to the RRT on 24 August 2007 was about disclosure to persons in Georgia but the enquiries she had authorised would certainly extend to Georgia because that is where she had claimed, before the delegate, to have become involved in Jehovah's Witness meetings. At interview on 7 June 2001, she described how she was introduced to the beliefs of the Jehovah's Witness faith whilst in the USA. She described how on return to Georgia from the USA, she became involved in Jehovah's Witness meetings for several months and the harassment she experienced as a result. The country information cited above shows that followers of the Jehovah's witness religion are subject to persecutory treatment in Georgia. The question is whether the applicant is a genuine adherent to the Jehovah's Witness faith and whether on [sic] not she will have a real or imputed profile as a Jehovah's Witness follower on return to Georgia. As I earlier indicated, the letter of 4 July 2002 from the RRT to the appellant and the other two applicants explicitly indicated that personal details about them had been provided in that way. No complaint was made about enquiries in Georgia or Russia. If you could contact the group that we knew you would get the only possible information. We are Jehovah's Witnesses. By contrast, at the hearing of the appeal she appeared to accept that she had, in fact, authorised enquiries in Georgia but she continued to complain about enquiries being made in Russia, although she was not able to articulate why that was of significance. The Russian officials appear to have been only a conduit for enquiries in Georgia. 31 Whatever the specific nature of her complaint I am satisfied, as was the FMCA, that the appellant authorised the enquiries which were made, offered no protest upon being told they would be made and registered no complaint when those enquiries were made and the results disclosed to her. There was no breach of Information Privacy Principle 11 (assuming it applied) because the appellant consented to the disclosure about which she later complained. 32 The Minister also argued that compliance with the Privacy Act was not a prerequisite to the making of a valid decision by the RRT because the requirements for a valid decision are set out comprehensively in the Act and because the Privacy Act contains its own remedial provisions which are 'self-contained'. The submission was supported by reference to a judgment by French J in Goldie v Commonwealth of Australia [2000] FCA 1873 ; (2000) 180 ALR 609 at [85] - [87] and the concurrence of Beaumont J in Abbasi v Minister for Immigration and Multicultural Affairs [2001] FCA 1274 at [67] . Although it was not necessary for the FMCA to examine this issue, I agree with Mr Kennett's submission that the argument advanced by the appellant to the FMCA was legally unsound and provided no basis for the relief that she there sought. 33 Now it is necessary to return to the question of whether there arose from the decision of the Full Court in SZKTI v Minister for Immigration and Citizenship (2008) 168 FCR 256 ( 'SZKTI' ) an independent foundation for a conclusion that the RRT committed jurisdictional error in its first decision. Although the Minister withdrew the suggestion that the first RRT decision was jurisdictionally flawed according to recent authority in this Court and although the argument was never independently identified by the appellant, fairness to the appellant requires that I explain why I agree that withdrawal of the suggestion of jurisdictional error was correct. However, if the Tribunal gets such information, the Tribunal must have regard to that information in making the decision on the review. In the present case the Tribunal sought information by a facsimile message addressed to a Mr Kalin at the Administrative Center of Jehovah's Witnesses in Russia (AB 148-149). The information sought was for the most part background information about a Jehovah's Witness congregation in Russia but included a question specifically about the present applicant. Following SZKTI , this facsimile [of 22 May 2002] must be regarded as an invitation under s 424(2). On that basis it was required to specify the way in which the information was to be given (s 424B(1)) and the period in which it was to be given (s 424B(2)). The facsimile did not do either of those things. The Tribunal thus failed to comply with an element of the procedural regime in Division 4 of Part 7 of the Act (see SZIZO v Minister for Immigration and Citizenship [2008] FCAFC 122 at [75] ). In SZKCQ v Minister for Immigration and Citizenship [2008] FCAFC 119 ( 'SZKCQ' ) another Full Court came to the same view. Moreover, since that decision, the legislature has made it plain that this subdivision ought to be understood as incorporating all of the obligations necessary for an administrative decision-maker to discharge the natural justice hearing rule. If the Tribunal fails to provide the applicant with the benefit of any of those procedures which are mandated by the Division, the Tribunal will have failed to discharge "imperative duties" or to observe "inviolable limitations or restraints" found in the Act and would commit jurisdictional error: Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476. It is necessary to read the paragraph in its context, and with regard to what 'those procedures' are to which reference was being made. The Secretary must, of course, provide the documents prescribed in s 418 which are in the Secretary's possession or control. The Tribunal is given all the powers of the Minister, if the Minister made the decision under review, or the Minister's delegate, if the delegate was the decision maker. The Division contemplates that the Tribunal will obtain further documents and information from sources apart from the applicant. The Division requires the Tribunal to have regard to any information it gathers and also to bring any information to the attention of the applicant for the applicant's comment if that information may be used for the purpose of affirming the decision under review. Whilst the Tribunal is said to be conducting a review, it does so on the information which it obtains from the Department, the delegate, the applicant and any other source. The information which it may accumulate may be quite different to that which the delegate had when the delegate made a decision. Natural justice is further provided to the applicant by requiring the Tribunal to invite the applicant to the hearing except in the circumstances mentioned in s 425(2). The purpose of requiring the Tribunal to invite the applicant to the hearing is to ensure that the applicant has an opportunity of putting his or her case to the Tribunal considering the review. It is important that the applicant receive notice of that invitation. First , the Tribunal must give the applicant particulars of any information that the Tribunal considers would be the reason or part of the reason for affirming the decision under review. Secondly , except in the circumstances mentioned in s 425(2), the Tribunal must invite the applicant to appear before the Tribunal. Thirdly , the Tribunal must conduct a hearing. 43 As already indicated, s 424C relieves the RRT from any obligation to take further action to obtain information which has been sought under s 424 if it is not provided within a period specified in the invitation. Section 424B also enables the RRT to specify the way in which the information is to be provided. It is clear from other provisions in s 424B that those ways include giving the information at an interview scheduled for a particular place and time (s 424B(3)). The RRT is given a discretion to extend periods for providing information (even if the period is prescribed - s 424B(4)) and to change and extend nominated times for an interview (even if a period within which to hold an interview is prescribed - s 424B(5)). In these ways the RRT is given considerable flexibility and control over the way in which, and the time by which, information should be provided to it. If its requests in that regard are not met, s 424C(1) allows it to proceed to a decision without the information and with no breach of the natural justice hearing rule being thereby committed. However, those powers, and the manner of their exercise, stand in a different position to the obligation in s 424(3). In particular, the consequence of a failure in an invitation to specify precisely how, or by when, information is to be provided requires attention. It is best to do it, in the present case, by reference to the facts of the case. 44 On 12 April 2002 a senior researcher with the RRT addressed an enquiry by facsimile to the Administrative Center of Jehovah's Witnesses in Saint Petersburg, Russia. The enquiry sought general information about Jehovah's Witness congregations in and around Tbilisi and key leaders in Georgia. It was not addressed to any specific person. Although they are not included in the Appeal Book, it appears from a later exchange of facsimiles that a Mr Vasiliy Kalin responded by facsimile and that the senior researcher sent another facsimile on 19 April 2002, presumably addressed to him personally. On 29 April 2002 a further facsimile was sent to Mr Kalin about a different applicant. On 8 May 2002 Mr Kalin responded to the facsimiles of 19 and 29 April 2002. The facsimile number on his response (both in the body of the facsimile and on the facsimile header showing transmission details) was the same as the number to which the original facsimile of 12 April 2002 was sent in Russia. The facsimile number in Australia to which Mr Kalin's facsimile of 8 May 2002 was sent was that given as a facsimile number by the senior researcher for the purposes of a reply. Mr Kalin and the senior researcher, at least, appear to have understood and agreed that they would communicate with each other by facsimile. Their communications passed between the facsimile numbers originally nominated by the senior researcher. In his facsimile of 8 May 2002 Mr Kalin offered his further assistance, having responded to enquiries made about the case of the present appellant and her colleagues, who had not, to this point, been identified. If there is anything more we could do for you, please do not hesitate to contact us. 46 The facsimile of 22 May 2002 was sent to Mr Kalin. It was a request for additional information. It was therefore an 'invitation' within the meaning of s 424(2). It was sent by facsimile. It therefore conformed with s 441C(5) and s 424(3). It was sent to, and from, the same facsimile numbers as before. It identified a particular facsimile number (again) as a facility for communication with the senior researcher. As I indicated in my facsimile of 19 April 2002, the Tribunal expected to learn more regarding the circumstances of the Applicants referred to in case GGA 15057 --- we are now aware of additional information regarding these Applicants and would like to clarify some further matters. Five specific questions were posed. The information may be cited by the Tribunal in a finalised decision. The information or your organisation's identity may be disclosed to applicants, their advisers, the Department of Immigration, Multicultural and Indigenous Affairs (Australia), or otherwise become publicly available. The facsimile of 22 May 2002 and the reply on 1 July 2002 were the further enquiries, and the responses, foreshadowed by the RRT at its hearing to which I referred earlier. They were the subject of the letter from the RRT to the three applicants on 4 July 2002 which prompted no complaint from them. The enquiry of 22 May 2002 was made after receipt by the RRT on 1 May 2002 of the authority by the appellant dated 30 April 2002 authorising enquiries of, amongst others, officials of the Jehovah's Witnesses. 49 The Minister's most recent written submissions withdrew the suggestion that the RRT had failed to comply with s 424(3) or s 424B of the Act. It was argued that each provision had been complied with. An alternative submission was that if there had not been strict compliance with s 424B that did not result in jurisdictional error or invalidity in the first RRT decision. I agree with those latest arguments. 50 First, it seems to me, that for reasons earlier given there is no doubt that the RRT complied with s 424(3). Secondly, I do not think the suggested lack of conformity between the terms of the facsimile to Mr Kalin on 22 May 2002 and the requirements of s 424B(1) and (2) have the consequences originally suggested. 51 Section 424B(1) directs the RRT to specify the way in which the additional information is to be given. Clearly it was not to be at an interview. Equally clearly, Mr Kalin understood that he was being invited to respond in kind, by facsimile. The course of dealings between him and the senior researcher since the first enquiry by facsimile on 12 April 2002 had established that as their mutual, and agreed, method of communication. In my view the nomination of a facsimile number as a facility for the response was also a sufficient specification of a method of response. Accordingly, there was no breach of s 424B(1). 52 Section 424B(2) on its face directs that 'information or comments are to be given within a period specified in the invitation' . It does not, in terms, impose a direct obligation on the RRT about the terms of the invitation (cf. s 424B(1) --- 'the invitation is to specify ...' ). The consequence of any failure to specify a period is that the facility in s 424C of proceeding to a decision in the absence of the information might not be available but I do not see s 424B(2) as establishing the kind of obligation on the RRT which could lead to either statutory breach or jurisdictional error. A circumstance of this kind (failure to specify a period and consequent inability to rely on s 424C) does not fall within any of the reasoning in SZKTI, SZKCQ or SZIZO . As it happens the information was given. It was brought to the attention of the appellant. She had an opportunity to deal with it. It cannot be said that the information was not given before the time for it had passed (s 424C(1)(b)). In my view no 'breach' of s 424B(2) occurred and, in any event, any failure to comply with its strict terms did not, in the circumstances of this case at least, amount to jurisdictional error on the part of the RRT. The Minister's latest written submissions drew attention to judgments of this Court to similar effect ( SZEXZ v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 449 and M v Minister for Immigration and Multicultural Affairs [2006] FCA 1247 ; (2006) 155 FCR 333 at [34] - [37] ). 53 In my view there is no ground to set aside the first decision of the RRT. No occasion arises therefore to call into question the second decision of the RRT. 54 The appeal must be dismissed. It is appropriate to dismiss it with costs. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | parties agreed that appeal should be upheld court required to be satisfied for itself respondent's consent later withdrawn question of jurisdictional error examined no error established. invitation to provide information to specify the way in which it may be given evidence of prior communications method agreed by conduct challenged information followed previously agreed method of providing information no jurisdictional error established appeal dismissed. privacy principles information disclosed by consent refugee review tribunal not bound by privacy principles. practice and procedure migration administrative law |
The claim relates to assessments issued by the Commissioner for the financial years ending 30 June 1992, 1993, 1994, 1995, and 1996, respectively, and alleged amendments to the assessments, which are said to have been made on or about 8 September 1998. Mr Gates seeks a number of declarations, damages and costs. It is not necessary to describe those steps. It is sufficient to start the chronology with the directions hearing held before Lee J on 8 February 2006. His Honour made a number of orders on that date, including an order that the applicant file an amended statement of claim by 15 February 2006 and orders that put in place a programme for the filing of affidavits upon which the parties intended to rely at the hearing. Lee J also made an order that the matter was to be listed for hearing for two days on dates after 10 May 2006. 3 Mr Gates filed an amended statement of claim on 15 February 2006. 4 On 23 March 2006 Mr Gates filed an affidavit and on 4 April 2006 he filed a second affidavit containing minor corrections to his first affidavit. 5 Mr Gates has appeared in person in the proceedings and he has given details of a residential address, telephone number and a facsimile number. 6 On 5 May 2006 an officer in the Registry of the Court advised Mr Gates that it was proposed to list the proceedings for hearing for one-and-a-half days commencing on 12 June 2006. Mr Gates told the officer that the matter should not be listed for hearing that week as 'things may change'. The officer then wrote to both Mr Gates and the solicitor for the Commissioner. It is not entirely clear what is meant by this statement. Should the listing dates not be suitable please advise the Court as soon as possible. In fact, he has not contacted the Registry since 5 May 2006. 8 On 10 May 2006 the District Registrar wrote to both Mr Gates and the solicitor for the Commissioner advising them that the action had been listed for trial on Monday 12 June 2006 at 10.15 am and Tuesday 13 June 2006 at 10.15 am. 9 On 11 May 2006 Mr Gates was sent an invoice for a setting down fee and a daily hearing fee. He was reminded that the setting down fee became payable on a date for hearing being fixed and should be paid immediately. Mr Gates did not pay the fee, nor has he applied for a waiver of the fee. 10 On 31 May 2006 Mr Gates and the solicitor for the Commissioner were advised that the hearing would commence at 12 noon on Monday 12 June 2006. 11 Mr Gates did not appear on 12 June 2006. As I have said, he has made no contact with the Registry since 5 May 2006. The Commissioner has asked for an order dismissing the action. That is one of the orders that I may make if, when a proceeding is called on for trial, the claimant is absent: Federal Court Rules , O 32 r 2(1)(c). I made such an order on 13 June 2006 and said that I would deliver reasons for making the order. These are my reasons. 13 It is difficult to describe the claim made by Mr Gates because no particulars of even the most basic nature are provided. I have carefully read his amended statement of claim, and I have also had regard to his affidavit of 4 April 2006 and his outline of submissions of the same date. It seems that Mr Gates alleges that the Commissioner did not act honestly in issuing assessments for the assessment years previously referred to. He also alleges that the Commissioner did not accord him procedural fairness; that the Commissioner acted in bad faith, particularly in 1998, and that the Commissioner did not make a bona fide attempt to deal with assessments for the years ending 30 June 1997, 1998 and 1999. There also seems to be a complaint about an audit commenced by the Commissioner in about 1996. 14 In the material filed by the applicant, there are no allegations or particulars of the conduct that is said to constitute the serious breaches of duty alleged against the Commissioner and his officers. It is not possible to say that the statement of claim discloses a cause of action. It certainly does not comply with the rules as to pleadings. 15 The applicant's statement of claim contains a request for the matter to be dealt with as soon as possible, 'considering this matter has been tried to be brought before this Court since 2001 and the applicant has suffered since May 1998 and is still suffering'. 16 Indeed, Mr Gates' complaints have a long history. There were previous proceedings in this Court (File Number W245 of 2001) that have been the subject of various rulings and judgments, to which I now turn. Amended Notices of Assessment issued to Engler on 24 September 1998 relating to the financial years ended 30 June 1992, 1993, 1994, 1995 and 1996 and a Notice of Assessment issued on the same date for the year ended 30 June 1997. A Notice of Amended Assessment issued to Gates on 15 September 1998 and relating to the financial year ended 30 June 1992. Orders apparently by way of injunction are sought that the Commissioner "be permanently stopped from reviewing the Applicants on any issue that has been reviewed in the past again" and "from reviewing the Applicants' taxation affairs from the year ended 30 June 1997 and backwards". Other orders are sought that the Commissioner, if reviewing the applicants in the future, must adhere to the principles outlined in the Taxpayers' Charter and in the law and that from the date of the filing of the application the applicants and any other business or entity in which they become involved should be classed as restricted access taxpayers. A claim is also made for unspecified "losses and damages and costs". These contentions are to be found in pars 9, 11, 13 and 15 of the application. There is however, on my reading of the points of claim, little exposed in the way of facts which would support a case of improper purpose or want of bona fides. Paragraphs 18 and 19, as the Commissioner contends, do not specify the alleged breach of natural justice. As to pars 20 and 21, the broad brush assertions in the points of claim as to the various species of misconduct attributed to the Commissioner and his officers do not disclose facts sufficient to ground the tort of misfeasance in public office or negligence. That is not to say that on the facts apparent from the chronology and some of the matters raised in the points of claim the applicants may not have had cause to complain about the way in which and the efficiency with which their affairs have been handled in the ATO. But that of itself is not enough to establish a cause of action. 21 On 6 May 2003, French J made an order that the statement of claim filed on 5 March 2003 be struck out: Engler v Federal Commissioner of Taxation (No 2) (2003) 52 ATR 642. He also gave liberty to amend the statement of claim if it be the applicants' contention that the notices of amended assessment were issued other than in good faith. They have now filed an amended application and a statement of claim pursuant to the orders which I made then. The amended application and statement of claim have been prepared with the assistance of pro bono counsel who has since ceased to act for them. The respondent moves to strike out that statement of claim or for an order that the application be dismissed or permanently stayed. 23 The applicants filed a further statement of claim. The Commissioner moved the Court for an order that that statement of claim be struck out and that the proceedings be dismissed generally. That motion came on for hearing before French J and, on 23 December 2003, his Honour made an order that the application be struck out and that the applicants pay the respondent's costs of the proceedings: Engler v Federal Commissioner of Taxation (No 3) (2003) 54 ATR 617. French J noted that Ms Engler and Mr Gates had had great difficulty in formulating a viable statement of claim, despite the fact that they had had assistance from three different legal practitioners, two of whom acted on a pro bono basis. The statement of claim is, like its predecessors, a welter of confused and irrelevant allegations which, as the respondent submits, not properly engaged the jurisdiction of the Court. The analysis of paragraph [59] exemplifies the ways in which the applicants will allege fraud on foundations which cannot logically support such an allegation. The applicants have demonstrated that they are unable to frame in a responsible and careful way a cause of action which is amenable to determination by the Court. They have had the assistance of two pro bono lawyers, one of whom is Queens Counsel. They have now had a number of opportunities to formulate a viable statement of claim. As I have said, he did not respond to the letter from the officer of the Registry dated 5 May 2006. He was given adequate notice of the dates fixed for the hearing, but he did not appear at the hearing. 25 Mr Gates' amended statement of claim clearly does not comply with the rules as to pleadings and, in fact, it is not possible to say that it discloses a cause of action. All of this has occurred in the context of a long history involving previous proceedings in this Court in which Mr Gates was given every opportunity to formulate his claim, but failed to do so. 26 In my opinion, it is appropriate in all the circumstances to order that the claim be dismissed, and I so ordered. It is also appropriate that costs follow the event in the usual way, and I made an order to that effect. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | application for action to be dismissed non-appearance of applicant federal court rules , o 32 r 2(1)(c) where applicant given adequate notice of date of hearing where applicant failed to pay court fees non-compliance of statement of claim with rules as to pleadings previous proceedings in which applicant given every opportunity to formulate claim but failed to do so held, action dismissed. practice and procedure |
The appellants are all citizens of the Peoples Republic of China. The first appellant is the wife of the fourth appellant and the mother of the second and third appellants. The second, third and fourth appellants' visa applications are dependent upon the success of the first appellant's visa application. I shall call the first appellant simply the appellant. The appellant has entered Australia on a number of occasions since 17 July 2000, sometimes entering Australia on a Business Long Stay visa and sometimes on a Business Short Stay visa which are two subclasses of a Class UC visa. Relevantly, the appellant entered Australia on 2 April 2003 on a Business Long Stay visa on the basis that she would be employed by a standard business sponsor employer, Adcom Strategies Pty Ltd as a sales and marketing manager. On 10 March 2005 the appellant applied to the Department of Immigration and Multicultural and Indigenous Affairs (which later became the Department of Immigration and Citizenship) for Employer Nomination (Residence) (Class BW) visas which a delegate decided to refuse on 25 November 2005. The appellant sought a review of the delegate's decision in the Tribunal and on 21 June 2007 the Tribunal affirmed the delegate's decision. The appellants applied to the Federal Magistrates Court for a review of the Tribunal's decision but that application was dismissed by the Federal Magistrates Court on 21 April 2008. The appellants appealed to this Court and, on 29 August 2008, Emmett J set aside the orders made by the Federal Magistrates Court and in lieu thereof ordered that the decision of the Tribunal be quashed and the matter be remitted to the Tribunal for determination according to law. The first respondent was ordered to pay the appellants' costs of the application and the appeal. On 7 May 2009 the Tribunal, differently constituted, decided to affirm the delegate's decisions not to grant the appellants' Employer Nomination (Residence) (Class BW) visas. The appellants applied for a judicial review of the Tribunal's decision but on 21 September 2009 Federal Magistrate Emmett dismissed that application. It is from her orders that this appeal is brought. For the reasons that follow, this appeal must be dismissed. On 17 February 2005 Revetec Limited lodged an application for approval of a nominated position pursuant to reg 5.19 of the Migration Regulations 1994 (Cth) (the Regulations). Regulation 5.19(1) empowers an employer to apply to the Minister for approval of a nominated position as an approved appointment. Regulation 5.19(1B) empowers the Minister to approve or reject an application. On 6 July 2005 the Minister approved the application of Revetec Limited as an approved appointment. Revetec Limited nominated the appellant as an employee as sales and marketing manager. The appellant applied for an Employer Nomination (Residence) visa --- Subclass 856 visa. (1) An employer may apply to the Minister for approval of a nominated position as an approved appointment . Paragraph 4.02(4)(e) provides that a decision under subregulation 5.19(1B) to reject an application is an MRT-reviewable decision. MRT-reviewable decision is defined in Division 2 of Part 5 of the Act. The nominated position must be paid employment in accordance with the standards for wages and working conditions under relevant awards for a highly skilled person in the employer's Australian business, and be for full time employment for a fixed term of at least three years. The Minister must be satisfied that there is no Australian citizen or permanent resident who can be found who is suitable for the appointment. The history of that application has been set out above. After the matter was remitted to the Tribunal on 19 November 2008, the Tribunal wrote to the appellant pursuant to s 359A of the Act. The appellant's migration agent replied to the Tribunal and enclosed a letter from Revetec Holdings Limited dated 12 December 2008 in which a director wrote: "We advise that our company will continue to support Mrs Tian Li in her application for Subclass 856 visa. " On 18 December 2008 the Tribunal carried out a search with ASIC to determine the status of Revetec Limited, which was the company which had applied to the Minister for approval of a nominated position which had been approved as an approved appointment. That search showed that Revetec Limited had on its own application been deregistered by ASIC on 8 April 2008. A search on the same day showed that Revetec Holdings Limited had been incorporated on 4 August 2005. On 18 December 2008 the Tribunal wrote to the appellant's migration advisor inviting comment on information that the Tribunal considered would be the reason or part of the reason for affirming the decision under review. The nominated position was Sales and Marketing Manager and the application was approved on 6 July 2005. The appointment was in the position of Sales and Marketing Manager. This application was refused by the delegate on 25 November 2005. Proceedings brought by you in the Federal Magistrates Court were dismissed on 21 April 2008. However, the Federal Court allowed your appeal on 29 August 2008. Your proposed business sponsor employer is Billabongs Restaurant Pty Ltd ATF Billabongs Restaurant Unit Trust (Billabongs). Billabongs was approved as a standard business sponsor on 15 December 2007. The nominated activity you were to be employed in was Marketing Specialist (ASCO Code 2221-13). The business nomination application was approved on 15 August 2007. Regulations require, at time of decision, that the appointment continues to satisfy the criteria for approval. The criteria for approval include, amongst other things, that the employer nomination is made by an employer in respect of a need for a paid employee in a business actively and lawfully operating in Australia and operated by that employer. If the Tribunal makes these findings it may also find that you do not meet relevant criteria, particularly clause 856.221. Revetec Limited was established in August 1997 for the purpose of acquiring 100 per cent of the issued shares in Revolution. Revetec Holdings Limited was incorporated on 4 August 2005 to acquire the business assets of Revetec Limited. As a result it has a new ABN and ACN number. Revetec Holdings Ltd therefore continues the support of Miss Tian Li's subclass 856 visa application. The sponsorship undertakings remain the same. Consequently, Revetec Holdings Limited was incorporated and a sales contract was signed between Revetec Limited and Revetec Holdings Limited. Counsel expressed the opinion that "there is no obstacle to RH [Revetec Holdings Limited], as the legal successor to RL [Revetec Limited], being treated as the employer for the purposes of the present application" (underlined in the original). Counsel expressed the further opinion that if the Tribunal affirmed the decision under review "there is a solid foundation for the existence of jurisdictional error if proceedings were taken in the Federal Magistrates Court to challenge the adverse decision". On 7 May 2009 the Tribunal handed down its decision in which it referred to the matters to which I have referred and the opinion with which it was provided. After discussing those matters, the Tribunal concluded: Revetec was the employer who nominated the applicant in respect of an appointment in the business of Revetec. However, at the time of decision, the applicant cannot be employed in the business of Revetec as Revetec no longer exists as it was deregistered by ASIC on 8 April 2008. Therefore, the applicant cannot be employed by Revetec in relation to an approved appointment and the Tribunal finds accordingly. For all of the above reasons and on the above findings the Tribunal also finds that the applicant does not satisfy the criterion in clause 856.221. The Federal Magistrate upheld the Tribunal's decision. She said: Regulation 5.19(2) makes clear that the criteria that the specific employer must satisfy includes that the specific employer has made and continues to make adequate provision for training existing employees (or for future training of employees if the business is newly established); and, that the Minister is satisfied that a suitable Australian citizen or permanent resident cannot be found, in which case, the specific employer should not be required to seek a suitable employee in Australia. Regulation 5.19(2)(f) (sic) provides that an employee employed in such circumstances must be engaged in accordance with the standards for wages and working conditions provided under relevant Australian legislation and awards. In accordance with 856.22 (sic), the criteria in 856.221 to be satisfied at the time of decision makes clear, that it is the appointment referred to in cl.856.213(a) that is the "approved appointment" . Clause 856.222 refers to "the employer referred to in the relevant employer nomination" . To my mind, those words make clear that the reference is specific to the employer in respect of whom approval to nominate was granted, namely Revetec Limited and not Revetec Holdings Limited. She concluded: In the circumstances, the Tribunal's finding that, at the time of its decision, the Applicant was not employed in the business of Revetec Limited was correct as Revetec Limited no longer existed, having been deregistered by ASIC on 8 April 2008. The Tribunal's findings that the Applicant was therefore not employed by Revetec Limited in relation to an approved appointment at the time of its decision was open to it on the evidence and material before it and for the reasons it gave. The Tribunal applied the correct law to its findings in considering whether or not the Applicant satisfied the statutory criteria for a subclass 856 visa. The Tribunal's finding that the Applicant, therefore, does not satisfy the criterion in cl.856.221 is without error. There is an error in paragraph 29 of the Federal Magistrate's reasons. Regulation 856.222 is not in the form her Honour has quoted in that paragraph. The regulation reads: "... employment referred in the relevant employer nomination". The Minister contended that as her Honour had previously set out the regulation correctly (at [16]), the misquotation is merely a typographical error. I do not think that is so. I think the sentence which follows the misquotation suggests that her Honour wrongly read the regulation as it is quoted. Earlier in her reasons, the Federal Magistrate wrongly referred to and set out the current form of reg 5.19 rather than the correct and relevant form: [19]. The Minister contended that her Honour did have regard to the relevant form of the regulation in [28] of her reasons. I think that is right. I think her reasons at [28] address the regulation as it then stood. There are three grounds of appeal, but only one was pressed. Her Honour erred in finding that the First Appellant could not satisfy the requirements of cl 856.221 and 856.222 of the Migration Regulations 1994 solely for the reason that the company which had originally applied for approval of her appointment under reg 5.19 was no longer in existence having transferred the entirety of its business to another company. The appellant contended that she satisfied the criteria because she would be employed by Revetec Holdings Limited which had acquired the business of Revetec Limited and she would therefore be employed in the same business for which approval was given under reg 5.19. Regulation 856.222 requires the Minister to be satisfied that the appointment in paragraph 856.213 (a) will provide the employment referred to in the relevant employer nomination. The employment referred to in the relevant employer nomination was with Revetec Limited. The appellant's contention that she will be employed in the same business which had been approved by the Minister and therefore satisfies reg 856.222 cannot be accepted. Regulation 5.19 provides for a procedure to approve a nominated position as an approved appointment. The only person who can apply for that approval is the employer and the application is for a position with that employer. The criteria that must be satisfied by the employer include criteria that are personal to the employer. The employer must be able to satisfy the Minister that the position requires an employee who is highly skilled. The Minister must be satisfied that no Australian citizen or permanent resident can be found to fill the position. The employer must satisfy the Minister that adequate provision is made for training existing employees. In my opinion, reg 5.19 contemplates a process whereby the Minister in exercising the power in reg 5.19 approves a nominated position for the employer who makes the application. The approved appointment is not at large. It is for a nominated position with the employer who made the application under the regulation. As soon as Revetec Limited either ceased to carry on its business or ceased to exist it was not capable of providing any appointment to the appellant. The Minister in those circumstances could not have been satisfied that Revetec Limited, which had secured the appointment, could provide the employment referred to in the relevant employer nomination. The appellant could not satisfy the criteria in reg 856.222. The relevant employer nomination was made by Revetec Limited and the position for which it sought approval was with it. The appellant could only rely upon Revetec Holdings Limited in support of her application for a Subclass 856 visa if Revetec Holdings Limited had first been approved as an approved appointment under reg 5.19. If the appellant's construction were right, it would render the process in reg 5.19 pointless if the person seeking the visa intended to work for some other employer other than the employer who was seeking approval of a nominated position as an approved appointment. In my opinion, the Federal Magistrate was right to conclude as she did, that the decision of the Tribunal was not infected with error. The appeal must be dismissed. The first and fourth appellants must pay the first respondent's costs. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | appeal from an order made by federal magistrates court whether appellant satisfied regs 856.221 and 856.222 of migration regulations 1994 (cth) employer obtained approval by the minister of a nominated position as an approved appointment under reg 5.19 of migration regulations 1994 (cth) employer ceased to exist whether that approval can be used by appellant for employment offered by another company which purchased first employer's business without first obtaining the minister's approval. migration |
The defendants do not oppose an order that the plaintiff have leave to discontinue the proceeding and in due course that order will be made. However, the defendants contest an order that they pay the plaintiff's costs of the proceeding and submit that the most appropriate order in the circumstances of the case is for each party to bear its own costs. 2 The initiating process in this matter was an application filed on 27 September 2005 by Lion Nathan against the defendants, the second to seventh defendants of whom are directors of the first defendant, Coopers Brewery Limited ("Coopers Brewery"). In that application two general areas of relief were sought. First, declarations were sought in relation to the effect of certain proposed modifications to the constitution of Coopers Brewery, having regard to the provisions of s 140(2) of the Corporations Act 2001 (Cth) ("the Act "). Secondly, injunctive relief was sought in respect of alleged contraventions of s 1041H(1) of the Act and s 52 of the Trade Practices Act 1974 (Cth). 3 The injunctive relief that was sought was firstly an injunction restraining Coopers Brewery from taking any further steps pursuant to a notice of meeting issued by it on 21 September 2005, including the conducting of the meeting proposed to be held on 20 October 2005. Secondly, an injunction was sought requiring Coopers Brewery and its directors to send a notice in writing to the shareholders of Coopers Brewery containing certain material relating to the effect of the proposed modifications to the constitution and certain other matters that were set out in detail in the application. The interlocutory relief which was sought was an order that until the hearing and determination of the application or further order, the defendants be restrained from taking any further steps pursuant to the notice of meeting issued on 21 September 2005, including the conducting of the meeting proposed to be held on 20 October 2005. 4 There is a commercial background to the application which was the announcement by Lion Nathan of a proposal to make takeover offers for all the shares in the capital of Coopers Brewery. The application for interlocutory relief came on for hearing on 3 and 5 October 2005, and on 11 October 2005, upon Lion Nathan proffering the usual undertaking as to damages, I ordered that Coopers Brewery and its directors be restrained from proceeding further with the conduct of the meeting of shareholders convened by notice dated 21 September 2005 and proposed to be held on 20 October 2005, other than to adjourn it to a date and time to be fixed. I also reserved liberty to the defendants to apply on 24 hours' notice in writing, to apply to vary or discharge the order. I reserved the costs of the application for further consideration. 5 The reasons for judgment published on 11 October 2005 set out in considerable detail the background to the application and the reasons why I granted the injunctive relief. Without intending to be comprehensive, the reason was that the explanatory memorandum which had been sent out to shareholders was deficient in the information which was contained in it. A further explanatory memorandum which had been propounded by the defendants in the course of the hearing did not cure all the defects and deficiencies to which I referred in my reasons for judgment. 6 What subsequently occurred was that the defendants, pursuant to the liberty which I had reserved, came back to the Court with a modified explanatory memorandum and on 18 November 2005 I made an order that, upon the defendants' undertaking to post to shareholders a modified explanatory memorandum in the form which was handed up to the Court, the injunction granted on 11 October 2005 be discharged. I reserved the costs of the application for further consideration. The meeting of shareholders was held, modifications were made to the constitution of Coopers Brewery and ultimately the takeover offer that had been propounded by Lion Nathan lapsed. 7 There is considerable authority which deals with the issue of the appropriate order to make as to the costs of proceedings where the proceedings are either sought to be discontinued or do not proceed to a final hearing. I have been referred to a number of those authorities, in particular J T Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122; Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194; O'Keeffe Nominees Pty Limited v BP Australia Limited (No 2) (1995) 55 FCR 591; Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6 ; (1997) 186 CLR 622; and One.Tel Limited v Commissioner of Taxation [2000] FCA 270 ; (2000) 101 FCR 548. 8 It is a trite proposition that the power to order costs by the Court is in the Court's discretion: see s 43 of the Federal Court of Australia Act 1976 (Cth). In Australian Securities Commission v Aust-Home Investments Limited (supra) at 201, Hill J, having referred to a number of cases including Stratford v Lindley (No 2) (supra), set out a number of propositions which he considered were supported by the authorities. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. The Court cannot try a hypothetical action between the parties. This approach has been adopted in a large number of cases. Although I granted interlocutory relief the directors of Coopers Brewery were not acting unreasonably in my view, albeit they may have been mistaken in a number of respects, in relation to the submissions they made as to the contents of the initial explanatory memorandum and the subsequent explanatory memorandum. 10 In a number of cases there has been reference to the fact that costs should normally follow the event and that if a party is successful in proceedings that party should ordinarily obtain its costs. As Gummow J noted in New South Wales Dairy Corporation v Murray Goulburn Co-operative Co Ltd (1989) 86 ALR 549, 'the event' can be considered as the commercial result, so that a successful applicant may recover all his costs where the objective sought by litigation is achieved, even though the applicant does not succeed on every issue in the litigation. In my opinion, that general proposition is directed to a consideration of the litigation as a whole and it is going too far to say that it necessarily applies to every interlocutory step in the principal proceedings. In most cases, when an order for costs of the principal proceedings is made, no specific reference is made to costs which are reserved and they are, by the order for costs which is made, picked up in favour of the party that has been successful in the litigation. This circumstance reinforces the not uncommon position that in respect of the payment of costs of an interlocutory application, it is not necessarily just that the costs of an interlocutory application should follow the result of that interlocutory application but rather should be determined by the result of the principal litigation of which the interlocutory application forms but a part. 13 It seems to me, however, that the authorities to which counsel on both sides referred, and to which I have referred, have not specifically addressed the type of situation which occurred in this case. This was a situation which occurs from time to time where the application for interlocutory relief is in a sense an application for what I might call loosely, final relief. 14 As I noted earlier, the application sought an injunction restraining Coopers Brewery from conducting the meeting proposed to be held on 20 October 2005 which had been convened pursuant to a notice issued on 21 September 2005. Lion Nathan was successful in obtaining such an injunction. It also sought an injunction requiring the defendants to send to shareholders a notice or a memorandum setting out a number of matters. In the course of the interlocutory hearing a substantial number of matters were discussed, with Lion Nathan submitting that the explanatory memorandum should contain considerable further material. In some respects it did not succeed in those submissions. For example, one submission, which I paraphrase, was that the explanatory memorandum should contain substantially the material to be included in the Target's Statement required to be sent out pursuant to the provisions of Pt 6.5 of the Act . 15 Nevertheless, I was satisfied on the material which was before me that the explanatory memorandum was deficient in a considerable number of respects and that the further supplementary explanatory memorandum propounded by Coopers Brewery in the course of the hearing did not cure all those deficiencies. For that reason an interlocutory injunction was granted. But having regard to what I considered to be the paramount consideration which was the interests of shareholders and the fact that shareholders should be put in a position to make decisions in respect of resolutions to be put before them, I gave Coopers Brewery the opportunity to come back to the Court to seek to vary the injunction to give it the opportunity to have the shareholders' meeting convened and held on a date subsequent to 20 October 2005. 16 I consider that from a practical point of view, having regard to the primary relief which was sought on an injunctive basis, Lion Nathan succeeded in its application by having the meeting proposed to be held on 20 October 2005 restrained, and was also successful in having Coopers Brewery put out further supplementary information to shareholders in the form which I described in the order of 18 November 2005, a modified explanatory memorandum. In those circumstances it is fair to say that the issues which were resolved and determined, and which resulted in the orders of 11 October 2005 and 18 November 2005, were not likely to arise again in the litigation. 17 The initial meeting had been restrained; the relief sought in relation to propounding further more comprehensive information before the shareholders had been obtained. If the matter were to go to trial now across the board there would be no practical issue to be determined in relation to the injunctive relief which was sought in the final form in the application, because the interlocutory injunctive relief which had been granted effectively resolved that issue. It seems to me in those circumstances that this is a case which is one which is, in a sense, a gloss on the observation of McHugh J, in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin where he referred to the fact that a judge could feel confident that one party was almost certain to have succeeded if the matter had been fully tried. I consider that gloss is the situation where the grant of the interlocutory injunction effectively resolves the application for final relief. 18 As I said earlier the issues which were then determined were not likely to arise again if the proceeding had continued further. True it is, as Mr Blight who appeared for the defendants submitted, that ultimately the defendants succeeded in the outcome of the issues which had arisen between the parties. That is, they succeeded in the sense that the takeover offer which had been proposed by Lion Nathan, and which had been sent to shareholders, lapsed. From a commercial point of view the defendants succeeded. However, the proper analysis for the purpose of the costs question in my view is a legal analysis of what occurred in the proceedings before the Court and the nature of the orders which were made. To that extent I am satisfied that Lion Nathan succeeded. 19 In all of those circumstances, as an exercise of the costs discretion committed to me, I consider that the appropriate order to make is that the costs which were reserved in relation to the interlocutory application which was brought, should be costs to be awarded in favour of Lion Nathan and that the appropriate order to make is that Lion Nathan have its costs of and incidental to that interlocutory application. 20 Lion Nathan goes further and seeks the costs of the whole of the proceeding, excepting of course the costs in relation to the issues relating to the s 140 Corporations Act matter. 21 I consider in all the circumstances that the appropriate order to make, nevertheless, is that the costs of the interlocutory proceeding brought by Lion Nathan be paid by the defendants and that otherwise the parties bear their own costs of the proceeding. It seems to me in those circumstances that, having regard to the contested issues which have been raised today, Lion Nathan should have its costs of and incidental to this motion. The plaintiff have leave to discontinue the proceeding. The defendants pay the plaintiff's costs of and incidental to the application for interlocutory relief filed on 27 September 2005, including the costs of and incidental to the hearings on 3 and 5 October 2005 and 11, 17 and 18 November 2005 which costs were reserved for further consideration. 3. The defendants pay the plaintiff's costs of and incidental to the motion filed on 25 July 2006. Otherwise the parties bear its and their own costs of and incidental to the proceeding. The plaintiff be discharged from its undertaking given by its counsel on its behalf on 11 October 2005. | interlocutory relief granted in favour of plaintiff where interlocutory relief effectively resolves application for final relief costs |
The decision of the second respondent was that although the applicant had been assessed as being totally and permanently disabled after a workplace incident in 2002, no insurance benefit was payable because the total and permanent disablement was on account of his pre-existing medical condition, namely schizophrenia. Such proceedings come before the Court for hearing and determination in the exercise of its original, rather than appellate, jurisdiction: Cullinane v Mercer Benefit Nominees Ltd [2006] FCAFC 82 ; (2006) 152 FCR 1. The applicant claims he did so orally over the telephone and in a personal medical statement which was posted to QSuper, however it appears that this medical statement was not received. The Tribunal noted that the issue was not whether the Tribunal would have made the same decision. The Tribunal considered that the issue before it was whether the decision of the Trustee that the condition rendering the applicant totally and permanently disabled was related to a pre-existing condition (as that term appeared in subcll 6.2 and 6.5 in the Fund's insurance terms) operated fairly and reasonably in relation to the applicant in these circumstances. I note that the applicant was given leave to be legally represented at the hearing before the Tribunal. In the opinion of the Tribunal after reviewing all of the available medical evidence, the Complainant's PTSD or anxiety disorder is sufficiently related to his schizophrenia such as to render the decision of the Trustee fair and reasonable in relation to the Complainant in the circumstances. as a consequence unduly fettered the exercise of its powers under Section 37(1)(a) of the Superannuation (Resolution of Complaints) Act 1993 . (b) affirming the decision of the trustee to decline payment of the Total and Permanent Disablement benefit to the complainant on grounds that his medical condition namely Post Traumatic Stress Disorder or Anxiety Disorder was related to his schizophrenia because it was manifestly wrong to have concluded in the absence of any evidence to the contrary that either of the said medical conditions were related to the schizophrenia. Nowhere does Dr De Leacy say that PTSD arises because of schizophrenia, or that PTSD is a subset of schizophrenia. Moreover, in his report of 22 October 2005 Dr De Leacy specifically said PTSD is an illness quite separate from schizophrenia and with separate causes. Rather it is to form a view, from the perspective of the trustee or insurer, as to whether the decision of either was (recognising the overriding framework given by the governing rules and policy terms, respectively) unfair or unreasonable. A number of these reports, including the reports of Dr Jamieson, Dr Safier and Dr White, concerned orthopaedic issues and are not relevant to any pre-existing mental condition of the applicant. In her first report, which was to the referring medical practitioner, Ms Jooste diagnosed the applicant as suffering from PTSD, depression and panic attacks. In her second report, which was to the Trustee, Ms Jooste noted that the applicant had reported being diagnosed with schizophrenia after a psychotic episode four years prior, and that the applicant suffered from a mild intellectual disability. His original condition, schizophrenia, the mild mental retardation, and low working skills would continue as before. Dr Olsen's report dealt primarily with the physical impact on the applicant of the event involving the dogs. It was readily apparent to me that Mr Edington is truly struggling to deal with the event that involved his incident including his fright at the prospect of being attacked by two Rottweilers, although he was not, and also the subsequent events in which he was left without assistance and his trust took a considerable set back. In my opinion Mr Edington has decompensated and although he remains on a major tranquilizer for his schizophrenia and although there were no profound outwards indications of instability in his schizophrenia his reluctance and in the end non acceptance of further investigations including a bone scan is in my opinion a clear indication of his mental state. I was concerned that I may miss an undisclosed fracture by not performing the bone scan. In the final analysis however my opinion will not depend on the bone scan and therefore I consider it reasonable to not proceed with that investigation. • two reports to the Trustee, one dated 3 May 2003 and another undated but from early 2006, prepared by Dr JG Reddan, a consultant psychiatrist. However Dr Reddan considered that the applicant would be permanently unable to perform duties as a field assistant, most significantly because of the residual symptoms of schizophrenia. In her second report from early 2006, Dr Reddan stated that she had read a report dated 9 May 2003 by Dr Jamieson, a letter dated 15 July 2004 by Dr M Safier, reports dated 17 July 2003 and 15 July 2004 by Dr J Butler, and a report dated 22 October 2005 by Dr E de Leacy, however that additional material did not cause her to alter the opinions expressed in her report of 3 May 2003. • three reports to the Trustee dated 13 January 2003, 17 July 2003 and 15 July 2004 by Dr Jeremy Butler, who was identified by the Tribunal as the applicant's treating psychiatrist. In the first report, Dr Butler described the primary psychiatric diagnosis as "Schizophrenia paranoid sub type with ongoing residual negative symptoms". Subsequent to that incident he has suffered from some phobic anxiety with relation to exposure to dogs and has experienced some avoidance... In compiling his report, Dr de Leacy had reference to reports of Ms Jooste and doctors Olsen, Jamieson, Butler, Safier, and Reddan. Dr de Leacy observed that the applicant suffers schizophrenia, but also a high level of anxiety, an intense fear of dogs, and, in Dr de Leacy's view, PTSD. He thus he endorsed (sic) the following intrusive, recollective, experiencing symptoms including having recurrent and intrusive distressive recollections of the event including images thoughts or perceptions, having recurrent distressing dreams of the event, acting all feeling (sic) as if the event were recurring at various times including having flashbacks to the event, having intense psychological distress on exposure to cues that symbolise the event and having intense physiological reactivity on exposure to such cues. He considered an alternate diagnosis as a specific phobia with respect to dogs, but considered there was less merit in this diagnosis and that a more appropriate diagnosis was PTSD because of the severity of the symptoms. Someone with a phobia would be more likely only to have avoidance symptoms. Additionally a phobia is by definition an irrational fear and in this case the fear is not irrational. Post Traumatic Stress Disorder is a condition that is quite separate from Schizophrenia. There is no direct correlation between the two conditions. There is no reason why a person with schizophrenia and (sic) should not develop Post Traumatic Stress Disorder if exposed to sufficiently severe stressful event. 10. It is conceivable that schizophrenia may have made Mr Edington more susceptible to Post-Traumatic Stress Disorder. Earlier in this report I stated that Criterion A requires the person perceives that here he is fear (sic) for his life and this perception would depend on many factors. A person who has a past history of paranoia might be more prone to fear and panic in dangerous situations. Mr Edington has cognitive slowing and would not be able to think of options as quickly as some people. This might lead to panic and to the perception of a greater sense of danger. I would make the additional point that although the (sic) this event might be considered insufficiently severe to cause PTSD in some individuals of a more robust psychological nature there would be a significant number of people in the community not suffering a pre-existing a (sic) mental illness who would suffer a similar stress reaction given the same event. The susceptibility to PTSD varies significantly and depends on past exposure to stress, coping mechanisms ad (sic) possibly genetic factors. 11. Although the anxiety symptoms may result from him being more susceptible as a result of his schizophrenia his current symptoms of stress which have been discussed in this report are not due to schizophrenia but due to a severe stress reaction as discussed. 12. I consider that Post-traumatic Stress Disorder has rendered Mr Edington totally and permanently disabled for the purposes of the definition under the terms of the policy. He is unable to a (sic) perform work in a job predominantly involving manual and walking duties i.e as a Field Assistant and this is primarily due to his intense fear (sic) being attacked by dogs and has nothing to do with his residual symptoms of schizophrenia. ... That is why the Tribunal's task is not to ask itself whether such a decision was the correct or preferable decision, nor to engage in ascertaining generally the rights of the parties, nor to engage in some form of judicial review of the decision of the trustee or insurer. Indeed in reviewing a decision of a Trustee of a fund, the Tribunal has all the powers, obligations and discretions that are conferred on the trustee: s 37(1)(a). In exercising its powers of review, the Tribunal is not restricted to the documents which were before the Trustee, nor is it confined to the manner in which the applicant addressed the subject matter: Commonwealth Superannuation Scheme Board v Dexte r [2004] FCA 1434 ; (2004) 142 FCR 151 at 166-167, Crocker 48 ATR 387-388, Oppenhuis 94 FCR at 599, HEST Australia Ltd v Sykley [2005] FCA 1381 ; (2005) 147 FCR 248 at 259. 16 In light of these principles I make the following findings with respect to the questions of law raised by the applicant. 17 First, in relation to the question of law concerning the lack of evidence supporting the findings of the Tribunal, it is clear that, as observed by the Tribunal itself, and as demonstrated by my summary of the evidence before the Tribunal, there was a dissent of opinion amongst the reporting psychologist and psychiatrists. In such a case, the weighting of the evidence by the Tribunal, including the preference given to the views of the relevant medical practitioners, is an issue of fact, and any errors in so weighting the evidence do not give rise to errors of law appellable to this Court: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259. 18 Following from this point, there was evidence before both the Trustee and the Tribunal, in particular the opinions of Dr Reddan and Dr Olsen, that the cause of the applicant's total and permanent disability was his schizophrenia, and that the applicant did not suffer from PTSD (reports of Dr Reddan and first report of Dr Butler). It appears that the Tribunal, unlike the Trustee, accepted that the applicant suffered a medical condition in the nature of either PTSD or anxiety disorder. Nonetheless there was clear evidence in the report of Dr de Leacy - which was not before the Trustee, but to which the Tribunal could have regard in light of principles emerging from cases including Sykley - that the applicant's pre-existing schizophrenia may have made him more susceptible to experiencing PTSD or an anxiety disorder. It is clearly in respect of the view the Tribunal took of the susceptibility of the applicant to either PTSD or anxiety disorder resulting from his schizophrenia that the Tribunal was referring to the "sufficient relationship" between those disorders and the applicant's schizophrenia, which latter condition was the basis of the Tribunal's finding. It was open to the Tribunal on the evidence to make that finding of fact. Interestingly, while the applicant claims as a ground of appeal that the Tribunal failed to give any or adequate weight to the views of Dr de Leacy - which weight was an issue of fact for the Tribunal in any event - on the contrary, it appears that the Tribunal gave considerable weight to the views of Dr de Leacy regarding the susceptibility of persons (including the applicant) suffering schizophrenia to PTSD or anxiety disorders. 19 Second, in relation to the question of law concerning the improper exercise by the Tribunal of its powers under s 37(1)(a) of the Act , it is clear that the role the Tribunal assumed for itself, and the question it posed for itself, were correct. The Tribunal recognised that, irrespective whether the Tribunal would have made the decision the Trustee made, its role was to consider whether the decision of the Trustee to refuse payment of the TPD benefit because of the applicant's pre-existing illness was fair and reasonable in its operation in relation to the applicant in the circumstances (s 37). 20 Further, and contrary to the submissions raised in the applicant's first ground of appeal , in my view the Tribunal did not err in finding that the Trustee's decision was fair and reasonable, notwithstanding that the Trustee did not have the opportunity to have regard to the opinion of Dr Eric De Leacy in his report dated 22 October 2005. In relation to this point, I note in passing that clearly there was no dearth of psychological or psychiatric material before the Trustee, including several reports favourable to the applicant. However the key issue here is that the Trustee did not have the opportunity to have regard to the opinion of Dr de Leacy. The obvious answer to this point is that the reason for this is because Dr de Leacy's report had been neither sought nor prepared at the time the Trustee made its decision. In my review this issue has no merit. This conclusion inevitably supports the value judgment of the Tribunal as to the fairness and reasonableness of the Trustee's decision. 22 While the reasons of the Tribunal may have lacked the same rigour as the reasons required of a court, they are discernibly attributable to the evidence before it. It is clear that the Tribunal considered that, while the applicant may have also experienced either PTSD or an anxiety disorder, the root cause of the applicant's total and permanent disability was his schizophrenia. This is a conclusion that, ultimately, the Tribunal has in common with the Trustee in relation to the applicant's circumstances. It follows that it was open to the Tribunal to conclude that the Trustee's decision in finding that schizophrenia was the cause of the total and permanent disability of the applicant was fair and reasonable. 24 Accordingly, the appropriate order is that application be dismissed. The application be dismissed. 2. The applicant pay the second respondent's costs to be taxed, if not otherwise agreed. | appeal from the superannuation complaints tribunal tribunal affirmed decision of the trustee of the superannuation fund not to pay any insurance benefit to the applicant who had been assessed as totally and permanently disabled after a workplace incident because the total and permanent disablement was caused by his pre-existing medical condition, namely schizophrenia whether tribunal's finding that the applicant's medical condition was related to his schizophrenia could not be supported by the evidence whether evidence of link between applicant's post workplace incident medical condition and schizophrenia whether tribunal improperly exercised its powers relevance of the tribunal taking into account a medical report that was not before the trustee whether adequate weight given to further medical report whether tribunal erred in law in finding decision of trustee was fair and reasonable superannuation |
The reasons in that judgment give relevant context and background to these reasons. I heard oral submissions as to costs after judgment was delivered but gave Arc Energy Ltd ("Arc") and Buru Energy Ltd leave to put in further written submissions directed to the case of Re Crusader Limited (1996) 1 Qd R 117 cited by Oil Basins. Arc submits that Oil Basins Limited ("Oil Basins") ought pay the Plaintiff's costs of responding to the application filed by Oil Basins during the afternoon of Thursday, 7 August 2008, which occupied much of the hearing on the afternoon of Friday, 8 August 2008. It also opposes Oil Basins' application for a costs order in its favour. Oil Basins Limited have leave to intervene in these proceedings. 3. On the face of the application however, the interest of the Intervener was to obtain orders under s 413 of the Corporations Act 2002 (Cth) ("the Act") failing which the adjournment and other orders were sought. Leave was granted at a time when that was the relief sought. 4 It was only later in the hearing, after such leave had been granted that the Court was advised by senior counsel for Arc that Oil Basins was, contrary to the terms of the application, actually seeking the adjournment and related orders in addition to the orders under s 413 of the Act. 5 Rule 2.13 of the Federal Court (Corporations) Rules 2000 (Cth), permits the Court to grant leave to, amongst others, a creditor or interested person, to be heard in proceedings without becoming a party. Rule 2.13 was not relied upon by Oil Basins, although arguably it was the preferable course. Rather it applied to intervene in the proceedings. Nonetheless, Rule 2.13 applies generally to proceedings under the Corporations Act 2001 (Cth) in the Federal Court. Where the attendance of the person has resulted in additional costs for any party, the Court is empowered, by virtue of the rule, to direct that the person pay those costs, and may also order that the person not be heard further until the costs are paid or secured: rule 2.13(2). The rule ensures that, whilst persons may be allowed to appear before this Court in proceedings under the Corporations Act 2001 (Cth), there remains a discretion in appropriate circumstances to award costs against them. 6 The Court's power to award costs is discretionary and is unfettered, except that it must be exercised judicially: s 43 of the Federal Court of Australia Act 1976 (Cth); s 1335(2) of the Corporations Act 2001 (Cth). The Court's discretion to order costs pursuant to the power in s 43 is at large, and that section provides a broad and ample power which ought not be read down otherwise than in accordance with accepted principle: Cirillo v Consolidated Press Property Ltd (No 2) [2007] FCA 179 at [3] per Finn J. The purpose of an order for costs is to compensate the successful party, not to punish the unsuccessful one: Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ. 7 Oil Basins submits, correctly, that generally the costs of objectors should be paid by the Company (Plaintiff): Re Crusader (1995) 120 FLR 219; and Re Matine Ltd (1998) 28 ACSR 492 ; Re Arrowfield Group Ltd (1995) 17 ACSR 649 ; Re Castlereagh Securities Ltd [1973] 1 NSWLR 624 ; Re Ampol Ltd (1989) 14 ACLR 772 , which were cited with approval by Hansen J in his decision to award the objectors their costs in Quatro Ltd v Argo Investments Ltd and Others (1999) 32 ACSR 480. 8 In my opinion, however, Oil Basins is not, properly characterised, an objector. It was not given leave in order to oppose the approval of the scheme. Rather, it was granted leave to intervene primarily in order to seek relief under s 413 of the Act. Even in respect to the application for an adjournment and related orders, I do not consider that Oil Basins is an objector. It is not a shareholder in Arc. Such orders would have served no obvious legitimate interest of Oil Basins. 6.3 The court was already scheduled to hear the Plaintiff's application on 8 August 2008, and the Plaintiff was already required to attend (and bear the costs of this attendance) at the hearing. 6.4 OBL's intervention in the Plaintiff's application was limited. It did not cause the hearing to be delayed, rescheduled or otherwise. 6.5 It was proper for OBL to draw to the Court's attention, for its consideration, the question whether shareholders had been adequately informed of the potential impact of the Supreme Court litigation. That the Court held, following deliberation, that there was no substance to that submission ought not, of itself, disentitle OBL to its costs. 6.6 Buru Energy Limited was a necessary party to the application and appeared solely as a consequence of OBL's application. The orders against Buru Energy Limited have an important consequence to OBL's rights against Buru Energy Limited (that the importance of those rights may be disputed does not diminish the reasonableness of OBL's conduct in seeking to protect its position). 6.7 There is no evidence before the Court (or at all) to suggest that OBL have frequently tried to intervene in the Plaintiff's application, nor is there any evidence to suggest that OBL have engaged in a pattern of obstruction for an improper purpose. 6.8 OBL's need for protective orders arose solely out of the spin-off of assets in accordance with the Scheme of Arrangement proposed by the Plaintiff. The issues concerning s 413 of the Corporations Act 2001 (Cth) did not need to be the subject of an application - Arc accepted that orders pursuant to s 413 should be made and would have proposed those orders had Oil Basins sought them in correspondence. It did not. Indeed, Arc's solicitors corrected the errors in the formulation of the s 413 orders as expressed in Oil Basins' interlocutory application. (b) The interlocutory process filed on behalf of Oil Basins indicates that the adjournment application, which proposed a supplementary statement be issued and a fresh scheme meeting be held, was an "alternative". Oil Basins changed its position in this regard on Friday, 8 August, by seeking orders 3, 4 and 5 at the hearing. (c) The affidavit filed in support of the interlocutory application was deficient and unhelpful. It was sworn by Kim Warren McGrath, who is the chairman of Oil Basins, and a director of that company. Mr McGrath had access to legal advice before swearing the affidavit. Mr McGrath's affidavit contained obviously objectionable material (paragraphs 8 and 9), and included a misleading heading (above paragraph 11). It offered no real assistance to the Court, and failed to annex the 6 December 2006 ASX announcement, which was highly relevant (and which Arc produced - see annexure "DDK13" to the Fifth Kirk Affidavit). (d) Counsel for Oil Basins, during the hearing on 8 August 2008, was unable to explain the reason for Oil Basins' delay in commencing proceedings in the Supreme Court of Western Australia against Arc. The delay is in excess of 18 months (taken from the date of the ASX announcement on 6 December 2006). The litigation was filed, without warning, on 1 August 2008, only 4 days before the scheme meeting and 7 days before the Court hearing. The apparent explanation offered by Mr McGrath in his affidavit (see paragraphs 11 and following), under the misleading heading "Discovery of plaintiff's breach of confidentiality agreement", lacks credibility in the circumstances. (e) Counsel for Oil Basins, during the hearing on 8 August 2008, was unable to explain to the Court the "interest" which Oil Basins had in raising issues concerning the disclosure to members, and in seeking an adjournment of the scheme. The Court has inferred that Oil Basins' was acting to obtain some commercial advantage. (f) In addition, it is relevant to consider the seriousness of the order which was sought by Oil Basins (order 5). That order was pressed by Counsel for Oil Basins at the hearing on 8 August. Order 5 proposed an adjournment of the hearing, the preparation and distribution to shareholders of a supplementary statement, and the convening of a further scheme meeting of members, which would then have resulted in a further Court hearing before this Court. All of this would have involved considerable time and expense, and a delay to the scheme process. 11 I accept the submissions made by Arc. The question of what was the real purpose of Oil Basins in pressing for an adjournment is a primary consideration. During the substantive hearing I asked counsel for Oil Basins what interest it had in seeking an adjournment on behalf of proxy voters in Arc, none of whom he represented. MR BRUCE: Well, yes, that is --- I was wondering when your Honour might ask me that. HIS HONOUR: Well, I've asked it, I've asked the question. MR BRUCE: It is, your Honour, that we simply say that it is a matter for the court. We are here principally to seek the relief that we've sought, and that has been agreed to, but we say that that has a material impact which is disputed. HIS HONOUR: Well, it has absolutely no impact at all upon the first set of orders that were sought. MR BRUCE: No, no. HIS HONOUR: It only has impact on the alternative relief you seek. MR BRUCE: That is correct. HIS HONOUR: It wasn't a flippant question. I would like to know what interest it is of your client as to the concern of the proxies filed by shareholders of Arc? MR BRUCE: It is simply, your Honour, that it is the duty of the court to be satisfied in all the circumstances. HIS HONOUR: But why are you telling me what the duty of the court is? Why are you telling me that there should - - - MR BRUCE: Sorry, your Honour. HIS HONOUR: Why are you telling the court that there should be an adjournment? Why do you want an adjournment? MR BRUCE: Because we consider, your Honour, that that --- well, I should perhaps just sit down, appoint --- and say, your Honour, that we have --- it's a matter for the court and we thought that it was our duty to bring those matters to the court's attention. HIS HONOUR: You've brought it to the attention of the court but you're pressing for the adjournment. I'm asking you why you want the adjournment. That goes beyond informing the court as to its duty. MR BRUCE: Yes, I accept that. HIS HONOUR: Why do you want the adjournment? MR BRUCE: To ensure that the Buru shareholders know what they're getting themselves in for, is one answer, sir. 12 If the purpose of Oil Basins had been merely to inform the Court as to the position of the proxy voters in light of the litigation launched by Oil Basins then that was achieved by reading the affidavit of Mr David Charles Griffiths sworn 7 August 2008. The purpose behind the application for the adjournment however was not explained. It was the hearing of that application which consumed much of the Court time on Friday 8 August 2008. The long delay in commencing the litigation was unexplained. The claims made in the litigation are deficient of supporting material and obvious legal merit: Arc Energy at [9]. Its interests would have been served by the making of the orders sought under s 413(1)(c) of the Act. I was not given any answer which I found to be satisfactory. Oil Basins' conduct in bringing such a belated application upon a paucity of fact and without a satisfactory explanation leads me to conclude that its real reasons are for some commercial gain or advantage, by putting a roadblock in front of the progress of the scheme. It should not be allowed to succeed in that course unless of course there is, objectively viewed, a proper basis for granting the orders sought. 14 It was appropriate for Oil Basins to bring the matter of the litigation and the situation of the proxy voters to the attention of the Court. I am satisfied however that the application for an adjournment with associated orders was made for an ulterior purpose: Arc Energy at [10]. It unnecessarily added to the costs of the hearing. Even if Oil Basins may be considered to be an objector this finding is an exceptional circumstance warranting a costs order against it: Re Crusader at 231-232; Re Matine Ltd at 494. 15 Oil Basins should pay Arc's costs in relation to the application for an adjournment. Oil Basins will not be liable for the costs of the entire hearing on 8 August 2008. It will not be liable for that part of the hearing taken up with the explanation made by senior counsel for Arc as to the background to the litigation instituted by Oil Basins and submissions made as to the interests of the proxy voters. This would have been necessitated in any event once the matter of the litigation had been brought to the attention of the Court. Oil Basins was successful in obtaining orders under s 413 of the Corporations Act . This reflected Oil Basin's legitimate interest. However, I will not order costs in favour of Oil Basins in relation to obtaining those orders. Arc consented to these at the hearing and would have done so before the hearing if Oil Basins or its solicitors had sought Arc's consent. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | intervener in application for approval of scheme of arrangement appropriate for intervener to bring court's attention to litigation instituted by it against plaintiff relevant to whether scheme ought be approved intervener then pressed for adjournment and further meeting of members purportedly to protect interests of proxy voters who had not been informed directly by the plaintiff of litigation brought against it by the intervener adjournment sought for ulterior purpose. costs |
Those orders are the orders made in the substantive judgment in this matter SZHJE v Minister for Immigration and Citizenship [2007] FCA 904. In that case, I dismissed an appeal by the appellant against the decision of Emmett FM of 14 March 2007 which had, in turn, dismissed an application for judicial review of a decision of the Refugee Review Tribunal of 29 August 2005 and handed down on 20 September 2005. The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Citizenship to refuse to grant a protection visa to the appellant. 2 Although I am considering an application filed by the appellant in the substantive matter, for convenience I shall continue to refer to SZHJE as "the appellant". The appellant did not attend the hearing before me on 13 June 2007 and seeks to have the orders made that day set aside. The appellant's submission is that he did not receive the letter notifying him of the hearing before me on 13 June 2007 and, therefore, did not attend the hearing. The appellant further submits that he had filed information in preparation for the hearing and it was evident from this action that he wanted to attend. However, he could not do so because he was not aware of the hearing date. 3 I note by way of background that this matter first came before me on 22 May 2007. Both parties were present. At that hearing, it became apparent that an adjournment would be necessary as the appellant may not have received a copy of the reasons for decision of the learned Federal Magistrate and that in the interests of justice he should have an opportunity to consider her Honour's reasons. (I noted at that hearing that the decision of the Federal Magistrate was delivered on 14 March 2007 at which time her Honour indicated that the reasons for her decision would be given at a later date and that I understood that reasons for her Honour's decision were given on 7 May 2007. In my judgment in SZHJE [2007] FCA 904 at [16] - [18] I outlined the measures taken by the Court and the respondent to notify the appellant of the hearing date and indicated that I was satisfied that all reasonable attempts had been made to notify the appellant of the hearing. 5 The appellant has said in Court this morning that his appeal was dismissed on 13 June 2007 because he did not appear. This is not the case. As I made clear during the 13 June 2007 hearing, and as I specifically indicated in my judgment, I was not prepared to adjourn the hearing for want of appearance. In view of the material before the Court, I was prepared to decide this matter on the merits of the material before me. My reasons for decision in respect of each of the appellant's grounds of appeal are set out in SZHJE [2007] FCA 904 at [23] . 6 Accordingly, I note that this is not a case where the appellant's appeal was dismissed pursuant to s 25(2B)(bb)(ii) Federal Court of Australia Act 1976 (Cth) because the appellant failed to attend the hearing. In light of this, the question is upon what basis the appellant could seek to have my orders in SZHJE [2007] FCA 904 set aside. One clear avenue is by way of appeal from that decision, which is not a matter for this Court. Another possible ground is in terms of O 35 r 7 Federal Court Rules which provides in O 37 r 7(1): "The court may vary or set aside a judgment or order before it has been entered". Order 35 r 7(2) is not applicable in these circumstances because the Court is exercising its appellate jurisdiction. 7 No submissions have been made this morning as to whether my judgment or order of 13 June 2007 have been entered. Considering the situation on the best case of the appellant, however, comments of Toohey, Gaudron, McHugh, Gummow and Kirby JJ in De L v Director-General, NSW Department of Community Services [1997] HCA 14 ; (1997) 190 CLR 207 are relevant. The court may do so if it is convinced that, in its earlier consideration of the point, it has proceeded "on a misapprehension as to the facts or law", where "there is some matter calling for review" or where "the interests of justice so require". It has been said repeatedly that a heavy burden is cast upon the applicant for reopening to show that such an exceptional course is required "without fault on his part", ie without the attribution of neglect or default to the party seeking reopening. By such expressions of the power to reopen final orders, courts seek to recognise competing objectives of the law. On the one hand, there is the principle of finality of litigation which reinforces the respect that should be shown to orders, final on their face, addressed to the world at large and upon which conduct may be ordered reliant upon their binding authority. On the other hand, courts recognise that accidents and oversights can sometimes occur which, unrepaired, will occasion an injustice. In the case of a final court of appeal, such as this court, that injustice may be irremediable, unless the court itself, acting promptly, is persuaded to reopen its orders so as to afford relief in the exceptional circumstances of the case. It is unfortunate that the appellant did not appear at that hearing and that additional time and expense have been incurred on account of this application. However, I am not persuaded that there is any reason to depart from my decision in SZHJE [2007] FCA 904. I have considered all the appellant's claims in full in that judgment and am not satisfied that this is a case where there has been some misapprehension as to facts or law or some accident or oversight has occurred which occasions an injustice such that the decision should be set aside. No further submissions have been made by the appellant today which persuade me that there is an appellable error in the decision of the Court below, which could justify a review of my decision and orders of 13 June 2007. The application filed 19 June 2007 be dismissed. 2. The appellant pay the costs of the first respondent to be fixed in the sum of $500. | appellant failed to appear appeal dismissed on merits application to set aside order appellant's grounds of appeal and written submissions considered by the court practice and procedure |
There are three principal areas of dispute in relation to Jarra's proposed orders. 2 The first question is whether the respondents should be ordered to file and serve an affidavit deposing as to what records are kept and the way in which such records are made and retained by them. Jarra also seeks information as to how certain pulp and paper products ("PPP") and corrugated fibreboard packaging products ("CFP") are categorised or grouped for the purpose of recording production, production cost, sales volumes, sales revenues, sales margins or profits and production figures. In addition, details are sought as to how PPP and CFP production capacities are recorded, monitored, analysed and reported. Information is further sought as to how the costs in manufacturing or supplying PPP or CFP products are recorded, monitored, analysed and reported. 3 The second area of dispute relates to an order that the Amcor entities make initial discovery of certain electronic databases, one of the principal databases being an Oracle database. 4 The third dispute concerns the application of a discovery protocol formulated in relation to the proceedings brought by the Australian Competition and Consumer Commission ("ACCC") against the Visy entities. This protocol covers the form in which information is to be provided by the parties in the ACCC proceeding and contains provisions in relation to specific categories of meta-data and the de-duplication of electronic documents. 5 The proceeding before me is a representative action brought pursuant to Part IVA of the Federal Court of Australia Act 1976 (Cth) . The Application and Statement of Claim were filed on 11 April 2006. The Amcor entities on 7 July 2006 filed a Cross-Claim against the Visy entities, and the Visy companies filed a Defence to that Cross-Claim on 23 August 2006. A Defence was filed by the Amcor respondents on 7 July 2006 and there has been no Reply by the Applicants to date. 6 It is not necessary for the purposes of this discovery application to descend into the detail of the issues in the case. The Application is brought by a group whose members are described as "all those persons who purchased and paid more than $100,000.00 for corrugated fibreboard packaging products in Australia during the period 1 May 2000 to 1 May 2005. " The applicants claim to have suffered loss and seek declarations and damages in respect of alleged contraventions of s 45 of the Trade Practices Act 1974 (Cth) alleging that arrangements were made between the Amcor and Visy companies which related to the fixing, controlling or maintaining of prices for the supply of corrugated fibre board packaging products. The allegations in the Statement of Claim are disputed. On 27 July 2006, I ordered that the parties agree on categories of discoverable documents or, in default, file an application for discovery. The parties have been unable to agree on the scope of these categories. 7 In late 2005, five months before this proceeding was instituted, the ACCC commenced proceedings against the Visy entities and certain individuals in relation to alleged breaches of s 45 of the Trade Practices Act 1974 (Cth). Those proceedings raise issues of fact and law which, it is said, are identical to the issues in the present proceeding. The ACCC proceedings also make allegations against the Amcor entities as one of the parties to the arrangement. 8 On 23 February 2006, Heerey J, who is the Docket Judge for the ACCC proceeding, ordered discovery in that proceeding. This order has been treated by the parties as requiring them to give "general" discovery in that matter and there was no reference in the order as to categories of documents for discovery purposes. I understand that matter has been tentatively fixed for hearing to commence in October 2007. 9 On 16 June 2006, the Visy entities agreed with the ACCC as to the terms of an Electronic Document Exchange Protocol ("the ACCC Protocol") in respect of discovery in the ACCC proceeding. That discovery involves many thousands of documents. The ACCC Protocol required the parties to exchange discovered documents in prescribed electronic format described as single page TIFF files. The parties later agreed to the processing of documents in the possession of Visy companies and their storage on a Ringtail database ("the Existing Database"). The discovery is now well-advanced, with a total of 19,653 documents stored in the Existing Database, of which 15,556 are images of hard-copy paper documents and 4,097 are images of original electronic documents (namely emails and the attachments to them) as well as electronic files which have been located as a result of searches of computer servers and computer back-up systems. No doubt, in many cases, some of the documents or attachments will contain many pages of material. It is also anticipated that a further 10,000 hard-copy documents and 15,969 electronic documents are in the process of being imaged and added to the Existing Database. Further searches are also underway for potentially discoverable documents in relation to the ACCC proceeding. To date, the Visy entities have spent in the order of $35,000.00 processing documents for inclusion, and anticipate spending an additional $57,000.00 in respect of additional electronic and hard-copy documents. The Visy entities have provided an estimate that their total costs for processing documents for discovery in accordance with the ACCC Protocol will be in the range of $240,000.00 to $320,000.00. 10 In addition, the Visy entities claim that if the Amended Notice of Motion is granted in this proceeding, there will be further costs incurred in the rectification of coding and other adjustments to the documents which has not been counted. It is also submitted that these figures are exclusive of the costs of examining the documents for the purpose of obtaining legal advice as to discoverability and issues such as privilege. 11 Furthermore, there is a dispute as to extent and number of fields relating to meta-data that it is appropriate to provide at this early stage of the proceeding. The expression "meta-data," which is the subject of a substantial part of the claim for discovery in relation to electronic records, is a reference to electronic information created by and embedded in electronic documents in the form of electronic data. The term describes data contained within an electronic file relating to the identification, origin or history of the file itself. It is, in effect, electronic information about other electronic data. Meta-data can be used to ascertain the author and origin of a document, the existence of any attachments, and whether the document was sent or received by any particular individual. The information which is contained in the meta-data is not visible on a print-out of the relevant document, which shows only the face content and does not disclose the layers of electronic data beneath the visually readable information. 12 In the processing of the meta-data, advanced software may assist in ascertaining the provenance of a document and whether any alterations or deletions have been made to a document's original format. A new sector of the software industry has developed which provides methods of searching large fields of meta-data in a matter of seconds. These applications have proven invaluable to lawyers, particularly in complex litigation involving the collection and analysis of vast numbers of electronic communications. 13 In addition, meta-data can also provide substantial assistance in managing large volumes of documents and assisting with de-duplication, an electronic process by which software identifies absolutely identical documents and "clusters" those which look like they are almost duplicates of each other. Evidence from Mr McCormack, a computer expert for Jarra, states that the provision of meta-data reduces the need to check for duplicate copies because it can be filtered electronically to ensure that similar documents are clustered. This eliminates the need for documents that only have immaterial differences to be examined for production. 14 Jarra claims that the provision of suitable and sufficient fields of meta-data is critical to minimise human error and enable the use of software filters to perform keyword searches and cluster related documents. The ACCC Protocol, which the Amcor and Visy entities have already accepted, provides for the discovery of fourteen fields or parameters of meta-data in relation to electronic communications. Jarra seeks an additional nine fields of meta-data information. However, there is no evidentiary factual basis for this contention. The Court may also make such orders as are required to prevent unnecessary discovery. This Court is well aware of the problems created by unnecessary discovery and its impact on a complex proceeding. As highlighted by Practice Note 14, the Court is concerned with reducing the expense and burden of discovery. The Note provides that the Court will not order general discovery as a matter of course, but will expect to be satisfied as to whether any and what discovery is essential. The Court will determine whether discovery should be limited in order to reduce expense by restricting it to particular issues or allowing discovery in stages. In deciding whether to order discovery, the Court will have regard to the issues in the case and the order in which they are likely to be resolved, as well as the resources and circumstances of parties and the likely costs and benefits of the discovery. Practice Note 14 also states that orders for discovery will usually be limited to documents required to be disclosed under O 15 r 2(3), which sets out limited classes of documents. The word "document" is broadly defined in the Federal Court Rules to include documents encompassed by the definition of "document" in the Evidence Act 1995 (Cth), as well as any material data or information stored or recorded by mechanical or electronic means: see O 1 r 4. From this description, it is clear that embedded electronic information in relation to relevant documents, including the information embodied in electronic meta-data, is discoverable. The touchstone in both the Rules and the Practice Notice is the necessity for documents to be produced in order to ensure a comprehensive and fair determination of the matter on the merits. 17 The first relevant question is whether the respondents, at this stage of the proceeding, should be required to disclose on oath all details as to their records and methods of recording regarding the categorization of PPP and CFP products and other matters as outlined in as in paragraph 2 of the Amended Notice of Motion and noted above at [2]. 18 The difficulty with this requirement is that it proceeds on the basis that relevant records will not be discovered. In my view, the first step is to get disclosure and production of the basic relevant documents. Having examined those documents, if a proper basis can be made out that this disclosure is inadequate, then additional documents can be sought. The purpose of discovery is to obtain all records relevant to the issues before the Court as raised on the pleadings or particularised. The question then arises as to whether it is necessary to provide the detailed record keeping information sought before any documents are discovered or inspected in this proceeding. 19 It is further submitted that the orders requested in paragraph 2 should not be granted on the basis that the material sought that paragraph relates only to damages, which will be decided at a later stage. It is also said that paragraph 2 is too broad because it relates to the pulp and paper (PPP) products and not solely to the corrugated fibre board (CFB) products which are at the centre of the proceeding. 20 On the available evidence, I consider that the information could be relevant to the liability issue, and that some of the material relating to the PPP products may arguably bear on the question of the existence, nature and extent of the alleged price-fixing arrangements. However, I am not persuaded that this information as to record-keeping, methods of analysis, production costs and the other matters as referred to in paragraph 2 is necessary to enable adequate discovery at this stage. No evidentiary basis has been made out to justify such a requirement. 21 Under the ACCC Protocol, which has been accepted by both respondent groups in this proceeding, discovery of a large volume of documents will be provided. Due to the overlap of legal and factual matters with the ACCC proceeding, I consider that the information called for under that Protocol should be disclosed and, subject to claims of privilege and confidentiality, those documents can be inspected. I am satisfied that the ACCC, in consultation with the Visy entities, has worked out a substantially suitable protocol which is suitable for application in this proceeding with some adjustment. The ACCC Protocol was no doubt drawn up after considerable negotiations. At present, I am not persuaded that the Protocol is inadequate or inappropriate as a basis for discovery. This case is one in which discovery in stages is appropriate, and by a staged production and inspection, a proper basis may be laid for any request for additional discovery. Having regard to the expense, delay and complexity of the discovery process, as well as the prolongation of the trial process by unnecessary discovery, it is essential that orders for further discovery be substantiated. 22 I am informed that discovery in the ACCC proceeding is substantially advanced although by no means complete. For the above reasons, and having regard to the fact that there is no present reason to believe that any particular document or class of document will not be produced in accordance with the ACCC Protocol, I am not persuaded that the information sought in paragraph 2 of the Amended Notice of Motion is necessary at this stage on the material presently before me. 23 The second dispute concerns only the Amcor entities and relates to a number of electronic databases, including an Oracle database, in respect of which Jarra seeks reports and extracts as outlined in paragraph 4 of the Amended Notice of Motion. 24 This proposed order is resisted on the ground that the Amcor entities wrote to Jarra two days before the hearing setting out several difficulties presented by Jarra's request for the production of eight databases in native electronic format. In particular, it was highlighted that the cost to the Amcor entities of providing the Oracle database in this format would be in the vicinity of $100,000.00. It was also emphasised in this letter that it would be difficult to regenerate certain reports and information from several of the other databases. The letter indicated that Amcor was continuing its enquiries in relation to the obtaining the specific information as contained in the databases, and was in the course of taking steps to provide the information in a mutually acceptable form. In my view, in these circumstances, it is premature to require disclosure or production of the information as outlined in the Amended Notice of Motion until those avenues have been explored. 25 The next matter concerns the form of the discovery and any modifications to the ACCC Protocol which should apply. In considering the position of the Visy entities, the first question is whether they should be required to produce their electronic information documentation in PDF rather than TIFF format as provided for in the ACCC Protocol. The essential difference between these two formats is that the PDF format is "text-searchable," whereas with the TIFF format each page is scanned as a single image and cannot be text-searched. I note that the Amcor entities do not object to production in PDF format. However, the Visy entities say that such a requirement is unduly oppressive and that the production of documents in PDF format will involve substantial extra time and expense as well as the duplication of documents in two different formats. It is further submitted that the Visy entities are well advanced in preparing discovery using the TIFF format. Jarra responds by arguing that this objection can be met by limiting the PDF requirement to future discovery. 26 The difficulty with this approach is that there will be then two different formats used for production and discovery in the present proceedings. Again, Jarra does not offer to meet any costs of the conversion of the records from TIFF format to PDF format. Having regard to the material before me, I do not think it is appropriate at this stage for an order to be made requiring the conversion of records to PDF format. I am not convinced that sufficient cause has been shown to depart from the ACCC Protocol in relation to this. 27 The final matter concerns the important question of disclosure of the meta-data which attaches to the electronic records. As noted earlier, the ACCC Protocol anticipates the production of fourteen meta-data searchable fields. Jarra seeks to have the Protocol varied in this proceeding to require the meta-data fields to be increased to 23 fields. The advantages of taking this course have been outlined by Mr McCormack in his evidence. Although I am satisfied that meta-data could prove useful in providing additional searchable information to reduce the number of discoverable documents, I am not persuaded that the incremental nine data fields are necessary at this point. Again, I think that inspection should first be undertaken of the thousands of documents which will be produced under the ACCC Protocol as it now stands. The question as to the necessity for the additional meta-data fields involving further expense can then be deferred and canvassed if necessary on a fresh application at a later stage, with the assistance of reference to specific documents. 28 In reaching this conclusion, I have taken into account the evidence that meta-data could be useful in reducing the need to check for duplicate documents. Nevertheless, I do not think this advantage outweighs the desirability of first examining the documents produced using the fourteen fields on the first wave with a view to reviewing the position at a later stage of the proceeding. 29 Accordingly, I dismiss the Amended Notice of Motion. In relation to costs, I consider that the costs should be costs be in accordance with the outcome. 30 As to further orders, I consider that orders to the general effect of those set out in the Draft Minutes of Order sought by the Amcor entities provide an appropriate basis for orders in relation to discovery at this point. I therefore propose to make orders in the form of that Draft and the Schedules, with the exception that there will be no order that documents must be produced in PDF format. 31 I direct the parties to consult and draw up Short Minutes to give effect to these reasons. If there is any disagreement, I will hear the parties at time to be arranged with my Associate. 32 The proceeding is adjourned to 20 April 2007 at 9.30 am for further directions. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | representative proceeding brought by group who claim to have suffered loss in respect of alleged contraventions of s 45 of the trade practices act 1974 (cth) parallel proceedings in federal court instituted by the accc in victorian registry appropriate application in this proceeding of discovery protocol negotiated by parties to accc proceedings application for production of documents in "text-searchable" pdf format as opposed to image-based tiff format application for discovery of electronic databases in their native electronic format application for an additional nine fields of "meta-data" to be produced in relation to discoverable documents advantages of the provision of meta-data in the course of discovery, particularly as to tracing the origin, amendment history and transmission of electronic documents and assisting with de-duplication- principle that court may limit discovery by restricting it to specific issues or allowing discovery in "waves." discovery |
The applicant, who is a citizen of the People's Republic of China arrived in Australia on 12 December 2007. On 25 January 2008 he applied to the Department of Immigration and Citizenship for a Protection (Class XA) visa. On 12 February 2008 a delegate of the Minister refused to grant the visa. The applicant was notified of the decision on the same day. On 11 March 2008 the applicant applied to the Refugee Review Tribunal (the Tribunal) for a review of the delegate's decision. On 12 June 2008 the Tribunal affirmed the decision not to grant the applicant a Protection (Class XA) visa. On 8 July 2008 the applicant applied to the Federal Magistrates Court for judicial review of the Tribunal's decision. On 7 November 2008 Cameron FM dismissed the application for judicial review finding that the applicant had not established jurisdictional error on the part of the Tribunal. Counsel was present when Cameron FM published his reasons and made his orders. On 11 November 2008 counsel wrote to the applicant's solicitor enclosing a copy of Cameron FM's reasons for judgment and the orders. However it seems appropriate that the applicant be aware that payment of my fees for this application be settled before the appeal process can proceed. He will need to organise payment within the next 7 days so the appeal documents can be drafted. The applicant's solicitor deposes in an affidavit sworn on 9 December 2008 that the applicant provided him with funds for counsel's fees on 2 December 2008. He said that as soon as he received the money he gave counsel instructions to prepare the appeal. The applicant's solicitor does not explain whether he brought to the applicant's attention that O 52 r 15 of the Federal Court Rules requires the notice of appeal to be filed and served within 21 days after the date when the judgment to be appealed from was pronounced. No notice of appeal was filed within the time prescribed by O 52 r 15 but on 17 December 2008 the applicant applied for an extension of time to file and service the notice of appeal. The application was supported by the applicant's solicitor's affidavit to which I have already referred. Order 52 rule 15(2) allows the Court, for special reasons, to give leave to file and serve a notice of appeal outside the period of 21 days specified in O 52 r 15(1)(a). In Jess v Scott (1986) 12 FCR 187 , the Full Court said that special reasons need to be shown why the appeal should be permitted to proceed. The Court explained that special reasons in that context was meant to distinguish the case under consideration from the usual course according to which the time is 21 days. (b) There must be some acceptable explanation for the delay. (c) Any prejudice to the respondent in defending the proceedings, caused by the delay, is a material factor militating against the grant of an extension. (d) The mere absence of prejudice to the respondent is not enough to justify the grant of an extension. (e) The merits of the substantial application are to be taken into account in considering whether an extension is to be granted. As I have already noticed, it remains unclear whether the applicant was put on notice that the notice of appeal needed to be filed by 28 November. Counsel's letter to the applicant's solicitor put the solicitor on notice that there was a degree of urgency about the matter but that seems not to have been appreciated by the solicitor who swore his affidavit on 9 December 2008 but did not lodge the application for this extension until 17 December 2008. There is no prejudice to the respondent but as the Court said in Hunter Valley Developments Pty Ltd v Cohen 3 FCR 344 the mere absence of prejudice is not enough to justify the grant of an extension. It seems to me that whether or not an extension of time should be granted in this application will be determined by reference to the merits of the appeal to which I will now turn. The applicant was born on 7 April 1974 in the Archeng District, Harbin City, Heilongjiang Province in China. He was educated between 1981 and 1993, having studied at a technical school in the last three years of his schooling. In March 1994 he was employed by Archeng Water Company and worked for that company for more than 13 years. During this period of employment he studied for Business Management at Harbin Economic Cadre Management College. The Archeng Water Company is a State-owned enterprise and has the monopoly for water supply in the Archeng area. It has the responsibility of regulating the extraction of water so as to preserve ground water. The company established an inspection team to inspect water meter systems on a regular basis. In October 2006 the applicant was transferred to an inspection team. An inspector's duties were not only to inspect water meters but also to verify whether or not the users have paid proper water rates. The applicant said that he discovered that a restaurant's meter system had been modified without authorisation and that it was being charged at a residential rate rather than the higher commercial rate. He said that he brought those matters to the attention of the restaurant owner and then reported the matter to the leader of the inspection team. He said that the company did nothing about it but said that it would be addressed after another inspector, who was then in hospital, returned to work. The applicant said that the restaurant was controlled by the family of Mr Yun Fei Wang who was the then President of the Political and Legal Committee in Archeng District which had the responsibility of supervising the Courts, the Procuratorate and the Public Security Bureau in Archeng District. He said that in April 2007 he wrote anonymously to the Harbin Discipline Inspection Committee, Harbin City Anti-corruption Bureau, Harbin People's Procuratorate and Harbin People's Court revealing corruption in relevant government agencies in Archeng District urging those authorities to investigate the restaurant run by Yun Fei Wang's family and the corrupt officials, including Yun Fei Wang and those in charge of the Archeng Water Company. He said that the Harbin Municipal Government sent an investigation group into the Archeng District who spoke with him on three separate occasions inviting him to provide information to assist them in their investigation. He said that on 25 May 2007 the investigation group concluded that the restaurant, Yun Fei Wang and the leaders of Archeng Water Company were "clean". On the same day, at about 7.00 pm whilst he was having dinner with his wife and daughter, three police officers came to his house. They said that he was suspected of writing anonymous letters to damage Yun Fei Wang's reputation, as well as other leaders of the Archeng Water Company and, as a result, he was to be detained under investigation. He was sent to Archeng No 1 Detention Centre. He said that he was treated as a Falun Gong practitioner, notwithstanding that he was not. As a consequence, he said that he was subjected to persecution in the Detention Centre. He said that he was tortured, mistreated and humiliated every day and night and was forced to do punitive work. Notwithstanding his treatment, he refused to confess that he had been the author of the anonymous letters. He was detained for six weeks. When he was released on 6 July 2007 he was unemployed because he had been dismissed as soon as he had been detained. In August 2007 he said he began work as a temporary construction labourer and became acquainted with Song Tao Mao who was a member of an underground political association known as "China Freedom and Democracy Party". He said he was recruited to the Party by Mr Mao and thereafter secretly distributed promotional materials protesting against the communist dictatorship in China. He also assisted Mr Mao, he said, to recruit new members of the party. He said that in October 2007 an action group of the Party was established in the District under the leadership of Mr Mao. The action group had two objectives, namely the distribution of pro democracy materials and the recruitment of members. The applicant said that he appreciated the dangers involved in his association with the China Freedom and Democracy Party and therefore asked a friend to arrange a trip overseas in case there was any threat to his safety. On 1 December 2007 two members of the action group, the applicant said, were arrested by the Public Security Bureau. The applicant said that he had already obtained his visa and he arranged to leave the country as soon as possible. He said that Mr Mao was arrested on 20 December 2007, and another member of the action group arrested on 8 January 2008. He said his wife had been questioned by the police five times since he left and his house searched on each occasion that she was questioned. The applicant gave evidence before the Tribunal. The Tribunal concluded "that the applicant's material claims lack credibility and cannot be accepted". The Tribunal identified a number of matters of detail which it said rendered his evidence highly implausible. The Tribunal did not accept the details of his work history. Nor did the Tribunal accept that the applicant was ever arrested, tortured and detained by the police or any other interest group. The Tribunal found that his answers in relation to the China Freedom and Democracy Party's guidelines were "rambling and non-responsive". This raises serious doubts as to whether the applicant did join the Freedom of Democracy Party and become an active member. It also raises serious concerns in relation to the credibility of the applicant. It did not accept that two members of the Party were arrested on 1 December 2007 or that, if they were, that drove the applicant to leave China. The Tribunal found that the applicant was not a witness of truth and was prepared to fabricate his claims to give himself the profile of a refugee. It rejected his account to which reference has been made and found that the applicant's claims of fear and persecution were not well-founded. Specifically, the Tribunal found that if the applicant returned to China there was no real chance that he would be "arrested, detained, tortured, imprisoned or killed for writing anonymous letters of complaint to the authorities or for his membership of, or perceived membership of, and activities associated with the Freedom and Democracy Party". For those reasons, the Tribunal was satisfied that there was no real chance that the applicant would be persecuted if he were to return to China. In his application to the Federal Magistrates Court the applicant complained that the Tribunal had fallen into jurisdictional error by contravening s 424AA of the Migration Act 1958 (Cth) (the Act) in that it did not ensure that the applicant understood why the country information put to him at the oral hearing was relevant to the review. I'll explain to you why it's important first and then I'll give you an opportunity to say anything you wish to say. This is important, because it could result in me forming the view that you are not a witness of truth. If I were for form that view, it could lead me to the conclusion that you are not a refugee. If I were to reach that conclusion, then I would have to affirm the decision made by the Department of Immigration. That would mean that you would not be entitled to a protection visa and your application would be unsuccessful. Those laws prevent certain people from leaving China. This includes people that the Chinese authorities consider to be harmful to state security or national interest. So, if you are deemed to be somebody who are --- who is harmful to national interests, then this --- the information is that you would not have been allowed to leave China. You would have been on a black list. You don't have to and if you wish to say something you can do so or you can ask some more time to respond [sic]. Do you want to say anything about that? The Tribunal then referred to the country information which was to the effect that the law in China prevented certain people from leaving China and those people include people that the Chinese authorities considered to be harmful to State security or national interests. It was put to the applicant that if he had been arrested and detained for six weeks and suffered the ill-treatment of which he complained as a result of writing anonymous letters, the country information suggested that he would not have been allowed to leave China. He was asked to comment on that. He was also asked to comment on how it was that he was able to travel on his own passport and had no problems leaving from the airport. It was contended before the Federal Magistrate that the information which was put to the applicant in that passage was information notified to him pursuant to s 424AA of the Act and that the Tribunal failed to ensure that, as far as reasonably practicable, the applicant understood the relevance of the criteria for preventing departure from China under Article 8V of the Chinese "Law of the Control of Entry and Exit of Citizens". The Federal Magistrate concluded that the applicant's submission was to particularise and expand on information which the Tribunal had paraphrased or summarised in what it put to the applicant. He concluded that whilst the Tribunal could have put what was said to be what should have been put, the Tribunal could not be criticised for summarising the information in the way that it did. For those reasons, the Federal Magistrate concluded that even if the Tribunal had an obligation to give information pursuant to s 424AA(b)(i) that it did not breach that obligation. However, the Federal Magistrate also concluded that the information in question was independent country information which the Tribunal had no obligation to notify to the applicant. He followed a decision of Cowdroy J in SZLXI v Minister for Immigration and Citizenship [2008] FCA 1270 in which his Honour concluded that the exclusions contained in s 424A(3) applied with equal force to s 424AA. The Federal Magistrate concluded that that decision stood for the proposition that independent country information did not have to be provided to an applicant under s 424A(1) and s 424AA. The Federal Magistrate analysed for himself the two sections and came to the same conclusion as Cowdroy J and, in doing so, disagreed with a decision of Driver FM in SZLTC v Minister for Immigration and Citizenship [2007] FMCA 384 to the contrary. In the applicant's draft notice of appeal on this application two grounds are raised. Section 424AA and s 424A are within Division 4 of Part 7 of the Act. Section 422B provides that that Division is taken to be an exhaustive statement of the natural justice hearing rule in relation to the matters it deals with. The matter with which it deals is the manner in which the Tribunal must proceed on an application for review. The legislative history of the two sections under consideration is worth recording. Section 424A was introduced into the Act by s 3 of Schedule 3 of Part 1 of the Migration Legislation Amendment Act (No 1) 1998 (Cth) on 11 December 1998. It is to be noted that s 424A(2A) was introduced into the Act by the Migration Amendment (Review Provisions) Act 2007 (Cth) (the second amending Act) on 29 June 2007 at the same time as s 424AA was enacted. The subsection and the section are complementary. Section 424A(2A) excuses the Tribunal from compliance with the obligations in s 424A(1) if the Tribunal proceeds in accordance with s 424AA. The sections are markedly different in their purpose. Section 424A is mandatory in its terms and imposes a procedural obligation on the Tribunal to give to the applicant clear particulars of any information that the Tribunal considers would be the reason, or part of the reason, for affirming the decision that is under review and ensure, as far as is reasonably practicable, that the applicant understands why that information is relevant to the review and the consequences of the information being relied on in affirming the decision that is under review. It also requires the tribunal to invite the applicant to comment on the information or to respond to it. Section 424A(3) excises from the information that must be given to the applicant the particular information in the subsection. Section 424A(3)(a) specifically excludes country information from the information which must be given under s 424A(1). Section 424A(3)(b) excludes from the information that must be supplied by the Tribunal to the applicant, information that the applicant gave for the purpose of the application for review. Section 424A(3)(ba) which was first enacted in the second amending Act also excludes information that the applicant gave during the process that led to the decision under review other than information that was provided orally by the applicant to the Department. The purpose of paragraphs (b) and (ba) of s 424A(3) is clear enough. It is to exclude from the information which must be given to the applicant information which the applicant himself or herself gave for the purposes of the application and the processes following the application. The Tribunal is relieved of the responsibility of telling the applicant that which the applicant told either the Tribunal or the Department in writing. Because compliance with the natural justice hearing rule by the Tribunal requires the Tribunal to comply with any mandatory provision in Division 7, the Tribunal must comply with s 424A(1). The obligations in s 424A(1) can be discharged by giving the applicant the information and the invitation in one of the methods specified in s 441A or, if the applicant is in immigration detention, by the method prescribed for the purpose of giving documents to a person in immigration detention: s 424A(2). Prior to the enactment of s 424AA and s 424A(2A), the Tribunal could only comply with the obligation in s 424A(1) by giving the information and invitation to the applicant in one of the ways prescribed in s 424A(2). However, since the enactment of s 424AA and s 424A(2A), the Tribunal does not have to comply with s 424A(1) if the Tribunal proceeds in accordance with s 424A(2A). Section 424A(2A) is engaged "if the Tribunal gives clear particulars of the information to the applicant, and invites the applicant to comment on or respond to the information, under s 424AA". Section 424A(2A) does not, on the face of it, require the Tribunal to comply with s 424AA(b)(i) before s 424A(2A) is engaged but I think, although it does not need to be decided on this application, that it is implicit in s 424A(2A) that compliance with s 424A(1) is not excused unless there is compliance in all respects with s 424AA. Section 424AA is not cast in the mandatory terms of s 424A. At least s 424AA(a) is not. Instead, s 424AA(a) permits the Tribunal, where an applicant is appearing before it pursuant to an invitation under s 425, to orally give to the applicant clear particulars of any information that the Tribunal considers would be the reason or part of the reason for affirming the decision that is under review. Section 424AA(a) is facultative. It permits the Tribunal to adopt a different procedure to the procedure which is mandatory under s 424A. It is entirely discretionary. However, if the Tribunal resorts to using s 424AA(a), it must comply with s 424AA(b). So whilst s 424A(a) is permissive if it is invoked, the Tribunal must comply with s 424AA(b). That is why I have construed s 424A(2A) as I have. Section 424AA(a) assumes that s 424A has not been complied with, at least in relation to the information which is orally given pursuant to s 424AA(a). There would be no point in the Tribunal resorting to s 424AA(a) if the Tribunal had already given the information to the applicant in accordance with s 424A(1) and by the processes in s 424A(2). Section 424AA does not, of itself, cast any obligation upon the Tribunal to provide to the applicant any of the information which the Tribunal does not have to provide under s 424A(3). That is because s 424AA does not oblige the Tribunal to give any information to the applicant. It merely permits it to do so. The applicant contended that the absence of an equivalent of s 424A(3) in s 424AA means that the Tribunal must orally give the information in s 424A(3). That contention must be rejected. As already noted, s 424AA(a) is facultative. It permits the Tribunal to give the information in s 424AA(a) to the applicant. It does not oblige the Tribunal to give the applicant orally any information. Therefore, there is no obligation to give the information in s 424A(3) orally to the applicant. Because s 424A is not mandatory, there is no reason to exclude from the information which is to be given to the applicant the information in s 424A(3). There is no point in excluding any information when in fact no information has to be given pursuant to this section. A failure to comply with s 424AA merely means that s 424A(2A) is not engaged and the Tribunal is not excused from compliance with s 424A. That then means the Tribunal must comply with s 424A. If the Tribunal is obliged to comply with s 424A it does not have to give the information in s 424A(3). Whichever way the Tribunal proceeds, whether under s 424A or s 424AA, the Tribunal does not have to give the information in s 424A(3). When the sections are understood that way, it can be seen that there was no reason to include the equivalent of s 424A(3) in s 424AA. Moreover, why would Parliament require the Tribunal to give the information in s 424A(3) if the Tribunal were giving information orally pursuant to s 424A(a), but not give the information in s 424A(3) if the Tribunal were proceeding to give the information in writing in compliance with s 424A(1) utilising s 424A(2)? There is no reason for the distinction. The applicant's counsel, Mr Crossland, put as an alternative construction that the Tribunal when proceeding under s 424AA did not have to provide s 424A(3) information but if it so chose and then did not comply with s 424AA(b), that would amount to jurisdictional error. That contention must be rejected for the reasons already given. A failure to comply with a section which permits the Tribunal to give information such as s 424AA cannot amount to jurisdictional error. A failure to comply with s 424AA merely means that the Tribunal must ensure that it complies with s 424A because s 424A(2A) cannot be relied upon to excuse compliance with s 424A(1) and (2). Jurisdictional error will be demonstrated where the Tribunal does not comply with s 424A and that will occur if it does not give clear particulars of any information of the kind in s 424A(1)(a), ensuring as far as is reasonably practicable the applicant has the understanding addressed in s 424A(1)(b) and inviting the applicant to comment or respond to the information (s 424A(1)(c)), and in the manner prescribed in s 424A(2). However, the Tribunal's obligation to proceed in that way ceases if the Tribunal proceeds in accordance with s 424AA. Moreover, the contention, if accepted, leads to an absurd construction of the sections. If at the hearing the Tribunal did not give s 424A(3) information, that would not amount to jurisdictional error but if the Tribunal did provide information which it was not obliged to provide but did not conform with s 424AA(b), that would amount to jurisdictional error. If the applicant's contention were correct, the following would be the case. Tribunal 1 could conform with s 424A and would not need to provide any s 424A(3) information. Tribunal 2 could conform with s 424AA and not give any s 424A(3) information. Because Tribunal 2 had conformed with s 424AA, it would not need to give the information pursuant to s 424A(1): s 424A(2A). If Tribunal 3 however proceeded in accordance with s 424AA but gave, for example, country information which it was not obliged to give, its conduct would amount to jurisdictional error if it did not under s 424AA(b) explain the import of the information it was not obliged to give. That cannot be right. In my opinion, s 424AA does not oblige the Tribunal to provide any of the information in s 424A(3) if the Tribunal proceeds in accordance with s 424AA(a) even if it considers that information to be the reason or part of the reason for affirming the decision under review. The applicant's contention as to the construction in s 424AA has been considered and rejected by other members of the Court in SZLXI v Minister for Immigration and Citizenship [2008] FCA 1270 (Cowdroy J), SZMAE v Minister for Immigration and Citizenship [2008] FCA 1701 (Edmonds J), SZITH v Minister for Immigration and Citizenship (2008) 105 ALD 541 (Middleton J), SZLWI v Minister for Immigration and Citizenship [2008] FCA 1330 (Gilmour J) and SZLML v Minister for Immigration and Citizenship [2009] FCA 83 (Jagot J). Although the reasons in those cases may not be as these reasons, I agree in the results. Because there was no obligation upon the Tribunal to ensure, as far as reasonably practicable, that the applicant understood the country information presented to him because there was no obligation upon the Tribunal to provide the applicant with the country information, the second ground therefore does not arise but I shall nonetheless address it briefly. The relevant passage, to which I have referred above, shows that the Tribunal explained to the applicant the relevance of the country information in question. The applicant was put on notice that the Tribunal was concerned that the applicant's story was inconsistent with the country information and that inconsistency might lead the Tribunal to disbelieve the applicant. The country information which was disclosed indicated that the law in the People's Republic of China prevented persons who had been detained by the authorities or considered harmful to State security or national interests from leaving China. The applicant's claim was that he was a person of that kind, yet he was able to leave China freely. The Tribunal made it clear that that inconsistency was a matter that would lead the Tribunal to disbelieve the applicant. It follows therefore the second ground must fail because the Federal Magistrate did not err in finding that the Tribunal ensured that, as far as reasonably practicable, the applicant understood why the country information presented to him was relevant to the review. In my opinion, there is no prospect of an appeal succeeding and, in those circumstances, it would be inappropriate to extend time for the filing of the notice of appeal. The application to extend time to file a notice of appeal must be dismissed. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | application for extension of time within which to file and service a notice of appeal special reasons required to show by the appeal should be permitted to proceed explanation given for the delay perfunctory and incomplete question of extension of time determined by reference to the merits of the appeal no prospect of appeal succeeding application dismissed procedural fairness whether refugee review tribunal complied with s 424aa migration act 1958 (cth) whether tribunal failed to give particulars of information which might be the reason or part of the reason for the tribunal to affirm the decision under review information in question was country information excluded from operation of s 424a by s 424a(3) s 424aa did not oblige tribunal to provide information prescribed in s 424a(3) tribunal provided particulars of such information regardless no breach of s 424aa application dismissed practice and procedure migration |
In its decision, the Tribunal affirmed a decision of a delegate of the Minister to refuse to grant a protection visa to the appellant. 2 The appellant was born on 10 December 1980 and a citizen of Bahrain. He is of the Shia Muslim faith. On 7 January 2006 he arrived in Australia as the holder of a Subclass 676 (Tourist) visa. On 9 February 2006 he applied for a Protection (Class XA) visa. On 13 June 2006 a delegate of the first respondent refused that application. On 5 July 2006 the appellant lodged an application with the Tribunal for a review of the delegate's decision. The Tribunal affirmed the decision of the delegate. 3 In his application for a protection visa the appellant claimed that he had been involved in protests against the government over a number of years. He asserted that in 1997 he was captured by the authorities and, although not charged with anything, put in jail where he remained for 13 months during which time he was tortured. 4 After his release, he worked as a fisherman with his brother. He claimed that on 28 November 2005 he was involved in a peaceful protest after which he returned to his fishing. When he returned from his fishing trip he found that his younger brother had been arrested by the authorities. He said that he then hid for a month not returning home. Because his family advised him it was too dangerous to return home, he decided to leave Bahrain. He said that when he left threats against his life were being made to him by three government security officers. 5 He claimed that since arriving in Australia he had been advised by his family that an "arrest document" had been left at his house. He made arrangements to have it sent to him by mail and attached the document to his application to the Minister. 6 He claimed that if he returned to Bahrain he would be incarcerated without charge or hearing before a court and tortured. He claimed that he feared that he would be killed by government officers who had made threats to kill him. 7 When interviewed by the delegate, he told the delegate that he was discriminated against because of his religion because, although Shia Muslims comprise the majority of the population in Bahrain, the Sunni Muslims enjoy the power. As a result, he was not able to obtain government employment and was treated as a lower class citizen. 8 He told the delegate that between 1999 and 2003 he was not politically active. He said that he did protest between 2003 and 2005 but did not experience any difficulty with the authorities until after the peaceful protest in November 2005. 9 The appellant provided the Department with a report in support of an application for financial assistance under the Asylum Seekers Assistance Scheme from Dr Michael Lee dated 27 March 2006 in which Dr Lee said that as a result of the appellant's incarceration and torture the appellant was "unfit to work or study on psychological and emotional grounds. In his submission to the Tribunal he confirmed that which he had told the delegate in relation to his political activity to 2005. He said that he was unaware when he left the peaceful protest on 28 November 2005 that it had subsequently turned into a three day riot with dozens of protesters arrested. He said that following the protest, three government security policemen came to his house looking for him and made threats against him. He said that the police officers had told his family that if they found him they would kill him. 11 He said that he had subsequently found that one of his brothers was detained for three months and released, and another was detained for eight months without charge and had not been released. 12 He also said that following the 2005 protest, he had received a phone call from the police officer who was involved in his arrest in 1997, which caused him to be fearful. 13 Apart from the appellant, two witnesses gave evidence in support of his application before the Tribunal. Dr Lee described the appellant as a completely broken man who was unable to communicate anything without shaking. He said that although the appellant had not claimed that he was sexually assaulted, it was Dr Lee's strong suspicion that he had been which, by reason of Bahraini culture, was "worse than death". He said that the appellant was on medication including anti-depressants and anti-psychotics. The other witness, Mr Hertz, confirmed that he had been at the demonstration in 2005 and left with the appellant at 6.00pm to go fishing. 14 Following the hearing, the Tribunal wrote to the appellant in compliance with s 424A of the Migration Act 1958 (Cth ) (the Act) inviting his comments on a number of matters which the Tribunal informed the appellant were relevant because of inconsistencies between his claims in his protection visa application and his evidence before the Tribunal. 15 The appellant's migration agent responded on 20 October 2006 enclosing the appellant's statutory declaration in which the appellant addressed the inconsistencies which the Tribunal had raised. The migration agent also enclosed an undated letter from Dr Lee who offered a number of opinions, some within and some without his expertise. 16 In any event, Dr Lee said that the appellant had a fragile and sensitive personality and had suffered significant psychological damage due to his treatment by police in Bahrain. 17 The Tribunal accepted the appellant's claim that he was a Shia Muslim and thereby a person discriminated against in Bahrain. It accepted that Shia Muslims suffered from institutionalised discrimination which included political discrimination to ensure majority Sunni representation despite their minority status within Bahrain; political naturalisation, a policy designed to alter the island's demographic balance; discrimination in government employment; and segregation in that most Shiites lived in poor villages on the outskirts of the city because they were forbidden from living in certain areas and were not permitted to own land in those areas. The Tribunal observed that despite the discrimination in Bahrain the appellant had been in continuous employment whilst in Bahrain and had accumulated sufficient money to travel. In particular, the Tribunal concluded that "although Shias are subject to quite severe forms of discrimination in Bahrain, this discrimination is not of sufficient seriousness to amount to serious harm and is not persecution within the meaning of the Convention. It noted that Dr Lee did not identify the source of his information. The Tribunal found on the available country information that there was no real chance of the appellant being at risk "of this treatment in the reasonably foreseeable future merely for being a Shia. 20 The Tribunal accepted that the appellant had been arrested, detained and tortured in 1997 as he claimed. It also accepted that upon his release he may have received threats from the police. It found, however, that those threats had never been acted upon. 21 Notwithstanding his arrest, detention and torture in 1997, the Tribunal did not accept that that would have given him any profile with the Bahraini authorities in the absence of further political activity. 22 It found that after 1997 the appellant had little knowledge of political events and did not appear to have any strong political convictions. It found "that he was not politically active between 1998 and 2003. " Indeed, it had serious doubts as to whether the appellant attended the 2005 protest at all. However, if he did, the Tribunal found he attended for only about two hours at the peaceful protest. It found, therefore, that the limited involvement in that protest and the absence of any political activity since 1997 would have meant that he had no political profile in Bahrain. 23 The Tribunal rejected the appellant's evidence that the police had come to his home looking for him or that there was a warrant issued for his arrest. It also rejected his claim that the policeman who was involved in his 1997 arrest threatened him eight years later as the appellant claimed. 24 Whilst the Tribunal was prepared to accept that the appellant might have a subjective fear of persecution by reason of his arrest, detention and torture in 1997, it was not prepared to accept that he had been involved in any political activity since that time apart from the possible attendance at a peaceful demonstration in 2005. It found that it was not his fear of persecution that prevented him being involved in political activities but rather his lack of interest. 25 It found that there was no real chance that the appellant would be politically active if he were returned to Bahrain and thereby come to the attention of the authorities, or that he would be persecuted for reasons of an imputed political opinion or a political opinion. It therefore concluded that he did not have an objectively based well-founded fear of persecution for reasons of an imputed political opinion or a political opinion. 26 The appellant applied to the Federal Magistrates Court for a judicial review of the Tribunal's decision. Two grounds were advanced. First, that the Tribunal had exceeded its jurisdiction in making its decision to affirm the delegate of the first respondent's decision. Secondly, that the Tribunal had constructively failed to exercise its jurisdiction in arriving at its decision. The application did not contain any detail. 27 In his written submissions before the Federal Magistrate, the appellant's counsel submitted that the Tribunal failed to properly exercise its jurisdiction under s 91R of the Act by not properly considering the risk of serious harm if the appellant were compelled to return to Bahrain. In particular, it was put that the Tribunal had failed to consider the cumulative consequences of the appellant's experiences between 1997 and the present, and the potential to cause him psychological harm. 28 It was contended that the appellant had put forward a case that he would suffer a real risk of psychological harm if he were obliged to return to Bahrain. It was contended that the Tribunal had applied too narrow a test of s 91R. The appellant also contended before the Federal Magistrate that the Tribunal had not applied its mind to whether the appellant would be at risk of persecution for an imputed political opinion. The Tribunal had only applied its mind, so it was put, to whether the appellant would on his return be politically active. The question was, it was submitted, would he be at risk because the authorities would impute to him a political opinion in accordance with the previous judgment of the authorities. 29 The Federal Magistrate rejected both of the appellant's arguments. The Federal Magistrate found that the Tribunal did consider all aspects of the appellant's claim regarding his potential to be at risk of persecution in Bahrain. It is the applicant's complaint that the Tribunal failed to consider the cumulative consequences of the applicant's experience in assessing the degree of his fear that he might suffer serious harm, if returned to Bahrain. On a subjective basis, the Tribunal accepted that these were relevant considerations. It said as much. However, in my view, the particular vulnerabilities of the applicant are not relevant to the objective assessment of the risk of serious harm. The fact that subjectively an applicant's fears are likely to be intensified because of past adverse involvement with the state does not necessarily intensify the objective level of the fear and so increase the real chance of persecution resulting. 58. The Tribunal accepted that subjectively the applicant was likely to be fearful, if returned to Bahrain, because of what had happened to him previously. It is, I think, implicit in that finding that it accepted that potentially this was likely to have psychological ramifications for the applicant. Fear, by its nature, obviously has implications for the psyche. But, on an objective basis, at the present time, the Tribunal did not accept that the applicant was likely to suffer persecution, in Bahrain, for a Convention reason. This was essentially because the political situation in Bahrain had substantially changed since 2005. The Tribunal specifically rejected the contention that the applicant's detention in 1997 would have given him a more significant profile with the Bahraini authorities at the present time, particularly in the absence of political activity in the intervening period. In my view this was part of its fact finding exercise. His Honour found that the level of political profile was relevant in consideration of imputed political views, as was the period which had elapsed since the appellant had previously been involved in political matters. His Honour found that the Tribunal had properly applied its mind to that matter. 31 Four grounds of appeal were advanced, all of which were appropriately particularised. The Learned Magistrate erred in finding that the Tribunal had correctly applied the law in relation to what amounted to serious harm in accordance with section 91R of the Migration Act . The cumulative affect (sic) of the matters set out below amount to serious harm on a proper application of the definition of serious harm. 2. The Learned Magistrate erred in finding that the Tribunal had correctly applied the law in relation to what amounted to the "real chance" test of whether the Appellant would be persecuted in the future. 3. The Learned Magistrate erred in finding that the Tribunal had not failed to make findings in relation to a significant integer of the Appellant's claim namely the political beliefs imputed to the Appellant by the authorities. The claim, it was contended, which was not considered was that the appellant would suffer serious harm, being psychological harm. The appellant contended and the respondent demurred that the appellant had made a complaint that he would suffer psychological harm if he were to be returned to Bahrain. The applicant does not appear to have placed significant emphasis on Dr Lee's evidence before the Tribunal, apart from using it to support his claims of having suffered torture in Bahrain in the past, as demonstrated by his presentation to Dr Lee. Dr Lee's evidence was also apparently utilised to demonstrate why the applicant may have had difficulty in recollecting past events and answering questions in the Tribunal process. In this regard, there is in my mind considerable merit to Mr Tredrea's submission that the applicant did not specifically articulate the ground that his past experience made him particularly at risk of suffering serious harm, if returned involuntarily to Bahrain as a result of the cumulative effects of persecution. 35 In my opinion, the appellant's contention that a case was advanced that the appellant would suffer psychological harm if he were to be returned to Bahrain must be accepted. The effect of the appellant's evidence and the two reports of Dr Lee which were in the possession of the Tribunal, in my opinion, indicated that the Tribunal needed to be concerned, inter alia, with a claim that the appellant would suffer psychological harm if he were to return to Bahrain. 36 The respondent contended that Dr Lee's second report appears to have been provided simply as a part of the appellant's response to the s 424A letter. That is so. However, the previous report of Dr Lee dated 27 March 2006 which had been furnished to the Department was in the possession of the Tribunal. That should have alerted the Tribunal that the appellant was unfit to work or study on psychological and emotional grounds as a result of the torture in 1997. It seems to me that there is no doubt that Dr Lee's first report raised the issue of psychological harm sufficient to put the Tribunal on notice that it was one aspect of the appellant's claim. However, even if the first report did not have that effect, it does not seem to me to matter much that Dr Lee's second report was only provided in response to the s 424A letter. Dr Lee's undated second report alone should have been enough to put the Tribunal on notice. The fact is it was furnished to the Tribunal prior to the Tribunal making its decision. In those circumstances, the Tribunal ought to have been aware that the claim which was being pursued by the appellant included a claim that he would suffer psychological harm if he were to be returned to Bahrain. 37 If, contrary to my opinion, Dr Lee's second report was not of itself sufficient to raise the appellant's claim of serious harm, being psychological harm, the two reports in combination, undoubtedly in my opinion, had that effect. 38 If there is material before the Tribunal which, if accepted by the Tribunal, would raise a case different from that which was articulated by the applicant, the Tribunal is under an obligation to inquire into that other case: Htun v Minister for Immigration and Multicultural Affairs [2001] FCA 1802 ; (2001) 194 ALR 244 at [13] . That is consistent with the inquisitorial procedure under which the Tribunal operates. Like any other administrative decision maker, its responsibility is to make the appropriate and proper decision on the facts as found. It cannot, like a Court in an adversarial proceeding, limit its consideration to the case as articulated by the parties. In my opinion, there was. The Tribunal was advised, and did accept, that the appellant had been detained and tortured for a period of 13 months. It also accepted that upon his release he was subject to threats from the police. 41 The Tribunal specifically acknowledged that those experiences might have given the appellant a subjective fear of persecution. It had evidence from Dr Lee in the form of his report of 26 March 2006 saying that the appellant was unfit to work or study on psychological and emotional grounds. It heard evidence from Dr Lee who described the appellant as a "completely broken man who was unable to communicate anything without shaking. " It had Dr Lee's evidence that the appellant was on medications including anti-depressants and anti-psychotics. 43 I accept the appellant's counsel's submission that there was clear evidence that the appellant had suffered psychological harm as a result of his detention, torture and by reason of the discrimination suffered by persons of his faith. 44 The appellant contended before the Federal Magistrate and before this Court that the Tribunal had, notwithstanding the evidence before it, failed to consider a significant integer of the appellant's harm, that being serious harm by way of psychological harm. In this Court, the appellant contended that the Federal Magistrate had erred in his finding "that the applicant did not specifically articulate the ground that his past experience made him particularly at risk of suffering serious harm, if returned involuntarily to Bahrain as a result of the cumulative effects of persecution. " In my opinion, the appellant's contention must be accepted. As I have already said, there was evidence before the Tribunal that the appellant had suffered psychological harm as a result of his experiences in Bahrain as a 17 year old and later. 45 There was clear evidence that he was continuing to suffer that psychological harm which had left him, as late as 2006, unfit to study or work. 46 In my opinion, the Tribunal was under an obligation to consider whether if the appellant were to return to Bahrain he would, as a result of the discrimination which members of his faith suffer in Bahrain, suffer serious harm in the form of psychological harm. 47 The Tribunal did not consider that matter and, in my opinion, therefore fell into error. 48 It is necessary, if the appellant is to avail himself of the obligation Australia owes under the Refugee Convention, to establish that the persecution which he suffers involves serious harm to him. Section 91R of the Act gives instances of what will amount to serious harm. Section 91R(2) , however, is not to be understood as meaning that other forms of serious harm not addressed in s 91R(2) would not satisfy s 91R(1). Section 91R(2) specifically states that the instances which are given in that subsection are not to limit what might amount to serious harm for the purpose of s 91(1)(b). SCAT v Minister for Immigration and Multicultural Affairs [2003] FCA 80 ; 76 ALD 625 supports the appellant's contention that psychological harm may be serious harm within the meaning of s 91R. 49 Whether, as contended, the appellant would be a real chance of suffering persecution if he were to return to Bahrain is a matter for the Tribunal. This Court cannot address that question. The fact is the Tribunal did not address this question because it did not consider the appellant's claim that he would suffer persecution by reason of suffering psychological harm. 50 In my opinion, the Tribunal failed its obligations in exercising its jurisdiction under the Act by failing to consider this aspect of the appellant's claim. 51 In my opinion, the learned Federal Magistrate, with respect, also fell into error by failing to find that the Tribunal had failed itself to exercise jurisdiction. 52 The appellant also contended in ground 4 that the Tribunal had not considered the appellant's claim that he would suffer persecution by reason of his imputed political opinion. In my opinion, that contention must be rejected. The Tribunal specifically addressed that question and found, as a matter of fact, that the appellant's low political profile would be such that no political opinion would be imputed to him by the authorities. 53 However, for the reasons given, the appeal must be allowed. The order of the Federal Magistrate dismissing the applicant's application should be set aside. | whether tribunal considered the appellant would suffer psychological harm if he was returned to bahrain where tribunal found the appellant had been arrested, detained and tortured where tribunal accepted that shia muslims are discriminated against in bahrain where tribunal had before it two reports from a doctor whether of any consequence that the second report was only furnished to the tribunal in response to a s 424a request whether psychological harm may be serious harm within the meaning of s 91r(2) appeal allowed. migration |
A judge of the Court made an order that issues of liability be determined separately from and prior to issues of quantum. I heard and determined the issues of liability. My reasons, which I will refer to as my liability reasons, are published in Futuretronics.com.au Pty Limited v Graphix Labels Pty Ltd [2007] FCA 1621. The applicant is the owner of copyright in the artworks. The second respondent authorised the first respondent's said infringement of the applicant's copyright in the artworks in breach of s 36 of the Copyright Act 1968 (Cth). 4. It was an implied term of the agreement between the applicant and the first respondent ("the agreement") that the artworks would be used by the first respondent for the purpose of fulfilling orders and for no other purpose ("the implied term"). 5. The first respondent breached the implied term by providing samples of skins bearing some of the artworks to persons including one Ian Bagnall of Powermove Distribution Pty Ltd without the authorisation of the applicant. I refer to [41] of my liability reasons. The brochure referred to in the declarations is a brochure prepared by the first respondent and on which there were printed images of iPods displaying the artworks. 4 In addition to the declarations, I made orders for delivery up in relation to the brochure and samples of the skins and for the disclosure of information in relation to the distribution of samples of the skins. It is not necessary for me to set out the terms of those orders. I made an order that the applicant's application otherwise be dismissed. 5 I also made a number of procedural orders designed to facilitate the hearing and determination of the applicant's claim for damages. The applicant had elected to claim damages rather than an account of profits. 6 These reasons deal with the applicant's claim for damages for infringement of its copyright in the artworks and for breach of the implied term. The causes of action for infringement of copyright lie against both respondents, whereas the cause of action for breach of the implied term lie against the first respondent only. 7 I will deal first with the claim for damages for infringement of copyright. It should be noted that the respondents did not raise as a "defence" to the claim for damages the matters in s 115(3) of the Act . 10 In relation to the claim for damages under s 115(2) of the Act , the Court, in awarding damages for infringement of copyright, will have regard to similar considerations as attend the award of damages in tort: General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd [1976] RPC 197. The purpose of an award is to compensate the plaintiff for the loss suffered as a result of the defendant's infringement: Bailey v Namol Pty Ltd [1994] FCA 1401 ; (1994) 53 FCR 102 at 110-111. 11 Various methods of measuring damages for an infringement of copyright have been described in the cases. In Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1936] 1 Ch 323 at 336, Lord Wright MR said that the measure of damages in a copyright case "is the depreciation caused by the infringement to the value of the copyright as a chose in action". However, the authorities make it clear that is only one method of measuring damages: Autodesk Australia Pty Ltd v Cheung (1990) 17 IPR 69 ; Bailey 53 FCR at 111-112; Milpurrurru v Indofurn Pty Ltd (1994) 54 FCR 240. Another method is to determine the licence fee or royalty the infringing party would have to pay to use the work lawfully. There are difficulties in applying that approach in circumstances where it cannot be inferred that the infringing party would pay a licence fee rather than not use the work ( Autodesk 17 IPR at 75). The applicant did not contend that either of the aforesaid methods was appropriate in this case. It submitted that this was a case in which it was appropriate to treat the damages as being at large and to approach the assessment of damages as a jury would ( Fenning Film Service Ltd v Wolverhampton, Walsall and District Cinemas Ltd [1914] 3 KB 1171 at 1174 per Horridge J). I think that is the proper approach in the circumstances of this case. 12 The applicant conceded that its damages for infringement of copyright were limited and that the circumstances did not warrant more than a modest award of damages. The difficulty for the applicant is that the evidence did not establish that any economic loss flowed from the distribution of the brochure to the three named parties. There is no evidence of loss of contracts or potential contracts. The applicant sought to overcome this difficulty by submitting that it suffered "commercial embarrassment" and loss of reputation. It is not entirely clear what commercial embarrassment means in this context. At all events, whilst it is true that two people --- Mr David Bartlett and Mr Ian Bagnall, who was the operations manager of Powermove (see [87]-[91] of my liability reasons) --- told Mr Chojna of the brochure and of the samples, there is no evidence from them as to what they thought of the use of the artworks. As far as Mr Chojna is concerned he was no doubt annoyed to discover the use of the artworks by the first respondent, but I do not think that he can be said to have been embarrassed. 13 As far as loss of reputation is concerned the applicant sought to overcome the difficulties it faced by referring to cases in which damages have been allowed for injury to reputation and by submitting that this was such a case. In particular, reference was made to the decision of Wilcox J in Prior v Sheldon (2000) 48 IPR 301. At issue in that case was the damages to be awarded for the infringement of copyright in two original musical works used in connection with a popular television series. One joint owner had claimed sole authorship of the two original musical works. The other joint owner sued for infringement of copyright. Wilcox J referred to the significance of the recognition of authorship in terms of possible future commissions from film and television producers and directors. The infringement of copyright had meant that the innocent party had been unable to enhance her reputation and enhancement of her reputation may have led to future engagements. That loss, said Wilcox J, should be reflected in the award of damages although he said the amount was difficult to calculate. He awarded a sum of $40,000. 14 It seems to me that this case is quite a different one. There is no evidence that any of the three parties who received the brochure placed orders for skins with the first respondent, or were dissuaded from placing orders for skins with the applicant by reason of the distribution of the brochure. For completeness I also note that there was no evidence in this case of damage to reputation caused by the production and distribution of inferior or substandard copies of the artworks. 15 In view of the above conclusions, it is not necessary for me to consider a submission made by the respondents that if there was any damage in this case it was to the goodwill of the applicant's business and such damage is not recoverable under s 115(2) of the Act . The respondents referred to Paterson Zochonis Ltd v Merfarken Packaging Ltd [1983] FSR 273 at 281-282 per Oliver LJ; at 287 per Fox J; at 294-295 per Goff LJ although that was quite a different case on the facts. 16 I am not satisfied that the applicant has established any loss which should be reflected in an award of damages under s 115(2) of the Act . An award of nominal damages is appropriate to vindicate the invasion of the applicant's proprietary right ( MJA Scientifics International Pty Ltd v S C Johnson and Son Pty Ltd (1998) 43 IPR 275 at 281 per Sundberg J) and I award the sum of $10.00. 17 In relation to the claim for additional damages under s 115(4) of the Act , it is appropriate to begin by making the following general observations. First, there is no need for me to consider if an award of additional damages can be made under s 115(4) if no damages are awarded under s 115(2) because I have awarded nominal damages under s 115(2) ( Polygram Pty Ltd v Golden Editions Pty Ltd (No 2) 38 IPR 451 at 459-461 per Lockhart J; MJA Scientifics at 283-284 per Sundberg J). Secondly, it is not necessary that there be a proportionate relationship between the additional damages awarded under subs (4) and the damages awarded under subs (2): Flags 2000 Pty Ltd v Smith (2003) 59 IPR 191 at 198 per Goldberg J. An award of additional damages under subs (4) is not dependent upon the adequacy or inadequacy of an award of damages under subs (2). Thirdly, the matters in subs (4)(b)(i)-(iv) inclusive are not preconditions to an award of additional damages. In other words, and using the flagrancy of the infringement as an example, the Court must have regard to the flagrancy of the infringement in determining whether to award additional damages, but it is not the case that additional damages can be awarded only if the breach involves a particular degree of flagrancy. Fourthly, in the recent case of Flags 2000 Goldberg J suggested that there is a distinction between conduct of a defendant after an infringement (or after being informed that he has allegedly infringed the plaintiff's copyright) and relevant to the substantive allegations against him on the one hand, and the defendant's conduct of his defence to an action for an infringement of copyright in relation to procedural matters on the other. The former matter is within the terms of s 115(4)(b)(ib) of the Act , whereas it has been suggested that the latter matter is a matter to be taken into account in determining the appropriate order as to costs. There is substance in that submission as can be seen from cases such as Carson v John Fairfax & Sons [1993] HCA 31 ; (1992) 178 CLR 44 at 71 ; [1993] HCA 31 ; 113 ALR 577 at 597 and Microsoft Corp v Goodview Electronics Pty Ltd (2000) 49 IPR 578. However, the conduct taken into account in those cases was conduct which was relevant to the substantive allegations made against the respondents. For example, in the Microsoft case the respondent filed a defence which proved to be false. Branson J took that fact into account in conjunction with other evidence which showed an intention on behalf of the respondent to conceal the identity of their suppliers to find 'a deliberate pattern of conduct by the respondents in which they recognised the illegality of the enterprise they are engaged in and actively sought to conceal it'. [46] I do not consider that the conduct of the respondent contemplated by subpara (ib) of s 115(4)(b) is referable to conduct of the defence in so far as it relates to procedural matters and matters whereby the applicants are put to the proof of their case, albeit unreasonably. I consider that these are matters more appropriately dealt with by an appropriate order for costs. Nevertheless, I agree with the distinction identified by Goldberg J in Flags 2000 59 IPR 191. Fifthly, an award under s 115(4) of the Act can encompass damages which at common law would be aggravated damages and exemplary damages: Bailey 53 FCR at 113-114. 18 I turn now to consider whether an award of additional damages should be made in this case. 19 The meaning of "the flagrancy of the infringement" has been described in various ways. In Ravenscroft v Herbert and New English Library Limited [1980] RPC 193 Brightman J referred to it as "scandalous conduct, deceit and such like; it includes deliberate and calculated copyright infringement"; in Prior v Lansdowne Press Pty Ltd [1977] VR 65 at 70, Gowans J (at 70) referred to it as a "calculated disregard of the plaintiff's rights, or cynical pursuit of benefit"; and in Raben Footwear Pty Ltd v Polygram Records Inc (1997) 75 FCR 88 at 103 flagrancy was said to connote conduct which could probably be described as "glaring, notorious, scandalous" or "blatant". In Polygram at 461-462 Lockhart J said that flagrancy did not include mere mistakes or carelessness and that if the infringer mistakenly believed that he or she owned the relevant copyright, or acted in the bona fide belief that no copyright subsisted in the plaintiff's work then the conduct was not flagrant. 20 In my opinion, the infringements of copyright in this case were flagrant. Before 29 September 2006 the second respondent was employed by the applicant and he knew Ms W Hung, who was also an employee of the applicant, and he knew that she had produced the artworks on behalf of the applicant. He left the employ of the applicant and on 4 October 2006 he became an employee of the first respondent. He was responsible for producing the brochure on behalf of the first respondent and he knew the artworks on the brochure belonged to the applicant. Despite this knowledge, he went ahead and used them in a brochure designed to promote the first respondent's products. Whether he actually knew that the use of the applicant's artworks was an infringement of copyright is immaterial ( Pollock v J C Williamson Ltd [1923] VLR 225) ; the important point is that he knew the artworks were the applicant's artworks or, put a different way, that they belonged to the applicant. Although he attempted to say that he did not know he could not use the applicant's artworks because he was a "bit vague as to how all this worked" and that he had used samples with the brands of third parties before, I think he knew that he should not be using the artworks or, at least, was wilfully blind to that fact. As I said in my liability reasons there were unsatisfactory features of the second respondent's evidence (at [51]). As to what was said to be a practice in the printing industry of using other people's brands as illustrative of the work which can be done, it seems to me that it is one thing to use a sample showing a brand which announces itself as a brand of a well-known business; it is quite another for a previous employee of the applicant so shortly after he left the applicant's employ to use the artworks, which in no way announce themselves as belonging to the applicant, to promote his new employer's business. 21 It appears that the principals of the first respondent were prepared to leave, or largely leave, the production of the brochure to the second respondent. Mr Tallent was not able to shed any light on the production of the brochure with the applicant's artworks on it and the change to the second brochure, which it seems had taken place by 16 October 2006. He said that the second respondent would have been engaged "in most of that work and driving that". Mr Taylor said that the brochure was changed to remove the applicant's artworks and replace them with other artworks after he had received a telephone call from Mr Chojna complaining about the use of the applicant's artworks without its permission. He said that the second respondent probably made the change. 22 The respondents submitted that the infringements were few in number and that the evidence was that the first respondent did not intend to produce skins with the artworks on them for sale to customers. I accept the evidence that the first respondent did not intend to use the artworks on skins to be sold to customers. 23 The second matter I must have regard to is the need to deter similar infringements of copyright. It seems to me considering authorities such as Universal Music Australia Pty Ltd v Miyamoto (aka DJ Moto ) (2004) 62 IPR 605 and Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228 ; (2005) 215 ALR 788 that the circumstances may call for an award of additional damages, or a larger award of additional damages, if there is a real need to deter similar infringements of copyright. In Universal Music Australia Pty Ltd the infringers were disc jockeys who were likely to be regarded as role models for others and the infringements were deliberate and in flagrant disregard of the innocent party's rights, and in Sony Entertainment (Australia) Ltd the respondents had, to use Jacobson J's words in that case (at 41 [175]) "shown utter contempt for the applicants and for the court". This case does not exhibit those features and I think that in this case the need to deter similar infringements of copyright is a somewhat neutral factor. The second respondent's conduct was fairly blatant, but at the same time, upon complaint the respondents changed the brochure and gave undertakings not to use the artworks. 24 The third matter I must have regard to is the conduct of the respondents after the distribution of the brochure, or after the respondents were informed that they had allegedly infringed the applicant's copyright in the artworks. 25 The applicant accepted that the brochure was changed to remove the artworks soon after Mr Taylor received the telephone call from Mr Chojna to which I have previously referred. Furthermore, undertakings were offered by the respondents both before and after the proceeding was commenced in this Court on 6 November 2006. Notwithstanding this, Graphix Labels undertakes not to distribute the flyer or any other advertising material bearing any of the designs shown on the flyer. Further, Graphix Labels undertakes not to import, manufacture, print, offer for sale or sell any 'skins' bearing any of the designs shown on the flyer without your client's consent. Despite this, our clients have previously (and, indeed, prior to this proceeding being commenced) undertaken not to distribute the Brochure or any other advertising material or products bearing the Artworks (see our letters of 24 October 2006 and 25 October 2006). In any event, we note that your clients have already provided undertakings regarding the use of the Artworks and the proceedings need only continue in relation to the issue of damages in this regard. Graphix Labels Pty Ltd makes these undertakings on the basis of a denial of any liability for the allegations made by Futuretronics in Federal Court of Australia proceeding VID1237 of 2006. Executed as a Deed. 30 For its part, the applicant refers to certain conduct by the respondents after the proceeding was commenced. First, it refers to the fact that in their defences filed on 24 November 2006 the respondents denied that Ms Hung, an employee of the applicant, had created the artworks, denied that there was copyright in the artworks, denied that the applicant was the owner of the copyright in the artworks and denied that distribution of the brochure amounted to an infringement of the applicant's copyright in the artworks. Secondly, the applicant refers to the fact that the respondents required Ms Hung to attend Court and be available for cross-examination and she was cross-examined by counsel for the respondents. Thirdly, the applicant refers to the fact that the respondents only conceded an infringement by them of the applicant's copyright in the artworks during their closing submissions in the trial and that was on the fifth day of the hearing. 31 These facts are correct but I think they are relevant to costs rather than to an award of additional damages. I refer to my discussion in [17] above. 32 The fourth matter, that is to say the matter identified in s 115(4)(b)(ii) , is not relevant in this case. 33 The fifth matter I must have regard to is "any benefit shown to have accrued to the [respondents] by reason of the infringement". In Ravenscroft v Herbert [1980] RPC 193 Brightman J said that in his view "benefit" in the English section implied "that the defendant has reaped a pecuniary advantage in excess of the damages he would otherwise have to pay (see also Polygram 38 IPR at 462 per Lockhart J). There is no evidence that the respondents secured any financial benefit in this case by reason of the distribution of the brochure to the three named parties. 34 I do not think there are any other relevant matters apart from those I have already mentioned. 35 In my opinion, having regard to the matters I have identified, an award of additional damages should be made. It should be a modest award and I award a sum of $10,000. 36 There should be an award of damages in favour of the applicant against the respondents of $10,010 for infringement of copyright. The applicant accepted that it had not shown any damage resulting from the breach of the implied term and that therefore it was entitled to no more than an award of nominal damages. I agree, and I award the applicant the sum of $10.00 against the first respondent. I will hear the parties as to 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 Besanko. | infringement of copyright compensatory damages pursuant to s 115(2) copyright act 1968 (cth) methods of measuring damages no economic loss established no injury to reputation established nominal damages awarded to vindicate invasion of proprietary right infringement of copyright additional damages pursuant to s 115(4) copyright act 1968 (cth) matters to be considered not preconditions meaning of "flagrancy of infringement" second respondent knew or was wilfully blind to fact that he should not have used artworks as he did flagrant infringement infringement of copyright additional damages pursuant to s 115(4) copyright act 1968 (cth) conduct after infringement or after respondents informed they had allegedly infringed applicant's copyright conduct in relation to defence of proceeding such conduct relevant to costs and not to additional damages breach of implied term no damage established nominal damages awarded copyright copyright copyright contract law |
The application for an extension of time was filed by Terezie Sochorova (the applicant) on 20 October 2008, and indicates that "an extension of time is required because a notice of appeal was not filed and served within the time limited by Order 52, rule 15 ". The applicant indicated in her application for extension of time that she did not seek to have the application dealt with by oral hearing. In that affidavit, having referred to the dismissal of "[her] application for remedy for 7 years deprivation of Medicare and aged pension rights, and for stress-related injury to health, caused directly by 7 years defective administration of [her] 1999 permanent residency visa application" the applicant claimed that the dismissal of her application "gave no reasons, but was purportedly made on the basis of lack of jurisdiction to hear the case prior to a determination on it by the Human Rights Commission". The applicant says that she subsequently applied for a remedy to the Human Rights Commission, and her affidavit continues: On 15 September 2008 the commission also declined the application on grounds of lack of jurisdiction, stating that the Federal Magistrates Court was the appropriate authority to determine the matter, and that it cannot investigate decisions of judicial bodies or acts or practices done by government agencies in compliance with legislation. In fact, my application for remedy is NOT against judicial bodies; it is for remedy from the Commonwealth government for loss and injury to health caused by acts or practices done by government agencies in BREACH of, not compliance with, legislation. Because of my application to the Human Rights Commission, and its dismissal, I have run out of time for filing with the Court and serving my appeal. I therefore seek leave for an extension of time to lodge my appeal to the Court. The affidavit exhibits the orders made by Jarrett FM on 9 September 2008. That the application filed 1 August 2008 be dismissed. That the applicant pay the second respondent's costs fixed in the sum of $1,000.00. The affidavit also exhibited a reply from the Australian Human Rights Commission of 15 September 2008. In relation to your matter against the Tribunal, it appears their decisions are protected under the doctrine of judicial immunity. Furthermore, it appears the actions of DIAC in relation to your visa are actions done in direct compliance with the relevant immigration laws. As a result, it appears that this Commission is unable to investigate such actions. This is an appropriate avenue to challenge such a decision. Names of all decision makers, dates of decisions, breaches of law and statutes breached by the Respondents in this matter are detailed in ANNEXURE A., pages 1 to 12, of this application. Following several Federal Court hearings of the case, the Respondents' several decisions were overturned and the Applicant's visa was finally granted on 23 March 2006. The grounds of the applicant's application to the Federal Magistrates Court were expressed as: Delegates of the Respondents severally and jointly have deprived the Applicant of 7 years lawful Age Pension rights, totalling $93,173, as detailed in ANNEXURE B, page 13 of this application. Delegates of the Respondents severally and jointly have deprived the Applicant of 7 years public medical benefits, resulting in incurred medical costs totalling $19,175, as detailed in ANNEXURE B, pages 16 to 18, of this application. The second Respondent has failed to lawfully refund the applicant's review fee of $1,400 following the Federal Court's remittal of the case back to the first Respondent for determination according to law, as detailed in ANNEXURE B, page 14, of this application. Delegates of the Respondents severally and jointly have severely injured the Applicant's health and existential well-being through unwarranted stress over a 7-year period, for which the Applicant claims damages of $337,500, as detailed in ANNEXURE B, page 15, of this application. The applicant sought the following orders: The Respondents jointly be ordered to compensate the Applicant $93,173 for 7 years loss of Age Pension entitlements. The Respondents jointly be ordered to compensate the Applicant $19,175 for medical costs incurred due to 7 years loss of public medical benefits. The second Respondent be ordered to refund the Applicant her review fee of $1,400 according to law. The Respondents jointly be ordered to pay damages to the Applicant of $337,500 for 7 years injury to the Applicant's health and existential well being. I am a 74-year-old age dependent sister of Mr. Joseph Moder, with whom I live at 272 Lake Street Cairns QLD 4870. I have no assets or income, apart from a meagre pension of $56 per week from the Czech Republic, and am wholly dependent on my brother for my day-to-day living expenses, medical costs and psychological support. I have been severely aggrieved by 7 years of errors of law and gross maladministration by the Respondents in their processing of my 14 July 1999 permanent residency visa application. Following several successful Federal Court appeals by my brother on my behalf, the Full Federal Court finally ordered that my visa be granted on 23 March 2006. The prolonged maladministration of my visa application has deprived me of 7 years of lawful Age Pension entitlements and public medical insurance benefits. My brother has fully supported me for over ten years and, as I have not received any social welfare support from the government, my brother's finances are now almost depleted. The 7-year visa delay has therefore seriously jeopardised my existential security. I therefore claim compensation for 7 years loss of Age Pension entitlements and public medical insurance benefits, and also damages for stress related injury to my health, from the Respondents jointly, as detailed in ANNEXURE B, pages 13 to 18. I believe my claims for compensation and damages to be measured and just, in light of the circumstances of this case. That chronology recites the history of the applicant's visa application. It is relevant to note that on 14 July 1999 Mrs Sochorova lodged an application with the Cairns office of Department of Immigration and Multicultural and Indigenous Affairs (DIMIA or the Department) for a Special Category (Residence) (Class AO) Subclass 806 visa on family reunion grounds. On 25 October 1999 an authorised officer of DIMIA in Cairns refused the grant of the visa. On 22 November 1999, the applicant lodged an application for review with the Migration Review Tribunal (the MRT), the second respondent. On 21 August 2001, the MRT affirmed DIMIA's decision of 25 October 1999. The substantive written decision of the MRT was sent to the applicant's original legal representative. The applicant received a copy of the decision of the MRT on 19 December 2001. In January 2002, the applicant filed her appeal to the Federal Court from the decision of the MRT of 21 August 2001. After interlocutory disputes, both in the Federal Court and in the Full Court of the Federal Court, in which the applicant was successful, Kiefel J, on 13 June 2003, ordered, "The decision of the Migration Review Tribunal of 21 August 2001 be set aside and the matter be remitted to the Tribunal differently constituted, for determination according to law". On 23 November 2004, the MRT heard the remitted application. On 23 March 2006, an authorised officer of the Department advised that the applicant's visa application had been approved. The MRT filed a response on 8 September 2008 to the applicant's application in the Federal Magistrates Court, seeking that the application be dismissed, and that the applicant pay the second respondent's costs. The grounds of opposition were as follows: The application is misconceived. Section 435 of the Migration Act 1958 (Cth) (which refers to section 60 of the Administrative Appeals Tribunal Act 1975 (Cth)) provides that a member has the same protection and immunity as a Justice of the High Court. The application is misconceived as errors of law in decisions made by the second respondent have been rectified through the applicant's appeals to the Federal Court. The application is misconceived as remedies sought by the applicant in proposed Orders 1, 2 and 4 are not available pursuant to section 476 of the Migration Act 1958 (Cth). The application is misconceived as the second respondent has not made a decision refusing to refund the review fee of $1,400 to the applicant. This application has purportedly been made pursuant to section 476 of the Migration Act 1958 (Cth). Section 477 of that Act provides that any applications to the Court for remedies under section 476 must be made within 28 days of the actual notification of the decision. Section 477(2) provides that the Court may extend that 28 day period by up to 56 days. This application has been made more than 84 days after the applicant received actual notification of the second respondent's decisions and is outside the period for making such applications prescribed by section 477(2) of the Act. On 14 November 2008, these proceedings were before the Federal Court for directions. I gave directions for the filing of submissions by the parties, and for the matter then to be heard on the papers, once submissions had closed. The direction that the matter would be heard on the papers was with the consent of the parties. Reply to first respondent's submissions filed 13 February 2009. What is referred to in "1" above as "submissions of applicant filed 13 January 2009" was a document headed "Application for Extension of Time to File and Serve Notice of Appeal (Amended)". That document was filed and treated as the submissions of the applicant in respect of directions made by me on 14 November 2008. It is necessary to also have regard to the "supplementary submissions of applicant filed 21 January 2009". Those supplementary submissions acknowledge, "The appellant filed with the Court and served submissions on 13 January 2009". The supplementary submissions refer to a communication received on 19 January 2009 from Centrelink regarding the entitlement of the applicant to an age pension. That letter dated 16 January 2009 is a response to two letters of the applicant dated 2 December 2008 and 6 January 2009. It details the day on which a permanent visa is granted to a person or a person becomes the holder of a permanent visa for the purposes of a 'newly arrived resident's waiting period'. Section 7(4B) relates to persons serving a newly arrived residents waiting period. The 10 years qualifying Australian residence will end on approximately 23 March 2016. The Migration Review Tribunal affirmed this decision on review 2 years later, on 21 August 2001. On 13 June 2003 the Federal Court set the decision aside and remitted the case back to the MRT "for determination according to law". Following several further court hearings the visa was finally granted under court order on 23 March 2006 --- nearly 7 years after the application. The visa was applied for on 14 July 1999, was refused on 25 October 1999, was set aside and remitted on appeal by the Federal Court on 13 June 2003 for 'determination according to law', and was finally approved on 23 March 2006. Under these circumstances Mrs Sochorova is entitled to the age pension 10 years after date of the visa refusal , not date of grant, as specified by Section 7 part (4B) item (b)(ii) of the Social Security Act 1991 . This means that Mrs Sochorova will be entitled to the pension from 25 October 2009. It depends on whether s 7(4B) of the Social Security Act 1991 (Cth) (the Social Security Act ) does or does not apply to the circumstances of the applicant. In my opinion, it is not competent in these proceedings to determine that question. These proceedings are an application for an extension of time to appeal from the orders made by Jarrett FM in proceeding BRG 514 of 2008 given on 9 September 2008 in Cairns. They cannot therefore consider the correctness of any decision or direction which was made by Centrelink on or shortly before 16 January 2009 as to when the applicant would be entitled to an age pension. In the view of Centrelink, as expressed in the letter of 16 January 2009, the applicant becomes entitled to an age pension on 23 March 2016; the applicant and her brother contend that the applicant "will be entitled to the pension from 25 October 2009". Neither contention has any bearing on the claim for entitlement to social security benefits prior to her application in the Federal Magistrates Court on 1 August 2008. I have read the entirety of the material on this application for extension of time. Whether the judgment of Jarrett FM of 9 September 2008 was interlocutory or final is not precisely clear. In Mentyn v Westpac Banking Corporation [2004] FCAFC 149 at [3] , Kiefel, Weinberg, and Stone JJ held that an order dismissing an application for want of jurisdiction was interlocutory in character, at least where it does not finally dispose of the parties' rights. Whether the judgment of Jarrett FM is final or interlocutory, the application for extension of time to file a Notice of Appeal, which was filed 20 October 2008, is either 34 days late if it was an interlocutory judgment, or 20 days late if it was a final judgment. It is unnecessary to determine that question. In Gallo v Dawson [1990] HCA 30 ; (1990) 93 ALR 479 , McHugh J was concerned with the application of O 60 r 6 of the High Court Rules in respect of the applicant's application for an extension of time. The grant of an extention of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. The first is whether a sufficient explanation for the delay has been forthcoming; the second is whether the proposed appeal would enjoy any prospect of success, such that it ought be allowed to proceed. The applicant, on the first issue, says that the delay was occasioned by an application which she made to the Australian Human Rights Commission after the dismissal of a Federal Magistrates Court proceedings. The evidence establishes that the Commission said on 17 October 2008 that it was not the appropriate body for reviewing the applicant's case. On 20 October 2008, the applicant filed her application for an extension of time in the Federal Court. This application was filed promptly after the applicant was advised by the Australian Human Rights Commission determined that it was not the appropriate body to review the applicant's case. There is, in my view, a sufficient explanation for the delay, and the first requirement for the exercise of a discretion to extend time is, in my judgment, made out. It is obvious that the "Notice of Appeal (Amended)" referred to in the submissions of the applicant filed 13 January 2009 relates to three separate matters: the judgment of the Federal Magistrates Court of 9 September 2008; the communication by the Australian Human Rights Commission to the applicant on 17 October 2008; and the communication by the Minister to the applicant on 11 December 2008. It is said that each of these "decisions" constituted a dismissal of the applicant's application for "redress for loss of .7 years lawful rights to Medicare and the aged pension, and for stress-related injury to health, caused directly by 7 years defective processing by immigration authorities of the appellant's 1999 permanent visa application". This document purports to appeal not only the judgment of Jarrett FM in Cairns of 9 September 2008, where his Honour dismissed the applicant's application in the Federal Magistrates Court for want of jurisdiction, but also seeks to challenge what is said to be decisions by the Australian Human Rights Commission of 17 October 2008, and by the Minister on 11 December 2008. It is not competent in these proceedings to entertain the second "two appeals". I should say, however, the appeals "in those two respects" seem misconceived and incompetent to achieve "redress for loss of lawful rights to Medicare and the aged pension, and for stress related injury to health", as Ms Sochorova seeks. In my judgment, the judgment of Jarrett FM of 9 December 2008 is clearly correct. The Court had no jurisdiction to entertain the applicant's claims, for the reasons which the Federal Magistrate gave. It follows that the proposed appeal enjoys no prospect of success. For this reason, the application for an extension of time to appeal the judgment of Jarrett FM of 9 December 2008 must be dismissed, with costs. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. | migration appeal application for an extension of time in which to appeal whether the proposed appeal would enjoy any prospect of success held that the federal magistrate was correct in finding that the federal magistrates court had no jurisdiction to entertain the applicant's claims held that the proposed appeal enjoys no prospect of success application for extension of time dismissed o 52 r 5(3), o 52 r 15 applied mentyn v westpac banking corporation [2004] fcafc 149 cited appeals federal court rules gallo v dawson [1990] hca 30 ; (1990) 93 alr 479 |
In order to achieve that purpose, Vulcan hopes to complete a Scheme of Arrangement between it and its ordinary share holding members pursuant to the provisions of Pt 5.1 of the Corporations Act 2001 (Cth) ( the Act ). Approval of the Court is sought today under s 411 of the Act to enable that process to occur. The application is supported by affidavits from Mr Hughes who is Vulcan's Chief Financial Officer and Company Secretary and Mr Cardaci, Solicitor for Vulcan. The evidence in support of Vulcan's application indicates that Vulcan's Directors and Universal's Directors have agreed upon the merger and have formed the opinion that the most efficient method of securing that outcome is pursuant to the Scheme for which s 411 of the Act approval is sought so as to put the Scheme to shareholders in Vulcan for their consideration. An 'arrangement' under a Scheme is a broad notion. As observed in Re Hostworks Group Ltd (2008) 26 ACLC 137 at [26]; it may extend to any subject matter which is something a company is able to agree with its members, and is likened to a contract between a company and its members. Typically, such a scheme will have some elements that are compulsory for its members, if it is approved. In this case, there are such elements, such as the requirement that all members transfer their shares in exchange for new shares in a new holding company. This will be on a ratio of 1 Vulcan share to 6.85 Universal shares. If the Scheme becomes effective and the merger is achieved, Vulcan will thereby become a 100 per cent subsidiary of Universal. The Australian Securities and Investments Commission ( ASIC ) has received the requisite notice and information under s 411(2) of the Act. It has been provided with the Scheme Booklet. The Scheme Booklet contains a proposed Scheme, a final draft Explanatory Statement with annexures. It contains the relevant independent expert's report and the proposed Notice of Meeting and form of proxy. I am satisfied that ASIC has had a reasonable opportunity to examine the materials and ASIC has indicated that it does not oppose the making of the orders which are sought nor does it wish to be heard in relation to the Scheme. I take into account these facts. I am satisfied that the Scheme Booklet which comprises the Explanatory Statement appears to comply with the provisions of the Act in the sense of giving the necessary information such that a member could make an informed decision whether or not to approve the Scheme. Over and above that, it provides additional information consistent with that which would be required under Ch 6 of the Act in the context of a takeover bid. There is an independent expert's report. That report confirms the Scheme is fair and reasonable and that it is in the best interests of Scheme participants. As Mr Hughes deposes, Vulcan and all its option holders as well as Universal have entered into private treaties by which Vulcan and the option holders in Vulcan have agreed to the cancellation of their options in consideration for Universal issuing fully paid ordinary shares in Universal to each option holder. The completion of that transaction will occur if the Scheme becomes effective. It is also confirmed that if orders are made today that a meeting of creditors will be held to approve the Scheme, the Scheme Booklet will be registered with ASIC and sent together with the Notice of Meeting and form of proxy to all Vulcan members. There is nothing in the Constitution of Vulcan which is apparently inconsistent with or contrary to the terms of the Scheme. There is no reason to think that the Scheme has been proposed by either Vulcan or Universal for the purpose of enabling those companies to void the operation of Ch 6 of the Act. There are a number of other aspects concerning the Scheme to which the Court's attention has appropriately been drawn. For present purposes, there is no reason to believe that any of them raise a difficulty, nor does it appear that ASIC is of that view. They include the mechanics of the mutual obligations. The warranty of unencumbered title is high-lighted. The reciprocal 'break-fees' in the merger implementation agreement arise from normal commercial merger negotiations. They are apparently within the reasonable bounds of the Takeover's Panel Guidance Note 7, (that is, not more than one per cent of equity value). The parties have each been separately advised and represented. The 'no-shop' constraints in the merger implementation agreement are subject to an exception for performance of fiduciary duties. The notice of appearance and affidavit must be served on Vulcan at its address for service at least one day before the day fixed for the hearing of the application. | scheme of arrangement s 411 of the corporations act 2001 (cth) approval corporations law |
The applicant seeks leave to file and serve a notice of appeal from a judgment of the Federal Magistrates Court given on 6 February 2009 ( SZHLW v Minister for Immigration and Citizenship & Anor [2009] FMCA 51). Because the notice of appeal was not filed and served within 21 days as required by Order 52 r 15 of the Federal Court Rules , the application for the extension of time is required. The application is accompanied by an affidavit sworn by the applicant on 12 February 2009, as well as a draft notice of appeal also filed on 12 February 2009. When the matter was called for hearing today the applicant failed to appear. The representative for the first respondent, Ms Johnson, seeks an order dismissing the application pursuant to Order 35A rr 2(1)(f) and 3(1)(a) of the Federal Court Rules . Order 35A r 2(1)(f) provides that an applicant is in default if the applicant fails to prosecute the proceeding with due diligence. Order 35A r 3(1)(a) provides that if the applicant is in default the Court may order that the proceeding be dismissed. I have looked at the application for an extension of time, the affidavit of the applicant in support, and the first respondent's outline of submissions. In circumstances where the applicant has sought an indulgence of the Court by way of an extension of time to file and serve the notice of appeal, I am be satisfied that the applicant has failed to prosecute the proceeding with due diligence by failing to attend the Court on the date allocated for the hearing of the application. I am also satisfied that, by reason of this default, I should dismiss the application for the extension of time. It is a matter for the applicant to ensure attendance before the Court as required in order that the application may be determined. The applicant has not done so. The first respondent has attended and is ready to proceed. In all of these circumstances, where the applicant has chosen not to attend the Court, I am satisfied that the appropriate order is that the application be dismissed, and I so order. I am further satisfied that there should be an order for costs in the first respondent's favour and that the amount of $1,550 is an appropriate amount having regard to the matters set out in the affidavit of Rohan White of Sparke Helmore, solicitors for the first respondent, sworn 15 May 2009. Accordingly, I further order the applicant to pay the first respondent's costs fixed in the amount of $1,550. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | application for extension of time to file and serve notice of appeal migration |
The first in time is the applicants' application for leave nunc pro tunc to proceed against the first respondent (Opes Prime) (which is both in liquidation and has receivers and managers appointed) and also against the fourth respondent (Green Frog), a subsidiary of Opes Prime. Green Frog is also in liquidation. Leave was sought on the basis that the applicants will not, without the leave of the Court, enforce any judgment obtained against either Opes Prime or Green Frog if leave to proceed is granted. Leave was not sought by the applicants prior to commencing proceedings. Leave on that basis is unopposed by the liquidator but the position of the receiver is more complex. For reasons expressed below, the leave issue will be deferred. The second application is the motion of the second and third respondents (ANZ) to transfer the proceeding to the Victoria District Registry of this Court pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) (the Act). These reasons deal with the transfer motion. An examination of the outline by his Honour of the complex claims reveals that in many respects the claims are similar to the claims brought by the applicants in these proceedings. There are some differences in this application but those differences essentially are, as I perceive it, differences arising by reason of the proper legal characterisation of the relationships and circumstances arising on the evidence. Of course each applicant's position will differ to some extent but the extent to which there are common issues between not only the Beconwood proceedings and these proceedings but also proceedings in other States is very significant. The common features substantially outweigh the differences. The Beconwood proceedings were due to proceed to trial on 10 March 2009. It has been evident from media reports that the trial dates were vacated pending the outcome of prospective negotiations. In light of that development I invited the parties to consider whether they wished to make any further brief written submissions as to the effect of the Beconwood trial. ANZ contends that the adjournment of the Beconwood proceeding enhances its transfer argument as the gap between progress in the various cases will narrow, especially if a settlement can not be achieved. The applicants contend to the contrary. The applicants submit that the circumstances leading to the adjournment of the Beconwood proceedings, (those circumstances being a proposed scheme of arrangement to settle the various cases concerning the collapse of Opes Prime) makes it appropriate to adjourn ANZ's transfer application until the outcome of the proposed Scheme is known. Alternatively it is argued that the adjournment justifies a 'wait and see' approach for which the applicants have advocated. In my view it may well be that a period of time to permit negotiation on complex matters may be desirable but in relation to the transfer application, there is no reason to think that such a period would not be as readily afforded in the Victoria District Registry as the Western Australia District Registry. I have considered these submissions but in the end consider that the ultimate disposition of the transfer application is unaffected by the recent developments. In the absence of much more information about what may or may not ensue in consequence of the adjournment, in my view the Beconwood adjournment is more appropriately treated as a neutral factor on the transfer issue. Submissions have also been received from the liquidators of Opes Prime in light of the events leading to the adjournment of Beconwood asking that the matter be stood over, save for the delivery of this decision. All of the proceedings arise from the collapse of the Opes Prime Group of companies. They involve characterising the legal effect of standard arrangements entered into between Opes Prime (stockbrokers) and its customers (who include the applicants) and alleged liability of ANZ arising out of those arrangements. I am informed by Mr Donaldson SC for ANZ that motions will be or have been brought in all of the proceedings to which ANZ respond, to transfer the proceedings to the Victoria District Registry of this Court. The objective of doing so is to increase the likelihood of the proceedings being managed by one judge. In addition to Beconwood, Finkelstein J is also managing in his Honour's docket a class action Imobilari Pty Ltd v Opes Prime Stockbroking Ltd. Contemporaneous directions hearings in the matters raising the same issues have been taking place in the Victoria District Registry. There is also a third similar case which has been commenced before Finkelstein J, namely, CMG Equity Investments Pty Ltd v Australia and New Zealand Banking Group Ltd. In New South Wales there are two proceedings pursued by Opes Prime customers - Melewar Steel Ventures Pty Ltd v ANZ Nominees Ltd and Terpu v ANZ Nominees Ltd. The proceedings are at a preliminary stage in Melewar. An application to transfer the proceedings was stood over by Windeyer J so that it could be revisited if cross-vesting proved to be in the interests of justice as the case progressed. There is also the matter of Solamind Pty Ltd v Australia and New Zealand Banking Group Limited in the Supreme Court of Victoria. I am informed that Judd J delivered an ex tempore judgment on 4 March 2009 allowing the transfer of those proceedings to the Victoria District Registry of this Court. I am told that there are also proceedings brought in the Supreme Court of Queensland of a similar nature. There seems a significant likelihood that most of the claims in other States will be transferred to the Victoria District Registry of this Court. The relevant principles presently arising, in my view are these: Factors which may be relevant for consideration include: To these points I would add, perhaps an obvious point, that a judge to whom management of a case has been allocated will be reluctant to transfer that duty to another judge unless there is good reason to do so. Neither the liquidator nor the receiver opposed the transfer. Mr Bennett, counsel for the applicants stressed those features of the pleading advanced for these applicants which are not advanced in some or any of the other proceedings. Putting aside any question of whether the case will still be run on that basis when it comes to trial, it seems to me that those individual characteristics of the pleaded case in these proceedings essentially go to conclusions of law which might be reached from the established facts. It was not clear to me that the unique features of this case gave rise to any practical ramifications in terms of its management until trial. A single judge managing a series of cases which have very common features will be well placed to identify different features arising in any particular case and to make whatever provision is required to deal with the differences just as provision may be made for the common claims. Mr Bennett correctly submitted that there is no suggestion that this proceeding was instituted in the Western Australia District Registry capriciously. A significant proportion of the applicants reside or (in the case of companies) were incorporated and have registered offices in Western Australia. An approximately equal number of applicants reside in Victoria. Mr Bennett and the instructing solicitors, Lavan Legal are based in Perth. They have jointly undertaken all preliminary research and prepared all court documentation in relation to the proceeding. Nevertheless there would be nothing to preclude Mr Bennett who is experienced counsel, appearing in the Victoria District Registry as counsel at any significant hearing or appearing by video-link on general interlocutory applications. There is no reason to believe that in interlocutory applications counsel appearing by video is at any significant disadvantage, if at all. Lavan Legal is a large firm. The applicants, importantly, have the benefit of litigation funding. It is common ground that the applicants in the Beconwood proceedings as with the applicants in this proceeding are being funded by a litigation funder, IMF (Australia) Ltd (IMF). Any additional costs occasioned by a transfer will not be directly born at least in the first instance by the applicants themselves. Mr Bennett submits that as they have not acted capriciously in their choice of Registry they should not in the absence of 'compelling reasons' be deprived of their choice of venue. In my respectful view this places the test too highly. The real question is where the case can be conducted or continued most suitably bearing in mind the interests of all parties, the ends of justice in the determination of the issues between them and the most efficient administration of the Court. It is also true that the respondents, their representatives and the external administrators of the companies in liquidation are located in Melbourne, but I accept the submission of the applicants that this should not carry great weight in balancing the relevant factors. The applicants strenuously oppose consolidation of the proceedings. That opposition can be maintained. I make it clear that I am not assuming one way or another that there will be any consolidation. They also contend that the logical and practical location for the trial is Perth. However, the issue as to where the trial can most efficiently be held is not the relevant consideration in the transfer application. The proceedings are a substantial distance from trial. There is a statement of claim and foreshadowed challenges to it. If the proceedings are transferred to the Victoria District Registry it does not necessarily follow that the trial or the entirety of the trial would be conducted there. It is possible that part of the trial be conducted in Perth, and part of the trial be conducted in Melbourne, or elsewhere. The real issue is how the proceeding can most efficiently be managed between now and trial (as well as at trial) given the substantial commonality of issues between this and other litigation presently and/or likely to be transferred to the Victoria District Registry. The number of and location at which there are documents is evenly balanced. Both the applicants and ANZ have adduced evidence that they have significant numbers of documents relevant to the proceedings located in each of Western Australia and Victoria. As the applicants observed, however, there is no reason on the evidence as to why the parties to the proceeding cannot agree on an electronic discovery protocol in accordance with Practice Note No 17. The reliance by ANZ on a Victorian law provision in the Securities Lending and Borrowing Agreement (SLBA) as a basis for the proceeding being transferred to the Victoria District Registry, taken alone is not a significant factor. There is no particular reason why a Court sitting in Perth could not determine the effect of Victorian law in relation to the dispute. The clause is not an exclusive jurisdiction clause but its content did disclose an intention to prefer any dispute arising under the contract to be conducted in a court within the specified State: Australian Co-operative Foods Ltd & Anor v National Foods Milk Ltd [1998] FCA 376 and Aquila Resources Limited [2004] FCA 39 at [36] - [41]. Notwithstanding this, however, such a clause in a change of venue application does not carry significant weight where federal legislation is involved: Plantagenet Wines Pty Limited v Lion Nathan Wine Group Australia Limited [2006] FCA 247 at [61] . For example, orders could be made for discovery on common issues, expert evidence and the obtaining of documents from third parties. Even at an interlocutory stage there could be a saving in judicial resources with one judge dealing with the interlocutory matters rather than two. There would certainly be a saving of that type if all of the matters were heard at the one hearing. Consistency in the administration of justice and efficiency in the use of judicial resources suggest so far as possible that one judge should be responsible in determining what are substantially the same issues in these proceedings. Case management considerations suggest that one judge should manage the interlocutory aspects of the case so as to achieve the most efficient and cost effective resolution of common issues. If one judge manages the various proceedings or at least these and other proceedings in the Victoria District Registry, that may also assist in preventing or avoiding oppressive or unnecessary cross-examination of ANZ witnesses on multiple occasions, the risk of inconsistent outcomes with inconsistent findings and the prospect of diverse appeals. Significantly, a transfer may well also assist in a saving of time and costs for the applicants given the Court's familiarity with the relevant issues. These factors taken alone may not be sufficient if it would cause significant prejudice to the applicants, however, the applicants' solicitors are apparently the largest independent Western Australian law firm. They have appeared by video-link in related Court proceedings on behalf of other Opes Prime customers. As the applicants are funded by the litigation funder IMF, the immediate costs of running interstate litigation are not directly visited on the applicants personally. The receiver wished to pursue by way of cross-claim, claims for debts allegedly owing by certain of the applicants. The receiver raised this point on the morning of the hearing and there was inadequate opportunity for the parties to consider their positions. I heard argument and invited the parties to confer and if possible to file a consent minute in relation to the question of leave. That has not been possible. I will not at this stage, in light of my intended disposition of the transfer application, deal with the arguments concerning that issue although I did give the parties an additional eight days to file written submissions in relation to it. As I propose to transfer the proceeding to the Victoria District Registry, the parties can take up the issue in that Registry. No doubt the liquidators will also ask that there be a period of time for all parties to negotiate as their recent submissions suggest. It is preferable that the conduct of the proceedings be supervised in their entirety in the Victoria District Registry. For these reasons the following orders will be made: Pursuant to section 48 of the Federal Court of Australia Act 1976 (Cth), the proceeding be transferred to the Victoria District Registry of the Federal Court of Australia. The costs of this application be costs in the proceeding. The applicants' application for leave to commence proceedings against the first and fourth respondents be adjourned. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | leave to commence proceedings against company in liquidation transfer of proceeding whether proceeding should be transferred from western australia district registry to victoria district registry considerations include the interests of justice, efficiency and administration of the court similar proceedings in victoria district registry proceedings all arise from collapse of opes prime group companies practice and procedure |
50045 of 2006 ('the proceedings'). The proceedings were brought by Westpac against Mr Ollis and other defendants. 2 Westpac also seeks leave under s 58(3)(b) of the Act to join Shaun Gregory Condon as a defendant to the proceedings, in his capacity as trustee in the bankruptcy of Mr Ollis. An order for costs is also sought. Mr Dibb did not oppose the grant of leave. Mr Condon was represented by Mr Stephens who had instructions to neither consent to nor oppose the orders sought. The proceedings are set down for hearing on 20 August 2007. 6 Westpac alleges that Mr Ollis drew cheques on accounts that he held with the bank knowing that he was not entitled to do so, that he had no funds to meet payment of the cheques upon presentation and that Westpac honoured such cheques by mistake. It is also claimed by Westpac that the second and third defendants received, for no consideration, cheques and money from Mr Ollis knowing that Mr Ollis did not have the funds to meet the cheques on presentation, that Westpac was honouring the cheques by mistake and that Mr Ollis had obtained the money by presentation of cheques that Westpac honoured by mistake. 7 On 19 January 2006, the New South Wales Crime Commission obtained restraining orders against Mr Ollis and the other defendants to the proceedings and summary judgment in respect of asset forfeiture on 7 June 2006 under the Criminal Assets Recovery Act 1990 (NSW). The defendants sought leave to appeal to the New South Wales Court of Appeal in respect of such judgment and the decision in respect of these proceedings is currently reserved. 8 On 21 November 2006 Westpac obtained orders in the Supreme Court of New South Wales which restrained Mr Ollis from dealing with property and assets claimed by Westpac. 9 On 27 July 2007 a sequestration order was made against the estate of Mr Ollis by Federal Magistrate Smith and Shaun Gregory Condon and Brian Gleeson were appointed trustees of Mr Ollis' bankrupt estate. On that day an application was made by Mr Ollis for a stay of proceedings pursuant to s 52(3) of the Act and Smith FM made such order. On 7 August 2007 a Notice of Appeal from the decision of Smith FM was filed by Mr Ollis. 10 Both Mr Condon and Mr Gleeson have been notified that Westpac intends to join them as defendants in the proceedings in their capacity as trustees of Mr Ollis' bankrupt estate. However Mr Gleeson has determined that he will not act as trustee and accordingly Mr Condon is now the only trustee of Mr Ollis' estate. Further issues for determination are the effect of the orders obtained by the New South Wales Crime Commission and whether the grant of the stay of the sequestration order made by Smith FM renders the application for leave unnecessary. Section 82 of the Act provides the nature of debts provable in bankruptcy. 14 The term 'in respect of' as it appears in s 58(3)(b) of the Act has been considered in Re McMaster; Ex parte McMaster (1991) 33 FCR 70 at 72 and in Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110 at 111. Each of those authorities referred to the wide construction which is to be given to such words ' in respect of' as contained in s 58(3)(b) of the Act. 15 In Re McMaster 33 FCR 72-73, Heerey J referred to the considerations which must be addressed by the Court when considering such an application. The first is to ensure that the assets of the bankrupt are distributed rateably among creditors. The second, which is interrelated with the first, is to ensure that one creditor does not obtain an undue advantage over other creditors. The third is to bring about the discharge of the debtor from future liability for his existing debts, so that the debtor may start afresh: see Storey v Lane (supra) (at 556). 17 Despite such circumstances, the Court considers that the proceedings would merely determine the rights of the parties in relation to the property or property interests and determine ownership thereof. The determination would not provide Westpac with any privilege or preference. Accordingly, the submission is rejected. 18 The circumstances arising in these proceedings appear to be similar to those considered by the Full Federal Court in Allanson v Midland Credit Ltd and Another [1977] 16 ALR 43. In that matter a creditor had brought proceedings in the Supreme Court of New South Wales claiming monetary sums from the defendants. While the case was pending, a sequestration order was made against one of the defendants to those proceedings. The litigation involved complex issues including those raised under defences and cross-claims and leave was sought under s 58(3)(b) of the Act to continue the proceedings. The determination of the rights of Westpac will resolve any issue of ownership and of the existence of charges in respect of the identified properly. 20 The grant of the stay pursuant to s 52(3) of the Act made by Smith FM on 27 July 2007 does not alter the status of Mr Ollis as a bankrupt: see Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297 at 301. The sequestration order, having been made, remains in force. Accordingly s 58(3)(b) of the Act continues to apply rendering the current application for leave necessary. 21 A further issue raised is the effect of the orders sought if the restraining orders obtained by the New South Wales Crime Commission are set aside by the Court of Appeal. It is apparent that by virtue of the operation of s 58A of the Act, the property subject to the restraining orders does not form part of Mr Ollis' bankrupt estate whilst the restraining orders are in force. If the orders are set aside, the provisions of s 58(1) apply so that his property then becomes vested in the trustee. It is only at this point that Westpac would seek to join Mr Condon as a defendant in the proceedings. The Court does not need to consider this issue further as Mr Dibb has submitted that Mr Ollis has not in fact appealed against the making of the restraining order but only in respect of the making of a proceedings assessment order. 22 The Court is satisfied from the evidence before it that leave under s 58(3)(b)of the Act is required to enable Westpac to proceed with the adjudication of its claim against Mr Ollis and others and that the grant of leave would not be contrary to the purpose of the Act. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy . | leave to continue proceedings in the supreme court of new south wales instituted prior to sequestration order meaning of ' in respect of a provable debt' effect of order staying proceedings under a sequestration order effect of orders restraining dealings with property of the debtor. bankruptcy |
In that list of documents the respondent claims that the report is privileged from production on the ground of legal professional privilege. In a subsequent list of documents filed on 15 August 2006, the respondent describes the report as being 'Draft Report prepared by Barry Pinder of Pump Technology Pty Ltd undated but sent 7 August 1995, being a confidential report prepared on the instructions of and for the respondent's solicitors solely for the purposes of the litigation'. The existence of the report apparently came to light from a disbursement item in a bill of costs of the respondent. Previously, it had not been specifically itemised in the several lists of documents filed by the respondent, although it was said to come within the generic description of documents covered by legal professional privilege. By motion filed on 30 May 2006 the applicants sought, inter alia, orders for discovery and production of the report. That motion apparently promoted in part the further list of documents on 20 July 2006. The applicants now dispute the claim that the report is privileged from production. The applicants accept that the report was commissioned by solicitors then acting for the respondent, and was commissioned by them for the purposes of this proceeding. I do not need to refer to the nature of the proceeding. It is described in the judgment of Lander J in Brookfield v Yevad Products Pty Ltd [2004] FCA 1164. His Honour's decision was upheld on appeal, although the orders he then made were varied a little: Yevad Products Pty Ltd v Brookfield [2005] FCAFC 177. The initial judgment, in which the applicants' claims against the respondent were unsuccessful, was given on 8 February 1996, following a hearing which commenced on 11 August 1995: see Brookfield v Davey Products Pty Ltd (1996) 14 ACLC 303. The report therefore predated the commencement of the hearing by only a few days. The report was not then specifically discovered, nor prior to the judgment, nor indeed, at any time prior to 20 July 2006. I note, however, that in about September 2000 the applicants became aware of the existence of the report and requested its discovery, and that Mr Brookfield repeated that request in correspondence of 19 October 2000, and again by correspondence of 2 November 2000. Those letters are part of a series of correspondence concerning a range of issues. On 3 November 2000 solicitors for the respondent indicated that the report was obtained by the former solicitors for their client in circumstances protecting it from production on the ground of legal professional privilege. Evidence now before the Court also indicates that, when the report was sent to the former solicitors for the respondent, its author described it as 'the first draft of the technical report' on the pumps, and that it was for the purposes of the hearing then about to commence. The report was not used at the hearing. Nor was its author called. In my view, the relevant legal principles are quite straightforward. In Australian Securities and Investments Commission v Southcorp Ltd (2003) 46 ACSR 438 ( Southcorp ), Lindgren J at [21] identified a number of principles applicable. A draft report prepared by the expert is not, of its nature, such a communication. It may be that the draft report is, in fact, given or sent by the expert to the litigant or the litigant's lawyer, but that does not change its character as something prepared by the expert which is not intended to be a means of communication with the litigant or lawyer. That is because in Southcorp the documents in issue were documents held by the independent expert and not the documents reflecting that expert's opinion which had been communicated to the solicitors for the purposes of that litigation. The point of distinction, of course, is that the report in issue in the present proceedings is clearly one which was communicated to the then solicitors for the respondent for the purpose of the conduct of the litigation. It was not a document held only by the expert as a provisional or preliminary draft, although it is in the accompanying communication described as 'first draft'. It is the copy of the document held by the solicitors which is the present subject of the application. In Esso Australia Resources Limited v Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49, McHugh J at 79 [80] emphasised that legal professional privilege is concerned with communications, either oral, written or recorded, and not with documents per se. His Honour emphasised that privilege inheres in any document 'because it records or constitutes a communication prepared, given or received for the purposes of obtaining legal advice or assistance'. See also per Gleeson CJ, Gaudron and Gummow J at 65 [36]. In Commissioner of Australian Federal Police v Propend Finance Pty Limited [1997] HCA 3 ; (1997) 188 CLR 501, the High Court held that legal professional privilege attached to a copy of a document provided to a lawyer for the purpose of obtaining legal advice for use in legal proceedings, even when the original document may not itself have been privileged. See for example McHugh J at 553-554. In my view, the report falls squarely within that description. It is not necessary to decide whether a copy of the report held by its author is itself privileged. I do not think that the description of the report as a 'first draft' results in any different conclusion. Even if it be accepted that a draft report prepared by an expert witness which is not communicated by the expert to the party's legal adviser is not privileged, this copy of the document, being the report as discovered, is accepted by the applicants as being a document commissioned by the respondent's former solicitor and communicated to those solicitors by the expert for the purposes of the litigation. I do not think that Lindgren J's principle (3) in Southcorp should be read as suggesting that a draft report provided by an expert to solicitors for the purpose of litigation is not itself privileged. It operates precisely as a communication for the purposes for which privilege exists. That says nothing about the status of the expert's copy of such a document. However, if a draft of a report (as distinct from working notes and field notes and other documents used by an expert to form an opinion) encompassed within principle (3) is not in fact communicated to solicitors, the draft of that report may nevertheless have been prepared for the purpose of recording the views of the proposed expert and intended by the expert as a means of communication to a party's legal adviser. Provided that document was brought into existence for such a purpose, that is to record information to be submitted to a solicitor for the purpose of litigation, it may be privileged even in the hands of the expert. That is an issue as to characterisation, a point recognised both by Lindgren J in Southcorp and by Barrett J in Ryder upon a careful reading of their Honour's respective remarks. Some drafts may not have that character, so in some cases evidence may be necessary as to the characterisation of the particular document held by the expert. In Interchase Corporation Limited (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 1) [1999] 1 Qd R 141 at 162, Thomas J pointed out the reason why neither principle nor policy should protect from inspection documents which an expert generates from the information which the expert collects in order to form an opinion. His Honour did not indicate that the formation of the opinion itself would not itself be privileged, as he did not need to. Pincus JA in that case at 148-149 suggested that the formation of the opinion of the expert itself is not privileged, but a report on that information communicated to the party's legal adviser is privileged. Those remarks are unexceptionable observations of principle. The opinion of any expert is not privileged. If subpoenaed to give evidence which is otherwise admissible, the expert must give that evidence. The report or a draft of the report by an expert containing that opinion, if brought into existence for the purpose of a privileged communication, and if communicated on a privileged occasion, it is clearly privileged. If the intention of the creation of the draft report was that it be communicated but, for some reason it was not in fact communicated, I do not think that its non-communication necessarily leads to the loss of the privilege which would otherwise attach to that document. Obviously, sometimes, there will be different questions to decide as to the status of a particular document or document held by a third party expert. For the sake of completeness, I note that the decision of Bleby J in Harris Scarfe Ltd (Receivers & Mangers Appointed) (in liq) v Ernst & Young (No 6) [2006] SASC 148 concerning draft expert reports reflects the application of the different rules obtaining under the Supreme Court Rules (SA) and so is not directly in point. For those reasons, in my view the report is privileged from production on the ground of legal professional privilege. The respondent's further list of documents filed on 15 August 2006 also expressly listed 14 other documents, not previously expressly itemised although apparently covered by the generic privilege claimed in earlier lists. Each of those 14 documents is claimed to be privileged from production on the ground of legal professional privilege, as being brought into existence solely for the purpose of the litigation and being communications between the respondent's former solicitors and Pump Technology Pty Ltd or its officers. They cover the period 19 July 1995 to 8 November 1995. I note that seven of the documents exchanged on and after 14 August 1995 concern fees of Pump Technology Pty Ltd. The applicants do not accept the claim for privilege. In my view, the documents concerning the engagement of Pump Technology Pty Ltd, including the material with which it was briefed and information which it sought, are clearly privileged. So too is the document enclosing a 'first rough draft' of the report, dated 5 August 1995, and that draft, for the reasons already given. The authorities indicate that bills of costs are privileged if they disclose the nature or progress of privileged communications, but trust account ledgers and the like are generally not privileged: see e.g. Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (1994) 126 ALR 58. Nor are internal records which note times, mere attendances, or fee records and the like: see R v Manchester Crown Court; Ex parte Rogers [1999] 4 All ER 35. Those matters are discussed generally in Cook v Pasminco Ltd (No 2) [2000] FCA 1819 ; (2000) 107 FCR 44 at [45] - [48] . I have inspected the documents numbered 2.7, and 2.9 to 2.14 on the list of documents filed on 15 August 2006, as I did not consider the claim for privilege was clearly made out by the verified description of those documents or the assertion as to their status. With the benefit of that inspection, I consider all but document 2.13 are privileged. They all contain material as to the nature of the privileged communications passing between those solicitors and Pump Technology Pty Ltd. The residual document is a letter from those solicitors of 30 October 1995 seeking a supporting 'log of time'. It does not disclose any privileged communication, and in my view should be available for inspection. In making that ruling, I do not intend to expose the other documents referred to as not being privileged merely because they are part of a series of communications. I consider that they are privileged. I will, at the time this judgment is delivered, return to the solicitors for the respondent the copies of the documents in issue with which I was provided for their inspection to the extent I considered it necessary. As I have indicated, that inspection was of the documents numbered 2.7 and 2.9 to 2.14 only. For those reasons, I consider that in all but one respect the claim to legal professional privilege in the disputed documents should be upheld. In particular, the claim by the applicants to inspect the report is rejected and Order (5) sought on the applicants' motion filed on 30 May 2006 is refused. The motion will otherwise be adjourned to a date to be fixed. I point out that the privilege claimed concerns documents and copy documents held by the former solicitors for the respondent. My decision does not relate to any documents held by Mr Pinder or by Pump Technology Pty Ltd. I presently have no view as to the status of any such documents. I am confident that the respondent's solicitors will now produce for inspection the letter from Piper Alderman to Mr B Pinder dated 30 October 1995 concerning log of time and accounts\, without the need for an order. The costs of the application for inspection of the disputed documents, in particular the report, should be the respondent's costs in the cause other than the attendance on 15 August 2006 which was prompted by the respondent's proper desire to fully itemise the communications referred to above, but which in the circumstances should not be visited upon the applicants. | draft expert report held by respondent's former solicitors whether privileged from production legal professional privilege |
The applicant claimed various forms of relief related to alleged breaches of contract and contraventions of provisions of the Trade Practices Act 1974 (Cth) ("Trade Practices Act"). 2 The applicant has filed and served an application, a statement of claim and a reply and defence to cross-claim. The respondents have filed a defence and cross-claim and a reply. 3 The proceeding has progressed towards a hearing and procedural directions have been made from time to time. On 15 December 2006 a Judge of this Court made a number of directions, including a direction that the proceeding be set down for trial on all issues on 4 June 2007 with an estimate of three weeks. The respondents assert that the applicant has not complied with a number of the directions which have been made. (2) There be judgement for the Applicant against the Second Respondent, on that part of the Applicant's claim that the Second Respondent has, pursuant to s 75B of the Trade Practices Act 1974 , been involved in the contravention of s 51AD of Part IVB of the Trade Practices Act 1974 . (3) The assessment of the amount of damages or other relief, be deferred until further order. Note See section 31A of the Act in relation to proceedings commenced on or after 1 December 2005. (2) Where the Court pronounces judgment against a party under this rule, and that party claims relief against the party obtaining the judgment, the Court may stay execution on, or other enforcement of, the judgment until determination of the claim by the party against whom the judgment is directed to be entered. (3) The Court in any application under this rule may give such directions, whether for amendment of the pleadings or otherwise, as may be thought fit. (4) This section does not limit any powers that the Court has apart from this section. This proceeding was not commenced before 1 December 2005. The applicant's notice of motion was issued after 22 December 2006. It would seem then that this application for summary judgment is an application under s 31A of the Federal Court of Australia Act rather than O 20 r 1. The parties made a number of submissions on the basis that the application was governed by O 20 r 1. Had it been necessary to do so, I would have re-listed the matter and invited the parties to make further submissions. However, I have reached the conclusion that on any view the application must fail. The nature and scope of the relevant principles have been discussed by the High Court in recent decisions: Agar v Hyde [2000] HCA 41 ; (2000) 201 CLR 552; Batistatos v Roads and Traffic Authority of New South Wales ; Batistatos v Newcastle City Council [2006] HCA 27 ; (2006) 80 ALJR 1100. 9 The extent to which s 31A of the Federal Court of Australia Act relaxes the test formulated in General Steel has been the subject of observations in recent decisions of this Court: Duncan v Lipscombe Child Care Services Inc [2006] FCA 458 ; Garrett v Macks [2006] FCA 601 per Lander J at [21]-[22]; Jewiss v Deputy Commissioner of Taxation [2006] FCA 1688 per Mansfield J at [26]-[29]; Hicks v Ruddock [2007] FCA 299 per Tamberlin J at [12]. 10 I need not enter either field of debate because it is clear from the authorities that summary judgment should not be granted, either under O 20 r 1 or s 31A , if there is a real dispute between the parties as to issues of fact. In this case, I have concluded that there are such issues and summary judgment should not be granted. 11 I turn now to briefly summarise the claims made by the applicant, including the claim of an alleged contravention of s 51AD of the Trade Practices Act . The applicant's claim relates to an oral agreement which it alleges it made with the first respondent in or about September 2004. The applicant alleges that by reason of the agreement the first respondent appointed it to act as its franchisee or distributor for Jianshe motor vehicles in the States of Victoria, Tasmania and South Australia. It alleges that the agreement contained a number of terms which the first respondent has breached. It is not necessary for me to set out the details of the terms and the alleged breaches. The applicant alleges that it has suffered loss and damage as a result of those breaches. The applicant also alleges that on 20 July 2005 the first respondent wrongfully repudiated the agreement. In addition to the alleged breaches of contract, the applicant alleges contraventions of various provisions of the Trade Practices Act . It alleges that during the negotiations which preceded the agreement, the first respondent in trade or commerce engaged in misleading or deceptive conduct contrary to s 52 of the Trade Practices Act . The applicant also alleges that the first respondent acted in contravention of s 53 of the Trade Practices Act . The applicant further alleges that the first respondent was an importer and manufacturer of Jianshe motor vehicles within the provisions of Pt 5 Div 2A of the Trade Practices Act and owed various warranties to the applicant which it has breached. 12 For the purposes of the present application, the important allegations in the statement of claim are those contained in paragraphs D1 to D7. The applicant alleges that the oral agreement between it and the first respondent was a franchise agreement within the provisions of reg 4(1) of the Trade Practices (Industry Codes --- Franchising) Regulations 1998 ('the Regulations'). It also alleges that the agreement was a motor vehicle dealership agreement within reg 4(2) and, therefore, taken to be a franchise agreement within the Regulations. That is what the Regulations do in that they make the Franchising Code of Conduct ("the Code") a prescribed industry code and declare it a mandatory industry code. It is not necessary to refer to the provisions of the Code in any detail. The short point is that it requires a franchisor to disclose certain information to a prospective franchisee before the latter enters into a franchise agreement. Annexed to the Code are two disclosure statements, one a long form statement which is relevant where the franchised business has an expected annual turnover of $50,000 or more (Annexure 1) and, the second, a short form statement which is relevant where the franchised business has an expected annual turnover of less than $50,000 (Annexure 2). 15 The applicant alleges that he should have been given a copy of a disclosure statement in the form of Annexure 1 and a copy of the Code. It alleges that if it had been given copies of those documents it would not have entered into the agreement. It alleges that it has suffered loss and damages by reason of entering into the agreement and it seeks to recover that loss and damage under s 82 of the Trade Practices Act . The applicant alleges that the second respondent was a person involved in the contravention within the provisions of s 75B of the Trade Practices Act . 16 The applicant seeks summary judgment on this claim. 17 In their defence, the respondents admit that in or about September 2004 the first respondent and the applicant made an oral distribution agreement in relation to Jianshe motor cycles and other related products, and parts from China. It disputes that the terms were as alleged by the applicant and pleads what it says were the terms of the agreement. The first respondent makes a cross-claim against the applicant in which it alleges that, in breach of the distribution agreement, the applicant failed to pay the first respondent certain moneys owing to the first respondent. 18 The relevant orders in the amended notice of motion seek judgment for damages to be assessed on the cause of action based on the alleged contravention of s 51AD of the Trade Practices Act . In the course of submissions, the applicant sought to reformulate the orders it asked the Court to make. The applicant said that in lieu of the orders in the amended notice of motion, it sought by way of summary judgment a declaration that the first respondent has contravened s 51AD of the Trade Practices Act and a declaration that the second respondent is a person who aided, abetted, counselled or procured or induced or was directly or indirectly knowingly concerned in the contravention of s 51AD by the first respondent. 19 The respondents opposed the applicant's application to further amend its notice of motion in this way. I said that I would rule on the application when determining the applicant's application. 20 For the purposes of its summary judgment application, the applicant confined its case to the assertion that the agreement was a franchise agreement within the Regulations because it was a motor vehicle dealership agreement within reg 4(2). In other words, it did not seek to establish on the summary judgment application its alternative plea that it was a franchise agreement within reg 4(1). That term is not defined, although the terms "motor vehicle" and "motor vehicle dealership" are defined in cl 3 of the Code. 22 The applicant alleges that the agreement between it and the first respondent was an oral agreement which arose from a series of conversations between representatives of the respective parties. The respondents also allege that there was an oral agreement between the applicant and the first respondent which arose from a series of conversations. Each party pleads the terms of the agreement which it alleges. There appears to be an overlap as to the terms alleged but there is a dispute between the parties as to a number of terms. The question of the agreement and its terms will have to be determined by considering the evidence of the participants as to the conversations. That is not an appropriate issue to be determined on an application for summary judgment. Without making any comment on the merits of the respective submissions, there is force in the applicant's submission that there is a sufficient common factual basis in the pleadings for a determination to be made as to whether the agreement was a motor vehicle dealership agreement. However, I cannot be certain that a determination one way or the other can be made in the absence of clear findings as to the agreement and all of its terms. I accept the respondent's submission that the question of whether there was a motor vehicle dealership agreement should not be determined until the agreement and its terms are determined as a matter of fact. 23 The first respondent identified other issues that raised questions of fact which it submitted meant it was not appropriate to determine the question raised on an application for summary judgment. It submitted that it was not caught by the Code unless it was in the business of granting franchises and whether it was or was not in such a business could only be determined at trial. It submitted that it was open to the Court to find that there was no agreement in September 2004 and, at best, a separate agreement each time goods were actually supplied. It submitted that it was open to the Court to find that any agreement was between the applicant and another party and not between the applicant and the first respondent. In circumstances where I have already identified a real issue of fact it is not necessary or appropriate for me to make any comment on these arguments or whether they are fairly raised on the pleadings. 24 There are additional reasons why summary judgment for damages to be assessed should not be given. As I understand it, it was common ground between the parties that some loss or damage is an essential element of the cause of action under s 82 of the Trade Practices Act . That means that to obtain judgment for damages to be assessed the applicant would need to prove causation and some loss or damage. On the material before me, I am satisfied that there are triable issues of fact in relation to those matters. 25 The alternative claim for declarations avoids the difficulties of proving causation and some loss and damage but raises additional difficulties of its own. The respondents referred to authorities where the Court has said that it is not appropriate to make a declaration of a contravention of a provision of the Trade Practices Act either in the particular circumstances of the case before it, or in the absence of determining if the applicant is entitled to further relief such as damages under s 82 of the Trade Practices Act : Neeta (Epping) Pty Ltd v Phillips [1974] HCA 18 ; (1974) 131 CLR 286 per Barwick CJ and Jacobs J at 307; Magman International v Westpac Banking Corporation (1991) 32 FCR 1; General Newspapers Pty Ltd v Telstra Corporation (1993) 45 FCR 164 at 192-193; Jenkins v NZI Securities Australia Ltd (1994) 52 FCR 572 at 576; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 34 ACSR 673 per Hely J at 676 [13]-[21]. The cases suggest that one should be cautious about granting no more than declaratory relief on a summary judgment application and a consideration of all the circumstances may suggest that this should not be done. In my opinion it is not appropriate to grant a declaration of a contravention of the provision of the Trade Practices Act on an application for summary judgment unless the case is a particularly clear one and the other circumstances suggest that it is an appropriate case to do so. For the reasons I have given this is not a clear case, and the circumstances outlined in the following paragraph suggest that this is not an appropriate case. 26 Leaving aside the merits of the applicant's claim, there are a number of more general reasons why this is not an appropriate case for summary judgment. The applicant seeks judgment only in relation to one cause of action and then only as to liability. There is no reason to think a determination in the applicant's favour would significantly reduce the length of the trial and in fact the pleadings suggest that the trial will remain a substantial one. In addition to those matters, it is relevant to note that the notice of motion was issued over a year after the proceeding was commenced and only months before the date upon which the trial is due to commence. I will hear the parties as to the costs of the application. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | application for summary judgment applicant alleges breaches of trade practices act 1974 (cth) and breach of contract applicant seeks summary judgment for damages to be assessed on part of claim only where applicant alleges an oral agreement between applicant and first respondent where respondents allege oral agreement with different terms whether relevant part of claim can be determined with certainty without determination of factual issues at trial where applicant makes alternative claim for declaratory relief whether declaratory relief should be granted in the circumstances whether application for summary judgment should be brought pursuant to o 20 r 1 of the federal court rules or s 31a of the federal court of australia act 1976 (cth). practice and procedure |
The applicant is presently held in detention at the Metropolitan Remand and Reception Centre at Silverwater pursuant to a warrant issued under s 19(9) of the Extradition Act 1998 (Cth) ('the Act'), a Magistrate having determined that Mr Rivera, the applicant, is eligible for surrender to the United States of America in relation to an extradition offence being a charge of murder. 2 The respondents named in the application are the Minister for Justice and Customs of the Commonwealth ('the Minister') and the State of New South Wales. The Minister, who is responsible, along with the Attorney General, for the administration of the Act, has moved the Court by notice of motion filed 9 March 2006 for an order that the proceedings be dismissed under Order 20 rule 2 of the Federal Court Rules ('the Rules'). As I would understand it, the Minister's application is confined to those claims for relief in the application which are made against the Minister, as opposed to those made against the State of New South Wales, the second respondent. 3 The application is described as a writ of habeas corpus/bail application. A writ of habeas corpus, or alternativerly (sic) the applicant be released on bail. A declaration that the warrant executed on 19 September 2002 is a nullity, or an abuse of process under the Extradition Treaty Act (sic) ("the Act"). A declaration the applicant has been unlawfully detained since his arrest. Damages for false imprisonment. Alternatively, these proceedings be stayed until the applicant is able to put his case forward free from interferance (sic) . A declaration that the second respondent's agents confisicating (sic) the applicant's computer disk containing his legal work in relation to his extradition case was made without lawful authority. A declaration that the second respondent's agents made on or about September 2005 that the applicant be segregated and detained away from other prisoners facing extradition for the purpose to inhibit providing or receiving legal assistance was made without lawful authority. A declaration that the second respondent's agents conspired and engaged in acts to disrupt and de-rail these proceedings. A declaration that the second respondent's agents attempted to molest and sexually violated the applicant. A declaration that the second respondent's agents physically assaulted the applicant. A declaration that the second respondent's agents tampered and concealed the applicant's mail in November and December 2005 was made without lawful authority. A declaration that the second respondent's agents have engaged in threats and acts that are calculated to prejudice, obstruct, or interfere with the due administratioion (sic) of justice in relation to the applicant's extradition matter. A declaration that the applicant is entitled to protect, by means of legal redress his right to litigate his extradition proceedings free from prejudice. An injunction restraining the respondents --- whether agents or otherwise from interfereing (sic) with these proceedings. Any orders the court thinks fit. Cost. I do not understand the relevance of the relief sought in paragraph 5 as against the Minister. Nor do I understand the relief sought in paragraph 14 as against the Minister. No evidence has been provided justifying any submission that in some way the Minister has interfered with the conduct by the applicant of his current application. Mr Rennie, being a senior lawyer employed by the Australian Government Solicitor, is instructed in this matter on behalf of the Minister by an officer of the Extradition Unit in the Attorney-General's Department of the Commonwealth. 7 Whilst certain affidavits have been sworn by the applicant in the proceedings, and his attention has been drawn to those affidavits, none of them have been read by him on the current application. He has, however, tendered a copy of a letter from McGowan Lawyers to the Minister, dated 4 June 2006, and also a bundle of documents produced by him. 8 In relation to applications of this nature, the principles to be applied are well established. If the applicant's case is so obviously untenable that it cannot possibly succeed, manifestly groundless, so manifestly faulty that it does not admit of argument, discloses a case which the court is satisfied cannot succeed, under no possibility could there be a good cause of action, or it is manifest that to allow them, that is to say the pleadings, to stand would involve useless expense, then the court should exercise its power to order summary dismissal. I should indicate that in this matter there have been no pleadings filed. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff's claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. That Autopsy Protocol would appear to have been prepared by Frank Sheridan, M.D. as the Chief Medical Examiner on 24 June 2002. In it he reports his findings on the body of one Kristina Louise Garcia whose body was found on 22 May 2002. Adult female body found in shallow grave in desert. The circumstances under which the body was found are highly suspicious for homicide, however, the most likely mechanism being smothering or a similar form of asphyxiation that would leave no traces in a decomposed body. In August 2002 the United States of America ('USA') requested Mr Rivera's provisional arrest in respect of an offence of murder. On 4 September 2002 a New South Wales Magistrate issued a provisional arrest warrant under s 12 of the Act for the arrest of Mr Rivera. On 19 September 2002 he was arrested under that provisional arrest warrant. My understanding is that he has been held in custody ever since. He was brought before a Magistrate following his arrest and remanded in custody under s 15 of the Act. 15 On 12 November 2002 the USA presented a request to Australia for Mr Rivera's extradition. On 16 December 2002 a Magistrate of the State of New South Wales determined under s 19 of the Act that the applicant, Mr Rivera, was eligible for surrender to the USA in relation to the extradition offence of murder. It is under that warrant that the applicant is presently detained. 17 On 31 December 2002 the applicant applied to the Supreme Court of New South Wales under s 21 of the Act for review of the order made by the Magistrate under s 19(9) of the Act. On 28 November 2003 the Supreme Court of New South Wales confirmed the Magistrate's order. 18 On 10 December 2003 the applicant appealed to a Full Court of this Court from the decision of the Supreme Court. On 16 June 2004 that appeal was dismissed, it being determined that the applicant was eligible for surrender. 19 On 24 June 2004 the applicant applied to the High Court of Australia for special leave to appeal from the decision of the Full Court. That application for special leave was refused by the High Court on 10 December 2004. 20 On the hearing of the motion presently before the Court the applicant in the proceedings, Mr Rivera, has made it clear that he does not by his current proceeding wish to impeach the decision of the Magistrate that he is eligible for surrender nor the subsequent appeals from that decision. Whether Mr Rivera is to be surrendered to the United States in relation to the qualifying extradition offence now falls to be determined by the Attorney-General or the Minister for Justice and Customs in accordance with s 22 of the Act. Insofar as his application relates to the Minister, I do not understand the applicant to be relying upon those matters. 23 The gravamen of his complaint is that since the High Court refused to grant him special leave to appeal on 10 December 2004 the Minister, as the relevant Minister administering the Act, has failed to make a determination one way or another under s 22 of the Act. The facts do not support this submission. 24 The evidence is that on 13 December 2004 the Attorney-General's Department wrote to Mr Rivera requesting that he provide any representations he may wish to make in relation to the decision to be made by the Minister under s 22 of the Act. In due course Mr Rivera provided a submission in response to the Department's invitation to do so. The Department proceeded to invite the USA to provide comments in relation to Mr Rivera's submission and it did so on 13 April 2005. Those comments were then sent to Mr Rivera in order to give him an opportunity to respond to them. On 8 June 2005 Mr Rivera sought an extension of time within which he should respond. Ultimately on 21 July 2005 he provided his second submission in response to the comments provided by the USA. 25 The USA was invited to make comments in relation to Mr Rivera's second submission and did so on 6 October 2005. On 20 October 2005 the Department provided those comments to Mr Rivera for his response and on 15 January 2006 he provided a response. 26 As indicated earlier, the current proceedings were instituted by Mr Rivera on 23 January 2006, but eight days after Mr Rivera responded to the invitation to comment on the USA's comments in relation to his second submission to the Minister. 27 Mr Rivera submits that there has been an unreasonable delay in the processing of the matter under s 22 of the Act between 13 December 2004 and the present time. 28 He instituted separate proceedings seeking judicial review in this Court on 11 February 2005 which were summarily dismissed on 15 March 2005. My client asks you to personally read his Submissions and feels confident that you will come to a view that you will not approve of the Extradition Proceedings. The Department had been at pains to ensure that Mr Rivera had every opportunity to present whatever material he wished to the Department to ensure that his submissions could be taken into account by the Minister in exercising his powers under s 22 of the Act one way or another. 31 On the hearing of the application Mr Rivera has submitted that it is within the power of the Court to grant relief in the nature of habeas corpus. Alternatively he submits that there is an inherent power in the Court to order that he be released on bail. 32 In relation to the question of habeas corpus, Mr Rivera has directed my attention to observations of Rogers J, as his Honour then was, in Puharka v Webb [1983] 2 NSWLR 31 at 34-35 which were given in respect of an earlier statutory regime. He has also drawn my attention to decisions of single judges in this Court. This court has no express statutory power to issue the writ [of habeas corpus] , although the breadth of the range of remedies available under s 23 of the Federal Court of Australia Act 1976 (Cth) in matters within the court's jurisdiction probably encompasses orders of the kinds that would be made consequent upon it. I accept that in the circumstances in which Mr Rivera presently finds himself there is no power in the Court to order that he be released on bail. 35 It is perhaps unfortunate that a determination has not as yet been made by the Minister under s 22 of the Act given that it is now some five months since Mr Rivera provided his last response to the Department. Section 22(2) clearly requires the Minister to make a determination whether a person is to be surrendered or not 'as soon as is reasonably practicable'. It would seem to me that circumstances could well exist where a person would be entitled to apply for relief in the nature of habeas corpus if there was protracted delay on the part of the Minister in making a determination after appeals had been finally determined and the Magistrate's decision that a person was eligible for surrender had been confirmed. 36 However, I fail to see how it could be said by Mr Rivera that he was unlawfully detained as at 23 January 2006 in circumstances where in the preceding 12 months every opportunity had been afforded to him and availed of by him to present his case to the Minister as to why a determination should be made under s 22 which was favourable to him. 37 Mr Rivera has submitted that new evidence is available which demonstrates that his detention is unlawful. It would seem to me that if new evidence were available which cast doubt upon a determination being made that he should be surrendered to the USA then the proper person to whom such a submission should be put is the Minister and not the Court. No relevant contravention of the Constitution has been identified by Mr Rivera in his submissions in which he has referred to powers as being unconstitutional. 39 In the circumstances it seems to me that the claims made by the applicant fall within the several expressions such as 'manifestly groundless' to which reference has earlier been made in these reasons for judgment. Accordingly, I consider that the proceedings should be dismissed in relation to all claims for relief against the first respondent. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham J. | summary dismissal of claims for habeas corpus and/or bail by a person awaiting a determination by the minister under s 22 of the extradition act obligation on minister to reach a decision as soon as is reasonably practicable whether delay unreasonable. practice and procedure |
This is not a power to be exercised lightly but only in clear cases of a serious breach of duty. 2 The present is such a case. An application for judicial review was commenced in this Court in relation to decisions in the Commonwealth Attorney-General's Department refusing or limiting the extent to which legal assistance would be available to the applicants for the purpose of proceedings in the Supreme Court of Western Australia. The preparation and presentation of the application for judicial review was done at such a poor level of competence as to amount to a significant breach of duty by the practitioner and warrants the making of an order for costs against him personally. Their Association is also an applicant. For nearly ten years they have pursued proceedings in the Supreme Court of Western Australia alleging that the Commonwealth engaged in unconscionable conduct and breached its fiduciary duty to them in connection with their resettlement from Christmas Island to mainland Australia. They sought legal assistance from the Attorney-General's Department under a Public Interest and Test Cases Scheme administered by the Department. They applied for over $500,000 per annum in connection with the Supreme Court proceedings. Their solicitors estimated the overall legal costs of the proceedings to be between $2 million and $4 million. The damages claimed on behalf of the ex-residents were said to be as high as $500 million. 4 In February 2005 the applicants began judicial review proceedings in the Federal Court challenging decisions of the Attorney-General's Department in relation to their claim for legal assistance for the purposes of their Supreme Court action. For reasons published on 21 December 2005, that application for judicial review was dismissed. Some aspects of the application were plainly out of time and no extension was sought. More fundamentally, the administration of the Scheme was not amenable to review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) as it was not done pursuant to any statute or delegated legislation. Its statutory source was an Appropriation Act under which any of a variety of legal assistance schemes, or none, could have been set up. Mandamus was not available because there was no relevant legal duty to be enforced. 5 The applicants' solicitor was TRM Legal Services which names Mr T Mijatovic on its letterhead as principal. He appeared as counsel for the applicants on the hearing of the application for judicial review. I find, having regard to affidavit evidence filed in this case, that he also acted as their solicitor. The submissions also disclose a failure to give adequate consideration to key legal issues such as the non-statutory character of the Scheme. Written submissions were filed with the Court by the applicants' solicitors and on behalf of the respondents. Knight v FP Special Assets Ltd [1992] HCA 28 ; (1992) 174 CLR 178 so held with respect to the like general discretion conferred upon the Supreme Court of Queensland by O 91 r 1 of its Rules. The power does not bring with it an unfettered discretion. It 'must be exercised judicially and in accordance with general legal principles pertaining to the law of costs' --- Knight at 192 (Mason CJ and Deane J, Gaudron J agreeing at 205) quoting Oasis Hotel Ltd v Zurich Insurance Co (1981) 124 DLR (3d) 455 at 462 (Lambert J). 10 The power to award costs against a non-party may be exercised against a legal practitioner acting for a party in the proceedings. There are authorities which indicate that the power to make such an order is an aspect of a power of the Court to discipline legal practitioners conducting proceedings before it. In a recent judgment in the New South Wales Court of Appeal, Lemoto v Able Technical Pty Ltd [2005] NSWCA 153 ; (2005) 63 NSWLR 300, McColl JA cited, in support of that proposition, House of Lords and Privy Council authorities --- Myers v Elman [1940] AC 282 at 318; Medcalf v Mardell [2002] UKHL 27 ; [2003] 1 AC 120 at 143 and Harley v McDonald [2001] UKPC 18 ; [2001] 2 AC 678 at 703. Similar observations appear in the Victorian Court of Appeal in Etna v Arif [1999] VSCA 99 ; (1999) 2 VR 353 at 379 and in the Queensland Court of Appeal in Emanuel Management Pty Ltd (in liq) v Fosters Brewing Group Ltd [2004] 2 Qd R 11 at 16, cited with approval in Martinovic v Chief Executive Queensland Transport [2005] 1 Qd R 502 at 512. As her Honour also observed, however, Mason CJ and Deane J in Knight said it was artificial to attribute orders for costs against solicitors in the exercise of a court's inherent jurisdiction to an exercise of the disciplinary power rather than the power to award costs (188). In Lemoto, it may be noted, the Court was considering the application of Pt 11, Div 5C of the Legal Profession Act 1987 (NSW) introduced by the Civil Liability Act 2002 as part of a package of measures designed to reduce the costs of claims for damages (327). A practitioner is not to provide legal services on a claim or defence of a claim for damages unless he or she reasonably believes, on the basis of provable facts and a reasonably arguable view of the law, that the claim or defence has reasonable prospects of success (s 198J). Where that duty is breached, a costs order may be made against the solicitor or barrister personally (s 198M). In its statutory setting the power thus conferred on the Court might easily be seen as disciplinary. Even so it represents, as McColl JA observed, '... a departure from the historical basis upon which legal practitioners could be exposed to personal costs orders' (328). The Act imposes '... a standard that is more demanding than that applicable in cases where, by reference to general law principles, a costs order is sought against a party's lawyer' --- De Georgiou v Dunn (No 2) (2005) 62 NSWLR 285 at 292 (Barrett J). 11 The Federal Court has no 'inherent jurisdiction'. Its jurisdiction and its powers are statutory. It does however possess, as an incident of the statutory grant of judicial power, implied powers which are no less in relation to the jurisdiction vested in it than the so called 'inherent jurisdiction' of a court of unlimited or general jurisdiction --- Jackson v Sterling Industries Ltd [1987] HCA 23 ; (1987) 162 CLR 612 at 619 (Wilson and Dawson JJ), 623 (Deane J). It is not necessary to resort to any implied power in this case. The source of the Court's power to award costs against practitioners is to be found in s 43 and O 62 r 9. The latter rule authorises costs against practitioners as a specific application of the discretion to award costs conferred by the Act. The power is to be exercised with care and in clear cases only in which there has been conduct on the part of the solicitor which amounts to a serious dereliction of duty --- De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544 at 548. Unreasonable conduct in connection with the litigation may be sufficient to justify such an order. What constitutes unreasonable conduct must depend upon the circumstances of the case; no comprehensive definition is possible. In the context of instituting or maintaining a proceeding or defence, we agree with Goldberg J that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to abuse of process; that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success. That does not require demonstration of any collateral or improper purpose. 13 In Kumar v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 18 ; (2004) 133 FCR 582, Mansfield J rejected an application for costs made by the Minister against the solicitor for the applicant. His Honour held that, simply by instituting or maintaining on instructions, proceedings with no real prospect of success a solicitor would not be exposed to an order for costs. He referred to Medcalf v Mardell at 143-144 (Lord Hobhouse) and the decision of the Queensland Court of Appeal in Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683 at [24] (Davies JA). The litigant is entitled to be heard; to penalise the advocate for presenting his client's case to the court would be contrary to the constitutional principles to which I have referred. The position is different if the court concludes that there has been improper time-wasting by the advocate or the advocate has knowingly lent himself to an abuse of process. The respondent Minister in Kumar accepted that the applicant had given the solicitor instructions to institute the application. There was no evidence about what information had been given to the solicitor for the applicant or what advice the solicitor gave the applicant. Her Honour was not satisfied that the solicitor in Bagshaw had deliberately or consciously decided to commence proceedings without any recognition of the absence of a prospect of success. His conduct was not so unreasonable that it attracted an order that he pay costs personally. Her Honour set out a number of propositions emerging from the authorities. McColl JA undertook a similar exercise in Lemoto. It is not necessary to quote or analyse those lists here save to acknowledge them as convenient, albeit not entirely congruent, references to the law as stated in English and Australian cases. 16 It is necessary to bear in mind the particular statutory context in which the decisions of different courts are made in awarding costs against practitioners personally. In England, for example, prior to 1990, superior courts had an inherent disciplinary jurisdiction to make orders for the payment of costs by solicitors personally --- Myers v Elman at 290 (Viscount Maughan). That power was widened and extended to both solicitors and barristers by the enactment, in 1990, of a new s 51 of the Supreme Court Act 1981 (UK) providing for what are called 'wasted costs' orders. Some of the case law in this area is based upon rules of court predating that change which are similar in terms to O 62 r 9. Like rules are to be found in the State Supreme Courts --- see the detailed discussion by McColl JA in Lemoto at 319-320. 17 The power to award costs against a legal practitioner under O 62 r 9 was recently considered by Weinberg J in Tran v Minister for Immigration & Multicultural & Indigenous Affairs (No 2) [2006] FCA 199. In that case his Honour delivered judgment refusing an application for an extension of time within which to appeal against a decision of a Federal Magistrate. The question with which his Honour dealt in his subsequent judgment in the matter was whether the applicant's solicitor should be ordered, under O 62 r 9(1)(c) of the Federal Court Rules , to repay to the applicant some portion of the costs that the applicant had been ordered to pay to the respondent. 18 Weinberg J drew a distinction between the approach taken by the Full Federal Court in Levick and that taken by the Queensland Court of Appeal in Steindl. He regarded Steindl as sanctioning a range of cases in which a solicitor might be ordered to pay costs, wider than that enunciated in Levick . If a client instructs a legal representative to take points that are manifestly without merit, the legal representative has a duty to the Court to refuse to act on those instructions. In that regard, there is a distinction between points that are barely arguable, but most likely to fail which can and sometime must be taken, and points that are simply unarguable. If a point is plainly unarguable, it is improper to argue it. If a client insists upon it being argued, the legal representative should decline to do so and, if necessary, withdraw from the proceeding. However, it took only moments for that argument to be abandoned at the time of the hearing. When the applicant's solicitor was invited to explain why he had pursued the meritless constitutional point, he submitted that there was merit in it but that he had been unable to explain it properly because his client had no funds. Accordingly, the work that would have been necessary to allow the point to be argued properly had not been undertaken. Weinberg J came to the conclusion that the solicitor '... had no idea what he was talking about' when he had foreshadowed at a directions hearing that the applicant would be challenging the constitutional validity of certain provisions of the Migration Act 1958 (Cth). He had been warned in advance by his Honour that if a spurious constitutional argument was pursued the trial judge would consider whether or not to order costs against him personally. 20 In Lemoto McColl JA referred, at 324, to an apparent tension between decisions of the Federal Court and those of State appellate courts in circumstances in which legal practitioners act for litigants with hopeless cases. The Full Court in Levick had approved Goldberg J's conclusion in White Industries that a solicitor does not act improperly by acting for a party with a hopeless case unless that conduct is 'unreasonable'. On the other hand, in Carson v Legal Services Commission [2000] NSWCA 308 at [113] , Sheller JA (Giles JA agreeing) apparently excluded from the scope of proper conduct proceedings which are 'futile or fore doomed to fail'. And in Steindl (at 689) Williams JA set apart the case '... which is plainly unarguable and ought to be so to the lawyer who presents it'. Her Honour found it unnecessary to resolve those tensions in the case before the Court of Appeal in Lemoto . Nor is it necessary here to resolve those tensions. However, what Weinberg J said in Tran appears to involve the proposition that the wider range of cases is open to the application of O 62 r 9. 21 In the present case the way in which the application was formulated and the argument presented indicated not merely the presentation of an unarguable case. It indicated a failure to discharge the practitioner's basic duty to consider the legal issues which should have been considered before the application was prepared and filed and before argument on it was presented to the Court. 22 Having regard to the passages to which I have referred from the decision of the Full Court in Levick and the subsequent cases, I do not consider that the generality of the approach enunciated in De Sousa has been relevantly limited. A costs order may be made under s 43 of the Federal Court Act or O 62 r 9 when the solicitor or counsel has so failed in the duty to give proper consideration to the legal and/or factual questions involved in the preparation and presentation of an application as to be seriously derelict in his or her duty to the client and/or to the Court. There is no relevant distinction here between the position of solicitor and barrister whether in a divided or a fused profession. 23 The Privy Council in Harley v McDonald [2002] NZLR 1, on appeal from the Court of Appeal of New Zealand, held that the High Court of New Zealand had power to make costs orders against barristers and solicitors. In that country, as in Western Australia, there is a fused profession in which persons are admitted to practice as both barristers and solicitors. All have the same rights of audience in the courts. Recognition that barristers are subject to the same jurisdiction in this respect as solicitors is not inconsistent with any statutory provision or any rule of practice. In both cases there is the same public interest that a serious dereliction of duty to the Court by one of its officers should be dealt with by the Court. Their Lordships agree with the Court of Appeal that it is desirable in the public interest that the High Court should have power in appropriate cases to award costs against a barrister personally. Their distinctive roles may give rise to different applications of the general principles informing the exercise of the Court's powers. Their Lordships did not think it appropriate, when considering whether or not to make a costs order, for the court to rule upon whether there had been any breach of the rules of professional conduct. Nor was it appropriate for the court in exercising its summary jurisdiction to make such an order, to say whether the client would have a cause of action against the practitioner for negligence. That was a matter which, in their Lordships' opinion, fell to be dealt with in separate proceedings in which issues of fact and law between client and practitioner were focussed and the practitioner was given a full and fair opportunity to respond to the client's claim (at 24). In this respect the same distinction was drawn, as in the Australian cases, between the practitioner who represents a client in a weak or hopeless case after having advised the client of its weakness or hopelessness on the one hand and the practitioner who lends assistance to proceedings which are an abuse of process of the court. He referred to them as 'elderly, disabled non-English speaking, unskilled labourers or unemployed persons'. They ought not have to be subjected to further unconscionability and inequity by the respondent. The circumstances of this case make it highly improbable that the practitioner advised his clients of the hopelessness of the application and that he was instructed to proceed with it notwithstanding. 27 The application for judicial review did not, as required by the Federal Court Rules , set out the grounds of the order for review it sought. It sought no extension of time for claims which were plainly out of time. It disclosed a conceptual confusion between the identification of the conduct and decisions complained of and the grounds of judicial review themselves. The relevant enactment was not able to be identified by the practitioner and as it turned out there was none. The legal assistance scheme was administered pursuant to an appropriation made under Appropriations Acts. In the event no relief was available under the ADJR Act as there was no enactment under which, it could be said, any of the challenged decisions had been made. There was no legal duty which mandamus could enforce. 29 In written submissions on the costs issue the applicants' legal practitioner argued that the application was considered by him 'to be the only legal relief available to resolve the legal assistance application'. He said 'There are no other legal avenues available. The list of authorities filed 26 August 2005 contained 23 authorities and the outline of submissions were well researched and were 20 pages long. The research and effort placed into the application was substantial and the facts were well presented. The parties agreed to a final hearing based on affidavit evidence only and that final hearing was relatively brief of 1.5 hours. The applicants did all they could to seek the intervention of the court in a diligent and cost effective manner considering the lack of financial capacity available. 30 A solicitor or counsel may conceive of himself or herself as advancing the public interest or some moral cause in pursuing particular proceedings. Whether acting in the public interest or to advance a moral purpose, whether charging the highest fees or acting pro bono, and whether counsel or solicitor, legal practitioners have a duty to the client and to the Court to be competent in their conduct of legal business. 31 In my opinion the formulation of the application and the presentation of the case indicated that the practitioner acting for the applicants, as both their solicitor and counsel, was so incompetent in the conduct of the application as to be seriously in breach of his duty to his clients and the Court. He had failed to give proper consideration to the essential elements of the judicial review application which he presented. The applicants, evidently unsophisticated people entirely in his hands, should not have to bear the burden of a costs order in favour of the respondent in this case. 32 In my opinion it is appropriate to order that the practitioner pay the respondent's costs of the judicial review application and that a copy of this judgment and the order should be made available to his clients. It seems to me that the applicants themselves should not be charged any fee in respect of the application or the costs aspect of it. As no order under O 62 r 9(a) was foreshadowed in the reasons for judgment published on 21 December 2005, I will make no order in that respect at this time. If a question arises between the practitioner and his clients about his fee for the institution and conduct of the application it will be open to them to make a formal application to this Court under O 69 r 9(1)(a). I certify that the preceding thirty two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | legal practitioner award of costs against practitioner personally applicable principles incompetent preparation and presentation of application unarguable application failure to consider essential issues of law and fact serious dereliction of duty applicable principles costs award against practitioner costs |
The matter has been called and there has been no appearance by the applicant. The applicant was notified by letter dated 14 November 2006 from the Court that this matter was listed today. The applicant was also notified of this listing by the respondent's solicitors, by letter dated 22 November 2006 couriered to the applicant's address for service. However, I do not propose to deal with the matter on the basis that the applicant has not appeared. There is a more substantial basis for dealing with the matter. 2 Jessup J was determining whether leave to appeal should be granted from a judgment of a Federal Magistrate. The applicant did not appear at the hearing before Jessup J. The hearing and determination of the application involved the exercise of the Court's appellate jurisdiction. To the extent that the present motion purports to appeal against a judgment refusing leave, it is precluded by s 24(1AAA) and is incompetent. However the present application may be no more than a motion to set aside an order made in the absence of a party. In appropriate circumstances the Court can exercise an implied statutory power to set aside an order made in the absence of the party where the absence was through no fault of that party: see also SZISF v Minister for Immigration and Multicultural Affairs [2006] FCA 1612. 4 In the present case the decision of Jessup J involved consideration of whether or not the Federal Magistrate's decision was infected by error, which in turn involved consideration of the way in which the Tribunal dealt with the matter. His Honour, in effect, concluded that the challenge to the judgment of the Federal Magistrate was without substance. In those circumstances, it is not appropriate that to exercise such power as I may have to set aside the judgment of Jessup J. Accordingly, I dismiss the notice of motion filed on 14 November 2006 with costs and I fix those costs in the sum of $500. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore J. | motion to appeal judgment of single judge dismissing application for leave to appeal whether appeal precluded by s 24(1aaa) of the federal court of australia act 1976 (cth) whether application "in relation to an appeal from the federal magistrate's court" migration |
The proceeding was transferred to this Court by order of a Federal Magistrate made on 28 April 2008 pursuant to s 39 Federal Magistrates Act 1999 (Cth). 2 The applicant is a citizen of Indonesia. He came to be on the Australian mainland after representatives of the Australian Fisheries Management Authority boarded his fishing vessel in waters between Australia and Indonesia, took him and his crew into custody and destroyed the fishing vessel. At the time of the hearing, the applicant was detained in the Immigration Detention Centre at Berrimah in the Northern Territory. I was informed that a decision had been taken by the appropriate authorities not to prosecute the applicant for any offence and that the applicant's enforcement visa had, as a consequence, ceased to exist. For that reason, the applicant was "covered by subparagraph 193(1)(d)" within the meaning of subs 198(2) of the Migration Act 1958 (Cth) ('the Act') and, consequently, liable to removal from Australia in accordance with that subsection. He sought an injunction to prevent that from occurring. 3 On 28 April 2008, the applicant issued in the Supreme Court of the Northern Territory the proceeding that was eventually before me. By reason, presumably, of the Supreme Court's lack of jurisdiction to hear the matter, the applicant sought to have the matter heard by this Court. The proceeding was listed for hearing before me late in the afternoon on 28 April 2008 as a matter of urgency, as the applicant's removal was to occur the following morning. The applicant sought an interim injunction for a period of about a week to restrain his removal from Australia. At the hearing, counsel for the respondents submitted at the outset that the Court lacked jurisdiction by reason of this Court's limited jurisdiction in migration matters: s 476A of the Act. Counsel for the applicant did not contend otherwise and he informed the Court that the applicant would instead issue proceedings in the Federal Magistrates Court. I made no order and adjourned. Subsequently, the Federal Magistrate ordered that the proceeding be transferred to this Court and the matter was listed for hearing before me, again as a matter of urgency, in the evening on 28 April 2008. At this stage, proceedings had not been formally filed in the Federal Magistrates Court, nor in this Court, and the originating process and affidavits were in Supreme Court forms. Upon counsel for the applicant undertaking to issue proceedings in the Federal Magistrates Court and to file the affidavits upon which he relied, I proceeded to hear the substance of the application. At the conclusion of the hearing, I ordered that the application for an interim injunction be refused and said that I would deliver reasons in due course. The following are my reasons for refusing the application for an interim injunction. 4 The matters a court must consider on an application for an interim injunction are well-known. They were explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622-623 per Kitto, Taylor, Menzies and Owen JJ and recently reiterated in Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 227 CLR 57 at [65] - [72] per Gummow and Hayne JJ (Gleeson CJ and Crennan J agreeing at [19]). In this case, I was not satisfied that the applicant had made out a prima facie case. The applicant's submissions were put in terms of there being two "serious questions to be tried" (see Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; (1986) 161 CLR 148 at 153). It is permissible to approach the issue as one of whether there is a serious question to be tried provided that whether a question to be tried is a 'serious' question is understood to depend upon the same considerations, explained in Beecham [1968] HCA 1 ; 118 CLR 618 , which go to the strength of the probability upon which the existence of a prima facie case turns: O'Neill [2006] HCA 46 ; 227 CLR 57 at [70] per Gummow and Hayne JJ (Gleeson CJ and Crennan J agreeing at [19]). 5 The applicant alleges that his detention and removal into Australia against his will and the destruction of his fishing vessel were unlawful and that he has causes of action under Australian law against the Commonwealth of Australia in connection with those events. The applicant's contention as to the serious question to be tried is not the question of the Commonwealth's liability for the applicant's apprehension, rendition and detention or for the destruction of the applicant's vessel. The applicant submitted that there were two serious questions to be tried and that they were sufficient to justify the granting of an injunction to restrain his removal from Australia, at least on an interim basis. First, he submitted that his removal from Australia would "sterilise" his common law rights to obtain legal advice and to instruct legal advisers in connection with his claim for damages against the Commonwealth. Secondly, he submitted that his removal would contravene a right of consular access which arises under the Vienna Convention on Consular Relations [Opened for signature 24 April 1963. 596 UNTS 261, Art 36 (entered into force 19 March 1967) (entered into force for Australia 14 March 1973)] ("the Convention"). Either or both of these "rights" were said (at least on a prima facie basis) to override or at least to qualify the obligation of the Commonwealth or its officers under the Act to remove the applicant from Australia. 6 The applicant relied upon two affidavits, one of a Kerry Anne Sibley, and one of a Wahono Yulianto. The respondent did not object to the affidavits being read. 7 Ms Sibley is a solicitor and the effect of her evidence is that she is instructed to prosecute a claim for damages arising from the detention of the applicant and the destruction of his fishing vessel; that in order to carry out those instructions, she needs to take further and more detailed instructions; and that communication with the applicant, if he is deported to Indonesia, will be difficult. An appointment between Ms Sibley and the applicant was scheduled for the morning of 29 April 2008. 8 Mr Yulianto is a diplomatic representative of the Republic of Indonesia and the effect of his evidence is that he has met the applicant three times and obtained information "on a preliminary basis" from the applicant about the applicant's detention and the destruction of the applicant's fishing vessel. He says that he needs more time to communicate with the applicant for the purpose of preparing a full report on the matter for the Indonesian Ambassador. 9 The claim that there is a serious question to be tried as to the "sterilisation" of the applicant's common law rights to instruct legal advisers and obtain legal advice can be rejected on any one of a number of grounds. The respondent's submission was that, assuming such a common law right to exist, it could not prevail over the statutory obligation in the Act to remove the applicant. It is clear, in my opinion, that such common law right to instruct legal advisers as may exist --- and the applicant never articulated the precise basis or scope of this alleged right --- cannot entail a right in the applicant to remain in Australia. It is true, as the respondent submitted, that the statutory obligation to remove the applicant could displace the applicant's common law rights. Although I would not readily impute to the legislature an intention to displace those rights absent a clear statement of that intention, in my opinion the mandatory command of s 198 is expressed in clear and unambiguous language. In this regard, I refer to the decision of the High Court on the interpretation, in a different factual context, of ss 189 , 196 and 198 of the Act in Al-Kateb v Godwin [2004] HCA 37 ; (2004) 219 CLR 562 and, in particular, at 581 per McHugh J and at 643 per Hayne J (Heydon J agreeing at 662-3). Their Honours held that the provisions, being sufficiently clear, could not be read as subject to any intention not to affect fundamental rights. The shorter answer, however, is that neither the power to remove the applicant, nor the actual removal of the applicant, displaces any cause of action he may have against the Commonwealth or his right to instruct legal advisers in connection with such cause of action. I was told that his personal circumstances in Indonesia are such that it will be practically difficult for him to instruct legal advisers in Australia. That may be so, but does not constitute sufficient reason to restrain his proposed removal. 10 The claim that there is a serious question to be tried in relation to a right said to arise from the Convention was put on a somewhat shifting basis. It is plain that the Convention itself cannot be the source of rights under Australian law. Some provisions of the Convention have been incorporated into Australian law in the Consular Privileges and Immunities Act 1972 (Cth) but the applicant did not seek to rely upon this Act. The applicant cited Article 36 of the Convention, which deals with communication between consular officials and nationals of the officials' sending state, but that article is not incorporated into the domestic law. The applicant expressly did not contend that the rights expressed in the article had attained the status of customary international law and, even if they had, it by no means follows that they are for that reason enforceable by this Court. The applicant submitted primarily that the Convention, ratified by the Commonwealth, would be "a relevant consideration in relation to the ability of the Minister to remove" a foreign national from Australia. It was not made clear whether the applicant used the phrase "relevant consideration" in the administrative law sense, namely, a condition of the lawful exercise of the statutory power to deport, or whether the submission was as to the interpretation of the scope of the power. Counsel for the respondents evidently understood the submission against them to be of the latter form and submitted that although unincorporated treaties can be used as an extrinsic aid to interpretation, this was not an appropriate case. It matters little, for the applicant cannot succeed on either basis, as I will explain. 11 The proper use of unincorporated treaties in the interpretation of statutes is limited. The Act is not one which gives effect to the Convention. Nevertheless, Parliament is presumed to have intended to legislate in conformity with Australia's international obligations: Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs [1992] HCA 64 ; (1992) 176 CLR 1 at 38 per Brennan, Deane and Dawson JJ. That presumption is, however, rebutted by unambiguous language: Polites v Commonwealth [1945] HCA 3 ; (1945) 70 CLR 60. Although ambiguity in a statute may be resolved in favour of the interpretation consistent with those obligations, no relevant ambiguity was identified by the applicant in the present case. Nor is any ambiguity discernible. I refer again to the decision of the High Court in Al-Kateb [2004] HCA 37 ; 219 CLR 562 and especially at 642 per Hayne J and at 661 per Callinan J. It is not open on the language of the Act to interpret the power to remove an unlawful non-citizen as subject to the provisions of the Convention, least of all unincorporated provisions. 12 The power to remove in s 198(2) is to be exercised "as soon as reasonably practicable" and is a mandatory, rather than discretionary power. In my opinion, the Convention is not, having regard to the language of the Act, its purpose and subject-matter, a relevant consideration to the exercise of the power in the sense that an officer acting under the section would exceed his or her jurisdiction in not having regard to its provisions. I would not wish to foreclose an exceptional case in which some aspect of consular relations between an unlawful non-citizen and the diplomatic personnel of the non-citizen's State was such as to render it not "reasonably practicable", within the meaning of the Act, to remove the non-citizen. This case, however, is not such a case. The applicant has not been denied consular access, as the evidence reveals he has met on three occasions with Mr Yulianto. The collection of information by the Indonesian government about the applicant's circumstances and his treatment by the Australian government will not be affected by the applicant's removal to Indonesia. The Convention does not provide the applicant with any basis to assert a right to remain in Australia. 13 For these reasons the applicant did not establish any entitlement to remain in Australia nor any prima facie basis for such an entitlement. Therefore, I found there to be no prima facie case or serious question to be tried and it was unnecessary for me to consider the balance of convenience. Accordingly, I refused the application for interim injunctive relief. 14 The applicant sought an order for the preservation and delivery up of the applicant's GPS system, which had been seized by Commonwealth authorities prior to the destruction of his fishing vessel and which, I was told, would be evidence in any action for damages by the applicant against the Commonwealth. The respondents consented to the making of such an order and the order was made. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | removal from australia pursuant to s 198 migration act 1958 (cth) application for interim injunction to prevent removal expiry of enforcement visa alleged independent cause of action against commonwealth for unlawful arrest, detention and destruction of property foreshadowed claim for damages legal advisers being instructed in connection with claim for damages whether prima facie case that power to remove from australia subject to common law right to instruct legal advisers removal from australia does not affect cause of action or right to instruct legal advisers statutory language sufficiently clear to rebut presumption against invasion of common law rights consular representatives being consulted in relation to treatment in australia whether prima facie case that power to remove from australia subject to right of consular access arising under article 36 vienna convention on consular relations 1963 unincorporated treaty provisions no source of rights under domestic law no ambiguity in statutory language amenable to construction consistent with international law convention not mandatory relevant consideration in exercising power to remove conferred by s 198 prima facie case not established application for interim injunction refused migration |
The Refugee Review Tribunal affirmed a decision of a delegate of the Minister refusing to grant the appellant a protection visa. The appellant is a citizen of the Peoples Republic of China who claimed to have a well-founded fear of persecution on the ground of religion. He claimed to have been a taxi driver in China and that he had become a Christian in 2004 when he was introduced to Christianity through a manager of the taxi company where he worked. The appellant claimed that he had used his position as a taxi driver to proselytise customers by handing out Christian publications to persons using his taxi. He claimed to have been detained and ill-treated for these activities and that this led him to leave China for Australia. The appellant arrived in Australia in October 2007 on a tourist visa with about fifteen other people. The tour operator was a company which was referred to as the "ADS" (Approved Destination Status) tour operator. It provided a report to the Department ("ADS report") of the "illegal stay" abroad of the appellant and a female passenger, later described as Ms X. The ADS report contained two items of "information" which are said to have given rise to an obligation on the part of the Tribunal to give particulars of the information to the appellant under s 424A(1) of the Migration Act 1958 (Cth). The first item was that the appellant was in a relationship with Ms X, that he wanted to travel abroad with her, that they were "sleeping on the same bed" and that they were planning to get married. The ADS report stated that the information about the relationship had been provided to the tour operator by the appellant. The second item was that the appellant was employed in China as a legal representative of a company. This was in contrast to the information which the appellant had supplied in support of his protection visa application. The information about the appellant's employment as a legal representative in China was also stated in the ADS report to have been supplied by the appellant. The delegate was aware of at least some of this information but did not take it into account in his decision. At an oral hearing before the Tribunal on 23 April 2008, the Tribunal raised with the appellant the information about the relationship between himself and Ms X. I will set out more details of the exchange which took place at the hearing. It is sufficient to say by way of introduction that the Tribunal did not tell the appellant that the information which it had received came from the ADS report or that the appellant was said to have provided the information to the tour operator himself. The question of the appellant's employment was not raised by the Tribunal with the appellant in the course of the hearing. The day following the hearing, on 24 April 2008, the Tribunal sent a letter to the appellant pursuant to s 424A of the Act. The letter provided particulars of two items of information which it said could be the reason or part of the reason for affirming the delegate's decision. One of the items referred to in the letter was a report from a third party (apparently from the tour operator), which noted that the appellant had travelled to Australia with a tour and that he was accompanied by Ms X, with whom he was in a relationship. The letter did not state that the appellant was the source of that information, having provided it to the tour operator. Nor did the s 424A letter make any reference to the information in the ADS report that the appellant was employed as a legal representative of a company (rather than as a taxi driver) in China. The essential grounds of the appeal are twofold. First, it is said that the Federal Magistrate was in error in failing to find that the Tribunal was required to give, as part of its particulars under s 424A(1) , the fact that the appellant was the source of the information about the relationship with Ms X. The second is that the Tribunal was required to give to the appellant particulars of the information about the appellant's employment in China that contradicted his claim to be a taxi driver. Failure to do so was said to be a contravention of s 424A(1). The second question was not raised by the appellant on his application in the Federal Magistrates Court but the Minister does not object to it being raised for the first time on appeal. Both of these grounds involve a consideration of whether the information was "information" within s 424A(1) and, if so, whether it was information that the Tribunal considered to be the reason or part of the reason for affirming the delegate's decision. The delegate referred to the appellant's claim that he was detained by local police in China for fifteen days but did not accept that he would have been able to depart China legally on a passport issued in his own name if he were of serious interest to the authorities. The delegate stated that the appellant's performance at the interview, coupled with his written statement, led him to find that the claim lacked credibility. The delegate prepared a contemporaneous file note in which he addressed two matters of which he was aware but which were not included in the decision record. One matter was the information from the ADS report that the appellant and Ms X were in a relationship. The other was that the appellant had provided a photograph in support of his claim of Christianity, in which one of the persons in the photograph was Ms X, even though the appellant claimed he did not know her. The file note observed that Ms X was also seeking a protection visa and that the matters referred to above may be relevant to their credibility should either of them seek a review of the delegate's decision. However, the appellant claimed he did not know her. The Tribunal asked the appellant further questions on this topic. The most pertinent part of the transcript is at AB 178. But I have showed you the photo because you have provided a photo of her. She has applied on different grounds though. You both engaged the same migration agent. These similar circumstances would raise serious doubts about your claims and credibility generally [Mr SZMNP]. The information I have [Mr SZMNP] also suggests that you and this female in the photograph are a couple intending to marry. I don't understand. I didn't know it myself. Him who? The evidence before me suggests that you do know the woman. For reasons of confidentiality and privacy, the Tribunal cannot release the name of the female. The information before the Tribunal suggests that you had known the female for many years and that your wedding is planned for the end of the year. The information suggests that female X had also absconded, that she had applied for a protection visa (on different grounds), that she has the same residential and postal address as yourself and that she had engaged the same migration agent, Ms Weiming Qian. In the course of the interview and the hearing, you denied knowing the female standing in the middle of the back row. The Tribunal notes that the female whom you denied knowing bears a striking resemblance to the female with whom it is alleged that you are in a relationship and travelled with (ie female X as referred to above). The Tribunal showed you a copy of the photograph of the woman, contained in the Departmental file. The Tribunal's reasons included a reference to the matters raised in the s 424A letter. In particular, the Tribunal observed at [86] that the appellant's denial of his knowledge of Ms X raised doubts about his claims and credibility generally. The Tribunal referred at [87] to the information that the appellant had travelled to Australia with Ms X with whom he was said to be in a relationship and who he was planning to marry. The Tribunal said it found the appellant's denial of any knowledge of Ms X to be unconvincing. In particular, his complaint was that he was not informed that the ADS report claimed that he had told the tour operator himself about the relationship, and that if this had been put to him, he could have had an explanation: see also [16] of the Federal Magistrate's reasons. His Honour said at [19] that he had difficulty in accepting that the source of the information had any relevance to the Tribunal's task, which included an assessment of the appellant's credibility. The essence of his Honour's reasons for rejecting the submission that there was a breach of s 424A(1) is to be found at [20]. The information which " would be the reason or part of the reason for affirming the decision under review" was that a report had been received indicating an alternative motive for the applicant wishing to come to Australia and the existence of that report cast doubt upon the credibility of the applicant. The existence of the report and the reason why it might be relevant in the decision making process was clearly explained to the applicant in the s 424A letter dated 24 April 2008 [CB 104]. The applicant provided a response [CB 106] and the Tribunal then exercised its powers to assess the credibility of the applicant. Furthermore, this issue is one of the many concerns that the Tribunal has about this applicant. ' [CB 144]. However, since the appellant was represented on the application, his Honour did not consider it appropriate to deal with that question. Even if this can be said to be "information" within s 424A , I do not consider that the obligation imposed on the Tribunal by s 424A(1) was enlivened. The proper construction of s 424A(1) was referred to by the High Court in SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 ; (2007) 235 ALR 609 at [17] ff and by a Full Court in SZKLG v Minister for Immigration and Citizenship [2007] FCAFC 198 ; (2007) 164 FCR 578 at [33] . It has also been dealt with in subsequent authorities. I referred to them in my decision in SZMPT v Minister for Immigration and Citizenship (2009) 107 ALD 121 at [13] --- [19]. There is some tension in the authorities as to what use, if any, can be made of the Tribunal's written reasons in determining whether s 424A(1)(a) was enlivened. In SZMPT at [16] --- [18], I expressed the view that the Tribunal's reasons are not the starting point, but that it may be appropriate to refer to them to determine whether the Tribunal considered the information to be a reason for affirming the decision under review. I accept of course that, as the High Court said in SZBYR at [17], the question is to be determined in advance of, and independently from, the Tribunal's reasoning. But whether one looks at the transcript of the hearing, or the Tribunal's reasons, it is plain, in my opinion, that the approach taken by the Federal Magistrate was correct. As his Honour said at [20], the information which the Tribunal considered would be a reason for affirming the decision was that a report had been received which indicated that there was a motive for the appellant wishing to come to Australia different from that which formed the basis of his application for a protection visa, and the existence of that report cast doubt upon the credibility of the appellant. This is clear from what the Tribunal put to the appellant during the oral hearing as revealed in the passage from the transcript set out above. Moreover, as the Federal Magistrate went on to say at [20], the existence of the report and the reason why it may be relevant to the decision making process was clearly explained in the s 424A letter. It was the existence of the report and the information in it about the alternative motive for coming to Australia that was of "dispositive relevance" to the Convention claims advanced by the appellant before the Tribunal: MZXBQ v Minister for Immigration and Citizenship [2008] FCA 319 ; (2008) 166 FCR 483 at [27] . Particulars of the information and the reason why it may be relevant were given to the appellant in accordance with s 424A(1)(b). The fact that the information may have been provided in the first instance by the appellant to the tour operator was of no dispositive relevance and was not required to be supplied to the appellant. To the extent that it is permissible to refer to the Tribunal's reasons to determine whether the Tribunal considered the source of the information to be a reason for affirming the decision, the reasons of the Tribunal, in particular at [87], support the conclusion I have reached. Nothing in s 422B(3) alters this conclusion. I should add that s 422B(3) was mentioned only in passing in the appellant's submissions. The information about the appellant's employment as legal representative of a company was referred to in the ADS report, and was contrary to the appellant's claim before the Tribunal that he was a taxi driver. However, this inconsistency was not referred to by the Tribunal in the oral hearing. Nor was it referred to in the Tribunal's reasons. It follows that there is simply no evidence from which it can be inferred that this information, even assuming it to be information within s 424A(1) , was a reason for affirming the decision of the delegate. What seems to me to underlie the appellant's submission on this ground is that, in determining whether the Tribunal considered the information to be a reason for affirming the decision under review, the Court is required to carry out an objective assessment of what the Tribunal may have considered to be relevant. In my view, the effect of what the High Court said in SZBYR at [17], and, in particular, of what the Full Court said in SZKLG at [33] is that the word "considers" in s 424(1)(a) is directed at the subjective consideration of the Tribunal on the facts of each case. It is true that the Court will not generally have evidence of what the Tribunal subjectively considered to be dispositively relevant, so that it will be for the Court to determine that question objectively from the available evidence, including in an appropriate case, the Tribunal's reasons. But the alternative approach suggested by the appellant would require the Court to pour over all information in the Tribunal's hands to determine what might possibly be considered to be dispositively relevant, even if the Tribunal member himself, or herself, did not consider it to have that status. In my view, this exposes the fallacy in the appellant's argument and shows why it is contrary to the proper construction of s 424A(1)(a). Again, nothing in s 422B(3) alters that result. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | failure by tribunal to disclose to appellant source of information put to him at tribunal hearing did not breach s 424a of migration act 1958 (cth) no breach of s 424a where information supplied by a third party to the tribunal which contradicted appellant's evidence was of no dispositive relevance to tribunal's decision. migration |
2 On 4 August 2008 I ordered that the defendant be wound up in insolvency and that Bryan Kenneth Hughes be liquidator. These are the reasons why I made those orders. 3 The defendant is in voluntary administration by reason of a resolution of its sole director, Timothy Johnson, passed on 21 July 2008. Geoffrey David McDonald and Brent Kijurina, both of Hall Chadwick, were appointed voluntary administrators. They convened a meeting of creditors which was held on 31 July 2008 when the creditors decided not to oppose the making of a winding up order. 4 There is an outstanding issue, however, as to whether Bryan Kevin Hughes of Pitcher Partners, Perth, or Mr Kijurina should be appointed as liquidator. Both have signed consents to act. 5 The substituted plaintiff, Mr Boylan, seeks the appointment of Mr Hughes, whereas the defendant in voluntary administration seeks the appointment of Mr Kijurina. 6 Mr Kijurina's co-administrator, Mr McDonald, has appeared in person to assist the Court. In his capacity as a voluntary administrator, Mr McDonald has also been giving instructions on behalf of the defendant to the defendant's legal representatives. 7 In the earlier reasons for judgment I explained why I found that the defendant was insolvent and should be wound up, but deferred making the winding up order pending resolution of the issue as to who should be appointed liquidator. 8 Rolen Pty Ltd (Rolen), a company of which Ross John Graham is a director, claims to be a substantial creditor of the defendant. Rolen lodged a proof of debt with the administrators in a sum of $11,162,230.83. Rolen is by far the largest creditor of the defendant that is not associated with Mr Johnston, a director and the controlling mind of the defendant (assuming that Rolen is a creditor at all - see below). 9 Mr Graham has proffered his personal undertaking to the Court to fund Mr Hughes up to an amount of $100,000 to investigate the affairs of the defendant and the recoverability of assets for the benefit of its creditors. Mr Graham is not willing, however, to fund Mr Kijurina if he should be appointed liquidator. 10 The argument put against Mr Hughes's appointment is that, according to the defendant, there will be a question whether the defendant is indebted to Rolen. Mr N J Kidd of counsel who appeared for the defendant was able to point to some evidence suggesting that the money that was paid by Rolen to the defendant was paid to it as share capital, not loan capital. He submits that it would be unsatisfactory if Mr Hughes, having been nominated and funded by Mr Graham, was required to decide the question of indebtedness. 11 On the other side, Mr Kidd accepts that so far as the present evidence goes, Mr Kijurina is not funded. He suggests that it is early days and it may be that some creditors will come up with funds. He submits that there ought to be an opportunity for this to happen. 12 Mr J T Johnson, counsel for Mr Boylan, submits that there is no evidence that Mr Hughes will not act impartially in deciding the question whether Rolen is a creditor of the defendant. 13 If one puts Rolen to one side, the larges two creditors of the defendant, according to an interim list of creditors dated 23 July 2008 prepared by the voluntary administrators, are Firepower Investments Pty Ltd and Green Triton Ltd, which are owed in all $13,037,662.00 out of total debts of $16,289,624.01 according. Both of those companies are associated with and controlled by Mr Johnston,. The submission that a particular liquidator is likely to be perceived to favour a particular creditor or particular creditors seems to be available in respect of Mr Kijurina, as much as it is in respect of Mr Hughes. 14 While in a perfect world it may be desirable that where there is a challenge to the indebtedness of the funding creditor, the issue be determined by a liquidator who has not been funded by that creditor, it should not be assumed that a liquidator who has been so funded will not perform the duties imposed on him or her by the law. I note that the question of independence is discussed in Ch 6 of the Insolvency Practitioners Association's Code of Professional Practice for Insolvencies Professionals. I am not suggesting invalidity of the appointment but circumstances which could dispose unrelated creditors against an appointment of Mr Kijurina as liquidator. In the defendant's notice of appearance in this proceeding filed on 16 July 2008, the defendant opposed the application for winding up on, inter-alia, the ground that it was not insolvent. I assume that Mr Johnston gave instructions to the solicitor who filed that notice of appearance to that effect. Yet five days later, on 21 July 2008, Mr Johnston, in his capacity as sole director of the defendant, was able to resolve that it was the opinion of the Board constituted by himself that the defendant was likely to become insolvent at some future time . It is plain that the defendant was already insolvent. 16 The administrators themselves have been frustrated by Mr Johnston's failure to communicate with them. 17 Of course, Mr Kijurina is not to be tarnished by Mr Johnston's having given the instructions to the solicitor and by his failure to communicate with the administrators, but it remains the case that the unrelated creditors may have a sense of grievance if Mr Kijurina is appointed liquidator in circumstances in which he and Mr McDonald were appointed as administrators by Mr Johnston and in which Mr Johnston's two companies mentioned would have majority voting power at a meeting of creditors. 18 On the issue of utility/futility it was plainly desirable that Mr Hughes rather than Mr Kijurina be appointed. It is true, as Mr Kidd pointed out, that given time another creditor or group of creditors may see fit to fund Mr Kijurina, but against that possibility it is to be weighed the present undertaking proffered to the Court by Mr Graham. 19 It was for the above reasons that I made orders on 4 August 2008 that the defendant be wound up and that Bryan Kevin Hughes be liquidator. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | choice of person to be liquidator of company to be ordered to be wound up choice between one of two voluntary administrators on the one hand and a person nominated by the plaintiff on the other hand defendant company (in administration) acting through administrators supporting one of the administrators plaintiff creditor supporting a different official liquidator who had support of a person claiming to be a major creditor who undertook to court to fund that liquidator up to $100,000 voluntary administrator had no funding support at present submission that liquidator supported by claimant "creditor" would not be perceived to be impartial in determining whether latter was truly a creditor of company. held : (1) it should not be assumed that official liquidator would not discharge his duties impartially; (2) existence of substantial funding on one side and none on the other carried the day. corporations |
Orders were also sought against officers and former officers of those companies. On 20 April 2006 receivers were appointed to the property of each of the defendants save for the seventh defendant, Bowesco Pty Ltd (Bowesco), which already had a private receivership in place. In the case of Bowesco freezing orders were made in relation to its property: Australian Securities & Investments Commission; In the matter of Richstar Enterprises Pty Ltd (ACN 099 071 968) v Carey (No 3) [2006] FCA 433. It is not necessary now to recite the matters which led to the making of those orders. They are set out in the reasons for judgment. Nor is it necessary to recite the convoluted history of the interlocutory processes associated with these proceedings, which are in themselves interlocutory in substance, albeit not in form. For the most part that history appears from a series of judgments delivered since 20 April 2006. On 7 August 2006 ex parte orders were made joining Rold Corporation Pty Ltd (Rold) as the eleventh defendant. Interim asset preservation orders were made in relation to the property of Rold and remain in place until today. ASIC seeks freezing or mareva type orders in relation to the property of Rold and, in the alternative, the appointment of receivers to its property. The application is said to be made primarily under s 23 of the Federal Court of Australia Act 1976 (Cth). Reliance is also placed on what is said to be "the implied jurisdiction" of the Court and s 1323 of the Corporations Act . The application is opposed. Reliance upon s 23 as the primary source of power to make the orders sought is misplaced. That section can be invoked if grounds for making an order under s 1323 , such as the appointment of receivers, are established. If an order prohibiting or restricting dealings in the company's property would be a practical lesser alternative to an order under s 1323 , then s 23 may be relied upon to make such an order. In this case, for the reasons which follow, I am not satisfied that an order under s 1323 is, in the words of the section, necessary or desirable. I am not prepared to make an order under s 23 as though it were a source of jurisdiction. It is not that. It confers power in aid of jurisdiction. The application will be dismissed with costs. This does not mean that all of their evidence was accepted as true. The conclusions to be drawn from the evidence as to the risks to the property of Rold and the legal significance of the evidence were debated. The essential sequence of events and transactions which follows is taken from the affidavit evidence. I regard it as substantially correct. Rold was incorporated in December 1989. Allan Frank Carey was a director and its secretary from the outset. He has been its sole director since January 1997. Rold is the ultimate holding company of a corporate group called the "Revetment Systems International Group". Mr Carey is the managing director of Revetment Systems International Group Pty Ltd. The Group manufacturers and installs, evidently under franchise arrangements, concrete revetment erosion control products. Mr Carey began his business in erosion control products when he lived in Perth. In 1990 he moved to Sydney to establish the business on the East coast and in 1991 he moved to Queensland. He has developed a franchise system for the revetment systems business. He holds 14 patents in respect of the product that the Group distributes. Allan Carey is the younger brother of Norman Carey, the principal and effective controller of the Westpoint Group. He says he has not been involved in any business with Norman Carey. He says that he could not be in business with Norman Carey because of his personality. Nevertheless it is his association with Norman Carey and the Westpoint Group that forms the background to this application. The principal concern driving the application by ASIC is to protect, for the purposes of a proposed claim by the liquidator of Westpoint Corporation, a sum of about $935,000 held in a National Australia Bank (NAB) account in the name of Rold. That money, it is said, has a history which marks it as the property of Westpoint Corporation. The history begins with the purchase by Rold in 1995 of 11.5 acres of land at 26 Prairie Road, Yatala which lies between Brisbane and the Gold Coast. The land was purchased for $185,000. Allan Carey was prepared to construct an international standard Go Kart Track on the site. He obtained approvals for the development of the track and facilities. However the project did not proceed. In 2005 Rold received an offer for the land and sold it to Mac Group Holdings Pty Ltd for $2,400,000 plus GST. Before entering into the contract Allan Carey telephoned his brother to ask whether he thought the amount being offered for the land was reasonable. Norman Carey advised him that he thought it was. On or about 27 September 2005 Allan Carey had a telephone conversation with his brother who asked what he was going to do with the money. He said he was going to invest it in blue chip commercial real estate. Norman Carey suggested that he "park the money" in a Westpoint company, Renaissance Mezzanine Pty Ltd (Renaissance Mezzanine). It would earn 15% per annum. Allan Carey said if he did that it would only be for a short term until an appropriate property investment was found. He was told that the money could be invested on a short term basis and that his brother would personally guarantee the funds. On 27 September 2005 Raymond Ellis sent him an application form for debenture notes issued by Renaissance Mezzanine. On 28 September 2005 Allan Carey, on behalf of Rold, instructed the NAB to transfer $1,500,000 from Rold to Renaissance Mezzanine. On 31 October 2005 Renaissance Mezzanine paid Rold interest of $20,342.47. Allan Carey said that he rang his brother on 6 November 2005 and told him he had purchased a property and wanted to build on the land and would like $1 million of the money placed by Rold back to enable the building work to commence. Norman Carey advised him against taking the $1 million back as Renaissance Mezzanine at 15% was a better investment. Nevertheless he agreed to arrange to have the money put back into Rold's NAB account. On 25 November 2005 a sum of $1 million was received by Rold from Renaissance Mezzanine and paid into its NAB account. Rold continued to receive interest payments from Renaissance Mezzanine on the balance. In February 2006 Allan Carey had a discussion with Norman Carey about the remaining $500,000. It appears from evidence relied upon by ASIC that $1,490,000 of the $1,500,000 deposited into the bank account of Renaissance Mezzanine by Rold was transferred from Renaissance Mezzanine into an account in the name of Westpoint Corporation. It was there amalgamated with moneys already in the Westpoint account which, before the deposit, had a balance of $3,585,498. Westpoint Corporation is said to have used the $1,490,000 for its own purposes between September 2005 and November 2005. Following Allan Carey's request for repayment of the sum of $1 million that sum was transferred from Westpoint Corporation to Renaissance Mezzanine on 24 November 2005. Two other transactions occurred at the same time. One was a payment of $1.15 million to Bowesco by Westpoint Corporation and the other a payment of $1.37 million to Richstar Enterprises Pty Ltd by Westpoint Corporation. The Westpoint account, on 24 November 2005, had a negative balance of $333,147.70. According to ASIC the effect of these transactions was to remove cash assets of $3.52 million from Westpoint Corporation at a time when it was reasonable to expect that the company was facing significant liabilities which would result in its liquidation. Following its receipt of $1 million from Westpoint Corporation, Renaissance Mezzanine paid that sum to Rold. The on-payment was recorded in the general accounting ledger of Renaissance Mezzanine purportedly, according to ASIC, to reduce a debt owed to Renaissance Mezzanine by Vannin Pty Ltd. Jeffrey Laurence Herbert and Simon Andrew Read were appointed joint and several liquidators of Westpoint Corporation on 15 February 2006. Mr Herbert retired on 7 February 2007 but Mr Read continues as the sole liquidator of Westpoint Corporation. According to Mr Read's evidence immediately prior to the payment of $1 million by Westpoint Corporation to Renaissance Mezzanine, Westpoint Corporation was insolvent and Renaissance Mezzanine did not have adequate funds to pay $1 million to Rold. In a letter dated 25 October 2006 Rold's solicitors advised ASIC that Rold had an outstanding capital gains tax liability which would become payable in April/May 2007. The amount is estimated to be $655,000. ASIC contended that Rold intends to use the funds presently subject to interim asset preservation orders in these proceedings for the purpose of satisfying the tax liability. It is said to be the case that unless restrained two thirds of the preserved funds will be lost to creditors of Westpoint Corporation. Rold does not dispute that it will pay the tax if assessed as expected. It also appears that some of the money may be applied for the payment of legal fees incurred by Rold. ASIC submitted there are grounds for continuing concern about the risk of dissipation of Rold's assets. It referred to evidence of Norman Carey's influence over his brother, Allan, and sister, Karen Carey. He had previously exercised control over and transferred assets to and from entities owned by them. ASIC referred, in particular, to Norman Carey's evidence in the course of his examination by ASIC in December 2006. In that testimony he said that he was in a position to give directions to Allan Carey in his capacity as a director of Bowesco. ASIC submitted that there is cogent evidence to support the inference that Norman Carey exercises influence over both his brother and sister. Entities that have had dealings with the Westpoint Group and have derived property or assets from it and which, in appearance are legally controlled by his brother and sister, are in reality effectively controlled by Norman Carey. In this connection it is relevant that Allan Carey, in an affidavit sworn on 22 February 2007, said that Norman Carey had offered him a position of Queensland Manager with the Westpoint Group. On 6 October 2005 Allan Carey signed an Employment Agreement and confidentiality document. His employment commenced on 3 October 2005. He began working from home at Paradise Point in Queensland. According to Allan Carey's evidence however, he began to put some distance between his brother and himself following the discovery that he was director of a number of companies in the Westpoint Group which he had never heard of. He said he did not know how he became a director. He referred to heated telephone conversations he had with Norman Carey. On 7 March 2006 Allan Carey attended a meeting with Norman Carey in Perth. He told Norman Carey he was going to resign his directorships and terminate his employment. Norman Carey asked him to allow a couple of weeks so that he could find replacements. On 14 March 2006 Allan Carey attended at his solicitor's office to sign forms resigning as a director of companies associated with Norman Carey. He asked his solicitors not to lodge them for seven days to give Norman Carey an opportunity to obtain alternate directors. Despite his requests Norman Carey did not appoint directors in his place. On 10 and 12 April 2006 Allan Carey met with his solicitors and then signed notices of resignation. These were lodged with ASIC and a copy was sent to Norman Carey. Since 19 May 2006 Allen Carey has not had any contact with Norman Carey. Norman Carey has no involvement in Rold or any other company in the Revetment Systems International Group. It is not disputed, and I accept Allan Carey's evidence, that his brother does not have any involvement in Rold or any other company in the Revetment Systems International Group. In my opinion it is likely that Norman Carey has exercised influence over Allan Carey in the past but that he does not now have significant influence at least in relation to the affairs of Rold. ASIC submitted that the benefit of the $1 million was received by Rold directly from Westpoint Corporation funds in circumstances where, on the face of it, there was no justification for the payment being made. The funds were directly sourced from moneys received by investors and the relevant on-payment from Renaissance Mezzanine to Rold was recorded in the general ledger of Renaissance Mezzanine in such a way as to "mask" the fact that the true benefit of the on-payment accrued to Rold. There was some general reference by ASIC, in the evidence it relied upon, to Norman Carey's dealings with offshore companies and his use of them to establish offshore bank accounts and to transfer funds to those accounts. Mr Carey says that he has been informed by an accountant, David Hewitt, and believes that the tax will be due on or about 15 May 2007. (b) Payment of legal fees occurred in defending the present proceeding commenced by ASIC and dealing with issues which the liquidator wishes to ventilate. Allan Carey said that the appointment of a receiver to Rold will cause significant prejudice and irreparable harm to it and to the Revetment Systems International Group. He said Rold is the ultimate holding company. He is the sole director of Rold. He has a high profile in the civil engineering industry. An appointment of a receiver would be associated with him. In the civil engineering industry the major civil contractors undertake continual creditworthiness checks on potential subcontractors. Mr Read, the liquidator of Westpoint Corporation, requested, by letter dated 22 January 2007, that Rold repay the $1 million payment to Westpoint Corporation on the basis that the funds that comprised the payment were used by Renaissance Mezzanine to make the on-payment to Rold. In his affidavit he stated that ASIC has recently agreed to permit him, as liquidator, full and free access to the documents of Westpoint Corporation and related entities. At the time of swearing his affidavit he anticipated receiving full access to those documents by the end of February 2007. If they did not alter his view about the recoverability of the on-payment he anticipated commencing action against Rold to recover the on-payment by 30 June 2007. Even the interim orders for which s 1323(3) provides are limited to orders of the kind applied for under subs (1). The absence of power under s 1323 to make mareva type orders against "the relevant person" in respect of property held by that person was noted by Finkelstein J in Australian Securities and Investments Commission v Wiggins (1998) 90 FCR 314 at 319. That is not to say that a more general mareva type order may not be made on an interlocutory basis pending the determination of a substantive application under s 1323. Such an order, as an interlocutory order, would be authorised by s 23. Finkelstein J was not in doubt that he had the power to make an order of the kind sought by ASIC "but it would not be an order in pursuance of the powers conferred by s 1323" (at 320). Counsel for ASIC acknowledged the absence of power, under s 1323, to grant a mareva type order in relation to the assets of a company or individual. He relied upon s 23 of the Federal Court Act as the primary source of power for the orders which ASIC seeks. In my opinion, however, this is not an appropriate application of s 23. It is not open to ASIC to file an application for freezing orders in proceedings under s 1323 then effectively ignore s 1323 and say it is relying upon s 23 of the Federal Court Act. The question about the way in which s 23 could be invoked in an application under s 1323 was raised by the Court in argument. Subsequently, both parties were given time to file written submissions on the point which they have done and which have been considered. The jurisdiction which the Court exercises when it entertains an application under s 1323 is a jurisdiction defined in part by the remedies available under that section. In this respect there is some analogy between that jurisdiction and the jurisdiction conferred on the Court by s 39B(1) of the Judiciary Act 1903 (Cth) and on the High Court by s 75(v) of the Constitution . The question about the availability of relief under s 23 is analogous to the much debated question whether the High Court, in an application for mandamus or prohibition or an injunction under s 75(v) of the Constitution , has power to award certiorari in addition to, or in lieu of, those remedies. In the case of the Federal Court the source of that power in aid of jurisdiction under s 39B(1) would be s 23. The weight of authority, which need not be discussed in detail here, is that certiorari may be granted when it is in aid of the primary relief sought and, more controversially, as an alternative when a party has shown it is entitled to the primary relief but certiorari is the more practical remedy in the circumstances: Pitfield v Franki [1970] HCA 37 ; (1970) 123 CLR 448 ; R v Marshall; Ex parte Federated Clerks Union of Australia [1975] HCA 37 ; (1975) 132 CLR 595 at 609; R v Cook; Ex parte Twigg [1980] HCA 36 ; (1980) 147 CLR 15 at 26, 32 and 34; Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd [1981] HCA 7 ; (1981) 148 CLR 457 at 477; Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 ; (2000) 204 CLR 82 at 90; Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham (2000) 168 ALR 407 and Re McBain; Ex parte Australian Catholic Bishops Conference [2002] HCA 16 ; (2002) 209 CLR 372 at [19] and [54]. The general proposition informing the question considered in these authorities is that the conferral of power to grant a remedy in relation to matters in which the Court has jurisdiction does not constitute an expansion of the jurisdiction. In Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380 the question arose whether s 23 would authorise a mareva type order against persons not party to the proceedings in which it was sought. The High Court held, inter alia, that such an order was appropriate where the third party might be subject to some court process whereby, whether following the appointment of a liquidator or otherwise, the third party may be obliged to disgorge property. In their discussion of s 23 , Gaudron, McHugh, Gummow and Callinan JJ made the point that the section does not authorise the court to grant injunctive relief where jurisdiction is acquired under another statute which provides an exhaustive code of available remedies and that code does not authorise the grant of an injunction (at [33]). They referred in this connection to Byrne v Australian Airlines Ltd [1995] HCA 24 ; (1995) 185 CLR 410 at 425-426 and Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30 ; (1998) 195 CLR 1 at 29. Consistent with the approach which appears to have been adopted by the High Court in the s 75(v) cases, and bearing in mind what was said in Cardile [1999] HCA 18 ; 198 CLR 380 , I accept that where, in an application under s 1323, the grounds for the appointment of receivers are made out, then a lesser order restricting or prohibiting dealings with the relevant property may be made instead. While s 1323 sets out the specific orders which may be made on an application brought under it, it does not, in my opinion, provide an exhaustive code of remedies to the extent that the power to appoint receivers excludes the lesser alternative of orders restricting or prohibiting dealings with the subject property. It may be, for example, that the appointment of receivers would be necessary or desirable to protect the interests of a potential claimant against the property of the company or individual to which the receivers are to be appointed. At the same time, such an appointment might inflict significant damage on an ongoing business which is detrimental to that business and perhaps also to third parties. In that event a lesser order freezing or limiting dealings with the subject property could be regarded as an exercise of the power under s 23. Contrary, therefore, to the first submission put by ASIC, the application under which such orders can be made is not to be characterised as one "primarily made pursuant to section 23 of the Federal Court Act ". Section 23 does not confer jurisdiction. It confers powers on the Court to make orders in the exercise of the Court's jurisdiction. The sources of jurisdiction are to be found elsewhere. Jurisdiction under the Corporations Act is conferred on the Federal Court by s 1337B(1) and, for the purposes of this proceeding, defined by s 1323. It is open to the Court under s 1323(1)(h) to appoint receivers with powers defined according to the circumstances of the case. Such receiverships might be characterised as restrictive or light according to the nature of the powers and the range of dealings with the affected property permitted by the order. However it must be recognised that even though a receiver may be appointed with limited powers allowing for ongoing dealings in the ordinary course of business, the fact that a receiver has been appointed may trigger default provisions in security documents or otherwise cause practical difficulties with customers, contractors, suppliers and financiers dealing with an ongoing business. ASIC has sought the appointment of receivers as a fallback position in these proceedings. I will however regard that option as the only viable primary order which can be sought by ASIC. On that basis, if it were necessary or desirable, within the meaning of s 1323(1) , that receivers be appointed to the property of Rold, I would be prepared to consider the alternative of orders under s 23 which would prohibit or restrict dealings by Rold in its assets for a limited time. A determination to carry out an investigation in relation to it was made on 17 February 2006. ASIC, in effect, identifies Rold as the "relevant person" for the purpose of s 1323(1) and Westpoint Corporation as the "aggrieved person" whom Rold is or may become liable to pay money. The liability which may exist arises out of the payment by Westpoint Corporation to Rold of $1 million via Renaissance Mezzanine. Counsel for ASIC confirmed at the hearing that the only claim with which the Court is concerned in terms of the necessity and desirability criteria in s 1323 is the Westpoint Corporation liquidator's claim. It is said however that the ultimate beneficiaries of that claim, were it to succeed, could be retail investors in the mezzanine companies set up to raise finance for the Westpoint Group. There is no evidence of any immediate risk that Rold's assets will be dissipated in the absence of orders made under s 1323 or s 23 of the Federal Court Act. ASIC's primary concern is that some $655,000 of the $935,000 held in Rold's bank account may be paid to the Commissioner of Taxation to meet an anticipated liability for capital gains tax. The evidence is that the issue of an assessment is expected shortly after 15 May this year. Counsel submitted that, unless restrained, Rold would pay at least $655,000 to the Commissioner of Taxation which, in effect, would be made a preferred creditor when it is not entitled to preferred creditor status. ASIC also referred to the influence that Norman Carey has in the past exercised over Allan Carey and companies under his control. In conjunction with that observation it referred to Norman Carey's capacity and ability to put assets outside the reach of potential creditors. This was a reference to evidence of his offshore dealings. On the other hand, Allan Carey's evidence that he had severed his connection with companies in the Westpoint Corporation and that he had become increasingly concerned about the impact of events in the Westpoint Group on his own companies' operations, had the ring of truth. He has his own business to run and protect. Given the events which have overtaken the Westpoint Group any association with that Group will constitute a risk to his business. In my opinion the risk of dissipation of Rold's assets to the benefit of Norman Carey or his associated companies is at this stage more speculative than real. The Westpoint Corporation liquidator was appointed on 15 February 2006. According to his affidavit evidence, the liquidator has formed the view that the payment of $1 million to Rold by Westpoint Corporation via Renaissance Mezzanine is voidable and recoverable by him. Were he to commence recovery proceedings he would have the opportunity to apply for a mareva order in respect of the relevant funds. He has recently been allowed by ASIC access to documents of Westpoint Corporation and entities related to it, including Renaissance Mezzanine and Rold. At the time he swore his affidavit, on 14 February 2007, he anticipated receiving full access to those documents by the end of February. It is not apparent from the evidence why the proposed action could not be commenced before 30 June 2007. I approach the present application on the basis that I am asked to consider an order for the appointment of receivers to the property of Rold with appropriately defined powers. If satisfied that such an appointment would be necessary or desirable, I can then consider whether, in the alternative, I should make an order under s 23. The appointment of receivers under s 1323(1)(h) is, as von Doussa J said in Beach Petroleum v Johnson (1992) 9 ACSR 404 at 406 "a drastic step not lightly to be taken". In my opinion ASIC has not made out a case that it is either necessary or desirable that receivers be appointed to the property of Rold. The party for whom protection is sought is the liquidator. The liquidator can bring his claim and apply for any necessary interlocutory relief if he considers that the asset which he claims is at risk. He can do so with an appropriate undertaking as to damages which is not offered by ASIC. For final relief under s 1323 no such undertaking is required even though it maybe time limited. In respect of interim relief under s 1323(3), no such undertaking is required --- see s 1323(4). The primary "risk" which may confront the liquidator appears to be that of payment of a substantial amount of the relevant fund to the Commissioner of Taxation in satisfaction of a liability for capital gains tax. The requirement to make such a payment is not likely to arise for another three months. The history of the relationship between Allan Carey and his brother and their prior dealings gives rise, at worst, to a very small and, in my opinion, much diminished risk, that Norman Carey might influence Allan Carey to deal with Rold assets for his benefit or that of entities associated with him. I do not consider that risk of such a magnitude as to warrant the appointment of receivers under s 1323, nor the making of orders under s 23 of the Federal Court Act . I should add that, in my opinion, it is desirable that consideration be given to an amendment to s 1323 to include a power in the Court to make orders restricting or prohibiting dealings with the property of the "relevant person". This would allow more flexibility in the making of such orders than is possible by invoking s 23 in aid of the jurisdiction defined by s 1323. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | application for freezing orders in relation to property company under investigation by australian securities and investments commission jurisdiction s 1323 corporations act 2001 nature of powers conferred by s 1323 no power to make freezing orders application of s 23 federal court of australia act 1976 grounds for primary relief including appointment of receivers under s 1323 to be demonstrated before powers under s 23 can be invoked freezing orders under s 23 available in aid of jurisdiction under s 1323 grounds for exercise of power under s 1323 to be demonstrated grounds not made out application dismissed need for amendment of s 1323 jurisdiction power distinction power in aid of exercise of jurisdiction s 23 of federal court act power to make order in matters in which court has jurisdiction not a source of jurisdiction whether mareva type order may be made under s 23 in proceedings under s 1323 of the corporations act corporations courts and judges |
2 At the first court hearing (on 17 October 2007) I made the first two orders, for the reasons that follow. Its core business is investment in infrastructure assets and private equity investments. 4 According to the proposed scheme (the Scheme), CFI shareholders will transfer their shares in CFI to Sunsuper Pty Ltd (Sunsuper) or its nominee (I granted leave to Sunsuper to appear on the hearing without becoming a party). Sunsuper is trustee of the Sunsuper Superannuation Fund and manages over $12 billion in funds. The consideration which CFI shareholders will receive for each of their shares is cash of $0.798. As a result of the Scheme, CFI will become a wholly owned subsidiary of Sunsuper. CFI will cease to be listed on the ASX. 5 CFI and Sunsuper entered into a Merger Implementation Agreement on 16 August 2007 (MIA) by which they agreed to use their best endeavours to implement the Scheme subject to satisfaction, or, where possible waiver, of various conditions precedent, including shareholder and Court approval. 6 No director of CFI or any of his or her associates has any relevant interest in, or in any marketable security issue by, Sunsuper or any of its related bodies corporate or in the Sunsuper Superannuation Fund. The directors of CFI recommend that the CFI shareholders agree to the Scheme. 7 The Scheme Booklet is to fulfil the role of the explanatory statement referred to in s 412(1)(a) of the Act. Appendix 1 to the Scheme Booklet is a report dated 15 October 2007 by Deloitte Corporate Finance Pty Limited (Deloitte), which was appointed as an independent expert by CFI's Board of Directors to assess the Scheme. Deloitte has concluded that the Scheme is fair and reasonable and in the best interests of CFI shareholders. Deloitte concludes that the consideration for each CFI share is at the midpoint of Deloitte's assessed value of a CFI share. 8 The Deloitte report assesses the fair market value of CFI's assets and liabilities at $104.8 million to $111 million (or $0.773 to $0.819 per share). The amount of the Scheme consideration offered is $0.798 per share. That clause obliges Sunsuper to pay the aggregate Scheme consideration to CFI to be held on trust for the shareholders for the purpose of being distributed to them within five business days of the Scheme's implementation date. Accordingly, there is no possibility of title to the shares passing to Sunsuper with an outstanding obligation in Sunsuper to pay the CFI shareholders. 11 Sunsuper has executed a Deed Poll in favour of, and enforceable by, each Scheme shareholder, undertaking to comply with its obligations under the Scheme in respect of paying the Scheme consideration. I am also satisfied that ASIC has had a reasonable opportunity to do the things referred to in s 411(2)(b) of the Act. There is before the Court the "usual letter" from ASIC indicating that it does not wish to be heard on the first court hearing. According to the Letter of Agreement, Sunsuper will employ Colonial First State Managed Property Limited (CFSMPL), which apparently, directly or indirectly, has a relevant interest in CFI shares, as asset manager in respect of the assets acquired as a result of the Scheme. The Letter of Agreement sets out in a schedule the fees that Sunsuper will pay to CFSMPL. 14 The question has been addressed whether this arrangement constitutes CFSMPL as a "class" of CFI shareholder different from the other CFI shareholders, with the consequence that two class meetings would be necessary. Deloitte was asked to advise whether the benefits to CFSMPL under the Letter of Agreement are above "market". 15 Deloitte has expressed the view that the fees are not above "market" for agreements of the kind in question. 16 I accepted the submission by Mr Oakes SC that in the light of this evidence the Letter of Agreement was not "class creating", and that the members of CFI are appropriately treated as a single voting class, with the consequence that only a single Scheme meeting is called for. On 19 July 2007, the Director of Public Prosecutions for the Northern Territory obtained, in the Supreme Court of the Northern Territory, a restraining order in respect of her property, including her shareholding in CFI, under the Criminal Property Forfeiture Act 2002 (NT). 19 Clause 4.4 of the Scheme deals with payment by Sunsuper of the Scheme consideration. As noted earlier, generally speaking the aggregate Scheme consideration is to be paid by Sunsuper to CFI to be held by CFI on trust for the Scheme shareholders. I was informed by Mr Oakes SC that Ms Rose did not oppose the making of Order 2d. 21 Clause 4.4(c) of the Scheme satisfactorily addresses the special position of Ms Rose. 23 In the present case there are limited no-talk and no-shop provisions in cl 11 of the MIA and a break fee provision in cl 12 of the MIA. The "no-talk period" and "no-shop period" are defined to mean the period from 16 August 2007 until the earliest to occur of either 31 December 2007, the termination of the MIA in accordance with its terms, or the coming into effect under s 411(10) of the Act of the Court's Order under s 411(4)(b) approving the Scheme. Thus, the longest the period can be is from 16 August 2007 to 31 December 2007. I think I am entitled to take judicial notice of the fact that this period of some four and a half months is not unreasonably long by reference to the periods that one sees in similar provisions in schemes of the present kind. 24 The no-talk and no-shop provisions are related to the concept of a "Competing Proposal". There is a "fiduciary carve out" from the no-talk provision in cl 11.3 of the MIA. 25 By cl 11.4, CFI undertakes, during the no-shop period, to inform Sunsuper of any competing approaches made to CFI. 26 Importantly, Sunsuper has no relevant interest in shares in CFI (in contrast to the position that prevailed in APN 62 ACSR 400). Accordingly, there is no scope for an argument that Sunsuper used its position as a CFI shareholder with "representation" on CFI's Board of Directors, somehow to lock the CFI shareholders into the Scheme. 27 I turn now to the break fee for which cl 12 of the MIA provides. The amount of that fee is $1 million. As noted in APN 62 ACSR 400 at [48], the Takeovers Panel's Guidance Note 7, Lock-up Devices (2 nd issue, 2005) states (at [7.18]) that the Panel uses a guideline that a break fee should not exceed 1% of the "equity value" of the target, and for this purpose the equity value is the aggregate of the value of all classes of equity securities issued by the target. It will be recalled (see [8] above) that in the present case, the "equity value" of CFI is stated by Deloitte to lie between $104.8 million and $111 million. I note also that the aggregate consideration is $108,187,617.88 (135,573,456 shares x $0.798 per share). The break fee of $1 million dollars is below the 1% level. 28 By cl 12.1(c) of the MIA, CFI's Board of Directors acknowledged that it had received legal advice in connection with cl 12 and believed that the Scheme would provide benefit to CFI and CFI shareholders and that it was reasonable and appropriate for CFI to agree to the break fee in order to secure Sunsuper's participation in the transaction. 29 By cl 12.2(a) of the MIA, the parties acknowledged that the amount of $1 million represented "a genuine and reasonable pre-estimate of the transaction costs it [sic --- that] will have been incurred by Sunsuper". 30 Of course, the break fee is not payable merely by reason of the fact that the CFI shareholders decide not to agree to the Scheme. 31 The firms of solicitors representing CFI and Sunsuper are well recognised as practising in the mergers and acquisitions area. I was told by Mr Oakes SC that both companies were represented by those firms in the negotiation of the no-talk, no-shop and break fee provisions. 32 In the circumstances I think that although affidavit evidence to the effect described by me in APN 62 ACSR 400 was not led (I remain of the view that affidavit evidence is desirable), I am entitled to infer, as I do, by reason of the terms of the MIA and the other circumstances referred to above, that the matters to which I referred in that case (at [55]) are established. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | scheme of arrangement whether there were separate classes of shareholders "no-shop", "no-talk" and "break fee" provisions in merger implementation agreement supreme court of northern territory had made restraining order against a particular shareholder under the criminal property forfeiture act 2002 (nt) special term providing for payment of the amount otherwise payable to that shareholder. held : (1) order made that company convene a meeting of its shareholders to consider, and, if thought fit, agree to the scheme; (2) there were not separate classes of members; (3) in the circumstances the "no-shop" "no-talk" and "break fee" provisions should not prevent court approval; (4) the special provision for payment of the amount otherwise payable to the particular shareholder was appropriate. corporations |
The technical descriptions of these towns are annexed as 'A' and 'B' respectively to these reasons. The application is pursued under O 20 r 4 of the Federal Court Rules (FCR) on the basis that no reasonable cause of action is disclosed. The application regarding Dampier is also based on s 84C of the Native Title Act 1993 (Cth) (NTA) on the ground that the application does not comply with s 61A(2) NTA. At the hearing of the application, counsel for the Yaburara/Mardudhunera made it clear that the Yaburara/Mardudhunera no longer pursue the determination of native title over the townsite of Dampier. That leaves the townsite of Karratha for consideration. It also raises the question of what should be done in respect of the presently existing application for native title over the townsite of Dampier. The motion is brought by Violet Samson, Pansy Hicks, Norman Smith, Jim Fredericks, Max Sambo, Kerry Churnside and John Wedge representing the Ngarluma People who are also the applicant in matter WAD 165 of 2008 (the Ngarluma Townsites Claim). The Court has power to join any person as a party to proceedings if it satisfied that the person has an interest that may be affected by a determination in the proceedings and that it is in the interests of justice to do so (s 84(5) NTA). The assertion of native title rights may provide a sufficient basis for allowing respondent party status: Kokatha Native Title Claim v South Australia [2005] FCA 836 ; (2005) 143 FCR 544 ( Kokatha ). Further, a member of a claimant community asserting a competing communal native title right and interest which is inconsistent with substantive native title rights and interests being asserted in the claim may be joined as a respondent under s 84(5) NTA: Rubibi Community v Western Australia [2002] FCA 876 ; (2002) 120 FCR 512 ( Rubibi ). The Ngarluma People contend that their joinder will ensure that their interests would not be adversely affected by a determination in the proceedings without the Ngarluma People having the opportunity to be heard. It would also enable all matters in dispute arising from competing native title claims to the area to be adjudicated upon within the same proceeding if required ( Rubibi at [9]). As there can be only one determination of native title over a particular area, those who claim to be entitled to such rights should be able to become a party to a claim in which the rights may be determined ( Munn v State of Queensland [2002] FCA 486 per Emmett J. Of particular significance to the Yaburara/Mardudhunera claim is the fact that native title has already been determined in favour of the Ngarluma People in the surrounding area. A claim lodged on behalf of the Ngarluma and Yindjibarndi Peoples was lodged with the National Native Title Tribunal (NNTT) on 27 July 1994 and transferred to this Court on 21 November 1996. The Yaburara/Mardudhunera claim was subsequently lodged with the NNTT on 1 August 1996 and transferred to this Court on 7 November 1997. There was a substantial overlap between the Yaburara/Mardudhunera claim and the Ngarluma/Yindjibarndi claim. In the course of the Ngarluma/Yindjibarndi proceedings orders were made by Nicholson J that so much of the Yaburara/Mardudhunera claim that overlapped with the Ngarluma/Yindjibarndi application be heard as part of the same proceedings as the Ngarluma/Yindjibarndi application. The underlying reasons supporting most aspects of the claim at first instance are to be found in the extensive decision of Daniel v Western Australia [2003] FCA 666 , determined on 3 July 2003 ( Daniel ). The four townsites of Karratha, Dampier, Point Samson and Wickham were omitted from the original Ngarluma/Yindjibarndi claim and were therefore not included in the determination but native title in the area surrounding the townsites of Point Samson, Wickham and Karratha was determined as being held by the Ngarluma People. When making a determination of native title in favour of the Ngarluma People and the Yindjibarndi People, Nicholson J also dismissed that part of the Yaburara/Mardudhunera claim that overlapped the Ngarluma/Yindjibarndi claim. As there was no direct overlap between the two claimants in respect of the townsites' area, there has been no specific determination at the precise location of Karratha. The Yaburara/Mardudhunera claim (subject to amendment by deletion of Dampier), covers two of the four townsites (Karratha and Dampier) as well as a substantial further area which does not presently fall for consideration in the State's application. The Ngarluma People are entitled to be joined as respondents. However, in light of my intended disposition of the summary judgment motion, I will make no order at this stage joining the Ngarluma People. The position can be reviewed should their motion be maintained. For the present, I will adjourn the motion with liberty to apply. The State argues that: The alternative position of the State is that it is highly implausible that the Yaburara/Mardudhunera People could establish native title over Dampier given that Nicholson J found in Daniel and determined in Daniel v State of Western Australia [2005] FCA 536 (Daniel Determination) that native title does not exist on the Burrup peninsula which surrounds Dampier on all sides. Accordingly, the State argues that the Yaburara/Mardudhunera claim also discloses no reasonable cause of action over Karratha because of findings made by his Honour in Daniel and reflected in the Daniel Determination to the effect that native title to the Ngarluma area surrounding Karratha is held only by the Ngarluma People. His Honour held that the Yaburara/Mardudhunera People do not hold native title to the area surrounding Karratha and dismissed their claim to this extent in the Daniel Determination (Order 24). For present purposes it is not necessary to identify with precision the detail of the area of the claim. It suffices to say that the claim included the Dampier townsite, the Karratha townsite, an area seaward to the west and the north of those townsites and substantially to the south. In total, the area was some hundreds of square kilometres and very substantially more than the two townsites mentioned. It was said that the land and waters claimed were part of the traditional homelands of the Yaburara and Mardudhunera Peoples; that the ancestors of the Yaburara and the Mardudhunera Peoples, both at the time of sovereignty and the time of contact with various Europeans in the 1800s occupied and resided on the land claimed; camped on it; travelled over it; travelled over the waters; hunted on the land; fished in the waters; foraged for food on the land claimed and for shellfish on the edge of the waters claimed; quarried and knapped stoned on the land claimed; dug for ochre on the land claimed; made tools and weapons with raw materials found on the land claimed; made shelters on the land claimed from raw materials found on the land claimed; educated and guided their children with regard to ownership of the land and other matters; placed etchings and paintings of cultural significance on the rocks and trees on the land claimed; conducted ceremonies and rituals with regard to the birth and death and different life stages of members of the society; enjoyed recreation on the land and waters claimed; created and maintained sites of spiritual and cultural importance; cared for and maintained the land the subject of the claim; prepared medicines and religious artefacts from materials found on the land; used the Yaburara and the Mardudhunera languages which belonged exclusively to the area; gave names to landmarks on the land claimed in the Yaburara and Mardudhunera languages; asserted ownership of the land and waters claimed as against members of other language groups; resisted invasion and settling of the claimed land and waters by Europeans; conducted trade and commerce with other language groups around the claimed land and waters; and burned the land claimed for hunting and other reasons. In the following year certain amendments were made to the claim area and other features of the claim. It is to be noted that although the original claim relies upon connections to the claim area held by both the Yaburara People and the Mardudhunera People, the manner in which the case was presented in Daniel was somewhat different. As will be seen from the summaries of evidence and findings appearing below, in Daniel essentially the claim in relation to the Burrup was pursued on behalf of the Mardudhunera People who claimed their link to the land through the Yaburara People. That claim failed as Nicholson J found in Daniel that the Yaburara People or any other group were not in occupation of the Burrup beyond a period early in the Twentieth Century. The State argues that no other basis has been advanced to support the Yaburara claim in Daniel . It is unclear whether the balance of the overlap area was claimed by the Yaburara/Mardudhunera People as Yaburara or Mardudhunera or partly Yaburara and partly Mardudhunera or joint Yaburara/Mardudhunera. Nevertheless, Nicholson J observed at [352] of Daniel that those of the Yaburara/Mardudhunera who claimed to be Yaburara had not established that to be the case and that evidence supported the view that the Yaburara/Mardudhunera claimed as Mardudhunera. Nicholson J then went on to consider whether the Yaburara/Mardudhunera, being Mardudhunera, had continuity as a group since sovereignty. At [375] and [501] Nicholson J found that although the Mardudhunera group had held the requisite continuity since sovereignty, the evidence did not establish that the Mardudhunera had exercised the remaining two rights found to be presently observable continuously back to sovereignty. On that basis, Nicholson J found that no requisite connection was established and that even if they had connection at the time of sovereignty, it had not survived the passage of time. The State contends that it would be inherently implausible that, within the relatively small area of the townsite of Karratha, the situation were somehow different from the entirety of the area surrounding Karratha and which was closely examined in Daniel . So we would invite your Honour, in the light of my friend's evidence and in the absence of our opposition and subject to whatever else might be said to you, to find accordingly that that land is alienated, and that would then take it clearly out of our claim. (3) The Court may receive evidence on the hearing of an application for an order under subrule (2). There is no reason to believe that the principles applicable to the current form of the Rule are any different from those applying to the Rule in its previous terms. No party has suggested otherwise. The amendment to the Rules occurred on the introduction of the provisions for summary judgment contained in s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA). That section lowered the bar for summary dismissal but it is important to note in these proceedings that it is O 20 r 4 FCR which is the basis of the State's motion. That is the appropriate provision because the Yaburara/Mardudhunera claim was lodged with the Registrar of the NNTT on 1 August 1996. It was transferred to this Court on 10 November 1997. Such an application is a proceeding in the Federal Court (s 13(1) and s 61 NTA and Phillips v State of Western Australia [2000] FCA 1274 at [8] ). The principles are conveniently collected in Dey v Victorian Railways Commissioners [1949] HCA 1 ; (1949) 78 CLR 62 at 91 per Dixon J (as his Honour then was) and in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 ; (1964) 112 CLR 125 per Barwick CJ at 128-130. From the principles there stated it is clear that no court proceeding should be summarily dismissed except in a very clear case. It does not follow from this collection of principles that it is only in blindingly obvious cases that summary dismissal should be ordered. The fact that detailed argument may be necessary to highlight the basis of the contention should not be determinative of the issue. Were it otherwise, an issue estoppel argument could never be relied upon (and it has), to justify summary dismissal. The summary judgment principles have been applied in the context of native title determinations on a number of occasions. In Moran v Minister for Land & Water Conservation for the State of New South Wales [1999] FCA 1637 Wilcox J dismissed proceedings for lack of authorisation (at [44]-[48]). In Williams v Grant [2004] FCAFC 178 the Full Court (North, Dowsett and Lander JJ) (at [48]-[49] also on an authorisation basis); Bodney v Bropho [2004] FCAFC 226 ; (2004) 140 FCR 77 (at 88-89, at [50]-[51] where Stone J examined the Senate debate on the topic of summary judgment); Walker on behalf of The Noonukul of Minjerrabah v State of Queensland [2007] FCA 967 (at [17]-[18] again for lack of authorisation); and Van Hemmen on behalf of The Kabi Kabi People #3 v State of Queensland [2007] FCA 1185 (at [8] and, again, for lack of authorisation). Most recently in Quall v Northern Territory of Australia [2009] FCA 18 the claim was struck out for reasons which will be examined below in more detail but are presently pertinent. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or be constrained or that rights be declared. In the recent decision of Quall [2009] FCA 18 , an order similar to that now sought was made by Reeves J. In Risk v Northern Territory of Australia [2006] FCA 404 ( Risk ), parts of native title determination applications relating to a particular area near Darwin described as being 'Area A' had been consolidated into one set of proceedings. The second native title applicant in those proceedings, Mr Quall (on behalf of the Danggalaba and Kulumbiringin People), alleged the existence of a particular Aboriginal society that held native title. However, Mansfield J held, (as did Nicholson J in this case) that a different society to the one alleged by Mr Quall was the relevant society which held native title at sovereignty. His Honour held that society had ceased to hold native title due to a 'substantial interruption' in the observance of traditional laws and customs in the Twentieth Century. Claims over Area A were therefore dismissed. On the motion before Reeves J the Northern Territory applied to dismiss the balance of the Quall native title application. The balance of that application related to an area of land termed Area B. It was not the land which had been the subject of dismissal in Risk . Mr Quall argued the existence of the same society as asserted in Risk (as the Yaburara/Mardudhunera are arguing in this proceeding) and alternatively, the existence of another different society that he had not asserted in Risk but he had asserted unsuccessfully on appeal in Risk (on behalf of Larrakia People) v Northern Territory and Others (No NTD 5 of 2006) [2007] FCAFC 46 ; (2007) 240 ALR 75. It was held that to the extent the applicants relied on the same society they had asserted in Risk in relation to Area A, they were estopped from doing so because the continued existence of that society had been determined adversely and therefore there was an issue estoppel. His Honour also held that to the extent that the applicants proposed to rely on a different society to that asserted in Risk , they were also estopped from doing so because the society 'issue' had been determined (adversely against them, in effect, in Risk ) ( Quall at [99]). The Court took the view that it did not matter that a different area was involved (at [98] and [115]) nor that the alternative society argument had not been considered and determined in Risk (at [97]). It was held that it was an abuse of process to argue that a different alternative society existed in relation to Area B. Those findings followed an exhaustive examination of a large body of evidence and they resulted in the final orders made by Mansfield J to the effect that native title does not exist for Larrakia lands in Area A (see [43] above). In my view, the findings and orders of Mansfield J are final, in the sense that they foreclose on any other Aboriginal society being able to establish that the laws and customs under its normative system gave rise to rights and interests in Larrakia lands in Area A. Indeed, they constitute a judgment in rem that no native title exists in those lands (see the cases set out in [63] above). While the decision in Risk does not have the same status in relation to the lands in Area B, I do not consider that detracts from the final effect of the findings on the ultimate issues upon which that decision is founded. Specifically, that the Larrakia peoples were the relevant Aboriginal society at sovereignty that possessed rights and interests in Larrakia lands. I consider this constitutes a final finding as to the relevant Aboriginal society that possessed rights and interests in those lands whether they fell within Area A or B. That conclusion was reached following examination of extensive evidence. Was the determination of the status of the Yaburara/Mardudhunera essential to the determination of the native title question? After exhaustive analysis, Nicholson J in Daniel concluded that the Yaburara/Mardudhunera as Yaburara could not establish native title over the Burrup and that the Yaburara/Mardudhunera did not hold native title in the area surrounding Karratha as the Mardudhunera group did not have the requisite connection with the claim area. To appreciate the significance of the conclusion (in order to determine whether the Yaburara/Mardudhunera is issue estopped), it is necessary to consider what it was that Nicholson J had to determine in Daniel . The classification is a statutory construct, deriving from the language used in Mabo (No 2) . If it is necessary for the purposes of proceedings under the NTA to distinguish between a claim to communal native title and a claim to group or individual native title rights and interests, the critical point appears to be that communal native title presupposes that the claim is made on behalf of a recognisable community of people, whose traditional laws and customs constitute the normative system under which rights and interests are created and acknowledged. That is, the traditional laws and customs are those of the very community which claims native title rights and interests. By contrast, group and individual native title rights and interests derive from a body of traditional laws and customs observed by a community, but are not necessarily claimed on behalf of the whole community. Indeed, they may not be claimed on behalf of any recognisable community at all, but on behalf of individuals who themselves have never constituted a cohesive, functioning community. Is it a body of law and custom as it exists today but which, in some way, is connected with a body of law and custom that existed at sovereignty? How, if at all, is account to be taken of the inescapable fact that since, and as a result of, European settlement, indigenous societies have seen very great change? Those rights and interests may be communal, group or individual rights and interests, but they must be "in relation to" land or waters. The rights and interests must have three characteristics. The first is that they are possessed under the traditional laws acknowledged and the traditional customs observed by the peoples concerned. That is, they must find their source in traditional law and custom, not in the common law. Again, the connection to be identified is one whose source is traditional law and custom, not the common law. Native title rights and interests to which the NTA refers, the Court reinforced, are rights and interests finding their origin in pre-sovereignty law and custom, not rights or interests which are a creature of that Act. Are the laws and customs which those descendants acknowledge and observe "traditional laws" and "traditional customs" as those expressions are used in the Native Title Act , and are the rights and interests in land to which those laws and customs give rise possessed under traditional laws acknowledged and traditional customs observed? Has the society ceased to exist? Does not the survival of knowledge of the traditional ways suggest that it has not? Or is it shown that, although there is knowledge, there has been or is no observance or acknowledgment? These may be very difficult questions to resolve. Identifying a society that can be said to continue to acknowledge and observe customs will, in many cases, be very difficult. In the end, however, because laws and customs do not exist in a vacuum, because they are socially derivative and non-autonomous, if the society (the body of persons united in and by its observance and acknowledgment of a body of law and customs) ceases to acknowledge and observe them, the questions posed earlier must be answered, no. If the content of the former laws and customs is later adopted by some new society, those laws and customs will then owe their new life to that other, later, society and they are the laws acknowledged by, and customs observed by, that later society , they are not laws and customs which can now properly be described as being the existing laws and customs of the earlier society. The rights and interests in land to which the re-adopted laws and customs give rise are rights and interests which are not rooted in pre-sovereignty traditional law and custom but in the laws and customs of the new society. An application in Wong-Goo-TT-OO in similar terms to the current application was argued concurrently with this application. It is therefore necessary to consider an important aspect of that argument in which it was contended that no relevant 'finding' was made by Nicholson J in Daniel that is capable of operating as an issue estoppel. The most important issue in the present debate is whether Nicholson J relevantly made a 'finding' in terms for which the State contends. If there was no ultimate finding, there can be no issue estoppel. Although issue estoppel can operate as to fact and to law, it must be an issue for the doctrine to arise. Simply to discard one aspect of a claim would not raise an issue for the purposes of issue estoppel. Frequently a party may fail or succeed on one aspect of a claim while having a different result on others. There are many general statements about the operation of issue estoppel, approved in this Court, which require more than non-satisfaction to establish an estoppel in later proceedings. The ratio of the decision is at [45]-[46] in which the Court held that the second review officer had a different question to decide from the question which might confront the District Court on a common law claim. Notwithstanding that difficulties may be encountered in the common law claim in light of the conclusions reached by the second review officer, the matters which that officer had to decide were different from those which would arise on the common law claim. The reasoning of the High Court makes it clear that the proper approach to determining what has been decided in a matter can only be assessed having regard to the pleaded and argued issues. Plucking a sentence out here or there does not answer all the questions. The comments made by the Court on which the Yaburara/Mardudhunera rely appear under the heading 'Immaterial Matters' as part of a collection of other issues which arose and on which, in the circumstances, it was unnecessary to decide. Similarly, disbelief in the case presented by the moving party does not necessarily permit the court to conclude that the positive case of the opposing party is correct. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden. There are many general statements about the operation of issue estoppel, approved in this Court, which require more than non-satisfaction to establish an estoppel in later proceedings. In Kuligowski , however, the High Court observed that that important issue was not the subject of the primary submissions of the parties and was not necessary to decide in the present case so was put to one side. In Kuligowski , the High Court referred to the decision in the Privy Council which upheld the dissenting judgment of Higgins J in Hoysted v Federal Commissioner of Taxation [1921] HCA 56 ; (1921) 29 CLR 537. In Hoysted , Higgins J had referred to the use of the phrase 'actually litigated and determined' - in turn, an expression coined by the Supreme Court of the United States in Cromwell v County of Sac [1876] USSC 62 ; (1876) 94 US 351 at 353. Higgins J observed in Hoysted that the particular point (in relation to joint ownership for the purposes of land tax) was by virtue of the formal objections and from the nature of the judgment 'actually litigated and determined' in the former proceedings and that whether the judgment in its actual form was due to the Commissioner's consent or admission or to his neglect, he is bound by the finding of joint ownership which the judgment necessarily involves. In Kuligowski , the High Court went on to say that in the proceedings under the Workers' Compensation and Rehabilitation Act 1981 (WA), no findings were made which operated in the manner alleged as issue estoppels nor was the structure of the legislation in the nature of the proceedings such that there could be said that the necessary findings must be treated as having been actually litigated and determined. Unlike Kuligowski , in the present case it is central to the issue estoppel argument to determine whether or not Nicholson J made findings on the topic of whether the Yaburara/Mardudhunera had the ability to hold native title as a group. A number of cases have considered the passage in the joint High Court judgment in Kuligowski where the Court says that a failure to find a matter alleged does not establish the truth of the contrary of that which is alleged (at [60]): Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 ; DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16 ; Lancee v Willert [2008] WASCA 120 ; Wyatt v MR and RC Smith Pty Ltd [2008] WASCA 55 ; Squires Transport Pty Ltd v Turnor [2004] WASCA 245. One of the decisions cited in Kuligowski was Egri v DRG Australia Ltd (1988) 19 NSWLR 600 , a decision of the Court of Appeal of New South Wales in a Court constituted by Mahoney, McHugh and Clarke JJA. (McHugh JA was also a member of the Court in Kuligowski ). In Egri , the Court of Appeal upheld a conclusion by the primary judge that there had been an issue estoppel by virtue of the primary judge having said 'I am not satisfied that the theory of the disc lesion has been established... I am not satisfied that the injury has resulted in disc lesion'. The approach taken by the Court of Appeal as is evident from the judgment of McHugh JA was that unlike the case of Lombardo v Stuart Bros Pty Ltd (1967) 68 SR(NSW) 159 (and I might say, unlike Kuligowski ), the finding relied upon for an issue estoppel in Lombardo as to an infarction was not an indispensable step in making the ultimate findings. However, in the case of Egri , the finding that there was no disc lesion was fundamental in determining what was the nature of the injury and whether the worker was still incapacitated (at 605). It was because of the fundamental nature of what was being decided as distinct from the language employed that an issue estoppel was created. Even in Blair v Curran [1939] HCA 23 ; 62 CLR 464 , Dixon J (as he then was) observed at (at 531-532) that the essential task is to distinguish between those matters fundamental to the decision or necessarily involved in its legal justification or foundation from matters which are not in point of law the essential ground work of the conclusion. Indeed, in Egri , it was argued that because there had been no positive finding as to a failure to establish on balance of probabilities the existence of a disc lesion that the conclusion reached was insufficient to create an estoppel. That submission was expressly rejected in Egri (at [601F], [604D], [608D]). The Yaburara/Mardudhunera advance the same argument in this proceeding, that a negative conclusion such as not being satisfied, cannot constitute a finding. The argument should be rejected as it was in Egri . The High Court in Kuligowski says that in relation to ultimate facts which form the very title to rights in dispute would it require more than non-satisfaction. I take this to be indicating that conclusions reached about ultimate facts as distinct from evidentiary facts must necessarily be findings. That does not necessarily conflict with the observation that a failure to find a matter alleged does not establish the truth of the contrary of that which is alleged. As all the cases indicate, it is a matter of examining the real issues in dispute, the task for the Court, and the basis on which the Court arrived at its conclusion in order to assess whether a determination is, for the purposes of an issue estoppel, in the nature of an ultimate finding, however it may have been expressed. One thing, however, is clear. Only a decision about a matter which it was necessary to decide can create an issue estoppel. It is, therefore, essential to approach reasons for judgment which are said to create an estoppel with an accurate understanding of what the author of the reasons was required to decide (288). He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden (955). To decide this question, it is necessary to trace not only the history of the claim but also its resolution. The Yaburara/Mardudhunera native title determination application was first lodged with the NNTT on 1 August 1996. It included land that was already under claim by the Ngarluma/Yindjibarndi People in WAD 6017 of 1996 and land which was later claimed by the Wong-Goo-TT-OO People in WAD 6256 of 1998. The map which is annexed and marked 'C' depicts the Yaburara/Mardudhunera claim area vis a vis the Ngarluma/Yindjibarndi and Wong-Goo-TT-OO claim areas. To the extent that the Yaburara/Mardudhunera and Wong-Goo-TT-OO applications overlap the Ngarluma/Yindjibarndi claim area, they were consolidated with the Ngarluma/Yindjibarndi application which was heard by Nicholson J, first, in 1999. The Ngarluma/Yindjibarndi People were ultimately described as the first applicants in the proceeding, the Yaburara/Mardudhunera People became the second applicants and the Wong-Goo-TT-OO People became the third applicants. The State was the first respondent and there were other respondents. On 3 July 2003, Nicholson J handed down his reasons in Daniel . Subsequently, on 2 July 2005, his Honour made a determination under the NTA of non-exclusive native title rights and interests in respect of the claim area (Daniel Determination). The holders of the native title rights and interests so determined were the Ngarluma People and the Yindjibarndi People. His Honour dismissed, to the extent that they overlap with the claim of the Ngarluma/Yindjibarndi People, any competing claims of the Yaburara/Mardudhunera and the Wong-Goo-TT-OO Peoples. There were two appeals pursued from the reasons and orders of Nicholson J. They were heard together. The first appeal was that lodged by Ngarluma/Yindjibarndi. It concerned certain portions of the claim area in which his Honour had found that native title had been wholly extinguished. The Full Court delivered judgment in Moses on 7 June 2007. Then on 27 August 2007, the Full Court made final orders and a substituted determination of native title. That determination is annexed and marked 'D'. In a second appeal lodged by the Wong-Goo-TT-OO People, it was contended that the proceedings at first instance involved a wholly inadequate appraisal of the evidence of Wong-Goo-TT-OO and a misdirection of what was required to establish the elements of native title under s 223(1) NTA. That appeal was dismissed by the Full Court on 7 June 2007 in Dale v Moses [2007] FCAFC 82 ( Dale ). The townsites (of Dampier and Karratha) were not, however, claimed by the Ngarluma/Yindjibarndi and therefore were not the subject of the determination made by Nicholson J. This is also reflected in the determination and orders made by his Honour on 2 May 2005 and was not disturbed on appeal. Until further order, because the Yaburara/Mardudhunera's claim was only dismissed to the extent that it overlapped with the claim of the Ngarluma/Yindjibarndi, the Yaburara/Mardudhunera claim over the townsites remains on foot. It is that claim which is the subject of attack in the State's application for summary dismissal. The evidence from the second applicants on the point was inconsistent. The evidence supports the view that the second applicants having a claim in the claim area claim as Mardudhunera . ( Daniel at [352]; Moses at 41]). There is ample evidence of the Mardudhunera people as a tribe in the coastal zone of the claim areas. It is not apparent, however, whether the second applicants comprise all presently living Mardudhunera people. Nor is it apparent in the evidence whether the second applicants are recognised socially as a community of Mardudhunera people. The relevant common purpose is that of being Mardudhunera. While there is not evidence the second applicants are recognised by others as such apart from their role in these proceedings, I consider they fall within the broader connotation of the word 'group'. The nature of the issue, the submissions of the parties, the expert evidence and the lay evidence relating to that issue is set out in Appendix G . In reliance upon the matters there set out, I find that there has been no discharge of the onus of proof by the second applicants or in the circumstances of all the evidence that the Burrup was inhabited by the Yaburara. If, contrary to that finding, the evidence supports the finding that the Yaburara or a group by any other name inhabited the Burrup, the evidence establishes that that group disappeared as an identifiable group early in the Twentieth Century . Firstly, there is the unsubstantiated character of the evidence of the two second applicants Colin Cosmos and Valerie Holborow on this issue. Secondly, the evidence does not support a finding that Iniarba was Ngarluma. Thirdly, the argument that Yaburara was a sub-set of Ngarluma is not supported by the evidence . In reliance on the evidence set out in relation to the Mardudhunera as a Group in Part X, I find the group has had the requisite continuity . If they had connection at the time of sovereignty it has not survived the passage of time. I find no requisite connection is established in their case . (Order 24 of the Daniel Determination ; Moses at [92]). Some are comment but I have emphasised those that are findings. The remaining matters are necessarily stated to put the findings in perspective. Nicholson J found in Daniel (at [373]) that no society has inhabited the Burrup area since the beginning of the early Twentieth Century (see also Moses at [43]). The Yaburara/Mardudhunera acknowledge that they are bound by that finding. The State contends that it must follow that the applicants are estopped from asserting the continuity of any society since sovereignty over the area of the Burrup. Once that is acknowledged, it is fatal to the applicants' claim to Dampier which is geographically part of the Burrup and surrounded on all sides by the area in which Nicholson J found that there was no native title. As to Karratha, Nicholson J held in Daniel (at [370]-[371]) that the society holding native title over the Ngarluma native title area at sovereignty and at present is the Ngarluma society. That area fully surrounds the relatively small area of Karratha townsite. The Yaburara/Mardudhunera contend that the townsites present different issues from the surrounding areas under consideration in Daniel . The fact that such evidence was not led by the applicants even though certain of their evidence was in fact led about areas not included in the proceedings (as evident from Daniel at [308]) and also referred to in the Daniel Summary at [1379]-[1380]) would indicate that the applicants do not distinguish between the towns and the surrounding areas. The State contends that if the issues relating to Karratha are not identical to the issues concerning the surrounding areas, they are so similar as to disclose no reasonable chance of success for the claim in relation to the towns. Further, the State argues, it would be an abuse of process for the applicants to assert a different basis for their claim over Karratha to the one that was asserted in Daniel . It is argued that there is no value whatsoever in the applicants leading evidence of native title over either of the towns. The State also contends that in the interests of certainty, the strike out claim to the extent it includes Dampier, should be allowed in accordance with the State's motion or, alternatively, there should be a declaration that the claim does not include Dampier or, alternatively, an order that the claim is amended such that it excludes Dampier. The area claimed by the Ngarluma people was described as the lowlands between the Chichester Ranges and the sea found between Poverty Creek to the east of Whim Creek on the eastern side of the claim areas, to the vicinity of the Maitland River on the western side of the claim areas, as well as the adjacent portion of the sea. His Honour found that the boundaries as claimed were established on the evidence. The technique used by his Honour in this section, and followed in later sections, was to record the claims and findings in the body of his reasons for judgment and then to refer to the evidence on which the findings were based in appendices to the reasons for judgment. The evidence concerning boundaries is collated in Appendix A. It is a comprehensive review of the primary evidence of Aboriginal witnesses, as well as a review of the evidence of experts in history, linguistics and anthropology. His Honour also pointed out that the major population centres of west Pilbara, namely Dampier, Karratha, Wickham, Point Sampson, Roebourne and Cossack are located in the north-west coastal portion of the claim area, and that the remainder of the region is sparsely settled. His Honour made findings that this evidence established that the Ngarluma country included the Karratha area. Such evidence supported an inference that the Ngarluma people have retained a continuous connection with the Karratha area . (emphasis added) The Full Court also noted (at [313]) in Moses that the Ngarluma area had been treated as a whole for the reason that Nicholson J formed the view on the evidence that it was all part of Ngarluma lands. Subject only to the important qualification that the specific townsite of Karratha was not part of the claim, the conclusion expressed (at [305]) in Moses , appears to fully and finally conclude any possibility of the Yaburara/Mardudhunera establishing a claim over the Karratha townsite. The State and Ngarluma contend that these findings were all essential to the ratio of the conclusions that the Ngarluma People had native title throughout the area. Those conclusions, it is contended, are all that is required for issue estoppel for the reason that the Yaburara/Mardudhunera will not be permitted to allege facts that contradict the relevant foundational facts established in the Daniel decision. There is no doubt, it is contended, that it is open to look not only at the final judgment and order but also the reasons as well. This submission is correct ( Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 3) [2001] FCA 1861 ; (2001) 119 FCR 1 at [1153] - [1154] per Goldberg J). The findings in Daniel were not only positive for the Ngarluma People but also, necessarily, negative to the claim of the Yaburara/Mardudhunera. To the extent that the findings were based on the failure to be satisfied by the evidence of the Yaburara/Mardudhunera, the Yaburara/Mardudhunera are estopped by the finding that they do not hold native title in the area and by the finding that any use and enjoyment of resources and protection of important places that they engaged in did not have the required continuity back to sovereignty and thus not traditional. Those negative findings can still constitute an estoppel: see the analysis in Egri . They claimed that the claim areas were traditionally occupied by them ( Daniel at [99]). Nicholson J rejected and dismissed the claims insofar as they overlapped the Ngarluma/Yindjibarndi claim and found that the areas were areas over which only the Ngarluma or Yindjibarndi People held native title. Accordingly, his Honour's finding was, in effect, that the areas surrounding the townsites were not Yaburara or Mardudhunera country and the Yaburara/Mardudhunera People did not hold any native title rights within it. Evidence given by the Yaburara/Mardudhunera witnesses in Daniel as to boundaries of the Yaburara/Mardudhunera country or Yaburara country or Mardudhunera country included parts of the Ngarluma determination. Such evidence did not draw a distinction between areas surrounding the townsites and the townsites themselves which had been excluded from the hearing. This is apparent from the following passages in Daniel (at [1199]-[1200], [1374]-[1383], [1666]-[1667] (emphasis added): Robert Boona (Y) had been told by his father that the boundary of their land went from the mouth of the Nickol River, back into the Leopold Ranges, then went further down south to the Fortescue. The boundary followed Princup Hill to the Leopold ranges (T 2966). His father told him never to look at the Burrup (T 2970). Valerie Holborow had no knowledge of the boundaries of her land (T2974) and relied upon the boundaries as presented in evidence by Robert Boona (Y) , Colin Cosmos (Y) and Lawrence Kerr (N) (T 3063). Colin Cosmos (Y) had been told nothing of the boundaries of Mardudhunera land but Algie Patterson (M) had told him that they were from the mouth of the Fortescue up to Leopold Hill and towards the Fortescue River (T 2974). The following day he corrected this, saying that the boundaries were from the mouth of the Nickol River, to Mount Leopold and towards the Fortescue River and that he had been told this by his grandfather (T 2999). Lawrence Kerr (N) said that Algie Patterson (M) had told him that Mardudhunera country stretched from Fortescue, to Peters Creek and back to Nickol (T 3005). In cross examination he said that the territory between Miaree Pool on the Maitland River and Karratha town, in other words the area of Karratha station, was Mardudhunera country. He knew nothing of Yaburara country apart from the name (T 3036). Robert Boona (Y) agreed that the boundaries claimed as Mardudhunera in the overlap claim area were those of Karratha station. He denied that his father may have been referring to the station as the area for which they had responsibility when they were doing their mill run (T 3074). Colin Cosmos (Y) said that the Yaburara people were different from the Mardudhunera, and had distinct territories. He only knew the boundary from what he had recently read (T 3084). Robert Boona (Y) , whom Mr Robinson identified as a Mardudhunera man, told Mr Robinson that the Maitland River was the boundary (T 5453). Mr Robinson accepted the view that Yindjibarndi people regarded the Mardudhunera as the people who lived downstream from them on the lower Fortescue River (T 5519). Mr O'Connor agreed under cross-examination that he had earlier conducted ethnographic survey work for the second applicants and had formed a view that they were entitled to lodge a native title claim (T 6111). In a site survey he conducted in 1997, he described the Yaburara as 'coastal people whose territories were centred upon the Burrup Peninsula, the present towns of Dampier and Karratha and the surrounding coastal plain'. He qualified that to mean 'coastal flats' and noted that Karratha town is built partly on the coastal flats. He agreed that boundaries in Aboriginal Australia are not a matter of general agreement . Colin Cosmos considered his father Yaburara but had not been told anything about the law from him (T 2952). To his knowledge his father had no connection to the Burrup (T 3095). Colin Cosmos grew up on Karratha station. It was like a little Aboriginal village then. He could remember some people who lived there including Kenny Jerrold (T 3009). He was told of his ancestors by Algie Paterson , but not which tribe they belonged to (T3020). He lived separately from the other Aboriginal people on Karratha station (T 3065). He was not taught anything about the Burrup (T 2991). He felt his family's claim to the land came from their descent from Inarba, his father's step-father, who was a Yaburara man (T 2952; 3021). He only concluded he was Yaburara from reading material published recently, not from his own knowledge of Aboriginal groups and culture which was poor (T 3020). Even if Inarba were shown to be Ngarluma he would still consider himself most entitled to the Burrup through descent (T 3022). He heard from an old man on Karratha station that his land stretched from the mouth of the Nickol River to Leopold Hill and towards the Fortescue River (T 2975; 2999). His maternal grandmother's brother was Fred Hicks, and he acknowledged being related to Wilfred and Cane Hicks (T 3012). Lawrence Kerr testified that he had been initiated the Ngarluma way because his father was Ngarluma. His mother and step-father were Mardudhunera and he could have been initiated the Mardudhunera way. He knew of only one other surviving Mardudhunera man, Algie Paterson (T 3004-3005). Algie Paterson had told him of certain Mardudhunera places, from Fortescue River to Peters Creek and across to the Nickol River. He did not mention the Burrup (T 3006). Robert Boona's mother was related to the Hicks family but he did not know details (T 3044). His mother was Yindjibarndi and his father was Mardudhunera which he equated with Yaburara. His father had pointed out the boundaries of his country which roughly coincided with the boundaries of Karratha station (T 3073). He knew no Aboriginal place names in that area (T 3074). He said their traditional land extended to the small offshore islands (T 2969). He had never been told by any of the old people of any fishing out among those islands (T 3033). Dorene Wescombe regarded herself as Mardudhunera after her father. She was related through her father with the Cosmos and Boona family (T 2956). She grew up on Mardi (not in the overlap area between the first and second applicants claims) and Karratha stations (T 2984). Margaret Boona grew up on Mardi and later Karratha stations (T 2988-2989). Valerie Holborow testified that her grandmother was Yaburara, from the Burrup, as was her father. She had no knowledge of the boundaries of her country (T 2974). She lived in Derby when her children were young and didn't take them fishing or hunting there (T 2985). Mardi station and Derby are outside the overlap area between the first and second applicants' claims. Dorene Wescombe still hunts kangaroo inland from Karratha (T 2984). She fished in the Fortescue River. She was taught by her grandmother (T 2979). She fished in the sea at Karratha, gathered shellfish and watched her father catch turtles (T 2984). She teaches her grandchildren to gather bush tucker (T 2986). Margaret Boona was taught hunting and gathering bush tucker by her parents. She fished in the Fortescue River and around Roebourne (T 2988-2989). Roebourne is outside the overlap area between the first and second applicants' claims. Colin Cosmos takes his son hunting, and teaches him what he knows about skinning kangaroo and traditional methods of cooking of goanna (T 2991). He fished with his father at Wajabi waterhole on the upper Fortescue River near Karratha station and in the ocean at the mouth of the Yanari River (T 2976). He takes his family fishing on day trips to Nguria Point (' 40 Mile'), Withnell Bay and Hearson Cove on the Burrup, The Landing, the Yanari River (T 2990; 3085). He fishes from the shore (T 3100). His brothers and sisters do not attend because they know nothing of the law for that area. Robert Boona does any 'heritage work' (T 3057). Robert Boona testified that his father warned them as children not to look at the Burrup or their spirit would be taken away (T 3029). Colin Cosmos was told by his father the Maitland could be a dangerous place because of a snake that lived in a permanent waterhole there (T 2992), and a waterhole at Leopold Hills upon which one should never allow one's shadow to cast (T 2975). He had never discussed it with them (T 2972; 2978). Colin Cosmos did not know if they were 'sorry scars' (T 3051). Valerie Holborow testified she did not know their meaning because she was a woman (T 3090). Her father took his law and culture seriously and would not divulge it to his daughter. Nor did he speak of it to his son Colin (T 2952). He would engage in ritual such as spraying water at water holes (T 2973). Lawrence Kerr had been initiated. He testified that scarification indicated a person had been initiated and was a senior lawman. The practice was no longer continued. He did not know why (T 3006-3007). Robert Boona's father had not been initiated (T 3043). Robert Boona testified that he was not an initiated tribal person, because all traditional Mardudhunera law, songs, dance had been extinguished (T 2953). He had been prevented from undergoing initiation at Woodbrook for that reason (T 3046). His and Colin Cosmos' fathers conversed in Mardudhunera. Very few could (T 2955). Dorene Wescombe testified her father and the older men on Mardi and Karratha stations would talk in a language she assumed was Mardudhunera. They did not teach any of it to her. Her father forbade her going anywhere near men's meetings by the river (T 2980). She only speaks her mother's language, Yindjibarndi, which she teaches to her grandchildren (T 2985). Colin Cosmos acknowledged that when he was growing up there were men on his country who knew and practiced the law of that country, including Mibbin Lowe and Tim Kerr (T 3025). He did not know the law himself (T 3026), but expressed a desire to learn it, if necessary from Ngarluma men who knew it (T 3028). His father had never taught him anything about it (T 2975). Dorene Wescombe (T 2981), Margaret Boona (T 2988), Colin Cosmos (T 2991) all recounted that their family was only permitted to kill and eat the yellow goanna. The black goanna would harm them. Margaret Boona was taught to placate the yellow goanna's spirit by cutting off its tail. That finding was expressed in Daniel (at [501]) where the following appears: The evidence does not establish that the Mardudhunera second applicants exercised the remaining two rights found to be presently observable continuously back to sovereignty. If they had connection at the time of sovereignty it has not survived the passage of time. I find no requisite connection is established in their case. (emphasis added) There is a summary of some of the evidence leading to the conclusion set out in Daniel (at [1656]-[1658]) where the following appears: Radcliffe-Brown writing in 1913 relevantly described the Mardudhunera people's country as bordering that of the Ngarluma people at the Maitland River. He said they probably did not number a hundred, and they mostly lived on sheep stations. The tribe was divided into a number of local groups each with its own defined country. He identified important camping places in each of these groups' areas. He did not indicate the existence of such a group within the relevant overlap claim area. He was able to establish genealogical links between the Mardudhunera he met and those living before the European occupation of their country. Radcliffe-Brown, writing in 1913 observed that some of the customs of the Mardudhunera resembled those of the 'Fortescue tribes' (which includes the Yindjibarndi). The Mardudhunera had a system of totems resembling those of the Kariyarra (which in turn he found resembled the Ngarluma system), and performed ceremonies, called talu for the purpose of increasing these totems. Those rights, such as they were, were not found to be rights and interests satisfying the Yorta Yorta tests of continuity ( Members of the Yorta Yorta Aboriginal Community v Victoria [2002] HCA 58 ; (2002) 214 CLR 422). The State, supported by the Ngarluma People, now submit that no valid distinction could be made between the townsites and the rest of the Ngarluma determined area as there is, not only, no distinction made in the course of the evidence given but, more importantly, that the Yaburara/Mardudhunera People were found not to have exercised rights continuously back to the time of sovereignty. In the proposed determination reflecting the findings of Nicholson J on this topic, it was originally intended to record that the Yaburara/Mardudhunera People do not hold native title in the determination area (see Daniel at [1163] - Daniel Determination at [5]). Subsequently that finding was not included. It was unnecessary in the final determination because the determination could only mean that the Ngarluma People were the only people found to be native title holders in the area. The Ngarluma People as part of a Ngarluma/Yindjibarndi claim received their own determination. Even if not parties, they were clearly 'privies' as that expression has been used. They had the key interest in that decision and a benefit from it. 'Privies' refer to people with such a community of interest (see Carl Zeiss Stiftung [1967] 1 AC 853). The existence of (or addition of) any different respondents makes no difference to the issue estoppel. In Quall (at [78]) the Court held that the existence of a different respondent in the form of a Shire Council made no difference to the question of issue estoppel nor did the fact that there are other parties to the earlier proceedings who are not parties to the current action. It was the same party seeking to agitate the same issues. See also Taylor v Ansett Transport Industries Ltd (1987) 18 FCR 342 per Fisher J at 356-358, with whom Ryan J agreed at 365. That conclusion, taken with the conclusion of the Full Court in Moses ([at 305]) and the analysis by his Honour collected in the summary appearing in [77] above make it clear that his Honour reached a finding which it is no longer open for the Yaburara/Mardudhunera to challenge. It would be wholly artificial, in my view, to suggest that those findings in a circumstance where no distinction was made in any of the evidence led between the townsite of Karratha and the surrounding area, that a different conclusion might be reached as to the status of the Yaburara/Mardudhunera within the townsite of Karratha as distinct from the entirety of the surrounding claim area. Such a conclusion would be inconceivable. I conclude, therefore, that the Yaburara/Mardudhunera are estopped from advancing a claim for native title in respect of the townsite of Karratha. Are there policy considerations which militate against issue estoppel? Although elements of flexibility and discretion can be found in the NTA, the concept of issue estoppel is more than a rule of evidence. It is more correctly viewed as a substantive rule of law: Canada and Dominion Sugar Company Limited v Canadian National (West Indies) Steamships Limited [1947] AC 46 , 56 per Lord Wright for the Privy Council. An issue estoppel is not lightly found but if found, there does not appear to be any discretionary basis to ignore it. It is strongly contended by the State and the Ngarluma People that all factors point in any event in favour of the estoppel being applied. It is contended that the Yaburara/Mardudhunera simply wish to relitigate their whole claim to native title in the remainder of the claim area on the same grounds on which they had previously failed. As in Quall , even if the two issues were not identical for the purposes of an issue estoppel, they were sufficiently similar for the purposes of an abuse of process. The same logic applies in the present circumstances: see Quall at 116. The underlying philosophy is compelling. In Quall (at [119]) the view expressed by Reeves J was that it was in the interests of justice to ensure that Court resources are devoted to the resolution of real and genuine native title determination applications which have not been provided with a determination on their merits. Further, it would not be in the interests of justice to create a situation of conflicting determinations. The Yaburara/Mardudhunera stress that the submissions of the State of Western Australia (the State) assume that any future trial court will have no 'discretion' about the application of issue estoppel. However, this assumes there is a discretion when it comes to issue estoppel. The Yaburara/Mardudhunera also fortify their submission with the flexibility with which it is said that s 86 NTA is cast. The respondents contend that the findings and judgment on which the State seeks to rely are all caught by s 86(1)(c) such that there is a discretion in the future trial court to adopt or not adopt the findings on which the State seeks to rely. However if the State is correct as to the issue estoppel argument, the Yaburara/Mardudhunera claim over the townsites should be dismissed. Section 86 NTA will not be engaged. Nor is there any other discretion. It is doubtful whether there is room for any discretionary factor. The threshold for establishing an issue estoppel is high. The requirements are exact and have been clearly prescribed. None of those requirements appears to invoke any overriding discretionary aspect. Nevertheless, the underlying doctrine as it has been explained in the cases behind the doctrine of issue estoppel can be seen to have relevance to the present case. The Yaburara/Mardudhunera assertion that the Yaburara/Mardudhunera People form a society that has existed continuously since sovereignty and the assertion that they have maintained their traditional lifestyle and connection with the land has been exhaustively and extensively ventilated in previous hearings. The duration of the Daniel hearing and appeal and the extensive analysis in the respective judgments would all have been wasted if the Yaburara/Mardudhunera were permitted to progress the present claim in respect of Karratha townsite. There is a real interest in achieving finality of litigation. It would also be an undesirable conflict if a Judge hearing future proceedings reached a different conclusion than that reached by Nicholson J on the same point in relation to the issue. By its adoption of Wong-Goo-TT-OO's arguments, Yaburara/Mardudhunera complains that the State is failing in its model litigant obligation by refusing to negotiate with the Yaburara/Mardudhunera. This submission misconceives any statutory obligation under the NTA. There is certainly an obligation to negotiate in good faith for a period of six months in relation to future acts but there is no reason to believe that in circumstances where there is a proper foundation for a view that a claim has no basis, the State should continue to negotiate for resolution of it. That would clearly produce an impractical outcome ( North Ganalanja Aboriginal Corporation v Queensland [1996] HCA 2 ; (1996) 185 CLR 595 at 615). Is the fact that Yaburara/Mardudhunera's claim has been registered relevant to issue estoppel? Also by adoption of Wong-Goo-TT-OO's arguments, Yaburara/Mardudhunera contend that the fact that the claim has been registered adds support to the Yaburara/Mardudhunera position giving rise to a presumption that the claimed rights and interests exist. This presumption, it is contended, adds to the burden on behalf of the State in establishing that no reasonable cause of action is disclosed. In my view, registration does not fortify the presumption that the asserted native title rights exist, at least for the purposes of this motion. Registration is an administrative act. It involves no real assessment of the actual merits of the claim. Registration itself may be conducted on the basis of an assumption that the facts asserted in the relevant native title application are true but it does not follow that in the context of an issue estoppel challenge the Court must operate on the same presumption. If it did, there would never be a successful challenge on the basis of issue estoppel. Further, there was such registration prior to the decisions in Daniel and Dale which judgement's plainly rebutted any presumption which may have previously existed. There is no longer any presumption. Technically, none of the findings identified relate specifically to the townsite of Karratha because it and other towns were excluded from the original Ngarluma/Yindjibarndi claim. However, it is submitted that these findings apply equally to Karratha in substance because Karratha is surrounded by the area to which the orders apply. It is not plausible, it is said, that different orders could be made in relation to Karratha. The submission is supported by the fact that the holders of native title in the area surrounding Karratha, the Ngarluma People, assert native title over Karratha as well. Given two competing claims over the town (as opposed to a single claim by two claim groups asserting overlapping rights, as was the case with Ngarluma and Yindjibarndi Peoples in relation to part of the Ngarluma/Yindjibarndi claim), it is implausible that any claim other than the Ngarluma claim to the townsite of Karratha could succeed. Having reached a conclusion on the basis of issue estoppel, it is unnecessary to rule on this argument. As an aside, however, were that the only argument, I would be less inclined to allow it as a basis for dismissal of the claim, notwithstanding that it has a logical appeal. I would not be prepared to conclude that the present Yaburara/Mardudhunera claim should be dismissed as disclosing no reasonable cause of action on the basis that it is 'seriously implausible' that a claim could succeed in respect of Karratha despite having failed all around the townsite. It may be highly unlikely that such a claim could succeed because there is little doubt that the evidence in Daniel was relevant to the entirety of the area. The real basis for dismissal is the conclusion at [501] in Daniel and at [352], [353], [373], [374] and 375]. Barwick CJ adopted a number of expressions from earlier decisions encapsulating the extent to which the Court would have to be satisfied that a case should be dismissed for showing no reasonable cause of action. I do not consider that any of those expressions descends into the arena of implausibility whether it be at the high end of the implausibility scale or the low end. The degree of certainty that a court must have as to the absence of a reasonable cause of action is at a level above implausibility: see Australian Building Industries Pty Ltd v Stramit Corporation Limited & Anor [1997] FCA 1318 , Seven Network Ltd v News Ltd (No 4) (2005) 214 ALR 686 at [14] and Millet J in Lonrho Plc v Fayed (No 2) [1992] 1 WLR 1 (Ch 9) at 5. Of course the new lower threshold introduced by legislation in s 31A FCA sets a different test. The very need for that legislative amendment fortifies the view that under the former Rules applicable to this motion, serious implausibility or serious improbability fall a little short of the mark. Implausibility would be more in line with the new test under s 31A FCA. However, in a circumstance in which the prospect of a claim succeeding is inconceivable (that is, beyond any rational as distinct from theoretical possibility), in my view, the position is different. In my view, it is inconceivable that in the circumstances described, particularly where no distinction is drawn between the small area now occupied by a modern mining town which did not exist until a century or more after sovereignty, that connection evidence would be any different from evidence as to the entire surrounding areas. As has been pointed out, evidence was not given in the context of conventional European boundaries by reference to longitude, latitude etcetera but rather by reference to primary physical geographical features such as mountain ranges, rivers, the ocean and such like. Notwithstanding this, having regard to the very substantial resources which have been devoted to litigation in this area in relation to native title, it seems to me desirable to put beyond doubt the question of whether or not the Yaburara/Mardudhunera People have any entitlement to pursue a claim in respect of the Dampier townsite. In that regard, I propose to order that the claim for native title in respect of the townsite of Dampier as defined in Annexure 'B' to these reasons be dismissed. Nor do I underestimate the demanding standards required of a dismissal on the basis of issue estoppel. However, that said, I have no doubt that the Yaburara/Mardudhunera are estopped in the manner asserted by the State. It follows that the State's motion is to be allowed. Pursuant to s 85A NTA, there will be no order as to costs. I certify that the preceding one hundred and twenty (120) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. The determination of native title made by the trial judge, being orders 1 to 17 (inclusive) on 2 May 2005, is set aside and a new determination is substituted in the terms of the Schedule to these orders. The non-exclusive native title rights and interests in relation to the ' Inter-tidal Zone ' (defined in the First Schedule) do not include the rights in subparagraphs (b), (c), (e), (g), (h), (i), (j) or (k) of paragraph 6 above. The non-exclusive native title rights and interests in relation to the ' Offshore Islands ' (defined in the First Schedule) do not include any of the native title rights and interests in subparagraphs (a)-(j) of paragraph 6 above. The non-exclusive native title rights and interests in relation to the ' Telstra Cable Routes ' (defined in the First Schedule) do not include right (h) in paragraphs 6 and 7 above, to the extent that the right involves digging beneath the surface of that land. There are no native title rights and interests in respect of ' Subterranean Waters ' (as defined in the First Schedule) in the Determination Area. The non-exclusive native title rights and interests are subject to and exercisable in accordance with the laws of the State and the Commonwealth including the common law. ' Cemetery Reserve Area ' means the land and waters the subject of reserves 5698, 30904 and 41146, as shaded in orange on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Depuch Island ' means Depuch Island and Sandy Island, West Moore Island and East Moore Island landward of the low water mark, as shaded in dark green on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Determination Area ' means the land and waters described in Attachment 1 to this First Schedule, being the land and waters bordered in light blue on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Hamersley Ranges Area ' means the land and waters shaded light brown on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Inter-tidal Zone ' means that part of the Ngarluma Native Title Area which is between mean high water mark and mean low water mark, as shaded in orange on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Ngarluma Area ' means the land and waters bordered and hatched in dark blue on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Ngarluma Native Title Area ' means the Ngarluma Area but not including the Ngarluma Total Extinguishment Area. ' Offshore Waters ' means the waters within the Determination Area seaward of the mean low water mark of the coastline, as shaded in light blue on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Subterranean Waters ' means waters which are for the time being contained in aquifers underneath the natural surface of the Determination Area; but does not include such waters to the extent they have percolated to the natural surface of the Determination Area. ' Telstra Cable Routes ' means the land and waters through which Telstra Corporation Limited's underground cabling is installed. ' Total Extinguishment Area ' means the Ngarluma Total Extinguishment Area and the Yindjibarndi Total Extinguishment Area, as shaded in olive on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. In the event of an inconsistency between the written description of the Ngarluma Total Extinguishment Area or the Yindjibarndi Total Extinguishment Area and the Total Extinguishment Area as depicted on the Maps in Attachment 2, the written description prevails. ' Yindjibarndi Area ' means the land and waters bordered and hatched in orange on the maps marked 'Map 1' which are Attachment 2 to this First Schedule. ' Yindjibarndi Native Title Area ' means the Yindjibarndi Area but not including the Yindjibarndi Total Extinguishment Area. All those lands and waters commencing at the northernmost corner of the northeastern severance of Reserve 35098 and extending southeasterly along the eastern boundary of that severance to the northwestern boundary of Reserve 35097; Thence northeasterly along that boundary of that reserve to the southernmost corner of reserve 31834; Thence northwesterly, northeasterly and southeasterly along boundaries of that reserve to the northwestern boundary of Reserve 35097; Thence northeasterly and southeasterly along boundaries of that reserve to a northern boundary of Karratha Lot 2567 as shown on Department of Land Information Deposited Plan 214664; Thence northeasterly along the northern boundary of that lot to a western boundary of Unallocated Crown Land, previously Lot 1058 as shown on Department of Land Information Deposited Plan 211552; Thence northerly, easterly, southeasterly and southwesterly along boundaries of that unallocated crown land to the easternmost boundary of Karratha Lot 4601 as shown on Department of Land Information Deposited Plan 35280; Thence southwesterly along the southeastern boundary of that lot to the northernmost corner of the northern severance of Reserve 32318; Thence southwesterly along the northwestern boundary of that severance to its westernmost corner; Thence southwesterly to the northernmost corner of the southern severance of Reserve 32318; Thence generally southwesterly along northwestern boundaries of that severance to a northern boundary of Pastoral Lease 3114/464 (Karratha Station); Thence generally southwesterly along boundaries of that pastoral lease to a eastern side of Karratha Road; Thence northerly along that side of that road to the southernmost corner of the southeastern severance of Lot 971; Thence southwesterly to the southeastern corner of the southwestern severance of Lot 971; Thence southwesterly and northerly along boundaries of that lot to the southwestern corner of Venn Road; Thence northerly and northeasterly along sides of that road to a western side of Karratha Road; Thence generally northerly along western sides of that road to the prolongation southwesterly of the northern side of Mooligunn Road; Thence northeasterly to and northeasterly, easterly and southeasterly along northern sides of that road to a western boundary of the southwestern severance of Reserve 35098; Thence generally northeasterly along boundaries of that severance to a western side of Keating Road; Thence generally northeasterly along sides of that road to a southwestern boundary of the northeastern severance of Reserve 35098; Thence northwesterly and northeasterly along boundaries of that severance back to the commencement point. All those lands and waters commencing at the northeastern corner of Wickham Lot 103 as shown on Department of Land Information Deposited Plan 175534 and extending southerly and southwesterly along boundaries of that lot to a eastern side of Mulga Way; Thence southerly along that side of that way to a northeastern corner of Lot 104 as shown on Department of Land Information Deposited Plan 175534; Thence southerly, westerly and northerly along boundaries of that lot to a southern side of Mulga Way, a point on a present boundary of portion of Special Lease 3116/4629; Thence southwesterly, generally northwesterly, northeasterly and southerly along boundaries of that special lease back to the commencement point. All those lands and waters commencing at the northwestern corner of Walcott Drive, a point on a present boundary of portion of Special Lease 3116/4629 and extending northeasterly, generally southeasterly and southwesterly along boundaries of that special lease to the southeastern corner of Walcott Drive road reserve; Thence southwesterly and northwesterly along sides of that drive back to the commencement point. All those lands and waters commencing at Latitude 20.662706 South and Longitude 117.141458 East, a point on a present boundary of portion of Special Lease 3116/4629 and extending southeasterly, generally southwesterly and northwesterly along boundaries of that special lease to a northern corner; Thence northeasterly back to the commencement point. All that land comprising Reserve 31274 and Unallocated Crown Land, being Wickham Town Lot 112. All those lands and waters commencing at Latitude 20.658647 South and Longitude 117.146449 East and extending easterly to the northernmost northwestern corner of Wilson Way; Thence easterly along the northern boundary of that way to the northwestern corner of Wickham Lot 44 as shown on Department of Land Information Deposited Plan 211961; Thence easterly along the northern boundary of that lot and continuing easterly along the northern boundaries of Lots 45 to 51 inclusive to a western side of the Point Samson Roebourne Road; Thence generally easterly and generally southwesterly along sides of that road to the northeastern corner of portion of Special Lease 3116/4629; Thence northwesterly and southwesterly along boundaries of that special lease to a southern boundary of Wickham Lot 97 as shown on Department of Land Information Deposited Plan 211961; Thence northwesterly along that boundary of that lot to its westernmost corner; Thence northwesterly to Latitude 20.663391 South, Longitude 117.144469 East; Thence northeasterly back to the commencement point. ' Yindjibarndi People ' are Aboriginal persons who recognised themselves as, and are recognised by other Yindjibarndi People as, members of the Yindjibarndi language group. Tenure no. | application under o 20 r 4 federal court rules (fcr) for summary dismissal issue estoppel earlier determination by court that native title claimants could not establish connection whether ultimate 'findings' made in earlier determination whether same issue had been decided whether the parties to the determination were the same principles applicable to an application under o 20 r 4 fcr for summary dismissal native title practice and procedure |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs on 31 March 2004 refusing to grant the appellant a protection visa. He arrived in Australia on 15 September 2003 and applied for a Protection (class XA) visa on 14 October 2003. On 31 March 2004, his application was refused by the delegate and the appellant applied to the Tribunal on 27 April 2004 for a review of the delegate's decision. The appellant claimed to have a well-founded fear of persecution in India due to his Sikh religion and his political opinion both actual and imputed. 3 The Tribunal rejected the appellant's claims and provided comprehensive reasons which I do not need to go through at this time. The Tribunal concluded that the appellant did not have a well-founded fear of persecution for a Convention reason and dismissed the application. 4 The appellant appealed from this decision to the Federal Magistrates Court on 13 December 2004. Before McInnis FM the appellant claimed that: the decision of the Tribunal was made without jurisdiction or was affected by error of jurisdiction; the decision of the Tribunal being affected by jurisdictional error was not a private clause decision to which s 474 of the Migration Act 1958 (Cth) ('the Act') applied; and the decision of the Tribunal is affected by jurisdictional error in that the Tribunal failed to take account of relevant material. 5 The appellant did not appear at the hearing. In considering the application, McInnis FM went though a number of matters that need no rehearsal in the circumstances that have now arisen. His Honour concluded that the Tribunal's decision was free of jurisdictional error and all claims had been properly considered and thoroughly analysed. Accordingly, his Honour dismissed the application. The appellant relies on two grounds of appeal, namely: that there was an error of law in the Federal Magistrate's decision constituting a jurisdictional error; and that there was procedural error in the Federal Magistrate's decision constituting an absence of natural justice which was also a jurisdictional error. The appellant has not filed any written submissions in support of his claims. Apparently, on 20 November, 2006, a facsimile was sent at 8.30 pm addressed to the Registrar of the Federal Court of Australia from the appellant stating that he could not attend the hearing as he is very ill. Included with that facsimile was a medical certificate which certified that the appellant 'is unfit for his normal work from 20/11/2006 to 21/11/2006 inclusive'. The medical certificate does not, in my view, support any proper application for an adjournment, which is what has effectively been asked for by the appellant. In particular, it does not address the critical question of whether, and if so, why, the medical condition complained of would prevent the appellant from travelling to the Court and participating effectively in the hearing. The medical certificate only deals with the question of the appellant's fitness for normal work. 8 The question arises as to what to do in the circumstances where there is a non-attendance by the appellant at the hearing of the appeal, but where, nevertheless, the appellant has notified the Court of a reason in support of the adjournment. On the material before me, however, I do not accept that the appellant has a valid reason for the adjournment. 9 The question arises then how to dispose of the matter. Section 25(2B)(bb)(ii) of the Federal Court of Australia Act 1976 (Cth) empowers the Court to make an order that an appeal to the Court be dismissed for failure of the appellant to attend a hearing relating to the appeal. In circumstances where no proper justification has been given for the failure to attend, in my view, it is appropriate to exercise the discretion given to make such an order. In reaching this conclusion, I have considered the principles in other cases dealing with similar matters, in particular the decisions of NAKX v Minister of Immigration & Multicultural & Indigenous Affairs [2003] FCA 1559 , and NALM v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 17 , which support the exercise of the power in these circumstances. 10 Another way to approach the matter is to determine the matter on this day on its merits. Such an approach was adopted, for example, in MZWIK v Minister of Immigration & Multicultural & Indigenous Affairs [2005] FCA 185 and VOAQ v Minister for Immigration & Multicultural & Indigenous Affairs (2005) 224 ALR 460. However, the circumstances in those cases differ from the present case. In the circumstances of this case where there are no written submissions, and where it is not merely determining a point of law such as the competency of the Court, I do not consider it is appropriate to proceed in that way. I should indicate, however, that the appellant may, if so advised and on the proper material, seek to have the order for dismissal in the absence of the appellant set aside upon application. I say nothing as to whether an application to set aside will be likely to succeed, and this will be a matter which will need to be determined if and when such an application is made. Therefore, I order that the appeal be dismissed with costs. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | judicial review non-attendance by appellant at hearing where medical certificate provided in support of adjournment did not provide sufficient basis for the grant of an adjournment power to dismiss appeal in accordance with s 25(2b)(bb)(ii) of the federal court of australia act 1976 (cth) migration |
The second applicant is a company which carries on business as a potato merchant in Western Australia. 2 The respondent is a statutory corporation established under the Marketing of Potatoes Act 1946 (WA) ('the MOP Act'). The preamble of the MOP Act states that it is an Act, among other things, '... to make provision for the marketing, sale and disposal of ware potatoes and to control their production ...' in Western Australia. The MOP Act defines 'ware potatoes' essentially as unprocessed potatoes grown in Western Australia for sale for human consumption. I shall refer henceforth to 'ware potatoes' as 'potatoes'. The Act also provides for the establishment of the respondent and defines its functions and powers. Sections 22(1) of the MOP Act makes it an offence for a commercial grower of potatoes to sell or deliver potatoes to any person other than the respondent. Section 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 potato grower. The Act also provides for the appointment by the respondent of inspectors with extensive powers of entry, search and seizure. 3 On 21 February 2006 the applicants commenced this application. In the statement of claim the applicants allege that the second applicant wishes to compete with the respondent in the market in Western Australia for the purchase of potatoes by wholesalers from commercial potato growers and that the first applicant wishes to compete with the respondent in the market for the supply of potatoes to potato merchants. The applicants go on to allege that the respondent has threatened to prosecute the applicants for breach of s 22 of the MOP Act in response to the first applicant making ad hoc wholesale sales of potatoes to persons other than the respondent, including sales to the second applicant. 4 By their application, the applicants seek a declaration that ss 17(A)(a)-(e), 19(k)-(o), 22-32 and 40-42 of the MOP Act and Regulations 29 - 38 and 58 - 62 of the Marketing of Potatoes Regulations 1987 (WA) are invalid on the grounds that those provisions are inconsistent with s 46 of the Trade Practices Act 1974 (Cth) ('the TP Act'). The applicants rely upon s 109 of the Constitution . 5 On 23 March 2006 the respondent filed a notice of motion supported by affidavits seeking an interlocutory injunction to restrain the applicants until judgment or further order from purchasing or taking delivery of potatoes otherwise than in accordance with the MOP Act, and from obstructing any inspectors from entering onto land on which potatoes were produced and from carrying out their duties under the MOP Act. 6 On 5 May 2006 the applicants gave undertakings to the Court substantially in the terms sought in the notice of motion claiming the interlocutory injunction, and on that day the notice of motion was dismissed. 7 By a notice of motion dated 3 April 2006 the respondent seeks to strike out pars 5-15 of the amended statement of claim and the attendant claim for relief, on the grounds that the statement of claim disclosed no reasonable cause of action. The facts and matters pleaded in support of the applicants' claim for the declaration of invalidity based on s 109 of the Constitution are pleaded in pars 5-15 of the statement of claim. 8 The respondent's main contention is that the impugned claim is untenable because it is clear beyond argument that there is no relevant inconsistency between the nominated sections of the MOP Act and the Regulations and s 46 of the TP Act. The respondent also complained about the way that the applicants had pleaded the 'market', and the way in which the relief claimed was formulated. 9 At the commencement of the hearing, the applicants produced a minute of further amended statement of claim. The respondent objected to the proposed amendment to include that claim on the grounds that the material facts relied upon by the applicants in support of that claim were not sufficiently identified. 11 The Attorney-General of Western Australia has intervened in the proceeding. At the hearing counsel for the Attorney-General of Western Australia supported the respondent's motion to strike out the applicants' claim for a declaration of invalidity. In support of that claim the applicants have pleaded in pars 8A, 9, 13A and 14 of the statement of claim that the MOP Act required the respondent to engage in conduct which was forbidden by s 46(b) and s 46(c) of the TP Act. 13 Senior counsel for the respondent submitted that the pleading in pars 8A, 9, 13A and 14 of the statement of claim, and the applicants' case, which depended on that pleading, was untenable because it was clear that the MOP Act did not 'require' the respondent to engage in the proscribed conduct under s 46 of the TP Act because the MOP Act did not 'require' the respondent to do anything. All that the MOP Act did, said senior counsel, was to define the functions of the respondent and vest in the respondent certain powers and discretions. Further, senior counsel argued, it could not be inferred that if the respondent acted within its powers and discretions that the respondent was acting for the purposes proscribed by s 46 of the TP Act. 14 The respondent submitted further that the applicants were precluded from giving effect to their expressed desire to buy and sell potatoes to persons other than the respondent, by the operation of s 22(1) and s 22(2) of the MOP Act and not by reason of any duty imposed on the respondent by the MOP Act. It was those subsections which created the criminal offences and it was, therefore, the operation of the MOP Act, in that sense, which precluded the applicants from buying and selling potatoes in the manner in which they desired. Senior counsel submitted that whereas the respondent had the power to prosecute in respect of any breaches of s 22(1) and s 22(2), the MOP Act did not impose a 'duty' on the respondent to prosecute any person that contravened those sections of that Act. The respondent was, therefore, not required to do under the MOP Act, what was forbidden under s 46 of the TP Act. 15 It followed, submitted senior counsel for the respondent, that the applicants' case was bound to fail. 16 Senior counsel for the applicants submitted that whether a statute imposed a duty on the repository of a statutory power to exercise that power is a matter of construction of the statute as a whole. He said that it was at least arguable that the intention and effect of the MOP Act was to create a statutory monopoly in favour of the respondent in relation to the commercial purchase and sale of potatoes in Western Australia. He submitted that on the proper construction of the MOP Act, it was also at least arguable that the MOP Act imposed a duty on the respondent to exercise the powers and discretions in order to give effect to its statutory purpose. Therefore, said senior counsel it was at least arguable that the MOP Act required the respondent to act in a manner which was directly contrary to the provisions of s 46 (b) and (c) of the TP Act. 17 In my view, the submissions of senior counsel for the applicants are to be accepted. 18 In the case of Julius v Lord Bishop of Oxford 5 App Cases 214 the House of Lords recognised that there would be circumstances where there would be a duty upon the repository of statutory powers to exercise those powers. At issue in that case was whether the words "it shall be lawful" in the context of the statute under consideration, were enabling words, or words which imposed a duty on the bishop in question to take action under the statute. The Commonwealth argued that there was no such duty on the Postmaster-General because the statutory provisions were 'permissive rather than obligatory, and directory rather than mandatory. It should, however, be said that there is nothing in Bennett and Fisher Ltd. v Electricity Trust (S.A.) [1962] HCA 11 ; (1962) 106 CLR 492 that is inconsistent with the established rule that in the construction of a statute regard may be had to its subject matter and object, and if the object of the statute is to confer a monopoly upon some public authority the decision in that case does not deny that due regard may be had to that fact. The High Court embarked upon a detailed consideration of the provisions of the Act and found that the Act did impose a duty on the Postmaster-General to provide postal services to the complainant in that case. 22 In my view, it is plainly arguable that the object of the MOP Act is to confer a monopoly on the respondent. On the authority of Bradley this can be taken into account by the court in construing whether there is a duty upon the respondent to exercise its statutory powers. In addition, it is arguable, that by providing for an extensive investigatory and punitive regime in the MOP Act, the legislature intended to impose upon the respondent an obligation to use its powers to achieve the statutory purpose. Further, because it is open to the trial court to find that the statutory purpose was to confer a monopoly upon the respondent, it is also open to the trial court to find that in exercising its powers under the Act the respondent is required to do so to give effect to the statutory purpose. It follows, that in my view, it is arguable that on the proper construction of the MOP Act there is a duty upon the respondent to exercise its statutory powers and discretions to give effect to the statutory purpose of conferring monopoly powers upon the respondent in relation to the purchase and sale of commercial potatoes in Western Australia. Accordingly, it cannot be said that the applicants' case for a declaration of invalidity is so patently untenable that it should be struck out on the grounds of no reasonable cause of action. 23 Counsel for the Attorney-General of Western Australia intervening, submitted that the applicants' claim was untenable because the justiciable controversy before the Court was confined to the question of whether s 22(1) and s 22(2) of the MOP Act validly prohibits the applicants from engaging in the proscribed conduct; which, he said, was a different question to whether the rest of the MOP Act requires the respondent to engage in conduct proscribed by s 46 of the TP Act. Counsel submitted that there could never be any inconsistency between s 22 of the State Act and s 46 of the TP Act because s 22 does not impose any duty upon the respondent whereas s 46 of the TP Act is directed at proscribing conduct. 24 In my view, it is at least arguable that s 22 of the MOP Act is to be construed as a statutory provision to facilitate the carrying out by the respondent of its alleged duty to implement a monopoly, and that, therefore, s 22 of the Act is inextricably linked to the rest of the impugned provisions of the MOP Act. It is, therefore, also arguable that s 22 cannot be viewed in isolation from the other impugned provisions of the MOP Act, and that the validity or otherwise of s 22 has to be considered in the context of the extent of any duty imposed upon the respondent under the Act, and the validity or otherwise of the other impugned sections of the MOP Act. I do not, accordingly, accept the argument of counsel for the Attorney-General of Western Australia. 26 The respondent complained that the pleading was embarrassing because a market requires both buyers and sellers, and the applicants had referred to only one side of the relevant transaction, namely the purchasers. The pleading has not referred to the sale by growers. Both purchasers and sellers should be mentioned. A similar complaint was made about the way the applicants had pleaded the market for the supply of potatoes in par 10 of the statement of claim. 27 The respondent also complained it was not possible to plead, as the applicants had, that the respondent participated in the market as a purchaser of potatoes, because under the MOP Act the respondent acquired the potatoes from growers and did not purchase them. 28 In my view, the pleading of the markets in pars 5 and 10 is sufficient for the purposes of this case and for the determination of the issues which are raised in this case. The pleading makes it clear that the markets on which the applicants rely are the markets for the purchase of commercial potatoes and for the supply of commercial potatoes in Western Australia. If further detail is necessary to assist the respondent to understand the case against it this could be dealt with by a request for particulars. 29 Further, in my view, the question of whether the means whereby the respondent acquires potatoes under the MOP Act is to be characterised as 'purchasing' potatoes as opposed to some other form of acquisition is a mixed question of fact and law. It is, therefore, a matter for trial. I do not accordingly, accept the respondent's objection. These words, said counsel, rendered the claim for relief vague and embarrassing. He also said that a declaration could not be made in those terms. 31 Senior counsel for the applicants accepted this criticism. Senior counsel for the applicants submitted that by identifying specific provisions of the MOP Act and Regulations in par A in the prayer for relief, the applicants had sufficiently identified those provisions in the MOP Act and Regulations which they claimed were invalid by the operation of s 109 of the Constitution . Therefore, said senior counsel, the impugned words should be deleted from the proposed minute of further amended statement of claim. In my view, this is the correct approach. By identifying the specific provisions of the MOP Act and the Regulations that the applicants allege are invalid, the applicants have identified those provisions which they say represent the extent of the inconsistency under s 109 of the Constitution between the MOP Act and the s 46 of the TP Act. This is sufficient to identify the case that the respondent must meet. 33 Senior counsel for the respondent submitted that the applicant had not sufficiently identified the conduct which the applicants relied upon as comprising the conduct which contravened s 46 of the TP Act. I would, accordingly, give the applicants leave to amend the statement of claim in accordance with the minute of further amended statement of claim dated 29 June 2006, subject to the deletion of the words 'to the extent that they are inconsistent with s 46 of the TPA' in claim A of the minute. 36 The respondent's notice of motion dated 3 April 2006 is dismissed with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | strike out no reasonable cause of action whether it was arguable that sections of marketing of potatoes act 1946 (wa) were invalid on grounds of inconsistency with s 46 of trade practices act 1974 (cth). practice and procedure |
The applicant, CEMEX, seeks a review of the decisions made by the Takeovers Panel (Panel) in relation to a takeover offer made by it for Rinker Group Limited. On 12 August 2007 the Panel made a declaration of unacceptable circumstances under s 657A of the Corporations Act 2001 (Cth) ( Corporations Act ) arising from CEMEX's conduct of the takeover. On 20 September 2007, pursuant to s 657D , the Panel ordered CEMEX to pay to shareholders who had sold Rinker shares during a specified period, the sum of $0.25 in respect of each share sold. The offer price was $US13 per ordinary Rinker share. The terms of the offer were set out in the Bidder's Statement dated 30 October 2006, a copy of which was lodged with ASIC on that date. The following provisions of the Bidder's Statement are presently relevant. If you do not do so, or if you have received or are entitled to receive ... the benefit of those Rights, Bidder will be entitled to deduct the amount ... of those Rights from any consideration otherwise payable to you under this Offer. If Bidder does not, or cannot, make such a deduction, you must pay that amount to Bidder. Clause 9 contained the definition of "Rights" which included the right to all dividends and all rights to receive them attaching to or arising at or after the date of the Bidder's Statement. 3 The Board of Rinker recommended that its shareholders reject CEMEX's offer. On 10 April 2007 Rinker obtained a trading halt from ASX Limited (ASX) until 12 noon on that day. Prior to 12 noon CEMEX reached an agreement with Rinker increasing its offer price to $US15.85 per share. It made an announcement to ASX advising of the increased price and stating that this was its best and final offer in the absence of a superior proposal. 4 Before 12 noon, CEMEX also filed a copy of the Bid Agreement and a Notice of Variation with ASX. 5 On 27 April 2007, in its report for the year ending 31 March 2007 Rinker announced that it would pay a final dividend of $0.25 with a record date of 8 June 2007. On 7 May 2007, CEMEX announced to ASX that Rinker shareholders would be entitled to a final dividend of $0.25 per share if they accepted the offer and CEMEX would not deduct the dividend from its best and final offer price of $US15.85 for each Rinker share. 6 On 13 June, the second respondent, Australian Securities & Investments Commission (ASIC), concerned that CEMEX's conduct departed from the "best and final" offer, applied to the Panel pursuant to s 657A(2)(a) of the Corporations Act to make a declaration of unacceptable circumstances. On 12 July 2007, the Panel made a declaration that CEMEX's conduct between 10 April and 7 May constituted "unacceptable circumstances" and ordered that CEMEX pay the affected shareholders an amount of $0.25 per share for the net number of Rinker shares sold during the above period. On 16 July 2007 CEMEX sought a review of the Panel's decision. The following outline, draws heavily on the submissions made by the Panel, which, consistent with the principle in Queen v Australian Broadcasting Tribunal; ex parte Hardiman [1980] HCA 13 ; (1980) 144 CLR 13 at 35-36, made submissions limited to the Panel's powers and procedures and not in the role of a protagonist. 8 The written submissions of the Panel outlined its history, commencing with its establishment under Part 10 of the Australian Securities Commission Act 1989 (Cth). When that Act was repealed and replaced by the Australian Securities and Investments Commission Act 2001 (Cth) ( ASIC Act ), the Panel continued in existence by operation of s 261 of that Act. Initially, the Panel was known as the Corporations and Securities Panel. Its name was changed to the "Takeovers Panel" by the Financial Services Reform Act 2001 (Cth). Interesting as the history is, it is not necessary to refer to it in any detail and I shall confine my comments to the present constitution and operation of the Panel. They must be persons with knowledge or experience in one or more of the fields of business, administration of companies, financial markets, financial products and financial services, law, economics, and accounting; ASIC Act s 172(4). The Panel is not a legal entity, but is merely a collective term for the individual members. 10 The Panel is intended to be the main forum for resolving disputes about a takeover bid until the bid period has ended; Corporations Act s 659AA. It is an important element in the scheme for regulating takeovers and for effecting the purposes of Chapter 6 of the Corporations Act . It has also made its own procedural rules under s 195 of the ASIC Act . Proceedings before the Panel are commenced by way of an application under the Corporations Act . ASIC's application in relation to the CEMEX takeover of Rinker was made pursuant to s 657C(2)(c) of the Corporations Act . The review application was made pursuant to s 657EA(1)(a) by CEMEX which was granted leave to be legally represented in the review proceedings. 12 An application to the Panel is considered by a sitting panel appointed by the President. The Panel is constituted by three members having a mix of expertise and including, if possible, a member with particular skills relevant to the matter. The parties are advised of any potential conflict of interest affecting a sitting member and given an opportunity to object. No party in the Rinker matter objected to the membership of either the original Panel or the review Panel. Both provisions were amended by the Corporations Amendment (Takeovers) Act 2007 (Cth) which took effect after some of the circumstances identified by ASIC as relevant to the assessment of CEMEX's conduct had occurred. Despite this the amendments apply to the present matter by virtue of s 1478 of the Corporations Act . 14 The Panel's power to make a declaration of unacceptable circumstances is qualified with reference to the purposes in s 602 and to factors that are relevant to the conduct of takeovers. Without limiting this, the Panel may declare circumstances, to be unacceptable circumstances, whether or not the circumstances constitute a contravention of a provision of this Act. (2) The Panel may only declare circumstances, to be unacceptable circumstances, if it appears to the Panel that the circumstances: (a) are unacceptable, having regard to the effect that the Panel is satisfied the circumstances have had, are having, will have or are likely to have on: (i) the control, or potential control, of the company or another company; or (ii) the acquisition, or proposed acquisition, by a person of a substantial interest in the company or another company; or (b) are otherwise unacceptable (whether in relation to the effect that that Panel is satisfied the circumstances have had, are having, will have or are likely to have in relation to the company or another company or in relation to securities of the company or another company), having regard to the purposes of this chapter set out in s 602 ; or: (c) are unacceptable because they: (i) constituted, constitute, will constitute or are likely to constitute a contravention of a provision of this Chapter or of Chapter 6A, 6B or 6C; or (ii) gave or give rise to, or will or are likely to give rise to, a contravention of a provision of this Chapter or of Chapter 6A, 6B or 6C. The Panel may only make a declaration under this subsection, or only decline to make a declaration under this subsection, if it considers that doing so is not against the public interest after taking into account any policy considerations that the Panel considers relevant. (3) In exercising its powers under this section, the Panel: (a) must have regard to: (i) the purposes of this Chapter set out in s 602 ; and (ii) the other provisions of this Chapter; and (iii) rules made under section 658C ; and (iv) the matters specified in regulations made to the purposes of paragraph 195(3)(c) of the ASIC Act; and. (b) may have regard to any other information it considers relevant. In having regard to the purpose set out in paragraph 602(c) in relation to an acquisition, or proposed acquisition, of a substantial interest in a company, body or scheme, the Panel must take into account the actions of the directors of the company or body or the responsible entity for a scheme (including actions that caused the acquisition or proposed acquisition not to proceed or contributed to it not proceeding). The written submissions made on behalf of the review Panel whose orders are the subject of this application, gave a helpful overview of the usual procedures adopted by the Panel in dealing with applications in relation to unacceptable circumstances. The following is a revised and truncated summary of this overview. 16 A review Panel has the same powers as the initial Panel to make a declaration under s 657A and an order under s 657D or s 657E; s 657EA(4). The Constitution of a review Panel and the procedures to be followed in conducting the review are governed by regulations made under the ASIC Act . The review Panel considers the review application de novo and is not limited to the facts found by the initial Panel. In the CEMEX review presently under consideration, the review Panel was provided with the evidence, submissions, rebuttals and other documents circulated to parties in the proceedings before the initial Panel, as well as material and information relating to the review proceeding. 17 As required by s 657A(4) the review Panel gave the parties an opportunity to make submissions. All parties, except Rinker, provided submissions and rebuttal submissions. The Panel also has discretion to convene a conference during proceedings and may do so where it considers, having regard to any time pressures, that a conference will elicit information to assist it in reaching a decision promptly. The Panel did not convene any conferences in this matter. 18 On 13 August 2007 the review Panel advised the parties by email that it had made a declaration of unacceptable circumstances and that it proposed to make orders similar to those made by the original Panel. It also attached a draft media release. ... 2. the time limits it has proposed in the orders on Affected Rinker Shareholders, ASIC, CEMEX, and Rinker's share registry. 3. the time it might take to settle the content of the proposed notices and claim forms. 6. how Affected Rinker Shareholders might reasonably satisfy ASIC under order 20(a). 7. how CEMEX might reasonably satisfy ASIC under order 20(a). 8. any unfair prejudice that you contend that the orders would be likely to cause any person. 9. any steps that the Panel might take to mitigate the prejudice such that it is no longer unfair. It received submissions from ASIC and CEMEX. There were subsequent discussions concerning the orders and, in particular, the mechanics of the orders. On 10 September 2007 the Panel advised the parties that it had decided to make the orders in the form attached to its email of 13 August. 20 On 17 September 2007 the Panel provided its draft reasons for the decision to the parties and the parties were invited to comment on issues of fact or unfair prejudice. No party made any comments and the review Panel's reasons were published on 20 September 2007. The Panel's media release on final orders was also published on 20 September 2007. CEMEX did not clearly, unambiguously and proximately reserve the right to improve the Offer consideration (other than in the event of a superior proposal). An aspect of the best and final statement was that CEMEX was assuring the market that it would not improve its Offer consideration in the absence of a superior proposal. Allowing shareholders to retain the dividend was an improvement in the Offer consideration. There was no superior proposal. The 7 May announcement departed from and was inconsistent with the assurance in the 10 April announcement. The market for Rinker Shares between the 10 April announcement and the 7 May announcement reflected (among other things) CEMEX's best and final statement. Sellers sold on the basis of that market. After the 7 May announcement the market reflected (among other things) the improved Offer consideration. (b) acceptances of the Offer went from approximately 3.24% on 7 May to 95.66% when the Offer closed on 16 July 2007. After the 10 April announcement, acceptances went from approximately 0.03% to 3.24% before the 7 May announcement. While there may be a question about whether CEMEX varied its Offer without following section 650B, this is not the basis for the Panel's declaration. The declaration is based on CEMEX's departure from its best and final statement. 24 It may well be that the Panel's concern to make quite clear that it was not basing its decision on a finding that there had been a contravention of the Corporations Act was because its decision predated the decision of the High Court in Attorney-General (Cth) v Alinta Ltd [2008] HCA 2 ; (2008) 242 ALR 1. At the time, therefore, the question of whether s 657A(2)(b) involved the exercise of the judicial power of the Commonwealth had not been authoritatively determined. 25 The review Panel rejected CEMEX's submission that the terms of its best and final offer should be construed as retaining for CEMEX a discretion whether or not it would deduct the amount of the dividend paid to Rinker shareholders or that it had qualified its 10 April announcement by reserving such a discretion. It referred to analysts' reports submitted by CEMEX and found that of the seven reports submitted, only one expressed the view that CEMEX could allow Rinker shareholders to retain the benefit of the final dividend, two expressed a contrary view and the others did not address the matter. 26 The review Panel also referred to the statement made by Rinker on 27 April 2007, when it announced the final dividend of $0.25. The Panel considered that the "ordinary reading of the statement" would merely remind shareholders of the terms of CEMEX's offer and would not convey the meaning that CEMEX might improve its offer, by allowing them to retain a dividend. 27 CEMEX submitted that it would not be in the public interest for the Panel to make a declaration of unacceptable circumstances. In support of this submission it said that there was "an absence of evidence" that its conduct had any adverse effect on the market or on shareholders' rights. The Panel disagreed, relying inter alia on the difference between the number of trades and number of shares traded before and after the announcement of 7 May. 28 CEMEX also submitted that there had been no allegation or finding of a contravention of the Corporations Act or any inquiry into whether the conduct might amount to a contravention of the Corporations Act . In the absence of such an inquiry CEMEX argued, by reference only to broad policy considerations and without any reference to questions such as "whether the relevant conduct affected the market or any party suffered loss", that the review Panel's orders would impose a significant penalty on CEMEX. The Panel rejected both those submissions. In the context of this order, "Affected Shareholder" was defined as meaning "a person who disposed of a beneficial interest in a net number of Rinker shares during the "Relevant Period". " The "Relevant Period" was defined to mean the period between 10 April and 7 May 2007. Order 14 dealt with disputes concerning entitlement to payment. 31 Orders 21, 22 and 23 provided that CEMEX was to establish a Special Purpose Account in which it was to deposit $15 million to be used to make the payments required by order 3. Other orders established procedures by which applications for payment were to be submitted and processed, how the money was to be paid, determinations of special circumstances, disputes as to entitlement to payment, requesting of further information, and other orders relating to the administration of the payments. I shall deal with each ground of review in turn. 35 The ADJR Act provides that an improper exercise of power includes, inter alia, taking an irrelevant consideration into account in the exercise of the power and failing to take a relevant consideration into account: s 5(2). CEMEX submitted that in declining to have regard to whether its conduct gave rise to a contravention of Chapters 6, 6A, 6B, or 6C of the Corporations Act or was otherwise contrary to law, the Panel ignored a consideration that it was bound to take into account in making the decision: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 39-40. It is not in dispute that the Panel expressly declined to consider this question. Therefore the only issue for me to decide on this point is whether the Panel was required to have regard to it. 36 Section 657A(3)(a)(ii) imposes an obligation on the Panel, when contemplating a declaration of unacceptable circumstances, to have regard to "the other provisions of this Chapter [6]". CEMEX submitted that, because of the express reference in s 657A(2)(c) to Chapters 6A, 6B and 6C, the obligation extends also to those chapters. It accepted that a declaration of unacceptable circumstances may be made even if the circumstances do not give rise to a contravention of the Act; s 657A(1). It submitted, however, that a consideration need not be determinative to render it relevant. CEMEX referred to the Panel's observation that forming a view about whether a contravention had occurred would only be one aspect of considering whether the circumstances were unacceptable. It argued that it did not follow that the issue could be ignored. 37 CEMEX's submissions advocate a mechanistic approach to the interpretation of s 657A(3)(a). This is not what the section requires. An obligation to have regard to Chapter 6 does not require the decision maker to consider whether there has been a contravention of each and every applicable provision. The task of the Panel was to consider whether, as ASIC alleged, unacceptable circumstances had arisen. Section 657A(3)(a) sets out the matters that it is mandatory for the Panel to consider. The question of whether there has been a contravention of Chapters 6, 6A, 6B, 6C is not included as a mandatory matter. The fact that s 657A(1) specifically provides that it is not necessary for there to be a contravention of a provision of the Act, indicates that if the Panel considered CEMEX's conduct resulted in unacceptable circumstances irrespective of there being a contravention, it was not necessary for it to consider if there had been a contravention. It is clear that the fact of a contravention would be highly relevant to the question of whether the circumstances should be characterised as "unacceptable". If, however, such circumstances exist irrespective of a contravention, it is not necessary for the Panel to consider that issue. 38 The regulatory framework which Chapter 6 establishes is, as Gleeson CJ observed in Attorney General (Cth) v Alinta Ltd at 4, designed "to preserve an efficient, competitive and informed capital market". Section 657A(1) recognises that the conduct of a takeover may be inconsistent with such a market even where it does not contravene a specific provision of the Corporations Act . Part 6.10 of the Act provides flexibility in the regulation of the acquisition of shares in circumstances where the literal operation of the regulatory regime is either unnecessarily restrictive or ineffective to achieve the object of Ch 6. It is clear enough that the regime involving the panel is designed to ensure regulation of the acquisition of shares over and above the provisions contained in the balance of Ch 6: ... The panel made its declaration because, notwithstanding compliance by Glencore and the Banks with the disclosure regime prescribed by the Act, the purposes of Ch 6, as expressed in s 602 , were not achieved. That is precisely the circumstance for which s 657A provides. It is not unreasonable for the panel, if its decision was otherwise lawful and authorised, to reach that conclusion. 39 The Corporations Act specifically reposes in the Panel the responsibility for deciding whether conduct is "unacceptable". The conclusion which the review Panel reached was open to it and I find no error in it reaching that conclusion. 40 CEMEX also submitted that the Panel had misconstrued its Bidder's Statement, its best and final offer statement made on 10 April 2007, the notice of variation of offer made on 10 April 2007, the fourth supplementary bidder's statement dated 17 April 2007, the fifth supplementary bidder's statement dated 18 April 2007. It submitted that, correctly construed, clauses 8.1(c), and 8.8(e) of the Bidder's Statement had the effect of preserving for CEMEX a discretion as to whether or not it would take steps to receive the benefit or value of any future Rinker dividend from accepting Rinker shareholders. It also argued that on a correct construction, the best and final offer statement indicated that CEMEX reserved a discretion to decide whether or not it would take steps to receive the benefit or value of any future Rinker dividend from accepting Rinker shareholders. 41 In essence, all of these allegations make the same basic point, which is that in all of the statements referred to above, CEMEX had reserved to itself a discretion (Dividend Discretion) to decide in respect of each and every dividend declared by Rinker, whether or not it would deduct the amount of any such dividend from payments made to Rinker shareholders for each share sold to CEMEX. The review Panel considered the arguments put to it by CEMEX that it had at all times, reserved a Dividend Discretion and rejected the arguments. 42 I agree with the submission made by ASIC that these contentions are, in substance, a challenge to the Panel's findings of fact. This challenge is not available to CEMEX in the present proceeding. In any event, I do not accept the construction for which CEMEX contends. In my view the Panel correctly interpreted CEMEX's best and final offer statement as being a statement that the offer would not be increased except in the context of a higher offer from another source. In its statement of 7 May 2007 CEMEX offered Rinker shareholders an additional sweetener by allowing them to retain the benefit of the dividend of $0.25 per share. This was an increase in the consideration for the shares and, in my view, it was contrary to the position advanced in CEMEX's best and final offer statement. 43 I do not accept that clause 8.8(e) of the Bidder's statement gave CEMEX a discretion to decide whether or not to take the benefit of future dividends. In my view the Panel's analysis of the Statement was correct for the reasons it gave. It is consistent with the plain meaning of the Statement and, as ASIC submitted, it is reinforced by the clear terms of s 8.1(c) of the Bidder's Statement, to the effect that if CEMEX bought a shareholder's Rinker securities, then CEMEX was entitled to all rights in respect of those securities. There is nothing in the other statements to which CEMEX referred that casts doubt on this construction and it is not necessary to add anything more on this point. 3. The Panel erred in law within the meaning of s 5(1)(f) of the ADJR Act in various respects, arising out of the above grounds, including by concluding that an order could be made to "protect" rights or interests which no longer existed at the time the orders were made. 45 These grounds raise three issues: (1) whether the Panel had power to order CEMEX to pay each Affected Shareholder $0.25 in respect of each share sold during the Relevant Period in the absence of a finding that each Affected Shareholder had suffered a loss; (2) whether the orders involved an impermissible delegation of power to ASIC; and (3) whether the orders invalidly attempted to "protect" rights or interests that no longer existed. Did the Affected Shareholders need to prove individual financial loss? Consequently, where there is no evidence before the Panel that any individual Rinker shareholder suffered financial loss as a result of CEMEX's conduct order for payment is beyond power. The absence of such evidence meant the Panel was not in a position to determine whether there was a "reasonable connection between the extent to which the right/interest has been affected and the extent to which it is sought to be protected". This is because individual shareholders may have suffered no loss or may have suffered a loss lesser or greater than the final dividend. 47 As an example of a shareholder who suffered no loss CEMEX put forward the hypothetical case of a shareholder who utilised the proceeds from the sale of Rinker shares to purchase stock in BHP and whose BHP shares increased in value at a higher rate than the Rinker shares would have increased in an efficient market. Such a shareholder, it submitted, would have suffered no loss and therefore the review Panel's orders would confer a windfall on that shareholder at the expense of CEMEX. This example assumes that the only relevant loss is financial. While the orders were purportedly made for the purposes of protecting the rights or interests of persons affected by the non-disclosure, the order applied indiscriminately to any person who sold shares on ASX during the relevant period, irrespective of whether any such person would have taken any different course had the relevant disclosure been made. 49 This submission does not take account of the amendments to the Corporations Act made by the Corporations Amendment (Takeovers) Act 2007 (Cth). The Explanatory Memorandum to the corresponding Bill makes it clear that the amendments were designed to respond to the concern that, following Glencore , "it may be open to read the Panel's powers and jurisdiction in the current legislation in way that is too narrowly formulated to enable the Panel to perform effectively the role envisaged for it by Parliament", in particular the power to make orders to protect the rights or interests of persons affected by unacceptable circumstances. The amendment means that this is not confined to rights and interests directly affected by the circumstances. The amendment ensures that the Panel can make any order it thinks appropriate to protect any rights or interests of a person or group of persons, where the Panel is satisfied that their rights or interests have been, are being, will be or are likely to be affected by the unacceptable circumstances. This will allow the Panel to protect the interests of those persons more effectively. The amendment will also ensure that the Panel may make orders which protect the interests of a group of persons whose interests have been affected, rather than requiring it to address the effects person by person. (Emphasis added. First, as well as being consistent with the express words of s 657D(2)(a) ("if the Panel is satisfied that the rights or interest of any person, or a group of persons ..."), such an approach recognises that the unacceptable circumstances misinformed the market as to the status of CEMEX's offer, thereby affecting the rights and interests of vendors of Rinker shares in that market, as a group. 51 In my view, there is no error in this approach. Disclosed in those steps was a reasonable connection between the extent to which the right or interest has been affected and the extent to which it was sought to be protected. That connection was based on the finding, open to the Panel, that persons who sold shares between 10 April and 7 May did so in a market that was not efficient and informed, and in particular they lost the opportunity to include as part of their decision to sell, the information that the offer consideration might be improved; and that the value of the final dividend was the best estimate of the value of the lost opportunity. That opportunity was lost whether or not any particular shareholder went on to purchase BHP shares which increased in value at a rate higher than Rinker shares would have in an efficient market. That is, the opportunity was lost by each Affected Shareholder irrespective of whether any individual Affected Shareholder actually suffered a financial loss because of the unacceptable circumstances. It therefore cannot be said that the Panel failed to have regard to whether loss was suffered. 52 The concept of the loss as the opportunity to participate in an informed and efficient market is underpinned by the purposes of Chapter 6 of the Corporations Act , referred to above at [14]. In particular, the purpose of ensuring that acquisition take place in an efficient, competitive and informed market is a legitimate interest of all persons participating in the market. Where, as here, the actions of a person or a company are found to have detracted from the openness and competitiveness of the market, the purpose of Chapter 6 is to redress that problem. Were I to accept CEMEX's submission that purpose would be subverted. 53 I am therefore satisfied that it was within the Tribunal's power to order CEMEX to pay each Affected Shareholder $0.25 per share sold in circumstances where they did not make a finding that each Affected Shareholder had suffered a loss. 54 A related argument put by CEMEX was that the Panel did not satisfy itself as to whether its order would "unfairly prejudice" CEMEX, as required by s 657D(1). Section 657D(1) requires that the Panel "must not make an order if it is satisfied that the order would unfairly prejudice any person". They lost the opportunity to include as part of their decision to sell the information that the Offer consideration might be improved. The value of the final dividend is, in the review Panel's opinion, the most logical and best estimate of the value of the lost opportunity. (b) CEMEX's best estimate to the initial Panel of the relevant number of shares involved (i.e., the net sales between the two announcements) was 44,849,359, and the amount involved was A$11,212,340. That must be compared to the benefits that CEMEX received by departing from its best and final statement. Allowing shareholders to retain the benefit of the final dividend significantly, if not wholly, contributed to the success of the Offer. The total value of the Offer was approximately $A17 billion. CEMEX submitted as its best estimate to the initial Panel, that the value of the final dividend was approximately A$223.7 million. Relative to these amounts, the likely amount of the payment order is not out of proportion or otherwise unfair. It also follows from my findings that the Panel's orders cannot be said to be unreasonable in the Wednesbury sense; Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223. Was there an impermissible delegation of power? CEMEX may refer a claim to ASIC, within 2 weeks of CEMEX or the ISP receiving the claim form (whichever is earlier). If CEMEX refers a claim form to ASIC under Order 14, ASIC shall within 2 weeks of receipt of that claim form make a determination, after consultation with CEMEX if ASIC considers it desirable, as to whether or not the person submitting the claim form is entitled to be paid in accordance with the Orders and if necessary, for how many Rinker shares. 16. If ASIC is unable to make a determination under Order 15, it shall refer the claim form to the Panel within 2 weeks of receipt by ASIC of that claim form for decision. 59 For several reasons I do not accept that the mechanism provided in orders 14-16 involves an impermissible delegation. First, ASIC has not been given the power to determine conclusively whether a person is an Affected Shareholder. The orders clearly define membership of that category. Initially it is CEMEX which considers the question. Disputes are referred to ASIC which, if it is unable to make a determination, may refer the matter to the Panel. It is therefore the Panel which ultimately has the power to resolve a dispute about whether a person is an Affected Shareholder. Indeed, ASIC is specifically charged with the function of providing staff and support facilities to the Panel. Even if the assignment of administrative responsibilities to ASIC is not within the terms of s 657D , it would be implied into the power given the sheer administrative necessities of the legislative scheme. 61 Thirdly, the relevant criterion is whether Rinker shares were sold in the relevant period. This is a matter of fact that will be established or not by the evidence. It is not a matter that depends on the decision-maker's discretion. Do the orders involve a protection of rights or interests that no longer existed? Moreover, given the delisting of Rinker, Affected Shareholders could never be in a position to enjoy that opportunity again. As a result, any such right or interest, even though not now in existence, cannot be characterised as prospective or contingent in nature. They are designed to negate, for the future, any detrimental effect suffered to a person's right or interest by virtue of an unacceptable circumstance. That policy cannot be achieved where the right or interest no longer exists. An order requiring the payment of money is such circumstances must, necessarily, be characterised as compensatory in nature. 64 ASIC submitted that this contention is inconsistent with the wording of the Corporations Act , which expressly contemplates the protection of rights or interests that, at the time the order is made, have already been affected; ("... if the Panel is satisfied that the rights or interests of any person, or group of persons, have been or are being affected"). This submission does not distinguish between merely impairing rights or interests and affecting them to the point of extinction. The applicant relies on such a distinction. In my view the distinction is unwarranted. I accept ASIC's submission that such an approach is inconsistent with the policy of the legislation and that there is nothing in s 657D(2) to indicate that rights and interests must exist at the time the order is made. Sub-paragraph (b) is obviously intended to be used, if it can be, during the course of a takeover. Sub-paragraph (a) is obviously intended to have an operation outside the terms of sub-paragraph (b). An obvious instance of when this could occur is after the takeover has been completed. 65 In Australian Securities & Investments Commission v Yandal Gold Pty Ltd (1999) 32 ASCR 317, Merkel J considered a contravention of s 615 of the then-applicable Corporations Law . Section 737 empowered the Court to "make such order or orders as it thinks just" and s 739(1) empowered a court to make "such orders as it thinks necessary or desirable to protect the interests of a person affected by the takeover scheme". It relates to Edensor's carried interest. Mr Lonergan's evidence, which valued that interest at $27-30 million, was only partly challenged by the respondents. As explained earlier, that is effectively the "price" paid by the Normandy group to Edensor to secure the bid structure agreement and the Shareholders Agreement or, put another way, a measure of the benefit obtained by Edensor by its contraventions of s 615. As a consequence of the payment of that "price" the shareholders were deprived of the opportunity of receiving an offer of a significantly higher price at the time of the bid and were left with little practical choice but to accept the offer made or to now exercise their right to require the acquisition by Yandal Gold of their shares pursuant to s 703(2). Is it just that that "price" be redirected to those who suffered the detriment arising from its payment? In my view an order that Edensor be required to disgorge to those shareholders the value of the benefit it received for its contravening conduct is "just" under s 737 and is protective of the interests of the shareholders under s 739. 66 It follows from the above that I am satisfied that the Panel made no error in making the orders. 67 For all of the above reasons the application must be dismissed. In the ordinary course, the respondents, having been successful, would be entitled to their costs. However, neither party made any submissions as to costs either orally or in writing. That being so I shall allow all parties time to make submissions as to costs before making any orders. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | takeovers panel review of panel's declaration that applicant's announcement of a final dividend payment departed from its best and final offer whether "unacceptable circumstances" whether contravention of the corporations act 2001 (cth) is a mandatory consideration in deciding to make a declaration of unacceptable circumstances takeovers panel review of panel's orders following declaration of unacceptable circumstances whether orders were authorised by s 657d of the corporations act 2001 (cth) whether improper exercise of power whether error of law takeovers panel orders under s 657d of the corporations act 2001 (cth) whether panel had power to make order for payment to affected shareholders in the absence of evidence as to individual loss by shareholders whether orders involved an impermissible delegation of power to the australian securities & investments commission whether orders protected rights or interests that no longer exist judicial review judicial review corporations |
Numerals in bold within brackets refer to paragraphs of the statement of claim. 3 The applicant (Mr Boyn) was born on 16 January 1940 ( 2 ). From about 1971 until 31 March 2005 he was employed by Schering ( 3 ). He had intended to continue working for Schering until at least his 70 th birthday (on 16 January 2010) ( 5 ). It was, however, a term of his contract of employment that he was to retire upon attaining the age of 65 years (on 16 January 2005) ( 6 ). 4 Mr Boyn was told by Schering that he must retire upon turning 65 ( 7 ). On 30 June 2004, he submitted a resignation to Berndt Maehliss of Schering ( 9 ). On the same day, however, Mr Boyn sent a letter to Mr Krueger of Schering expressing concern over his "forced resignation" and a willingness to make himself available for a further five year contract ( 10 ). His proposal in this respect was not accepted ( 12 ). 5 (Schering initially applied for a striking out of paras 13 and 14 of the statement of claim relating to Mr Boyn's loss of "long term incentives" but upon its being made clear on behalf of Mr Boyn that his claim for damages in this respect related only to the period from 1 July 2004, and that his earlier asserted claim in respect of the years 2002 and 2003 were abandoned, Schering no longer presses for a striking out of those paragraphs. Schering applies to have those paragraphs and related paras 24 and 28(b) struck out. If Schering succeeds and there is no leave to replead, it will follow that the proceeding should be dismissed in so far as relief is claimed founded upon those paragraphs of the statement of claim. 7 It was a term of Mr Boyn's contract of employment that Schering would make contributions to the Schering Superannuation Fund (Fund), which Mr Boyn joined in January 1977 ( 15 ). It was an implied term of Mr Boyn's contract of employment that Schering, through its directors, officers and managers, "would act in a manner consistent with fidelity and good faith towards [Mr Boyn] in relation to the conduct of the contract" ( 16 ). 8 In 1984, Schering took steps to improve the level of superannuation benefits provided to its employees in order to take account of industry standards ( 17 ). In 1985 a new scheme was instituted by Schering providing for prospective benefits, being an accumulation type scheme with benefits accruing over time ( 18 ). This new scheme operated less favourably for older employees who had less time after its commencement to accumulate superannuation funds and to benefit from the improved conditions ( 19 ). 9 Schering implemented a further improvement to the Fund in or about July 1998 ( 21 ). 10 No "top up superannuation payment" was made to Mr Boyn on his resignation ( 23 ). 11 The conduct pleaded in relation to superannuation constituted "direct discrimination" on the ground of age by Schering against Mr Boyn within the meaning of s 14 of the Age Discrimination Act 2004 (Cth) (Act) ( 24 ). 12 By reason of those matters, Schering unlawfully discriminated against Mr Boyn on the ground of his age ( 26 ). It shows that the Fund does not exist, and apparently never did exist. There has been a succession of superannuation funds. The fund of which Mr Boyn became a member after signing an application form dated 26 October 1976 was called "Schering Pty Ltd Staff Superannuation Plan". (The statement of claim pleads that Mr Boyn became a member in 1977 and it may be that the processing of his application accounts for the intervening period. ) The current fund, pursuant to a Consolidated Deed incorporating all amendments up to and including 9 February 1995, is called the "Schering Staff Superannuation Plan" (Current Fund). That deed refers to four "Former Plans", including the "Schering Pty Ltd Staff Superannuation Plan". The trustee of the Current Fund is not Schering, but Schering Staff Superannuation Plan Pty Ltd (Present Trustee), which was incorporated by registration on 22 June 1994. Amendments to the terms of the Current Fund were made by a deed dated 30 June 1988 executed by Schering and the Present Trustee, but apparently there were no amendments between that date and 31 March 2005. 16 An ASIC Historical Company Extract shows that the Present Trustee is deregistered, having been dissolved on 30 July 2006 pursuant to s 601AA of the Corporations Act 2001 (Cth). 17 If it is to be alleged that Mr Boyn became a member of the Current Fund, the statement of claim will have to be amended to plead the material facts showing how and when this came about. There appears "no proper basis for the claim to be put". 20 Finally, Schering submits that, if Mr Boyn's claim under the Act in relation to superannuation is summarily dismissed, his related claim for breach of contract would be shown to have been outside the jurisdiction of the Court. 21 In response to Schering's motion, Mr Boyn emphasises the stringency of the test applicable, whether for summary dismissal of the proceeding, in whole or in part, or for a striking out of paragraphs of the statement of claim. 22 Mr Boyn relies on ss 14 and 18 (2) of the Act. 23 Mr Boyn submits that all the elements referred to in ss 14 and 18 (2) are pleaded. 24 He submits that Australian Iron & Steel Pty Ltd v Banovic [1989] HCA 56 ; (1989) 168 CLR 165 ( Banovic ) bears some similarity to the present case, although it was concerned with discrimination on the ground of sex under the Anti-Discrimination Act 1977 (NSW) (AD Act). I refer to this case below. 25 Mr Boyn submits that he was discriminated against on the ground of his age. In relation to "causation", he refers to Purvis v State of New South Wales [2003] HCA 62 ; (2003) 217 CLR 92 at [236] in support of a submission that the Court need only be convinced that Mr Boyn's age was one of the reasons for Schering's decision to act the way it did for the necessary causation to be established . In relation the appropriate comparator, Mr Boyn suggests that the comparator is a younger person who is employed by Schering after it introduced more favourable superannuation rules, and who served for as long as Mr Boyn did. Such a younger person would, so it is submitted, retire with greater benefits than those provided by Schering to Mr Boyn. 26 In answer to Schering's "wrong party" submission, Mr Boyn submits that Schering "played a direct role in the choice of superannuation funds and that the making of any top up payments to older employees who were provided with less beneficial superannuation arrangements". 27 Finally, Mr Boyn submits that even if his claim based on the Act should fail, his claim for breach of contract survives within this Court's accrued jurisdiction. 29 There is a hiatus between the facts alleged and the claim for relief. A reading of the statement of claim alone would lead one to expect that on the basis of the facts pleaded, the Act either entitles Mr Boyn to the relief claimed in the application or gives the Court power to grant that relief. This not so. Section 59 of the Act states that the Act does not confer on a person a right of action in respect of the doing of an act that is unlawful under a provision of Pt 4 (which includes s 18) unless a provision of the Act expressly provides otherwise. I am not aware of any provision of the Act that expressly provides otherwise and my attention was not drawn to any. 30 The hiatus is filled by the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (HREOC Act). That Act provides for the lodgement of written complaints with the Human Rights and Equal Opportunity Commission (Commission) alleging unlawful discrimination under, relevantly, the Act, inquiry into the complaint, termination of the complaint, and, where a complaint has been terminated in certain circumstances and notice of the termination was given to the complainants (being the persons who lodged the complaint), application to this Court or the Federal Magistrates Court for relief by the affected person in relation to the complaint (being the persons on whose behalf the complaint was lodged): see ss 46P to 46PO of the HREOC Act. Subsection 46PO(4) of the HREOC Act provides for the range of orders that either of those Courts may make if it is satisfied that there has been unlawful discrimination. 31 In fact, Mr Boyn did complain to the Commission alleging discrimination under the Act. The complaint was terminated pursuant to s 46PH(1)(i) of the HREOC Act on the ground that a delegate of the President of the Commission was satisfied that there was no reasonable prospect of the matter being settled by conciliation. Further, Mr Boyn's complaint relating to superannuation was also terminated pursuant to s 46PH(1)(c) of the HREOC Act on the ground that the delegate was satisfied that it was misconceived and lacking in substance. Mr Boyn was given notice of the termination. 32 In the circumstances recounted above, s 46PO of the HREOC Act was enlivened and Mr Boyn, being an affected person in relation to the complaint, was entitled to apply to this Court alleging unlawful discrimination by Schering. 33 The pleading would have to be amended to allege facts enlivening the Court's jurisdiction, including the lodgement of the complaint with the Commission, the termination of the complaint under s 46PH(1), and the giving of the notice of termination to the complainant under s 46PH(2) of the HREOC Act. 34 It is common ground that in order to succeed on his claim under the Act, Mr Boyn must be able to establish that Schering unlawfully discriminated against him on the ground of his age in one of the respects identified in paras (a), (b), and (d) of s 18(2) of the Act (see [12] above --- it is common ground that para (c) is irrelevant) after the Act commenced operation on 23 June 2004: for example, see Maxwell v Murphy (1957) 96 CLR 261 at 267. However, the statement of claim does not allege facts falling within s 14 and s 18(2) of the Act occurring after that date. There is no pleading of the conduct of Schering after 23 June 2004 that amounted to Schering having treated Mr Boyn less favourably than, in circumstances that were the same or not materially different, Schering had, after 23 June 2004, treated or proposed to treat persons of a different age after 23 June 2004 (see s 14 of the Act). 35 Banovic , relied on by Mr Boyn, is distinguishable. In that case, all of the relevant conduct occurred after the commencement of the Anti-Discrimination Act 1977 (NSW) (the AD Act). 36 In Banovic , Australian Iron & Steel Pty Ltd (AIS) operated a steel works at Port Kembla, New South Wales. All of the following events occurred after June 1977, the date of the entry into operation of the AD Act. Until mid-1980, AIS pursued recruitment practices that resulted in women constituting a very small proportion of the AIS ironworker workforce. Another result of those practices was that the waiting time for employment as an ironworker was considerably higher for women than for men. In mid 1980 AIS changed its practice as a result of which the number of women employed as iron workers increased, both in terms of absolute numbers and also as a proportion of the total ironworker workforce. Still, however, the waiting time for women as compared with the men was vastly disproportionate, being measured in years rather than a few days or weeks. 37 A downturn occurred in the steel industry in 1981 and AIS ceased recruiting new iron workers from September of that year. The downturn continued. In October 1982, AIS announced that it would be retrenching iron workers as from 14 November 1982 on the basis of "last on, first off". AIS in fact retrenched those iron workers who commenced work after 6 January 1981. Eight female iron workers who were retrenched complained of unlawful discrimination on the ground of their sex. By a 3:2 majority, the High Court held that although the "last on, first off" principle was in itself unobjectionable, it exacerbated the adverse effects of past discriminatory practices by AIS, and so it was open to the Equal Opportunity Tribunal to find, in respect of retrenchments, that the past discrimination on the ground of sex was repeated. 38 The facts are distinguishable from those of the present case because the earlier discriminatory hiring practice of AIS, as well as the implementation of the "last on first off" policy, post-dated the commencement of the AD Act, and because the implementation of that policy was able to be regarded as repeating the discrimination involved in the hiring practice. In the present case, the statement of claim does not allege any discriminatory treatment by Schering of Mr Boyn as compared with Schering's treatment of other people after the Act commenced to operate on 23 June 2004. 39 I do not find it necessary to deal with Schering's second and third attacks on the statement of claim distinct from its first attack. It suffices to say that once it is accepted that, immediately before the commencement of the Act on 23 June 2004 there was in place a superannuation scheme that Mr Boyn had voluntarily joined and about which he had no legal cause of complaint at that time, one searches in vain for subsequent conduct by Schering that fits the descriptions contained in ss 14 and 18(2) of the Act. Mr Boyn's complaint seems to be simply that Schering did not choose to make a "top up superannuation payment" that would have made the amount received by Mr Boyn equal to some unidentified amount payable to some unidentified person or group who were at some unidentified time younger to some unidentified extent than Mr Schering. 40 On my understanding of the facts, I do not think that the statement of claim can be amended so as to plead, in respect of superannuation, unlawful discrimination by Schering occurring after 23 June 2004 and falling within ss 14 and 18(2) of the Act. However, I am reluctant to deny Mr Boyn the opportunity of amending the statement of claim in an attempt to support the claim in respect of superannuation. I will allow him that opportunity. Before taking advantage of it, however, I strongly urge that Mr Boyn and those advising him should consider carefully the question whether facts can be pleaded showing a case falling within ss 14 and 18(2) of the Act consisting of conduct by Schering after 23 June 2004. 41 Pending any amendment, I need not deal with the question whether the Court has jurisdiction to entertain the breach of contract claim. If there is not to be an amendment, I will deliver supplementary reasons dealing with that issue. Ordinarily I would dismiss the proceeding in so far as it claims the relief sought in para 1 of the application, but, if Mr Boyn decides, notwithstanding my cautionary note, to file an amended statement of claim, the form of the application can be reviewed in the light of that document. 43 Since I have also referred to other deficiencies in the statement of claim, the best course is to strike it out in its entirety with leave to Mr Boyn to replead. Mr Boyn should be ordered to pay Schering's costs of its motion. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | pleading claim of unlawful discrimination by employer on ground of employee's age employee joined superannuation fund (fund) many years before commencement of age discrimination act 2004 (cth) (act) on 23 june 2004 new scheme instituted for fund before commencement of act that operated less favourably for older employees complaint that employer discriminated by failing to "top up" amount payable when employee retired on 31 march 2005 to the amount that would have been payable if he had had a longer period to accumulate benefits beyond his retiring age of 65 years. held : pleading deficient in failing to allege unlawful discriminatory treatment by employer occurring after commencement of act. practice and procedure |
In the principal proceeding, the applicant seeks injunctions restraining the first and second respondents from importing, promoting, distributing, advertising or otherwise offering for sale counterfeit hairstyling products bearing the mark GHD or, alternatively, marks described as "GHD Styler" or "GHD", or any other style which would constitute an infringement of the registered trade mark 951664 registered in respect of the letters GHD for the articles the subject of the proceeding. In addition to injunctions restraining the first and second respondents in those terms, the applicant seeks delivery up for destruction of infringing articles, damages or, alternatively, at its election, account of profits, interest and other related orders consistent with the principal relief. Apart from the final relief as just described, the applicant seeks interlocutory injunctions restraining the first and second respondents from engaging in the same conduct pending the trial of the action. The interlocutory orders, as framed, would also, in effect, run until earlier order made by the court. The remaining interlocutory orders are orders directed to the Chief Executive Officer of the Australian Customs Service pursuant to the provisions of the Trade Marks Act and, in particular, section 137(5) which provides that, if after 20 working days from the day on which the action was commenced (in this case, 20 November 2009), there is not in force at any time an order of the court directed to the Customs CEO preventing the goods from being released, the Customs CEO must release the goods to the designated owner. The elements of the cause of action alleged against the first and second respondents are the subject of an affidavit from Ms Kelly Maree Gardner sworn 24 November 2009. The events giving rise to the controversy between the applicant and these respondents essentially arises out of three Notices of Seizure to Objector, which were issued by the Australian Customs Service to the applicant. The first was on 19 October 2009 and two others were issued on 20 October 2009. Each of them bears a designation number, the first of which is DGMS N0090959CL. The other two bear numbers N0091060PJ and N0090788PJ, which identify the particular articles the subject of the proceedings. Ms Gardner deposes in her affidavit to her role as a brand protection officer for the applicant and, at paragraph 3, gives evidence of her experience in the identification of counterfeit GHD irons and/or other stylers. Ms Gardner says that she is able to identify the counterfeit nature of such a product, either from pictures she examines, a review of the actual product or written descriptions of the product in the relevant case. At paragraph 22 of the affidavit, Ms Gardner says that she has reviewed photographs of the seized items the subject of the three notices I have just described by reference to the identification numbers above. Those photographs were provided to Ms Gardner by the Australian Customs Service. Ms Gardner says that, by reference to those photographs, she immediately identified the seized items as counterfeit. She says that the easiest way of identifying the counterfeits is the verification code on the inside arm of the iron which has been photographed by Customs. Ms Gardner then describes, in a little detail, the verification codes depicted in the photographs which informs her conclusion that each of the articles the subject of the photographs are counterfeit articles. I am satisfied that, having regard to the affidavit of Ms Gardner, the applicant has made out a prima facie case of infringement of the trade mark in relation to articles which are not of the manufacture of the applicant or its parent, for the purposes of Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 227 CLR 57 per Gleeson CJ and Crennan J at [19] and Gummow and Hayne JJ at [65] to [72]. A further question arises in relation to the specific elements of section 136 of the Trade Marks Act 1995 (Cth) which provides that the Customs CEO must release the seized goods to their designated owner if, within the action period, Jemella has not brought an action for infringement of the notified trade mark in respect of the goods, and given to the customs CEO notice in writing of the action. The action period relevantly expired in respect of the first notice on 20 November 2009 and in respect of the second and third notices on 23 November 2009. The action was commenced on 20 November 2009 for infringement of the notified trade mark in respect of all of the goods. Mr Fox has appeared today on behalf of Jemella. He has given an undertaking to file an affidavit which will annex a copy of an email tendered to the court in relation to this very question. Mr Fox's email of Friday, 20 November 2009 at 4.09 pm, directed to officers of the Australian Customs Service, gives notice that Jemella has commenced the proceedings in question and the email attaches a letter confirmatory of that matter as well. Therefore, I am satisfied that s 136 of the Trade Marks Act has been met. That question is material to whether or not the court ought to make an order under s 137(5) directed to the CEO of the Australian Customs Service as sought in the interlocutory application. If, of course, the applicant had not given notice within the action period, then the CEO of the Australian Customs Service would be under a statutory obligation to release the goods and a question would arise as to whether an order ought to be made s 137(5) in all the circumstances. The position here is that notice has been given and those elements have been satisfied. The further matter is that there is a supplementary affidavit by Ms Gardner which goes to attempts to serve documents on the respondents. This application is an ex parte application. The report as to service identifies aspects of the attempts to serve the respondents with the Court papers. The service report contains material which suggests that the first respondent is, and will be, out of the jurisdiction for approximately three to four months. Nevertheless, the applicant proposes to continue to attempt to effect service of the papers on the respondents. The proposed orders contemplate that if any notice of motion is to be brought on which would arise in circumstances where the applicant has been able to find and serve the first and second respondents with the Court papers, such a motion would also be brought on, on the review date. On the footing that the first respondent is likely to be out of the jurisdiction for some time, it seems to me that the appropriate course is to re-list the matter for directions at 9.30 am on 20 January 2009 so the court might be informed about the status of the matter generally, and information will then be forthcoming about whether a notice of motion is to be heard and determined in relation to the matter more generally and if so, when. The background circumstances relating the trade mark and a copy of the trade mark certificate and the matters relating to the verification code, analysis of counterfeit articles and, in particular, the virtue of the authentic article that it meets all electricity safety approvals and is thus safe for the use for which it is intended, is deposed to in the affidavit of Mr Anthony Grigson sworn 23 November 2009. Having regard to all of these matters, then, I propose to make orders in terms of the draft orders which provide for liberty to apply on three days' notice in the event that service is effected upon the respondents, and they seek to discharge the interlocutory injunction for any reason. I will make orders in terms of the draft as initialled by me, subject to the amendment to order 7, adding the directions date of 9.30, 20 January 2010. There is one further matter that should be mentioned and that goes to a further affidavit of Ms Gardner. Ms Gardner filed an affidavit sworn 24 November 2009, in which she deposes to her search of eBay, which is part of her standard protocol for seeking to isolate and identify counterfeit articles. In this affidavit Ms Gardner says that on 14 September 2009, the applicant reported to eBay a listing for user name, "gabbyandsara44". The applicant then obtained copies of the eBay listing which provided information as to the seller's list of items for sale and the seller's items sold in the last 15 days. Ms Gardner says that eBay suspended the listing and provided the third respondent, who is Jemella Group Limited, with information relating to eBay user, "gabbyandsara44". That information identified the user as "Gabby Daizli of 12 Tantangara Street, Miller, New South Wales, 2170", at an email address of [email protected] with a telephone number. The material suggests that the first and second respondents are seeking to sell GHD-designated articles on eBay which the applicant contends are not authentic articles. A copy of the eBay entry is attached to the affidavit. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for an ex parte injunction restraining the respondents from infringing the applicant's trade mark consideration of an interlocutory order directed to the chief executive officer of the australian customs service that seized articles not be released to the respondents intellectual property |
The Scheme provides, in essence, for the merger of UKL with a company, Monaro Mining NL (Monaro), whereby UKL would become a wholly owned subsidiary of Monaro and the UKL shareholders would acquire shares in Monaro. The Scheme was approved by the requisite number at the meeting of members held for that purpose on12 June 2008. At the Court hearing for the final approval of the UKL Scheme on 16 June 2008, UKL read an affidavit of Mr James Lewis Michael Malone, a director of UKL. Mr Malone deposed that on 16 June 2008 Mr Grigor, a director of Monaro, informed him that the Securities Exchange Commission in the United States (the SEC) had advised Monaro's lawyers in the United States on Friday, 13 June 2008 that UKL may have breached a provision of the Securities Exchange Act of 1934 (the Exchange Act ). Mr Malone also deposed that it was his understanding that this possible breach had occurred as a result of the issue by UKL of its shares in or about September 2006 to Mineral Energy and Technology Company (METCO), a United States company and now the major shareholder of UKL, whilst not registered under the Exchange Act as a foreign private issuer. I interpose to say that, as a part of that transaction, exploration tenements in the United States were transferred by METCO to UKL, and that those exploration tenements are the major assets of UKL and will comprise important assets of the merged entity, if the merger proceeds. Mr Malone then deposed that in his view the expression by the SEC of the view referred to above, was "not a relevant consideration for [UKL] shareholders in determining whether or not to approve the merger with Monaro". He did not explain the reasons for holding that view. He went on to say that he had been informed by Mr Mart Rampe, a director of Monaro, that notwithstanding this information, the Monaro board had that day determined that all the conditions in the control of Monaro had been satisfied or otherwise waived. Mr Rampe filed an affidavit which confirmed the statements made in Mr Malone's affidavit. At the hearing of 16 June 2008, UKL submitted that I should on the basis of that evidence regard the latest development as no impediment to the approval of the Scheme. However, I was not satisfied that Mr Malone's and Mr Rampe's evidence was a sufficient basis on which to conclude that the new information was so trivial that I could approve the Scheme without further evidence as to possible consequences that the holding of that view by the SEC may have for the implementation of the Scheme. I adjourned the hearing to give UKL an opportunity to adduce further evidence as to the ramifications for the implementation of the Scheme that this new information may have. UKL relies today upon an affidavit dated 17 June 2008 from Mr John E Schmeltzer who is a partner of a law firm in New York. In summary, Mr Schmeltzer said the provision in question was s 12(g)(1) of the Exchange Act , and that SEC had the power to impose penalties in respect of a finding of wilful violation of the Exchange Act . However, he went on to say that based on the information which has been given to him by Mr Malone as to the circumstances in which UKL entered into the transaction with METCO in September 2006, it was unlikely that there would be a finding of a wilful or intentional violation of the Exchange Act by UKL. The information given by Mr Malone to Mr Schmeltzer was that UKL had acted on legal advice that all regulatory requirements had been complied with in relation to the METCO transaction. Mr Schmeltzer also said that whilst, in the case of a wilful violation of the Exchange Act by a corporation, it was possible for a penalty to be imposed up to the limit set out in s 32 of the Exchange Act ($US25 million), he believed that even if any penalty was imposed, that it would not be significant "in the context of the Scheme and the combined balance sheets of Monaro and [UKL]". He based this view on the fact that it is unlikely that the SEC would take a view that the 2006 transaction with METCO had impacted on investors in the United States. Thirdly, Mr Schmeltzer referred to an extract from an article in a journal, "International Lawyer" written in 1993 to the effect that SEC would be unlikely to initiate formal proceedings against a foreign issuer for an unknowing violation of the relevant section of the Exchange Act . In addition, UKL also relied upon an affidavit of Ms Kellie Elizabeth Thornley deposing that Mr Schmeltzer's affidavit of 17 June 2008 had been served on ASIC. ASIC has written a letter dated 16 June 2008 under s 411(17)(b) of the Act stating that that they did not intend to appear to oppose the Scheme. ASIC did not appear today. However, the evidence which has been adduced by UKL today does not satisfy me that this is a matter of such trivial consequence for the implementation of the Scheme that I should approve the Scheme without the matter first being disclosed to the members of UKL. It seems to me that there are at least three areas where the fact that the SEC holds that view it has expressed, may affect a member's assessment of the risk of the Scheme being implemented in the manner as described in the Scheme booklet. The first area is in relation to the listing of the American Depositary Receipts (the ADRs) referred to in the Scheme Booklet. The significance of the listing of the ADRs is demonstrated by the fact that Mr Gilmour of RSM Bird Cameron has mentioned his expert report that one of the key advantages of the Scheme is that Monaro is planning an ADR listing in the United States in respect of shares in the merged entity. This ADR, if the listing is granted, will provide important support towards raising the estimated US$20-$25 million in additional funding that is required to advance the Apex/Lowboy project... . The Apex-Lowboy project comprises the tenements formerly owned by METCO which were transferred to UKL in September 2006 as part of the transaction to which I have previously referred. The requisite regulatory filings for such listing are expected to be made to the Securities and Exchange Commission (Washington, United States) and the necessary listing application will be delivered to the American Stock Exchange in the second quarter of 2008. If and when this ADR listing is completed (which cannot be guaranteed), some of the MRO Shares will be listed for trading on the American Stock Exchange in the form of ADR's. At the time of the proposed listing it is expected that, each ten (10) MRO Shares will constitute (or be the equivalent of) one (1) ADR and the depositary bank for the ADR's will be JP Morgan Chase. There will be no new MRO Shares issued (and therefore no funds raised) by Monaro in connection with the initial ADR listing. Investors wishing to receive ADR's will need to deposit the appropriate number of MRO Shares with the depository bank's custodian in Australia prior to receiving delivery of certified ADR's from the depositary bank, subject to the terms and conditions, including without limitation, payment of certain fees, costs and expenses set forth in the applicable deposit agreement among MRO, JP Morgan Chase and the holders of the ADR's thereunder. The OTC Bulletin Board is not a public stock exchange under US Securities laws but is a privately run quotations service which tends to be accessed primarily by brokers/institutions. Quotation on the OTC Bulletin Board will therefore provide limited exposure for the ADRs. As a second stage MRO proposes, as mentioned above, to make in the second quarter of 2008 further regulatory filings with the Securities and Exchange Commission and an application to the American Stock Exchange to have the ADRs listed for trading on the American Stock Exchange. The American Stock Exchange is a public stock exchange under US securities laws. In those circumstances, it seems to me that the SEC's view that UKL has in the past not complied with securities legislation, may affect its attitude to the Monaro's application for a listing of the ADRs and may increases the risk of the listing of the ADRs not proceeding. As the possible listing of ADR's was mentioned as a key advantage of the Scheme, members should, in view, be advised of this information. The second area where the new information may possibly impact on risk assessment, is in relation to the litigation in New Mexico by an aggrieved former minority shareholder in METCO. According to the description of the litigation in the Scheme booklet, the relief sought includes the rescission of the September 2006 METCO transaction and one of the grounds relied on is the failure to comply with regulatory requirements. The third area is the risk of a penalty being imposed on UKL with the attendant possible diminution in of the assets of UKL and so, of the merged entity. Members may have a view as to the risk posed by those three matters to the implementation of the Scheme which in turn may influence their decision as to whether to continue to support the Scheme. I am, therefore, of the view that for the disclosure requirement to be satisfied, members should be advised of the new information. In those circumstances, I will adjourn this application to 24 July 2008 and will require that UKL write to each of the members, advising them of the new information. In the letter to members, the directors of UKL should make disclosure of material facts relating to the risk that the SEC's view may pose to the implementation and operation of the Scheme. I would expect that the information disclosed would include, but would not be confined to, the views expressed by Mr Schmeltzer. However, I will leave it to the directors to make an assessment of what needs to be disclosed in order to fulfil their duty of disclosure to the members. In addition, the members should be advised that the Court has required that they be apprised of the new information, and that they can obtain further information from UKL if they so wish. Further, the letter should state that each member is at liberty to appear at the Court hearing on 24 July 2008 to oppose the making of the final orders approving the Scheme. I certify that the preceding twenty-seven (27) numbered paragraphs is a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis . | scheme of management new information disclosed at court hearing for final approval whether new information should be disclosed to members corporations |
A delegate (the "delegate") of the Native Title Registrar (the "NT registrar") declined to register an application for a native title determination filed in this Court on 21 April 2006. The applicant applied pursuant to s 190D(2) for review of that decision. I concluded that the application did not satisfy the requirements of s 190B(5) , (6) and (7) of the Native Title Act 1993 (Cth) (the "Act"). The Full Court set aside my decision and remitted the matter for further consideration. It did not consider the correctness of my conclusions. Their Honours rather suggested (at [93]) that in my earlier reasons I may have approached the matter on the basis that the adequacy of the factual material should be evaluated as if it were evidence furnished in support of a claim. The Full Court also considered (at [96]) that I had not given appropriate weight to a report by Mr Hagen, an anthropologist. Although I have indicated that these reasons should be read in the light of my own earlier reasons and those of the Full Court, I appreciate the need to approach the matter with an open mind, untrammelled by my previous views. Nonetheless I believe that it is possible to do so and also avoid the considerable time which would necessarily be involved in writing "free-standing" reasons. The case primarily addresses the extent to which the application meets the criteria prescribed in subss 190B(5), (6) and (7) of the Act. The Full Court held that the requirements of s 190B were to be understood by reference to the nature of the information required by s 62 to be included in an application. The application must contain the details specified in s 62(2) and may contain details of the matters referred to in s 62(1)(c). There is an obvious link between the requirement that the evidence of the applicant include a statement that the applicant believes that all the statements in the application are true and the requirement that the application contains the details specified in s 62(2) together with the identification of the details in that subsection. Those details are in aid of the description, with some particularity, required by s 62(2)(d) of the asserted native title rights and interests. The fact that the detail specified by s 62(2)(e) is described as "a general description of the factual basis" is an important indicator of the nature and quality of the information required by s 62. In other words, it is only necessary for an applicant to give a general description of the factual basis of the claim and to provide evidence in the affidavit that the applicant believes the statements in that general description are true. Of course the general description must be in sufficient detail to enable a genuine assessment of the application by the registrar under s 190A and related sections, and be something more than assertions at a high level of generality. But what the applicant is not required to do is to provide anything more than a general description of the factual basis on which the application is based. In particular, the applicant is not required to provide evidence of the type which, if furnished in subsequent proceedings, would be required to prove all matters needed to make out the claim. The applicant is not required to provide evidence that proves directly or by inference the facts necessary to establish the claim. Similarly, the construction of ss 190A , 190B and 190C , which regulate the registration of claims made by application, may involve consideration of the purpose of registration. Registration is provided for in ss 185 - 190 of the Act. It may, in particular, be necessary to consider the meaning of terms such as "native title rights and interests", "traditional laws", "traditional customs", "factual basis", "asserted" and "assertions". Jurisdiction is conferred upon this Court to make determinations as to the existence of native title. Section 60A regulates the making of applications to this Court for such determinations and other applications. Division 1 of Pt III sets out the process by which the jurisdiction of the Court is to be engaged for the purpose of deciding whether or not there should be a determination as to the existence of native title. . Pursuant to s 66, the NT registrar is to notify various persons of the application. He or she must give notice "containing details of the application" to identified persons and must also "notify the public in the determined way". The expression "notify the public in the determined way" is defined in s 252. In general, applications are notified by advertisement of some sort. Fairly clearly, the purpose of notification is to notify those persons identified in s 66(3), including members of the public, of the application, presumably so that such persons can decide whether or not their interests may be affected by any determination ultimately made in the proceedings, and whether they should become involved in the proceedings in order to protect such interests. It follows that one purpose served by the application is to assist such persons to decide whether or not to be joined as respondents. It does not necessarily follow that the application must contain all of the information necessary for such an informed decision, but it must provide sufficient information to enable the notified persons, including members of the public, to determine whether or not they should enquire further. Section 62(2)(d) requires that an application identify the particular rights and interests claimed, suggesting that some degree of specificity is required. It expressly forbids a general claim for unspecified native title rights and interests. Section 62(2)(e) is of particular importance in this case. It requires that the application contain a general description of the factual basis on which it is asserted that the claimed native title rights and interests exist, including, in particular, the matters identified in the three subparagraphs. The provision clearly distinguishes between the "claim" and the "factual basis" of that claim. In particular, pursuant to s 190A(6), the NT registrar must consider whether or not the claim satisfies all of the conditions prescribed in ss 190B and 190C. I note that the duty imposed by s 190A(1) is to consider "the claim made in the application" and not merely the application itself. Registration performs at least two functions. First, it provides a public record of existing applications: see ss 185-187 and s 190 of the Act. Secondly, registration of a claim confers upon the applicant a right to negotiate pursuant to Subdiv P of Div 3 of Pt II of the Act. It is generally considered that such a right is a significant benefit. Registration also has effects pursuant to some state and/or territory legislation, but those matters are not relevant for present purposes. The applicant in relation to a registered native title claim is also the registered native title claimant [defined in s.253], and may access a number of special statutory benefits which are not available to unregistered claimants. For example, a registered native title claimant may be a negotiation party in relation to future acts covered by the right to negotiate ...a registered claim is able to prevent section 24FA protection from applying to an area ... and certain procedural rights are available only in relation to a registered native title claim. (Original emphasis. It constrains the ability of the State government to proceed to do a valid future act until, in the case of those acts to which Subdiv P applies, it has negotiated an agreement with the applicants or secured an arbitral determination that the act may be done. It explains the deficiency in the prior legislation which was to be remedied by inclusion of the so-called "registration test" prescribed in s 190A. It was intended that only those claims which were accepted would be entered on the Register of Native Title Claims, thereby enabling the claimants to have access to the right to negotiate and other statutory benefits flowing from that status as a registered native title claimant. Essentially, the acceptance test would ensure development was not impeded by unmeritorious claims. This decision meant that all claims, regardless of their prospects of ultimate success, would initially attract the right to negotiate until such time as they underwent the acceptance test. That test could take some months to apply in any given case, so that a claim which ultimately failed the test could remain on the Register for some time before being removed. 2)] that one of the outcomes the Bill was designed to achieve was 'to put in place a registration test for claims which ensures that those negotiating with developers have a credible claim'. The Attorney-General also stressed that 'an effective registration test as the gateway to the statutory benefits which the act provides is essential' and that it was 'essential to the continuing acceptance of the right to negotiate process that only those with a credible native title claim should participate'. The available material must constitute a factual basis, in general terms, for the claim that native title rights and interests exist. We are presently concerned with s 190B and in particular subss 190B(5), (6) and (7). However subs 190B(4) is also relevant. The requirement that laws and customs be "traditional" is of considerable significance. In my earlier reasons at [26], I identified a number of propositions which emerge from the reasons of Gleeson CJ, Gummow and Hayne JJ in Members of the Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 (" Yorta Yorta "). Some of those propositions expressly address the meaning of the term "traditional" in this context. Their Honours primarily dealt with the subject under the heading "The Inextricable Link Between a Society and its Laws and Customs". As to the word "traditional", at [45]-[47] their Honours observed: ... Hitherto it has been accepted, and the contrary was not contended in this appeal, that the native title rights and interests to which the Native Title Act refers are rights and interests finding their origin in pre-sovereignty law and custom, not rights or interests which are a creature of that Act. That being so, the references in pars (a) and (b) of the definition of native title to "traditional" law or custom must be understood in the light of the considerations that have been mentioned. As the claimants submitted, "traditional" is a word apt to refer to a means of transmission of law or custom. A traditional law or custom is one which has been passed from generation to generation of a society, usually by word of mouth and common practice. But in the context of the Native Title Act , "traditional" carries with it two other elements in its meaning. First, it conveys an understanding of the age of the traditions: the origins of the content of the law or custom concerned are to be found in the normative rules of the Aboriginal and Torres Strait Islander societies that existed before the assertion of sovereignty by the British Crown. It is only those normative rules that are "traditional" laws and customs. Secondly, and no less importantly, the reference to rights or interests in land or waters being possessed under traditional laws acknowledged and traditional customs observed by the peoples concerned, requires that the normative system under which the rights and interests are possessed (the traditional laws and customs) is a system that has had a continuous existence and vitality since sovereignty. If that normative system has not existed throughout that period, the rights and interests which owed their existence to that system will have ceased to exist. And any later attempt to revive adherence to the tenets of that former system cannot and will not reconstitute the traditional laws and customs out of which rights and interests must spring if they are to fall within the definition of native title. And if the society out of which the body of laws and customs arises ceases to exist as a group which acknowledges and observes those laws and customs, those laws and customs cease to have continued existence and vitality. Their content may be known but if there is no society which acknowledges and observes them, it ceases to be useful, even meaningful, to speak of them as a body of laws and customs acknowledged and observed, or productive of existing rights or interests, whether in relation to land or waters or otherwise. The rights and interests must be definable with sufficient certainty to enable them to be enforced by the common law ... . They must, for the same reason, be held in relation to defined land. For their enjoyment a physical presence is essential. This is so, because, if physical presence were not a necessary component of the right or interest, then the right or interest could be enjoyed elsewhere: physical occupation, presence or possession of the land would not then be essential for the observance, participation in, or enjoyment of the right in question. The Act is concerned with title, that is title to land, and a bundle of rights and interests attaching to, or arising out of that title. The definition of the rights must be found in the traditional laws or customs. Tradition requires a high degree of continuity. It also involves intergenerational transmission, acknowledgement and observance. The traditional laws and customs to which the rights and interests owe their existence must be ones which were in existence on first non-indigenous settlement, in 1788, because it was at that time that the sovereign radical title was assumed, and upon which the native title became a burden. And it is those traditional laws and customs which must have continued (albeit that they may have evolved, a matter which I will discuss later) in order to give real content to the rights and interests currently asserted. It follows that in order for native title to survive (absent extinguishment), and be the subject of a determination under the Act, there must have been, in 1788, a recognisable group exercising identifiable relevant traditional laws and customs, themselves reasonably certain, on and relating to defined land, involving physical presence on it, and continuity of these, until, and at the time of the determination. Section 190B(5) requires that the NT registrar be satisfied that such factual basis is sufficient to do so. Rather, it is permissible to look for (factual assertions of) laws and customs, for example like those apparent from the long list which were set out by the Court at first instance in paragraph [70] to [77] of the Reasons for Judgment, and consider whether they can be laws and customs having a normative content which can definite a relevant "society". Where the evidence is that such laws and customs have been handed down from generation to generation, inferences can be drawn to the effect that they form part of a normative system at the time of sovereignty. Such an approach was referred to in [ Moses v State of Western Australia (2007) 160 FCR 148) (" Moses ")] under the heading "Reasoning Backwards". Further, there is no requirement that different families maintain contact with each other in order to be subject of a common body of laws and customs. Annexure C includes references to the material concerning the laws and customs which have been handed down from generation to generation, and which can be inferred to be "traditional" in the Yorta Yorta sense. However first European contact in the claim area seems to have occurred at some time between 1850 and 1860. I understand the applicant to invite an inference that circumstances as at the time of first European contact were probably the same as the circumstances in 1788. I proceed on that basis. I understand the applicant to submit that one may look at existing laws and customs, presumably those recognized and observed by the claim group, and then draw an inference as to the existence of a pre-sovereignty "normative system". I am not sure how one would decide whether laws and customs have a "normative content which can define a relevant 'society' ". I do not understand the Act to address the appropriateness or adequacy of any system of laws and customs for that purpose. The relevant enquiry is as to laws and customs acknowledged and observed by an existing claim group, laws and customs acknowledged and observed by a pre-sovereignty society and the connection between those societies and between the laws and customs, attributable to them. As is pointed out in Yorta Yorta , a society and its laws and customs are inextricably linked. The applicant then submits that where the evidence is that such laws and customs have been handed down from generation to generation, it may be inferred that they formed part of a normative system at the time of sovereignty. Thus, it is submitted that the application need only contain a general description of the laws and customs presently acknowledged and observed and of the process by which they have been handed down. However the adequacy of such an approach will depend upon the circumstances of the case in question. Of course, in describing the factual basis of a claim for rights and interests in land and waters, the applicant must take account of the specificity required by s 62(2)(d). The general description required by s 62(2)(e) must be, one would expect, commensurate with the detail required by the former provision. In assessing the adequacy of a general description of the factual basis of the claim, one must be careful not to treat, as a description of that factual basis, a statement which is really only an alternative way of expressing the claim or some part thereof. In my view it would not be sufficient for an applicant to assert that the claim group's relevant laws and customs are traditional because they are derived from the laws and customs of a pre-sovereignty society, from which the claim group also claims to be descended, without any factual details concerning the pre-sovereignty society and its laws and customs relating to land and waters. Such an assertion would merely restate the claim. There must be at least an outline of the facts of the case. In some cases it will be possible to identify a group's continuous post-sovereignty history in such detail that one can infer that it must have existed at sovereignty simply because it clearly existed shortly thereafter and has continued since. It would similarly be possible, in those circumstances, to infer that the assertion of sovereignty had not significantly affected its laws and customs, so that the laws and customs shortly after sovereignty were probably much the same as the pre-sovereignty laws and customs. That is merely another example of the process of reasoning which leads to the proposition that the circumstances prevailing as at first European contact were probably the same as those prevailing in 1788. There are cases in which the continuous history of the claim group since the assertion of British sovereignty is well-known, particularly in the Torres Strait where the date of sovereignty is more recent than 1788. Where an applicant seeks to rely on such a continuous history, a general description of the factual basis of the claim will necessarily involve a general description of that history. In many cases the history of a claim group will not be sufficiently well known to permit such an approach. However other matters may be known which assist in demonstrating the traditional nature of the claim group's laws and customs. Sufficient may be known of circumstances before, or shortly after, first European contact (assuming that event occurred after the date of assertion of British sovereignty) to permit an inference that the claim group is a modern manifestation of a pre-sovereignty society, and that its laws and customs have been derived from that earlier society. Such an inference may be available notwithstanding the absence of any recorded history of the society and the way in which it has continued since the earlier "snapshot" of the society. Such a case will involve, at some point, a comparison of the earlier and later societies and their laws and customs. A case of that kind may have to address the fact that there is little or no evidence of continuity of the society since first European contact or of continuous acknowledgement and observance of its laws and customs, a problem recognized in Yorta Yorta . From a forensic point of view the difference between these two approaches is that in the former, the necessary link between the pre-European contact society and its laws and customs, and the claim group and its laws and customs, may be inferred primarily from continuity, without necessarily resorting to a close examination of the societies and their laws and customs. The evidence of actual events will demonstrate continuity. Even if the history commences shortly after first European contact, it may be reasonable to assume that such a stable society was unlikely to have arisen in the period between contact and the commencement of historical records. In the latter approach, the applicant will seek to demonstrate continuity of the pre-sovereignty society, and of acknowledgement and observance of its laws and customs, by examination of those societies and their laws and customs at two or more points of time, inviting an inference as to continuity. Of course there is no clear distinction between these two approaches. Many, perhaps most, cases will involve elements of both. However it must be kept in mind that it is necessary to demonstrate both a pre-sovereignty society having laws and customs, from which the laws and customs of the claim group are derived, and continuity of the pre-sovereignty society, including its laws and customs. Clear evidence of the existence of such a society and acknowledgement and observance of its laws and customs shortly after first European contact, and continuity thereafter, may satisfy both requirements, the first, by available inference and the second, directly. Clear evidence of a pre-sovereignty society and its laws and customs, of genealogical links between that society and the claim group, and an apparent similarity of laws and customs may justify an inference of continuity. However when the evidence as to both aspects is weak, the combined effect may, in some respects, be further to undermine, rather than to strengthen, the claim. Of course that is not the problem which I am presently addressing. I am presently addressing the adequacy, for the purpose of ss 190A and 190B, of the factual basis advanced as underlying the applicant's claim. However, to the extent that the applicant relies, in that process, upon inferences, the above remarks may have some relevance. The applicant starts with the claim group and its existing laws and customs, and effectively asserts that such laws and customs are traditional because, as it claims, they have been handed down from generation to generation. In fact there is very little in the affidavits which addresses the way in which the claim group's laws and customs relating to rights and interests in land and waters have been derived. The closest that Mr Santo comes to the subject is in para 2.7 of his affidavit of 11 September 2006, relating to the boundaries of Gudjala country, and in para 2.14, relating to place names. Paragraph 4.10 dealing with "recorders" may also be relevant to the method of transmission of knowledge. Yorta Yorta establishes that a society and its laws and customs are inextricably linked. It is impossible to identify a system of laws and customs as such without identifying the society which recognizes and adheres to those laws and customs. It would mean nothing to say that A had a legal interest in Blackacre unless one identified, or at least knew, the society which recognized that right. Indeed it appears (at [28]) that in Yorta Yorta the appellants took an approach similar to that urged by the applicant. Further, for the same reason, it would be wrong to confine the inquiry for connection between claimants and the land or waters concerned to an inquiry about the connection said to be demonstrated by the laws and customs which are shown now to be acknowledged and observed by the peoples concerned. Rather, it will be necessary to inquire about the relationship between the laws and customs now acknowledged and observed, and those that were acknowledged and observed before sovereignty, and to do so by considering whether the laws and customs can be said to be the laws and customs of the society whose laws and customs are properly described as traditional laws and customs. (Original emphasis. The applicant seeks support for its submission in the decision in Moses . However it misunderstands that decision. At [322]-[330] the Court considered a particular argument described as the "reasoning backwards argument". It seems that on appeal the State had asserted that the primary Judge had erred by adopting a process which involved "determining that the [claim group] presently exercises native title rights and interests in relation to land, and ... then assuming that traditional laws or customs had been acknowledged and observed since the acquisition of European sovereignty. " See [323]. The impugned approach seems very similar to the applicant's submission. The Court rejected this argument, but not upon the basis that such an approach was correct. Rather, the Court held that the primary Judge had recognized the need to determine whether communities occupying the relevant area at sovereignty had maintained their connection with the land and waters by observing traditional laws and acknowledging traditional customs. The applicant also refers to the decision of the Full Court in De Rose v State of South Australia (2003) 133 FCR 325 (" De Rose ") at [273]-[283]. It submits that the decision establishes that there is no requirement that different families within a group maintain contact with each other in order to be subject to a common body of laws and customs. To the extent that the applicant relies upon the decision in De Rose for that proposition, it has misunderstood that decision. It concerned a claim by persons described as "Nguraritja" to native title pursuant to the traditional laws and customs of a larger group known as the "Western Desert Bloc". The relevant laws and customs were not those of the Nguraritja but those of the Western Desert Bloc. It is clear that the Court considered that there was such a society which had enjoyed continuous existence and vitality since sovereignty and had traditional laws and customs. The case is of no assistance for present purposes. In any event, I accepted in my earlier reasons that it is not necessary that the apical ancestors be shown to have been members of the one pre-sovereignty society. However, if descent from three apical ancestors is the basis for membership of the claim group, then there must be some connection between them and the relevant pre-sovereignty society from which the claim group asserts that it has derived its native title rights and interests. In my earlier reasons I observed that the applicant had criticized the delegate for seeking to find a society of which the three apical ancestors were the members, asserting that it was not essential to the applicant's case that the existence of such a society be established. That criticism may not have accurately identified the delegate's reasoning. As I understand his reasoning it was that evidence that three women, who may have met or known each other, could not, without more, constitute a society, particularly given the absence of any identified men. I suspect that just as the applicant misunderstood the delegate's reasoning, the delegate may have misunderstood the applicant's claim. The latter misunderstanding may have been the result of the extreme lack of clarity with which it is expressed and the fact that, in order to identify it, it is necessary to trawl through various parts of the application and the affidavits. My understanding of the applicant's claim as to the traditional nature of the claim group's laws and customs is primarily that they are presently acknowledged and observed, coupled with assertions that they have been passed down from generation to generation by the claim group, and that the claim area was, prior to first European contact, that of the Gudjala people, a description which the claim group also applies to itself. Some evidence from Mr Hagen generally supports these assertions. He also says something about the named apical ancestors and a little about Aboriginal laws and customs. I will return to his report at a later stage. There is a substantial amount of evidence in the affidavits and the report concerning current laws and customs which, it is asserted, are "traditional", but little of it relates to rights and interests in land and waters. In para 40 of its submissions, the applicant refers to annexures C and E to the submissions as demonstrating the factual basis of the applicant's case. Annexure C purports to address different aspects of subs 190B(5). This is consistent with the submission in para 38 that the applicant need only demonstrate a "normative system at the time of sovereignty" without reference to the society to which it relates. I will summarize most of the evidence in a very general way. It is summarized in detail in my earlier reasons. I will, however, deal with Mr Hagen's evidence in detail. The broader system is a comprehensive body of law covering cultural values, norms of social behaviour and principles that comprise the land law component of that body of law that govern the land interests of the claim group. The acquisition of land interests is by descent from ancestors and derived from fundamental rights of possession and ownership of land. The reference in Sch F to "a broader system of Aboriginal culture" is not developed or particularized, but there is a possible reference to it in Mr Hagen's report. The relevant parts of that report are said to be pages 3-6 and 15. The numbering system used in the application appears to be a little different from that used by the applicant in its submissions. Pages 3-6 are probably those numbered 33-36. Those pages include information concerning the apical ancestors and a general reference to authorities which support "Gudjala interests in the current claim area". Page 15 (p 45) contains Mr Hagen's conclusions. The reference to Mr Santo's affidavit of 24 January 2006 is to paras 1-8. They deal with the history of his family. The reference to Ms McLean's affidavit is to paras 1-6 dealing with her family. The reference to Mr Santo's affidavit of 11 September 2006 is to paras 1.1-1.15 dealing with himself and his family. I have already dealt with Sch F. Schedule G, at paras (a)-(i), identifies certain aspects of land use which are not relevant for my present purpose which is to identify the factual basis for alleging that the claim group's laws and customs are traditional. The reference to Mr Hagen's report is to pp 7-13, 14 and 15 (probably pp 37-43, 44 and 45). This includes the parts headed "Traditional Laws and Customs of the Predecessors", "Laws and Customs Underpinning Interests in Land Today", "Do the native title claim group currently carry on any activities in relation to the land or waters? If so, what are these activities? " and "Conclusions". The reference to Mr Santo's affidavit of 24 January 2006 is to paras 10-20 which relate primarily to Mr Santo's own experiences and activities. Ms McLean, in the identified paras (7-9) of her affidavit, also deals with her position and experience within the Gudjala community. Paragraphs 2.4-2.7, 2.13, 2.14, 2.16, 3.1-3.8 and 4.1-4.13 in Mr Santo's affidavit of 11 September 2006 deal with the present relationship between the Gudjala claim group and adjoining groups and Mr Santo's own experiences and activities, including his experience of some matters which might be described as current laws and customs concerning land and its use. Mr Santo also makes assertions about his descent from Ms Thomson. He claims that she was a "full-blood Gurrdjal Aboriginal". The relevant passages in Schs F and G appear to concern the identification of current activities on the claim area. The reference to Mr Hagen's report is to pp 8-15 (38-45) under the headings "Laws and Customs Underpinning Interests in Land Today", "Do the native title claim group currently carry on any activities in relation to the land and waters? If so, what are those activities? " and "Conclusions". The reference to Mr Santo's affidavit of 24 January 2006 is to paras 9-21. Again, they deal with Mr Santo's own activities. The reference to Ms McLean's affidavit is to paras 7 and 9 to which I have previously referred. They relate to her own experience. The reference to Mr Santo's affidavit of 11 September 2006 is to paras 2.1-6.12. They deal in some detail with current laws and customs and Mr Santo's activities. They include his assertion of descent from Ms Thomson and that she was a "full blood Gurrdjal Aboriginal" and information concerning existing kinship arrangements and ritual. In para 40 of the submissions there is also a reference to Annexure E to the submissions. That annexure identifiers references in the material to particular rules, laws and customs. They are all based upon the material to which I have already referred although, in some cases, the annexure refers to the identification of that material in my earlier reasons. As far as I can see, save for Mr Hagen's report, none of the material offers a factual basis for the implicitly alleged existence of a pre-sovereignty society or its laws and customs, save for some implied or actual assertions that such laws and customs were the same as present laws and customs. As I have said, the applicant's position seems to be that it need not demonstrate such a society, other than by pointing to the claim group's own laws and customs, asserting that they have been handed down from generation to generation, and inviting the inference that they were the laws and customs of a pre-sovereignty society called Gudjala. For reasons which I have given, I do not accept that submission. The applicant asserts, perhaps correctly, that those occupying the claim area at or about the time of sovereignty described themselves as Gudjala people. The claim group now identifies itself using the same name. Laws and customs are also described as being "Gudjala". In so far as it refers to the claim group, the word "Gudjala" must be taken to mean members of the claim group, that is, descendants of the apical ancestors. However no attempt has been made to identify the meaning of the word when applied to those persons who occupied the claim area at the time of first European contact. Nor, apart from Mr Hagen's affidavit, has anything been said about the laws and customs of that pre-sovereignty society, other than that they must have been the same as existing laws and customs. In my view, to assert that current laws and customs are "traditional" is not to provide a factual basis for that assertion, even in a general way. Similarly, to assert that they have been handed down from generation to generation is to do no more than re-state the claim that they are traditional. This problem is connected with the way in which the claim group is described. I have adopted a construction of that description which enables it to meet the requirements of s 190B(3). However, as I have previously observed, that merely defers the problems inherent in the description to the time at which s 190B(5) is considered. Because the applicant does not demonstrate any connection between the apical ancestors and a pre-existing society and its laws and customs relating to land and waters, there is no explanation as to how current laws and customs of the claim group can be traditional. With the exception of the one assertion by Mr Santo as to Ms Thomson being Gudjala, there is no assertion that the apical ancestors were Gudjala people, although such an assertion may be implicit in the material. More significantly, there is no explanation as to what was meant by that description in the pre-sovereignty society. Another aspect deserves comment at this stage. There is a degree of emphasis, at least by implication, upon the dates of birth of the apical ancestors. In fact, it is not clear that any of them was born prior to first European contact. That would not necessarily matter if it were alleged that they were born into a society which had existed prior to such contact, or that they subsequently became members of such a society in accordance with its laws and customs. However that subject is simply not addressed. As a result the presence of these three women in the claim area at, or at some time after first European contact says nothing about any society existing prior to European contact. This is particularly so given that Ms Hann and Ms Thomson are associated with stations. Similarly, the assertion that those who occupied the area prior to European contact were described as Gudjala says nothing about that society, or about its laws and customs. To infer that such statement is part of the factual basis of the applicant's claim would be to confuse the claim with its factual basis. In discussing that aspect of the report, I will also refer to other evidence concerning the apical ancestors. Ms Hann was probably the eldest of the apical ancestors. She was the great-grandmother of Ms McLean to whom I have referred. Ms McLean says that Ms Hann was a young girl when the Maryvale station was set up, and that she worked there. Ms McLean also asserts that Ms Hann "tried to escape to join her people in the bush but was found and brought back". It seems that Ms Hann's daughter, Sadie, Sadie's daughter, Stella and Stella's daughter, Ms McLean were all born on Maryvale Station. However none of this suggests that Maryvale station was the location of any part of a pre-sovereignty society of which Ms Hann was a member. That Ms Hann sought to escape to join her people suggests that at that time, it was not such a location. Mr Hagen says that Ms Hann was identified with the Maryvale/Bluff Downs/Sandy Creek area, to the north of the Great Basalt Walls, and that her birth date was possibly around 1855 to 1860. Bluff Downs is also a station. Mr Hagen asserts that the descendants of Ms Hann are the "descendants of Gudjala people with traditional interests including the Charters Towers area". However neither Mr Hagen nor Ms McLean directly asserts that Ms Hann was, herself, recognized as a Gudjala woman, that she so identified herself, or that she was a member of a Gudjala society. Ms McLean does not place Ms Hann at Bluff Downs, nor does she offer any opinion as to where Ms Hann was born. It seems that she was not born at Maryvale as that station was set up when she was a young girl. It is possible that there was a society to which Ms Hann belonged, located in the region of the Maryvale station prior to its establishment, and that such community was displaced by that establishment. However no such factual basis for the claim has been asserted. Mr Santo claims to be descended from Maggie Thomson, and that she was born in the mid-1800s at Lolworth Range within the claim area. Ms Thomson is the second oldest of the apical ancestors. Ms Thomson went to the Bluff Downs station after it was established. There is no suggestion of any indigenous society in that location of which Ms Thomson was, or became, a member. It is said that her tribe came from the Lolworth Range area and were subjected to a massacre in the 1860s. Ms Thomson escaped into the Basalt country and then went to Bluff Downs where she was taken in by the station-owner's wife, Mrs Hann. This occurred during the 1860s. All of Ms Thomson's children were born at Bluff Downs. Mr Santo's grandfather was one of those children. He was born in 1882. Mr Hagen understands that Ms Thomson was born around 1860 and is identified with Bluff Downs and the nearby Great Basalt Walls in the heart of Gudjala country. Mr Santo claims in para 4.1 of his later affidavit that Ms Thomson was a full-blood "Gurrdjal Aboriginal". However he does not claim that she was identified as such during her lifetime, or identified herself as such. He offers no factual basis for his claim. Nor does he explain what it means to say that Ms Thomson was "Gudjala". A family which Mr Hagen describes as the "Huen-Kerr" family is descended from Alice Anning who was born in the 1860s or 1870s and is also said to be associated with Bluff Downs. She is the third oldest of the apical ancestors. That family is also said to be descended from Cissy McGregor who was born at St Paul's pastoral station in about 1880. St Paul's is east/south-east of Charters Towers. It is outside the combined claim area (this claim area and that of the core country claim) in an area claimed by the Birri people. It may be that it is also claimed as traditional Gudjala country, but no such assertion is made in the material. The delegate accepted that Ms Hann, Ms Thomson and Ms Anning were associated with the claim area at the time at which the first European settlers arrived. That may have been an unduly favourable assessment from the applicant's point of view. Their birth dates would suggest that Ms Hann might have been so associated, and that it is barely possible that Ms Thomson was so associated. No affidavit by a person claiming to be a descendant of either Ms Anning or Ms McGregor is before me for present purposes. There is no claim that Ms Anning or Ms McGregor identified herself as Gudjala or was identified as such by others. Again, there is no claim that they were members of any identifiable pre-sovereignty society. Ms McGregor's birth date is well after first European contact. Ms Hann, Ms Thomson and Ms Anning may all have been associated with Bluff Downs station. However one must look at the circumstances of such association. Ms Thomson took refuge there from violence which was occurring elsewhere and subsequently worked there. The nature of Ms Hann's association with Bluff Downs, and that of Ms Anning, are not stated. If Aboriginal people seeking refuge and/or work assembled on a cattle station, presumably established and managed by Europeans, the group of itself, and without more, could not constitute a pre-sovereignty society. It would be a society formed after first European contact. Ms McLean associates Ms Hann with Maryvale station, not Bluff Downs. She went there to work, tried to leave to join her people, but was returned to Maryvale. As I have said, none of this suggests membership of an identifiable pre-sovereignty society at Maryvale. In so analysing the evidence, I do not mean to impose a particular burden upon the applicant. I am rather analysing various, largely disconnected, and very general, assertions with a view to identifying available inferences as to the existence of a pre-sovereignty society relevant to the present claim group. Many of the assertions may, in isolation, suggest that a particular inference is available, but such inference may not be available when the whole of the applicant's assertions are taken into account. Mr Hagen says that the Santo-Boyd family have maintained a presence in the claim area at all times since non-indigenous occupation, and that there is "strong support for the view that they are descendants of Gudjala people with traditional interests". The word "traditional" may or may not be used in the same sense as it is used in the Act. I am willing to accept that the present Santo-Boyd family identifies itself as Gudjala, and that they claim to be descended from people who so identified themselves. I also accept that they are descended from Maggie Thomson. However there is no claim that Ms Thomson identified herself as a Gudjala woman, or that others so identified her. In the absence of such a claim, one must look for some other link between her and her descendants on the one hand, and the relevant pre-sovereignty society on the other, but none is claimed, except for Mr Santo's assertion that she was Gudjala. As to the Reid-Masso family, Mr Hagen says that they trace their ancestry to Topsy Hann, and that the evidence locates their known Gudjala ancestors to the west/north-west of Charters Towers. It is not clear to me that this means anything more than that they claim descent from Ms Hann who was associated with that area. I accept as much. The question again is how that relates them to a pre-sovereignty society. Similar comments apply to the Huen-Kerr family. Mr Hagen says that the available material supports the identification of the current claimants and applicants as members of the Gudjala group on the basis of their descent from Alice Huen, Cissy McGregor, Maggie Thomson and Topsy Hann. However the inclusion of those names in the one sentence does not constitute a factual basis supporting the claim that native title rights and interests have been derived under traditional laws and customs. Mr Hagen says that contemporary members of the group continue to maintain an association with the Gudjala area, as did their ancestral predecessors. That also says nothing about the traditional nature of relevant laws and customs. I have observed that Mr Hagen's report bears upon the identity of a pre-sovereignty society and its laws and customs. Mr Hagen says that documentary support for Gudjala interests in the claim area can be found in the work of Curr, Tindale, Sutton, Tsunoda and other authors, and that the evidence of senior Gudjala men and those of other neighbouring groups in the 19th and early 20th centuries clearly locate the Gudjala in the Charters Towers area. Mr Hagen concludes from this that it can reasonably be concluded that the land included in the present claim traditionally belongs to the Gudjala people. However Charters Towers is in the extreme south-eastern corner of the claim area. It is difficult to see how association with Charters Towers can, by itself, say much about the claim area as a whole. I accept for present purposes that people called Gudjala were located in the claim area at the time of first European contact. That says nothing about the claim group. Mr Hagen then considers the traditional laws and customs "of the predecessors". He refers to a statement by Edward Palmer, writing in 1883, about indigenous connection to land in north-west Queensland. The combined claim area can, in no sense, be described as being in north-west Queensland. Its eastern extremity is within about 100 km of the east coast, and its north-eastern extremity is about 60 km south-east of Townsville. The total width of the claim area is about 200 km from east to west. From north to south it is a little more than 100 km at its widest point. I raised this matter with counsel in argument. Our exchange appears at TS 18 l 38-TS 19 l 41. I see no basis for inferring that Mr Hagen's citation of Palmer's work, described by him as concerning indigenous connections to the land in north-west Queensland, can be applied to the Gudjala claim area. If there is some rational basis for so doing, it should have been included in the report. It is possible that the reference to Palmer's work is in connection with the "broader system of Aboriginal culture" referred to is Sch F to the application. No attempt has been made to explain the factual basis of that assertion. As I have observed, Mr Hagen has not sought to link the Gudjala position to that in north-west Queensland. Indeed, Mr Hagen's view that Palmer's work was geographically specific suggests that there is no basis for assuming its universal application. Mr Hagen also refers to an article by WE Roth. He does not say that the article concerns the Gudjala people. Even assuming that it does so, it says nothing about pre-sovereignty laws and customs concerning rights and interests in land and waters. It is therefore of little or no relevance for present purposes. None of this seems to add anything to the identification of a relevant pre-sovereignty society or its laws and customs relating to rights and interests in land and waters. Mr Hagen then considers the "law and customs underpinning interests in land today". I have no difficulty in accepting the various assertions which he makes in that context. He also addresses the extent to which the claim group currently carries on activities in relation to the claim area. Again, I have no difficulty in accepting his assertions. Mr Hagen reaches three conclusions. The areas concerned are traditionally associated with the Gudjala peoples. The current claimants are members of this group by descent. Members of the group continue to reside within their traditional lands to pursue other land-based activity upon them. It is probable that the words were not used in that sense. If they are to be so understood, then the fact remains that there is no stated factual basis for inferring the existence of a pre-sovereignty society with laws and customs from which the current claim group and its laws and customs are derived. In any event Mr Hagen does not identify any laws and customs concerning rights and interests in land and waters of an identified pre-sovereignty society which can be linked to the claim group through the apical ancestors. Discussion of such laws and customs in the early literature pertaining to the area and my own observations of their activity today, indicates a high degree of congruence between underlying legal principles followed then and now. However I again reject use of the word "traditional" simply because no pre-sovereignty society has been identified for the purpose of identifying its relevant laws and customs so as to demonstrate that the claim groups' laws and customs are traditional in the sense identified in Yorta Yorta . As to the second sentence, the reference to "early literature" is quite unclear. If Mr Hagen is referring to Palmer's writings, then it is curious that he has at no time explained why they should be applied to the Gudjala people. As to Roth's article, it does not deal with laws and customs concerning land and waters. If, in fact, Mr Hagen is referring to other "early literature", then it is curious that he has not identified it. The reference in the report to Curr, Tindall, Sutton and Tsunoda is in connection with location of the claim area, not laws and customs. Thus there is no factual basis for concluding that there were pre-sovereignty laws and customs with which to compare the claim group's laws and customs. I accept that Mr Hagen's professional opinions may, in certain circumstances, be, themselves, facts and therefore may be part of the factual basis advanced for the purposes of s 190B. I accept, also, that in some circumstances, it may be appropriate for certain expert opinions to be expressed without stating the factual basis which underlies them. However, in the present case, no attempt has been made to identify a pre-sovereignty society, the laws and customs which such a society may have acknowledged and observed in connection with rights and interests in land and waters, any connection between the apical ancestors and such society, or any connection between pre-sovereignty and current laws and customs of the relevant kind. The question is whether the applicant has stated the factual basis of its claim to the extent required by the Act. If it offers no explanation as to how the claim group's laws and customs can be sourced to those of a society existing prior to first European contact, then that obligation has not been discharged. In the present context, I cannot see that Mr Hagen, any more than the applicant or its deponents, can simply re-state the claim so that such re-statement becomes the factual basis of the claim. Paragraph 190B(5)(a) "that the native title claim group have, and the predecessors of those persons had, an association with the area ... . Mr Santo's grandfather and father appear also to have association with the claim area, as does Mr Santo himself. I am satisfied that there is evidence of a factual basis for the assertion that the Santo-Boyd family (as identified by Mr Hagen) had an association with the area sufficient to satisfy the requirements of para 190B(5)(a). Ms McLean demonstrates that she, her mother and her grandmother were all born on Maryvale station within the claim area and lived their lives in Charters Towers, also within the claim area. Ms McLean's great-grandmother, Ms Hann, also lived there. There is a factual basis for asserting that the Reid-Masso family have the required association with the relevant area. The Huen-Kerr family is rather more problematic. Ms Anning is said to be "also of Bluff Downs". I take this to mean that she was associated with the Bluff Downs station. It is said that members of the Huen-Kerr family continue to live in Charters Towers, play a prominent role in the affairs of the indigenous community and that "documentary and oral historical evidence indicates an unbroken chain of association with the claim area. " It is curious that no specific factual material is provided concerning this aspect. It is also curious that the applicant does not rely on affidavit material from members of this family. Descent from Ms McGregor does not seem to help as it is not asserted that she had any association with the claim area, although it is asserted that her descendants, also descended from Ms Anning, did so. However I accept Mr Hagen's assertion of an unbroken chain of association. This leads to the conclusion that the applicant satisfies para 190B(5)(a). However I do not accept that there is a factual basis for the assertion that such laws and customs are traditional. I have given my reasons. The applicant does not satisfy the requirements of para 190B(5)(b). I do not mean to exclude the possibility that the applicant may be able to remedy the deficiencies in the material to which I have pointed. However it will require a more disciplined approach to the Act than has yet been demonstrated. As to s 190B(7), much may depend upon the meaning of the term "traditional physical connection". I have not been referred to any authority on the point. It seems likely that such connection must be in exercise of a right or interest in land or waters held pursuant to traditional laws and customs. For the reasons which I have given, the requirements of that subsection are not satisfied. I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. | proceedings remitted from full court of the federal court of australia further consideration of the dismissal of an application for review of a decision of the native title registrar not to register a claim consideration of criteria for registration insufficient factual basis to satisfy subss 190b(5)(b)-(c), 190b(6) and 190b(7) of the native title act 1993 (cth) application dismissed " native title rights and interests ", " traditional customs ", " factual basis ", " claim ", " asserted " and " assertions " native title words and phrases |
The principal supplier of the first applicant has been Fuyao Glass Industry Group Co. Ltd of China ('FYG'), a company owned by a Mr Cho Tak Wong. The case concerns three separate publications said to have been made on or about Tuesday 13 September 2005 and Thursday 15 September 2005. The first publication took the form of a facsimile directed to 'NM Customers', presumably a reference to customers of the first respondent and/or another Nielsen & Moller business. In cross-examination the third respondent identified Nielsen & Moller Autoglass Pty Limited as such a business. The facsimile comprised a cover sheet on a 'Fax' form prepared for use by 'Nielsen & Moller Auto glass Australia Pty Ltd ABN 71 107 721 595' of '8 --- 10 Durkin Place Peakhurst 2210 SYDNEY' and a two page attachment in the form of a letter from the second respondent to Mr Scott Eldridge, Regional Coordinator, Australian Tax Office dated 13 September 2005. The Australian Business Number ABN 71 107 721 595 was in fact the Australian Business Number by which the first respondent was identified. To add to the confusion the cover sheet bore the stylised mark 'NM' followed by 'Since: 1919' and the third respondent purported to sign the facsimile cover sheet as Managing Director of 'Nielsen & Moller Autoglass International & Australia Pty Ltd'. A copy of the facsimile, with an indication that it was transmitted at 2.43 pm on 13 September 2005 on the facsimile machine of 'NM AUTOGLASS INTERNA 0291530192', was Exhibit B in the proceedings (the '13 September facsimile'). The 13 September facsimile as transmitted was not identical with the document referred to in the First Schedule to the Third Further Amended Statement of Claim filed 27 October 2006 as the 'Customer Facsimile'. The copy attached to that Statement of Claim bears the heading 'FIRST SCHEDULE' which has been added by the applicants, as have paragraph numbers for identification purposes both on the facsimile cover sheet and also on the attachment thereto being in the form of a two page letter bearing date 13 September 2005 from the second respondent to Mr Scott Eldridge, Regional Coordinator, Australian Tax Office. The form of the letter in the First Schedule is not a copy of the letter in fact attached to the facsimile cover sheet as transmitted. The copy of the letter in Exhibit B contains three manuscript alterations --- the misspelling of the word 'escaped' has been corrected, the word 'the' has been changed to 'their' in one place and the word 'major' has been inserted. In addition the copy in Exhibit B bears the signature of the second respondent as its author. The respondents have admitted that the third respondent published the first page of the Customer Facsimile and that the second respondent published a document resembling the first page of the attachment. The third respondent was the author of the first page of the 13 September facsimile and the second respondent was the author of the attachment, which he wrote at the request of the third respondent. There was no evidence to prove that the attachment had been written for any purpose other than its transmission to the addressee named upon it. Often the person sued for publishing is not the writer. The injury done by a libel arises from the effect produced upon its readers. These considerations naturally led to a rigorous application to libels of the rule that the meaning of a document should be determined independently of the actual intention which the writer entertained. The acceptance of a criterion of liability which adopted, not the intention actuating the writer, but the understanding produced in the reader, was aided by the rule, which can be traced back to an early time, that for the interpretation of a libel evidence could be received of particular circumstances affecting its meaning, and of the actual interpretation which persons conversant with those circumstances affixed to it. As at 13 September 2005 no companies had been registered bearing the names 'Nielsen & Moller Auto glass Australia Pty Ltd' or 'Nielsen & Moller Autoglass International & Australia Pty Ltd'. However, Nielsen & Moller Autoglass Pty Limited ACN 064 101 873, which was registered on 28 March 1994, was in existence on that date. Prior to October 2001, it apparently had a different name. As at 14 August 2006 Nielsen & Moller Autoglass Pty Limited had an issued capital of two shares, both of which were owned by the third respondent, who was also its sole director and secretary. Its address was shown as the third respondent's then home address. On 18 February 2004 the third respondent signed a facsimile message as 'Managing Director/Proprietor' of 'Nielsen & Moller Autoglass International Pty Ltd' on a facsimile form giving the Australian Business Number 79 064 101 873 as its ABN. On 11 May 2004 the third respondent signed a letter on the letterhead of 'Nielsen & Moller Autoglass International Pty Ltd' showing as its address '8---10 Durkin Place Peakhurst NSW 2210 Sydney Australia' and giving the Australian Business Number of Nielsen & Moller Autoglass Pty Limited as its ABN. Nielsen & Moller Autoglass International Pty Ltd may have been the then name of Nielsen & Moller Autoglass Pty Limited, but there is insufficient evidence to enable such a conclusion to be drawn. The Company has exclusive selling agency agreements. This Company arranges the supply of windscreens to Australia, including Nielsen & Moller Autoglass (NSW) Pty Limited. The Company is paid commission by the manufacturer. Mr Rankine commenced working in that industry in about 1979. In December 2003 Mr Rankine and the third respondent had discussions concerning the establishment of a new autoglass business specialising in the wholesale supply of replacement windscreens for motor vehicles in Australia. On 22 January 2004 they caused the first respondent to be registered with the Australian Business Number 71 107 721 595. Shortly after incorporation the third respondent became the sole director and secretary of the first respondent. The first respondent has an issued capital of 100 shares, 20 of which have been held by the third respondent and 80 of which have been held by GDF Nominees Pty Limited in trust for Mr Rankine and his wife, Karin Rankine. Mr Rankine's evidence was that both he and his wife worked in the business of the first respondent. However, he did not work for Nielsen & Moller Autoglass Pty Limited ABN 79 064 101 873, which was also referred to in evidence as 'the commission agent company'. As at 13 September 2005 the facsimile machine connected to the telephone service (02) 9153 0192 was located in the third respondent's office within the first respondent's premises. In another part of the same premises a facsimile machine was connected to the telephone service (02) 9533 2433. On 13 September 2005 People Telecommunications Pty Ltd invoiced 'Nelsen & Moller Autoglass Pty Lt (sic)' $39.45 in respect of the service (02) 9153 0192 described in the invoice as being for 'Local $4.95' and 'Service and Equipment $34.50'. The comparable invoice issued on 13 October 2005 imposed charges totalling $38.70 being for 'Local $4.20' and 'Service and Equipment $34.50'. I am further satisfied that the attachment to the facsimile was itself forwarded by facsimile from the second respondent to the first respondent at about 1.45 pm on 13 September 2005, whereupon it was added by the third respondent to the facsimile cover sheet and then transmitted by him as a three page document, on behalf of the first respondent. The 13 September facsimile was not published by the second respondent (see [5] above and [15]-[16] below; see also Webb v Bloch [1928] HCA 47 ; (1928) 41 CLR 331 at 363-5 per Isaacs J). The applicants' case is that more than 30 copies of the facsimile directed to 'NM Customers' were transmitted to various persons in New South Wales, Queensland, Victoria, Tasmania, South Australia, Western Australia and the Australian Capital Territory on or about 13 September 2005. The second publication took the form of a three page letter (not to be confused with the two page attachment to the 13 September facsimile) to 'Mr Scott Eldridge, Regional Coordinator, Australian Tax Office' from the second respondent bearing date 13 September 2005 ('the ATO letter'). A photocopy of a copy of this letter has become Exhibit C in the proceedings. It is acknowledged by the applicants that the manuscript letter 'C' was not on the copy from which the photocopy was made nor were the words 'SECOND SCHEDULE' or the paragraph numbers appearing in square brackets which have been added by the applicants in the left hand margin for ease of identification. The second respondent has admitted hand delivering the original of the ATO letter to the Hurstville branch of the Australian Tax Office on or about 13 September 2005. The third respondent says that the second respondent did so at his request. The applicants allege that the ATO letter was published by the respondents. The respondents have admitted that the second respondent published the ATO letter. Publication by the first and third respondents is denied. The second respondent was the author of the ATO letter. The third publication took the form of an email from the third respondent to Curie Chen with a copy to Zhou Jie in China. A printed copy of the email as received in China, indicating that it was transmitted at 11.33 pm on 15 September 2005 and that it emanated from the third respondent whose email address was '[email protected]', has become Exhibit D in the proceedings (the '15 September email'). It is acknowledged that the copy which is in evidence has had added to it by the applicants the words 'THIRD SCHEDULE' and the paragraph numbers appearing in square brackets in the left hand margin of the copy. The applicants allege that the 15 September email was published by the first and third respondents on or about 15 September 2005. The respondents have admitted that the third respondent wrote and published the email. Publication of it by the first respondent has been denied. Copies of Exhibits B, C and D are attached as appendices 'A', 'B' and 'C' respectively to these reasons for judgment. According to the third respondent he forwarded the 13 September facsimile to 'various customers and other members of the industry' on or about 13 September 2005. The extent of the publication would appear to have been to six automotive glass businesses in New South Wales, four in Queensland, two in Victoria, one in South Australia, one in Western Australia, one in Tasmania and one in the Australian Capital Territory, apart from transmissions to four 'Nielsen & Moller' businesses in Queensland and Victoria. No officers of any of the businesses to whom the 13 September facsimile was transmitted were called to give evidence in the proceedings. Apart from the proven publication of the 13 September facsimile by the third respondent on behalf of the first respondent, the applicants also rely upon what is said to be the 'grapevine' effect of its publication. The evidence suggests that communications were received by the applicants from various business associates of the first applicant in the period mid September --- October 2005 predominantly expressing concern about the business future of the first applicant in the context of issues with the Australian Tax Office. There were about 15 such communications. Only a couple of them made mention of any facsimile and only a couple of them made mention of the directors of the first applicant or any of them. It is unlikely that news of the 13 September facsimile having been transmitted, or of its contents, was widespread. In relation to the ATO letter I am satisfied that its publication was limited. I am satisfied that the ATO letter was published by the second respondent at the request of the third respondent and received no wider publication than that arising from the delivery of the original of it by the second respondent to the Hurstville branch of the Australian Tax Office. In relation to the 15 September email to Curie Chen I am satisfied that it was published to Curie Chen in the Special Administrative Region of Hong Kong , within China, and to Zhou Jie in China proper on 15 September 2005 and also that it received no wider publication. I am further satisfied that it was published by the third respondent on his own behalf and not in a representative capacity on behalf of the first respondent. the same email address as recorded on the 15 September email. That email address had no direct connection with the first respondent whose ABN was 71 107 721 595. The evidence indicates that the first respondent did not commence business until after 19 February 2004. In Sim v Stretch there had been a quarrel between neighbours which concerned the vicissitudes of a domestic servant whose fortune it was to be employed at successive times by both the plaintiff and the defendant. The defendant had dictated to the post office at Maidenhead a telegram reading 'Stretch, The Twigs, Cookham Dean. Edith has resumed her service with us to-day. Please send her possessions and the money you borrowed, also her wages, to Old Barton. --- Sim'. The learned Judge rejected the submission ... It appears to me that the alleged innuendo is fantastic, and that the words used are in their ordinary meaning incapable of being understood by reasonable persons as conveying an imputation on the plaintiff's financial credit. It was, in my opinion, the duty of the Judge so to have held, and to have withdrawn the count alleging the innuendo from the jury. Judges and text-book writers alike have found difficulty in defining with precision the word "defamatory". The conventional phrase exposing the plaintiff to hatred, ridicule, or contempt is probably too narrow. The question is complicated by having to consider the person, or class of persons, whose reaction to the publication is the test of the wrongful character of the words used. I do not intend to ask your Lordships to lay down a formal definition, but after collating the opinions of many authorities I propose, in the present case, the test: Would the words tend to lower the plaintiff in the estimation of right-thinking members of society generally? Assuming such to be the test of whether words are defamatory or not, there is no dispute as to the relative function of Judge and jury, of law and fact. It is well settled that the Judge must decide whether the words are capable of a defamatory meaning. That is a question of law; is there evidence of a tort? If they are capable, then the jury is to decide whether they are in fact defamatory. There is no direct evidence that they were published to anyone who had ever heard of the plaintiff. The post office officials at Maidenhead would not be presumed to know him, and we are left without any information as to the officials at Cookham Dean. ... It might, however, be inferred that the publication of the telegram at Cookham Dean was to someone who knew the plaintiff. What would he or she learn by reading the telegram? That Edith Saville had been in the plaintiff's employment; that she had that day entered the defendant's employment; and that the former employer was requested to send on to the new place of employment the servant's possessions, together with the money due to her for money borrowed and for wages. How could perusal of that communication tend to lower the plaintiff in the estimation of the right-thinking peruser who knew nothing of the circumstances but what he or she derived from the telegram itself? The question as to whether the publications were capable of giving rise to the defamatory imputations pleaded has already been addressed (see National Auto Glass Supplies (Australia) Pty Ltd v Nielsen & Moller Autoglass (NSW) Pty Ltd [2006] FCA 1386 ; (2006) 156 FCR 148). In the Third Further Amended Application filed 27 October 2006 in this case the first applicant identified that its claims have arisen under ss 52 , 53 , 55A and 60 of the Trade Practices Act 1974 (Cth) (the ' Trade Practices Act ') and ss 42 , 44 , 50 and 55 of the Fair Trading Act 1987 (NSW) (the ' Fair Trading Act '). An order that the Respondents are liable to pay damages to the Applicants for defamation, including aggravated and exemplary damages. However, the first applicant presses its claim for damages for defamation in respect of the publication of the 13 September facsimile in Queensland, Victoria, South Australia, Western Australia, Tasmania and the Australian Capital Territory, acknowledging that it has no entitlement to damages in New South Wales by virtue of s 8A of the Defamation Act 1974 (NSW). In respect of publication of the 15 September email in China, including the Special Administrative Region of Hong Kong, no attempt has been made to establish what, if any, defamation law applies in that country or in that region. The applicants submit that it should be presumed, in the absence of evidence to the contrary, that the defamation law in China, including the Special Administrative Region of Hong Kong, is the same as it is in the place in which the proceedings were brought. The answer preferred by Dicey is in the negative. A pleading of a cause of action in tort which did not allege that the facts occurred in any particular law district would be formally valid. Freya Navigation Shipholding Ltd was said to be legally responsible, as carrier, for the damage. A Full Court comprising Ryan and Allsop JJ considered a Notice of Motion brought by Alico Marine Ltd seeking an order that the writ in rem under which the ship had been arrested be set aside. Alico Marine Ltd claimed to be the owner of the ship. The issue before the Full Court was whether Freya was the owner of the ship at the time of the proceedings, given that it was the 'registered owner', or whether Alico was the owner, albeit in a proprietary sense. If Freya was the owner, then the arrest of the ship was warranted, as damage to the cargo had occurred while the ship was in the possession of Freya and prior to the sale of the ship to Alico. In the result the writ in rem was set aside. In the absence of detailed argument on the question, we do not propose to express any concluded views. ... It may be doubted whether an Australian statute in terms directed only to Australian-owned ships is properly the subject of the presumption in these circumstances. In Damberg v Damberg (2001) 52 NSWLR 492; [2001] NSWCA 87 at [118] - [147] Heydon JA (as his Honour then was) examined the authorities on the so-called presumption. That analysis reveals the difficulties of, and disparities in approach to, its application. Some authorities limit the presumption to non-statutory law. Some extend the presumption to statutes. Some, while accepting the presumption as extending to statute law, require that the statute law not be peculiar to local situations or linked to local conditions or to establishing regulatory requirements. Thus, to the extent that statute law can be seen as part of the "general law" of the law of the forum, it will form part of the presumption. See, in particular, the different approaches in Purdom v Pavey & Co (1896) 26 SCR 412; Hellens v Densmore [1957] SCR 768 at 780; Gray v Kerslake [1958] SCR 3; The Ship "Mercury Bell" v Amosin (1986) 27 DLR (4th) 641 and Schnaider v Jaffe [1916] CPD 696, all referred to by Heydon JA in Damberg v Damberg. In that case an Australian living in China had been injured in a fall in an apartment provided for his use by an Australian company. I find no assistance in a general presumption that, in the absence of evidence to the contrary, foreign law is the same as Australian law. That might be a rational and practical aid to decision-making in many cases, but, whatever its precise extent, the principle seems to me to be devoid of content in this case. This is to the effect that, in a case where the content of foreign law is significant for the resolution of the issues, and such law is not proved at all or adequately, an Australian court may presume that such law is the same as Australian law. It may decide the case accordingly. In this case, it involves an unrealistic fiction which has only to be stated for its flaw to be revealed. A presumption that a basic rule of the substantive law of England or some other common law country, in default of proof, is the same as the law of Australia is one that might be justified in a particular case. Or that a written law of China would be interpreted and applied by a Chinese court in the same way as an Australian judge would do in construing a similar text. Where the law of the forum is governed by a statute and the law within Australia is itself lacking in uniformity, I doubt whether it could be presumed that the defamation law in China, including the Special Administrative Region of Hong Kong, is the same as it is in New South Wales. 42 Damberg v Damberg [2001] NSWCA 87 ; (2001) 52 NSWLR 492 was a case in which a material consideration was whether in relation to the avoidance or evasion of capital gains tax, German law should be presumed to be the same as Australian law. The leading judgment in the case was that of Heydon JA, as his Honour then was, with which Spigelman CJ and Sheller JA agreed. The trial judge was not taken to the terms of any relevant German statute. Nor was this Court. All the trial judge was invited to do was assume that German law was identical to Australian law. He was not taken to any statutory provision in Australian law. This Court was not taken to the detail of the relevant Commonwealth legislation. This Court, too, was asked to assume that German and Australian law were the same. Is that assumption sound? His Honour concluded that it should not be assumed that German law in relation to the avoidance or evasion of capital gains tax was the same as Australian law. It is not necessary to perform it in this case. The issue in this case is whether it should be assumed that German law in relation to the avoidance or evasion of capital gains tax is the same as Australian law. In my opinion it should not. ... German law on the point must be statutory. German law is not a common law-based system. ... There is a risk that there may be special machinery and highly individual provisions in German law as there are in Australian tax law: indeed the only evidence of German law, from Mr Stiegler, suggests that it is quite different from Australian law. Taxation law cannot be assumed to be a field resting on great and broad principles likely to be part of any given legal system. However, notwithstanding the emphasis given by the applicants to the matter as a defamation action, it is important to note that the first applicant still maintains its entitlement to injunctive relief under s 80 of the Trade Practices Act and the corresponding s 65 of the Fair Trading Act , restraining the respondents from engaging in 'the misleading and deceptive conduct pleaded in the Second (sic) Further Amended Statement of Claim'. further, in respect of the publication of the matters complained of in Queensland, Tasmania and the Australian Capital Territory, such publication was made for the public benefit. pursuant to section 22 of the Defamation Act 1974 (NSW). the truth of the allegations contained in the First, Second and Third matters complained of. The respondents further contend that by reason of the substantial truth of any one or more of the relevant contextual imputations each of the imputations relied upon by the applicants did not further injure the reputation of the applicants. (f) In relation to the publication of the 13 September facsimile, the ATO letter and the 15 September email outside New South Wales, the respondents contended that the publications conveyed certain imputations of and concerning the applicants which were true in substance and in fact and the publication of which was for the public benefit and, by virtue of the substantial truth of them or some of them, the applicants' reputation was not further injured by the imputations for which the applicants contended. In their Reply to Defence to Third Further Amended Statement of Clam (sic), the applicants alleged that the respondents were 'actuated by express malice in the publication of the matters complained of in that they were motivated by an ulterior purpose or foreign motive'. Its directors were Yeung Lo, who is also known as 'Maggie' (the second applicant), Hui Ouyang, who is also known as 'Harvey' (the third applicant), Carl Christian Moller (the third respondent) and Tian He. According to the second applicant, the directors at the time were also the shareholders. Prior to their acquisition of the property known as 19 James Cook Island, Sylvania Waters, the second and third applicants lived at 95 Shoalhaven Road, Sylvania Waters. They purchased 19 James Cook Island, Sylvania Waters for $1,860,000 in October 2002. They sold 95 Shoalhaven Road, Sylvania Waters for approximately $846,000 about a year later. It was said that Tian He was born in Changhai (sic) China on 3 April 1971. The second applicant said of Tian He that she 'was not actively involved in the management of the NAGS [referring to the first applicant]'. Did that conversation take place? [The transcript at 357 is incorrect where it refers to Mr Cho as 'Mr Zhu'. On 25 October 1999 the second applicant as a director of the first applicant advised the Australian Securities and Investments Commission that Tian He had ceased to be a director on that day, her place being taken by Cho Yim Ping who had been born in Fu Jian, China, on 10 August 1975. It was submitted by the third respondent that Cho Yim Ping was the daughter of Cho Tak Wong, the owner of FYG. Apart from sharing the same surname 'Cho', there was no evidence to allow a finding on this submission to be made one way or the other. The residential address of Cho Yim Ping, provided by the second applicant as a director of the first applicant, was 95 Shoalhaven Road, Sylvania Waters, i.e. a home owned by the second and third applicants. On 22 October 2001 the second applicant as a director of the first applicant informed the Australian Securities and Investments Commission that the third respondent had ceased to be a director of the first applicant on 19 October 2001. On 13 June 2002 the second applicant, as a director of the first applicant, notified the Australian Securities and Investments Commission that the third applicant, whose address was 95 Shoalhaven Road, Sylvania Waters, had ceased to be a director of the first applicant on that day. In 2002, the third respondent ceased to be a shareholder in the first applicant, transferring his shares to the second applicant. On 15 July 2002 the second applicant as a director of the first applicant notified the Australian Securities and Investments Commission that Minnie Li-Adams had been appointed as a director of the first applicant on that day. On 3 September 2002 the second applicant as a director of the first applicant notified the Australian Securities and Investments Commission that Cho Yim Ping had ceased to be a director of the first applicant on that day. On 28 April 2003 the second applicant as a director of the first applicant informed the Australian Securities and Investments Commission that Minnie Li-Adams had ceased to be a director of the first applicant on that day. As at 27 October 2003 the second applicant was the sole director of the first applicant. Her address at that time was still 95 Shoalhaven Road, Sylvania Waters. As at 6 August 2004 the second applicant, whose address was then 19 James Cook Island, Sylvania Waters, was the sole director of the first applicant. The first applicant then had an issued capital of 100 'DIVIDEND V R' shares and 100 'ORDINARY' shares. The 'DIVIDEND V R' shares were owned as to 20 by Cho Yim Ping and as to 80 by the second applicant. The 'ORDINARY' shares were owned as to 25 by Cho Yim Ping and as to 75 by the second applicant. Cho Yim Ping's address was again shown as 95 Shoalhaven Road, Sylvania Waters, the former residential address of the second and third applicants, and the second applicant's address was shown as 19 James Cook Island, Sylvania Waters. The status of the second applicant as a director of the first applicant was materially affected by a criminal conviction in 2004 about which it will be necessary to say a little more shortly. In relation to each count each of the second and third applicants entered a plea of 'guilty'. The counts against the third applicant alleged offences under s 29D of the Crimes Act 1914 (Cth) and the counts against the second applicant alleged offences under ss 5 and 29D of the Crimes Act 1914 (Cth). It is clear that any convictions in respect of the offences charged would automatically disqualify the convicted person from managing corporations, with the consequence that the convicted party would cease to be a director of any company and subject to a five year period of disqualification calculated in accordance with s 206B(2) of the Corporations Act . On 30 April 2004 Goldring DCJ convicted the second applicant in respect of the two offences to which she pleaded guilty and also convicted the third applicant in respect of the two offences to which he pleaded guilty. He proceeded to fine the second applicant $30,000 in respect of each offence. In addition, in respect of each offence, his Honour sentenced the second applicant to a term of 12 months' imprisonment and ordered that the sentences be partly cumulative for a period of six months and partly concurrent. His Honour also fined the third applicant a sum of $30,000 in respect of each offence charged against him. In addition he sentenced the third applicant to a term of 12 months' imprisonment in respect of each offence, again on the basis that the sentences would be partly cumulative for a period of six months and partly concurrent. His Honour proceeded to remand the second and third applicants to appear before him again on Friday 18 June 2004 to determine whether it would be suitable to order that the second and third applicants serve their sentences by way of 'home detention'. On 18 June 2004 Goldring DCJ set a recognisance release period of 8 months in respect of each sentence. He directed that the first of the two sentences imposed on each of the second and third applicants start on 18 June 2004 and expire on 17 June 2005. He further ordered that the second sentence imposed on each of the second and third applicants should start on 18 December 2004 and expire on 17 December 2005. He determined that the recognisance release period in respect of the first sentence should expire on 17 February 2005 and, in respect of the second sentence, 17 August 2006 [plainly his Honour intended 2005]. On 2 February 2005 the second applicant purported to 'resign as director and secretary of National Auto Glass Supplies (Australia) P/L to be effective as from 2 nd February 2005'. On the same day the second applicant appears to have completed a form notifying the Australian Securities and Investments Commission of her cessation as an office holder of the first applicant, both as a director and as a secretary. That form was apparently received by the Australian Securities and Investments Commission later in the month of February 2005. On 2 February 2005 Lei Lei Lu, who had been born in An Kang, China on 22 August 1985, and whose address was 19 James Cook Island, Sylvania Waters, became the sole director and the sole secretary of the first applicant. Cho Yim Ping and the second applicant remained as the only shareholders of the first applicant, their shareholdings remaining as they had been on 6 August 2004. Lei Lei Lu was a daughter of the second applicant from a previous relationship she had with a 'young boy' when she was a 'very young girl'. Lei Lei Lu, a university student, is said to have instructed the solicitors for the first applicant to institute the current proceedings on the first applicant's behalf. The second applicant says that Lei Lei Lu did not give instructions directly to the second applicant as to how the business of the first applicant was to be run. Lei Lei Lu did not sign cheques for the first applicant, nor did she sign its Business Activity Statements. Furthermore, she did not have an office at the premises of the first applicant. On 7 July 2005 Lei Lei Lu appears to have signed a 'Change to company details' form, which was lodged with the Australian Securities and Investments Commission later in that month, which advised that on 7 July 2005 Cho Yim Ping had ceased to be the holder of any shares in the first applicant, all of the shares then being held by the second applicant whose address was given as 19 James Cook Island, Sylvania Waters. ' the answer provided was --- the second applicant. A 'SALES AGREEMENT' bearing date 1 January 2001 was entered into between FYG and the first applicant. That agreement was apparently signed by Curie Chen of the Sales & Marketing Department, Asian Pacific of FYG and by the third applicant on behalf of the first applicant. Before coming to Australia the second applicant attended university in China studying business, including accounting. In July 1995 the second applicant came to Australia with her daughter, Lei Lei Lu. Her purpose in coming was, in the first instance, to study English. The third applicant was born in Guangzhou in the People's Republic of China on 14 April 1969. After completing his high school studies in China he came to Australia in 1988. His primary purpose in coming to Australia was also to study English. The second and third applicants met each other in Australia when playing tennis. They were married to one another on 1 June 1996. There have been two children of the marriage, who were born in or about 2001 and 2002. From the time of registration of the first applicant in 1998, the second applicant has held the position of 'Financial Controller' of it, continuing to do so even after her conviction in respect of the offences mentioned above in 2004 notwithstanding the terms of s 206A(1) of the Corporations Act . In or about late 1997 the second and third applicants approached the third respondent with a view to him becoming involved in a company which would import windscreens from China and sell them by wholesale in Australia. In this context the second and third applicants and the third respondent visited China in early 1998 where they met representatives of FYG. At the time the second and third applicants had little or no knowledge of the automotive windscreen replacement business. Maggie was the financial controller of the First Applicant and handled all financial matters. I operated in the role of marketing, sales and export manager of the First Applicant. His sacking was preceded by a series of written warnings. Such behaviour and attitude are simply not accepted by the directors of the company. Your disturbing behaviour has caused Chairman and her family unrest and you are warned that police would be involved if you do further disturbance to Chairman and her family. Your sayings are simply not acceptable as NAGS is still paying your wages. You are warned not to spread rumours to damage NAGS image, reputation or disrupting NAGS activities or you will be responsible for any consequences. Maggie's and Harvey's threatened legal action against Carl is illogical as their legal position was compromised from the date of their first defaulsification (sic) and forgery of FYG invoices. Carl has no intention of staying on at NAGS while Maggie and Harvey are involved and must make use of his skills elsewhere. I understand your close relationship with Maggie, never the less I must inform you, that through Maggies complete misunderstanding of Australian Law and legal business practises. (sic) ... I also wish to inform you Maggie is now forcing me out of NAGS in a very bad way, I know this is her right, but I really think she is treating staff and business in a bad way which could ultimately destroy NAGS and FYG reputation in Australia, New Zealand. At this stage NAGS does not have a CEO, Maggie is pregnant and not thinking clearly and she is heavily manipulated by Harvey and his inexperienced ways, they seem to think they can carry on business of which I set up. We note that you chose not to attend this meeting. It is the decision of the company that these comments do not satisfactorily answer the allegations which were made against you by the company. The company is satisfied that your actions constitute gross and/or serious misconduct and accordingly your employment is terminated as from the date of this letter. On 6 April 1998 NAGS commenced importing windscreens from China into Australia. From 21 May 1998 NAGS imported windscreens exclusively from Fuyao Glass Industry Group Co Ltd ("FYG") in China. FYG only supplied goods in Australia through NAGS. During the charge periods NAGS imported goods from FYG on 30 occasions. The two offences relate to 30 importations of windscreens. The first offence relates to 8 importations between 25 September 1998 and 4 January 1999. The second offence relates to 22 importations between 14 March 2000 and 13 December 2000. During the charge periods all goods imported into Australia were subject to control by Australian Customs Service ("ACS"). When good arrived in Australia, it was necessary for their importation to be approved by the ACS and for customs duty and GST to be paid, before they could be released to the importer. The process of approval and payment was called "customs clearance". To obtain customs clearance of imported goods, the importer, or a customs broker acting on behalf of the importer, was required to complete an Entry for Home Consumption. The Entry For Home Consumption recorded the customs duty and GST required to be paid before the goods could be released for collection. Customs duty and GST was calculated against the declared value of the goods. To enable the ACS to calculate the customs duty and GST that was payable, it had to be advised of the value of the goods. Generally the customs broker prepared the Entry For Home Consumption on a computer system operated by the ACS and which customs brokers could access through computer terminals in their offices. Those details included the type, quantity and value of the goods, as recorded in the applicable commercial invoice. The ACS received the lodgement and determined whether the goods would be released. Rather, in deciding whether the goods would be released and in determining customs duty and GST, the ACS relied on the accuracy of the information provided by the customs broker in the Entry For Home Consumption. The information that the importer gave to the freight forwarder was accordingly of critical importance in the proper calculation of customs duty and GST. It was necessary for the importer to provide correct information about the value of the goods, if correct customs duty and GST was to be levied. If the importer understated the true value or quantity of the goods, a lesser amount of customs duty and GST would be levied than was properly payable, and the Commonwealth would be deprived of money. During the charge periods the offenders obtained false invoices from FYG for customs declaration purposes. The false invoices understated the value of the goods in shipments 1 to 6, and understated both the value and quantity of the goods in shipments 7 to 30. The invoices were on FYG letterhead and purportedly provided details of the imported windscreens, including size of each windscreen, the quantity of each type of windscreen, the price and the total amount in relation to each shipment. Some of the invoices also specified whether the cost of the goods included overseas insurance and freight (CIF) or the cost of the goods alone (FOB-"free on board"). The false invoices were provided to the freight forwarders and then to customs brokers, who relied upon them in preparing and lodging the Entries For Home Consumption. The under-declaration of value and quantity resulted in the underpayment of customs duty throughout the charge periods, and the underpayment of GST between 9 July 2000 and 13 December 2000. The offenders also obtained correct invoices from FYG that accurately recorded the value and quantity of the goods and enabled NAGS to make full payment to FYG. The ACS later located those correct invoices at the premises of NAGS and at the residence of the offenders. OUYANG was responsible for supplying importation documents in respect of the 30 shipments to freight forwarding companies (Famous Pacific Shipping (Australia) Pty Ltd and Ultimate Freight Group Pty Ltd). The importation documents were necessary to enable the ACS to calculate customs duty and GST, and to release the imported windscreens to NAGS. The importation documents comprised an invoice, a letter specifying which windscreens attracted a 5% duty rate, and a bill of lading. Both freight forwarding companies sent the documents to licensed customs brokers (Port of Melbourne Customs Agency Pty Ltd and Gary Ian Holt respectively). The customs brokers entered the details from the relevant documents into the COMPILE computer system and lodged the Entries For Home Consumption. Upon payment of the customs duty and GST, the goods were then customs cleared and delivered to NAGS. LO was responsible for organising payment to FYG and payment for customs duty and GST on behalf of NAGS. The husband, Mr Ouyang, has pleaded guilty to two charges of defrauding the Commonwealth, the first over a period between 25 September 1998 and 24 January 1999, the second between 14 March 2000 and 13 December 2000. Mrs Lo is charged with being knowingly concerned in the two offences committed by her husband. The charges are different because Mr Ouyang actually forwarded about thirty separate forged invoices to a customs agent so that they could be presented to the Australian Customs Service. However, the Crown contends, and I accept, that both are equally culpable. The total amount of $263,692.16 which should have been paid was not paid. Of this, about one-third was GST and two thirds Customs Duty. The amount of duty evaded in respect of the first offence on each indictment was significantly less than that in respect of the second. In addition, the invoices in respect of the second offence but not the first showed a false quantity, a smaller quantity, that was in fact delivered as well as a false price. The criminal acts involved in both offences were similar. They clearly resulted from a well thought out plan which required careful execution and the co-operation of the third party, FYG, in China. They were part of a series of transactions executed over two separate periods. I assume that interest on the money outstanding to the Commonwealth was also paid. ... It is agreed that the automotive glass industry in Australia is competitive. I am satisfied that the motive for the fraud was commercial rather than personal. In some ways it [customs fraud] is more serious because those who commit it are usually motivated solely by commercial greed and for that reason they would be seen as more culpable. There is no alternative to the imposition of such a sentence. In addition, in respect of each offence, each offender will be sentenced to a term of twelve months imprisonment. The sentences will be partly cumulative for a period of six months and partly concurrent. I direct that they be assessed as to their suitability to serve their sentences by way of home detention. That appeal was dismissed. National's principal activity was the wholesaling of automotive windscreens. Mr Ouyang was the general manager of the company and Mrs Lo was its financial controller. At the time of sentencing Mrs Lo was the sole director and shareholder of the company. It obtained them from Fuyuo (sic) Glass Industry Group Co Limited ("Fuyuo") in China. Eight shipments were imported in the first of these periods and twenty-two in the second. National was correctly invoiced by Fuyuo for the windscreens and paid the invoiced amounts. But the respondents also obtained false invoices from Fuyuo for customs declaration purposes. The false invoices were provided to freight forwarders and then to National's customs brokers, who relied on them in preparing declarations to the Australian Customs Service to obtain clearance of the windscreens. As a result, there was underpayment of customs duty of $167,268.35 and GST of $96,423.81, a total of $263,692.16. Mrs Lo was responsible for paying the correctly invoiced amounts to Fuyuo and the incorrectly calculated amounts of customs duty and GST. Their course of action was deliberate, in order to meet a cash flow problem of the company and for commercial advantage. The Judge recognised this, and considered that they were equally culpable. I am unable to discern any relevant 'repetition of the defamatory imputations in the matters complained of' in any of the documents identified in sub-paragraphs (i), (ii), (iii), (iv), (vi), (vii) or (viii) of the said paragraph 1(g). Once again it was an email sent by the third respondent using his own email address, namely '[email protected]'. It was not sent by him on behalf of the first respondent. She has now resorted to issuing a Summons for Defamation on Fatuous Grounds through her Solicitors Robert Yip&Co on myself and my father. Notwithstanding his education at Sydney Grammar School, I very much doubt that the word 'oleaginous' was one which formed part of the third respondent's vocabulary. He did not present as a linguistic scholar of any note. In relation to the applicants' reliance upon the so-called 'contemptuous conduct' of the second respondent by reason of his letter dated 9 January 2006 (referred to in paragraph 1(h) of the Third Further Amended Application --- see [31] above) to Robert Yip & Co, the solicitors for the applicants, I have difficulty in so categorising the second respondent's conduct in sending it. It would appear that the initiating process in this matter was served upon the second respondent mid morning on the Boxing Day holiday in 2005. The letter in question recorded the second respondent's response to the claims made by the applicants against him. What seems to have been of particular concern to the second applicant was the ' Certificate of legal practitioner ' under Order 11, rule 1B of the Federal Court Rules which would appear to have been signed by Alice Chen of Robert Yip & Co Solicitors as 'Legal practitioner representing the Applicants' and attached to the Statement of Claim. There were a number of occasions on which this matter was before the Court when interlocutory hearings took place. One such occasion was 22 August 2006 when the respondents' Notice of Motion filed 18 August was returnable before the Court at 4.30 pm on that day. The directions and orders made on 22 August were, relatively speaking, uncontentious. Senior counsel for the applicants suggested to the third respondent in cross-examination that when he was leaving the Law Courts Building on that day the third respondent shouted abuse at the applicants' lawyers including senior counsel himself. The third respondent conceded that he did say something but was not prepared to describe it as 'abuse'. The third respondent's recollection was that he said 'Maggie is a liar, your client is a liar'. The third respondent denied shouting at the applicants' lawyers 'You are all liars and your clients are liars'. The third respondent rejected the suggestion that his answer in this regard was 'deliberately false'. His evidence conflicted with that of Robert Yip, the solicitor for the applicants, who swore that the third respondent had said 'You are all liars, all liars. Like your clients, you are all liars. ' It may be observed that what was put to the third respondent did not itself accord precisely with Mr Yip's account of the communication. I am not satisfied that more was said on 22 August 2006 than the third respondent conceded. It is true that the third respondent did not challenge Mr Yip's account in cross-examination, but the niceties of Browne v Dunn (1893) 6 R 67 may not have been known to him as a litigant in person. That which was said could not, as I see it, be described as a 'violent verbal assault made by the Third Respondent on the Applicants' lawyers'. Insofar as the applicants rely upon the so-called 'malice' of the second respondent 'infecting the First respondent by reason of' his being a guiding mind of the first respondent, I am unable to so conclude. The second respondent was not a guiding mind of the first respondent. He was not a director of the first respondent, nor was he a shadow director or even a shareholder. Notwithstanding that the first applicant only entered the market for automotive replacement glass in 1998, it is clear that it rapidly progressed to become one of the major players in the market. Its ability to reach this status was undoubtedly assisted by the dishonesty of the second and third applicants, acting with the cooperation of FYG, in respect of which they were charged and convicted. I accept her evidence in this regard. She says that she was not given an opportunity to respond to any of the matters complained of. She further says that she felt outraged and it was more than she could stand. She said that she was so upset that she could not read the 13 September facsimile in one go but had to stop reading to calm herself down before she could continue. She said that she started to panic as she did not know to whom the 13 September facsimile had been sent and whether people would believe the matters stated in it. The second applicant gave evidence that when she read the affidavits of the second and third respondents she became angry and cried. She sensed that the second and third respondents just wanted to hurt her. In relation to the ATO letter the second applicant's reaction to it was that she could not believe that the second respondent actually sent it to the Australian Tax Office. She believed that the respondents would never stop trying to hurt and stab her in the back. In relation to the 15 September email the second applicant said that she was extremely embarrassed by its transmission. She said that one of the reasons for her extreme embarrassment was that the first applicant did not have direct business dealings with Fuyao (Hong Kong) Limited. She believed that as soon as the email was sent it would have been directed to Cho Tak Wong. The second applicant also said that she believed it would be disturbing to Curie Chen to receive the 15 September email. She believed that the ultimate purpose of the third respondent in communicating with Curie Chen was to damage her long established relationship with Cho Tak Wong and FYG. It will be recalled that it was Curie Chen who executed the Sales Agreement with the first applicant on behalf of FYG, which bears the date 1 January 2001. The second applicant said that following the publication of the matters complained of she lost all her confidence to meet and socialise with customers, staff or FYG. The second applicant also said that due to stress she had been unable to sleep well at night and felt that her health had been severely damaged. The second applicant sensed that some people who had previously been counted amongst her friends had intentionally ceased to have contact with her. The third applicant said that after reading the 13 September facsimile he felt offended and annoyed. He says that he was very angry and felt stressed as he thought that everyone in the market would have received a copy of the 13 September facsimile or heard about it from others. The third applicant says that he was very angry and felt stressed after he learnt of the ATO letter. After receiving a copy of the 15 September email the third applicant says that he was very angry. He feared that FYG would be very upset with the second applicant and himself which would adversely affect their long established business relationship. He says that he was very embarrassed especially when he was aware that Curie Chen and Cho Tak Wong were aware of his earlier conviction in respect of the customs fraud offences. He felt that Curie Chen and Cho Tak Wong might believe the third respondent's comment that the second applicant was cheating everyone she worked with and that he was involved in all sorts of criminal conduct in Australia. He says that he felt deeply embarrassed with the flow of emails. The third applicant says that he received no communication from any of the respondents before the publications, in respect of which complaint was made, were effected. I accept his evidence in this regard. The third applicant says that he was scared that people would think that he was a hard-minded criminal when he believed that he had done nothing wrong and was only trying to work hard. He says that he came to be under constant mental stress and pressure. He also says that he avoided social contact because he felt awkward and did not know what to say to people. He expressed his belief that following the publications complained of his health became affected. He said that he had trouble sleeping at nights and suffered back and neck pain and abdominal pain and felt tired all the time. No evidence was given by Lei Lei Lu, as the sole director of the first applicant, to indicate the attitude of the first applicant to the publications of which the applicants complained. None of the respondents were legally represented at the hearing. When asked which of the applicants' witnesses, who had sworn affidavits, were required for cross-examination, the third respondent, who effectively spoke for himself and the second respondent, at least until the second respondent withdrew from the hearing on 13 April 2007, indicated that the people he required were the second applicant and possibly Mr John Kersley. As it transpires the second applicant was called to give evidence on 7 December 2006. She was in the witness box giving evidence in chief for a little over half an hour. Somewhat surprisingly, neither the second nor third respondent had any questions for her by way of cross-examination at the conclusion of her evidence in chief. What I wish to do before I close my case is adduce evidence from both the second and third applicant as to hurt to feelings from the conduct of the litigation by the respondents. Now, we had to wait until this point to deal with the conduct up to this point so we were waiting to see if there was crossexamination and the like and whether propositions were going to be put to them and it's my intention to adduce short evidence of hurt to feelings going to aggravated damages from the ... respondents' conduct of the litigation and post-suit conduct as well. The second applicant's further evidence in chief concluded very shortly thereafter. Whilst the second respondent again indicated that he did not wish to cross-examine the second applicant, the third respondent took a slightly different tack on this occasion. When invited to cross-examine the second applicant the third respondent said that he had many questions he wished to ask. His cross-examination commenced at about 4.02 pm on 7 December 2006 and did not conclude until about 3.40 pm on 8 December 2006. Notwithstanding the applicants' professed desire to adduce evidence from the third applicant as to hurt to feelings from the conduct of the litigation by the respondents, the applicants elected not to call the third applicant. Instead, the applicants closed their case shortly after 4.00 pm on 8 December 2006. Evidence was given in the cases of the second and third respondents by the second respondent, until he was excused from giving further evidence on 13 April 2007, the third respondent and Mr Rankine. The third respondent closed his case shortly after 11.30 am on 19 April 2007. The applicants did not have any case in reply. When the second respondent was excused from giving further evidence on 13 April 2007 (see National Auto Glass Supplies (Australia) Pty Limited v Nielsen & Moller Autoglass (NSW) Pty Limited (No 5) [2007] FCA 569) an order was made, on the applicants' application, that no further use may be made of any part of the affidavit or oral evidence of the second respondent (see National Auto Glass Supplies (Australia) Pty Limited v Nielsen & Moller Autoglass (NSW) Pty Limited (No 7) [2007] FCA 582). At times during the course of the hearing each of the second and third respondents made remarks which manifest a degree of bitterness about the predicament in which the first respondent found itself and which they attributed to the applicants' conduct. They undoubtedly had a sense of grievance that the first applicant had not been competing with the first respondent on a level playing field. Some indication of the second respondent's feelings about the matter were reflected in an observation which he made shortly before the luncheon adjournment on 13 April 2007. Senior counsel for the applicants had indicated that his clients wished to apply for costs of the second respondent's application to be excused. If you choose not to be here I will take it that you do not wish to be heard in opposition to it. If you wish to be heard in opposition to it, I would suggest that you be here at 2.15 pm to let me know what your position is. I will not be here and I wish them Buckley's luck. Well, I have noted that that is your response to the application for costs, Mr Jack Moller. ... She gave me the impression that she was quite a healthy person. Such minor displays of emotional distress on her part, which I witnessed, did not seem to me to be reflective of any real feelings of hurt associated with the publication of the matters of which the applicants complained. The second applicant acknowledged that the Australian Taxation Office had visited the first applicant's office and also the second and third applicant's home. She acknowledged that the Australian Taxation Office had downloaded data from the first applicant's computer system and also obtained copies of some financial statements and documents of the first applicant. It is inconceivable, in the context of the fraudulent conduct in which the second and third applicants had engaged, with the cooperation of FYG, over two periods of three and a half months and nine months respectively during 1998, 1999 and 2000, and which became more grave with the passage of time --- the dishonest understatement of the value of goods that were entered for home consumption developing into a dishonest understatement of both the value and the quantity of goods that were entered for home consumption --- that they experienced all of the outrage, panic, anger, fear, hurt, embarrassment, lack of confidence, a sense of deterioration in health, a sense of avoidance by friends, offence, annoyance, stress, upset, a sense of being scared, pressure, rejection, sleep disorders, a sense of back, neck or abdominal pain and feelings of tiredness, of which they respectively complained when the 13 September facsimile, the ATO letter and the 15 September email were published. On 19 April 2007 senior counsel for the applicants handed up 'An Outline of the Applicants' Final Submissions'. These submissions did not include any express references to the Trade Practices Act or the Fair Trading Act . First of all is the representations, that's the Trade Practices Act cause of action. At the conclusion of the Outline of the Applicants' Final Submissions the applicants submitted, under the heading 'Injunctive relief', that an injunction should go restraining the respondents, their servants and agents, 'from publishing any matter of and concerning any of the applicants that contains any of the following representations', suggesting that there should then be inserted in the relevant order, details of all representations pleaded in paragraphs 7, 8 and 10 of the Third Further Amended Statement of Claim that may have been found to have been published by the respondents and to have been false. It was clear from the applicants' submissions that their Trade Practices case was confined to one alleging misleading and deceptive conduct or conduct that was likely to mislead or deceive in contravention of s 52(1) of the Trade Practices Act (or the equivalent s 42 in respect of the claims made against the second and third respondents under the Fair Trading Act ). They were made to two identified individuals --- Curie Chen and Zhou Jie, both of whom were officers of FYG or one of its related companies. It is unnecessary to go further and establish that any actual or potential consumer has taken or is likely to take any positive step in consequence of being misled or deceived. That is not to say that evidence of actual misleading or deception and of steps taken in consequence thereof is not likely to be both relevant and important on the question of whether the relevant conduct in fact answers the statutory description and as to the relief, if any, which should be granted (per Deane and Fitzgerald JJ in Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 ('Taco Bell') at 199). In order to determine whether there has been any contravention of s 52(1) of the Trade Practices Act it is necessary to determine whether or not the conduct complained of amounted to a representation which has led or would be likely to lead to a misconception arising in the minds of that section of the public to whom the conduct (which may include refraining from doing an act) has been directed. Where the persons to whom the conduct has been directed are members of a class, it is necessary to isolate by some criterion a representative member of that class to determine whether a misconception is likely to arise from the conduct alleged (see the judgment of the Full Court of the High Court in Campomar Sociedad, Limitada v Nike International Limited [2000] HCA 12 ; (2000) 202 CLR 45 ('Campomar') at [98]-[103]). In Taco Bell at 200, Deane and Fitzgerald JJ emphasised that 'no conduct can mislead or deceive unless the representee labours under some erroneous assumption' (cited with approval in Campomar at [104]). The task of the Court is to determine whether any misconceptions or deceptions alleged to arise or to be likely to arise from the conduct complained of are properly to be attributed to the ordinary or reasonable members of the section of the community towards whom the conduct has been directed. The Court may disregard assumptions drawn by persons to whom the conduct is directed, where those assumptions or their reactions are extreme or fanciful (see Campomar at [104]-[105]). Conduct which produces or contributes to confusion or uncertainty may or may not be misleading or deceptive for the purposes of s 52. Ordinarily, a tendency to cause confusion or uncertainty will not suffice to establish conduct of the type described in s 52. The question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52 (per Deane and Fitzgerald JJ in Taco Bell at 201; see also Campomar at [106]). In Astrazeneca Pty Limited v GlaxoSmithKline Australia Pty Limited (2006) ATPR 42-106 a Full Court formulated the above propositions as appropriate matters for consideration where there had been an alleged contravention of the Trade Practices Act by a drug company in the sending of certain flyers to members of the medical profession and the publication of certain advertisements in 'Australian Doctor' magazine concerning an asthma drug. The Court observed at [52] that the lack of evidence called by the applicant in that case to the effect that general practitioners relied upon the representations complained of in prescribing medication for use by their patients was not determinative of a case for an alleged contravention of s 52. The section does not require demonstration that anyone has actually been misled. The difficulty which will commonly arise in a s 52 case is in determining whether the conduct contains or conveys, in all the circumstances, a misrepresentation and in assessing the significance to that question of evidence that one or more persons were in fact led into error. In extreme, but not necessarily infrequent, cases, it may be correct to hold that, as a matter of law, conduct said to contravene s 52 is incapable of conveying the untrue meaning alleged or any other false meaning. Such cases aside, whether or not conduct amounts to a misrepresentation is a question of fact to be decided by considering what is said and done against the background of all surrounding circumstances. In some cases, such as an express untrue representation made only to identified individuals, the process of deciding that question of fact may be direct and uncomplicated. No such representation was made. The applicants submit that in the 13 September facsimile it was represented that the first applicant conducted its business unfairly, in that it sold products at unrealistic prices that were below cost in order to gain market control. However, observations about how the first applicant conducted its business are relatively confined. However, the objective of price-cutting will ordinarily be to take business away from competitors. If the objective is achieved, competitors will necessarily be damaged. If it is achieved to a sufficient extent, one or more of them may be eliminated. That is inherent in the competitive process. Successful competition is bound to cause damage to some competitors. It is dangerous to proceed too quickly from a finding about purpose to a conclusion about taking advantage of market power, which may be wrongful and constitute conducting a business unfairly (see per Gleeson CJ and Callinan J in Boral Besser Masonry Limited v Australian Competition and Consumer Commission [2003] HCA 5 ; (2003) 215 CLR 374 ('Besser') at 420 [122]-[123]). For a finding to be made that the 13 September facsimile contained a representation that the first applicant conducted its business 'unfairly' one would need to find material suggesting that the unfairness lay in the first applicant taking advantage of a substantial degree of power in the relevant market for the purpose of eliminating or substantially damaging its competitors. I do not consider that by the assertion that the first applicant had 'at the moment ... embarked on predatory pricing policy to control the Australian replacement market by selling product below cost' the 13 September facsimile represented that the first applicant 'conducted its business unfairly'. The applicants submit that in the 13 September facsimile it was represented that the first applicant conducted its business illegally in order to gain market control by acquiring imported products dumped by Chinese suppliers. No such representation was made. The applicants submit that in the 13 September facsimile it was represented that the first applicant had assisted Chinese suppliers to dump products on the Australian market. No such representation was made. The applicants submit that in the 13 September facsimile it was represented that the first applicant had laundered money to China for its own financial gain. No such representation was made. The applicants submit that in the 13 September facsimile it was represented that the first applicant had defrauded the Australian Taxation Office by falsifying its accounts and transferring the benefit to China. The applicants submit that in the 13 September facsimile it was represented that the ATO letter was written on behalf of PGI Windscreens. The two page attachment to the fax form was never sent to the addressee named therein. It could not be said that it was a letter that had been 'written' in the sense of having been sent. There was no representation that the ATO letter (Exhibit C) had been written on behalf of PGI Windscreens. In my opinion, such a representation was made in the 13 September facsimile in respect of the Australian autoglass replacement market. However, the 13 September facsimile also represented that the other three major wholesalers of autoglass in Australia, namely O'Brien Windscreens, P.G.I. Windscreens and N & M Autoglass had been selling windscreens for below cost for the preceding six months. The third respondent's evidence, which I accept, is that between 2004 and 2006 the average wholesale price for Category A windscreens fell from $75 to $50 inclusive of GST. ... you cannot produce, can you, and have never been in a position to produce any invoice, receipt, order or other business record of NAGS, indicating that it sold any product below cost? I have copies of invoices in my exhibits explaining that prices were below cost in my opinion. But they don't say anything about this is below cost, do they? They indicate a low selling price. To you? To the industry. Yes, but you've not been able to produce a document to compare with them, that is, as to what it cost from FYG to what it was sold by NAGS? I haven't got FYG invoices as costs, I have other factories, similar factories in China's comparison costs. Did you ever see any invoice or receipt, order or other document that caused you to suspect that NAGS was selling any product below cost? No. Have you ever had any information that the company was selling any product below cost? No. I prefer that evidence to the second applicant's evidence that she never had any information that the company was selling any product below cost. In my opinion, the representation in the 13 September facsimile that the first applicant had implemented a predatory pricing policy by selling product at below cost to control the Australian autoglass replacement market was not false or misleading within the meaning of s 52 of the Trade Practices Act and/or s 42 of the Fair Trading Act . In the foregoing circumstances the first applicant has no right to declaratory or injunctive relief in respect of the alleged contraventions of s 52 of the Trade Practices Act and/or s 42 of the Fair Trading Act in respect of the publication by the third respondent on behalf of the first respondent of the 13 September facsimile. Nor is the first applicant entitled to any relief against the second respondent in respect of the 13 September facsimile. No such representation was made. The applicants submit that in the ATO letter it was represented that the first applicant had defrauded the Australian Taxation Office by falsifying its accounts and transferring the benefit to China. The applicants submit that in the ATO letter it was represented that the ATO letter was written on behalf of P.G.I. Windscreens. No such representation was made. The applicants submit that in the ATO letter it was represented that the first applicant implemented a predatory pricing policy by selling product below cost, to control the Australian replacement glass market. In my opinion, such a representation was made in the ATO letter in respect of the Australian autoglass replacement market. In this regard, I would repeat the evidence and findings at [160]-[165] above. In my opinion, the representation in the ATO letter that the first applicant had implemented a predatory pricing policy by selling product at below cost to control the Australian autoglass replacement market was not false or misleading within the meaning of s 52 of the Trade Practices Act and/or s 42 of the Fair Trading Act . Apart from other considerations, I cannot imagine that the relevant representation was one which would be likely to lead to a misconception arising in the mind of that section of the public to whom the conduct had been directed. I find it difficult to imagine that what might be described as a whistleblower's letter to the Australian Taxation Office would be likely to lead to any relevant misconception. It would simply provide a basis for inquiry and careful assessment following a thorough investigation. In the foregoing circumstances the first applicant has no right to declaratory or injunctive relief in respect of the alleged contraventions of s 52 of the Trade Practices Act and/or s 42 of the Fair Trading Act in respect of the publication by the second respondent of the ATO letter. Nor is the first applicant entitled to any relief against the first and/or third respondents in respect of the ATO letter. The 15 September email has not been expressed with great clarity, apart from containing numerous typographical errors. Its central feature seems to me to be a concern in respect of 'taxation crimes' that may have been 'committed by all directors' for which 'jail sentences' may be imposed. The third respondent has focussed upon alleged misdeeds of the second applicant. True it is that the 15 September email refers to a desire on the part of the third respondent to relieve himself of responsibility 'for NAGS possible prosection (sic)' and refers to a very serious problem 'we all now have re NAGS possible frauds being found'. The 15 September email informs the addressees that 'the Australian Government Taxation Office has now officially launched full investigation to possible taxation fraud, money laundering, and predatory pricing in Australian market since new competitor entered market'. In my opinion the 15 September email did not contain a representation that the first applicant had so conducted its affairs as to warrant official investigation by the Australian Tax Office into whether it had engaged in criminal conduct including taxation fraud, money laundering and predatory pricing. The applicants submit that in the 15 September email it was represented that the first applicant was implicated in a major taxation fraud. Alternatively, it was submitted that in the 15 September email it was represented that the first applicant was reasonably suspected of being implicated in a major taxation fraud. I have difficulty in concluding that any such representation was made in the 15 September email. It refers to an investigation into 'possible taxation fraud' and later to 'NAGS possible frauds being found'. As already observed, the main thrust of the 15 September email seems to be directed at conduct of the second applicant that may implicate the directors of the first applicant. It is clear that the foreshadowed possibility of the loss of stock orders and payments was predicated upon the words 'if crime has been committed'. There was no allegation that crime had been committed. Nor is the first applicant entitled to any relief against the first and/or second respondents in respect of the 15 September email. Apart from other considerations it will be recalled that the addressee to whom the 15 September email was sent was Mr Curie Chen, who had been appointed as FYG's representative under the sales agreement between FYG and the first applicant (see [77] above). The party to whom the 15 September email was copied was Mr Zhou Jie, another officer of FYG. Mr Zhou Jie had been a party to a merry-go-round of emails back on 4 October 2001. The third respondent had forwarded an email to Mr Cho Tak Wong expressing concerns which he had about the second applicant. Mr Cho Tak Wong proceeded to copy the relevant email to Mr Zhou Jie who in turn copied the email to the third applicant. It is inconceivable that Mr Curie Chen and Mr Zhou Jie were without detailed knowledge of the convictions of the second and third respondents for the very serious customs fraud in which they had engaged, by the time of the third respondent's transmission to them of the 15 September email, and also detailed knowledge of the District Court's and the Court of Criminal Appeal's findings in respect of FYG's significant involvement in that fraud (see [94]-[96] above). In the circumstances, it is unlikely that the 15 September email would have led to any relevant misconceptions arising in the minds of Mr Curie Chen and/or Mr Zhou Jie as the persons to whom the 15 September email had been directed. It follows that the first applicant's claims for relief under the Trade Practices Act and/or the Fair Trading Act should be dismissed with costs. I turn now to the claims made by the applicants for relief in respect of alleged defamation. It is convenient to firstly deal with the claims made by the first applicant. It does not allege that it was defamed by the publication of the ATO letter, nor does it allege that it was defamed by the publication of the 15 September email. In relation to the 13 September facsimile I have already found that it was published by the third respondent on behalf of the first respondent. Relevantly for the first applicant's case, the 13 September facsimile would appear to have been published to about four automotive glass businesses in Queensland, two in Victoria, one in South Australia, one in Western Australia, one in Tasmania, one in the Australian Capital Territory and to about four 'Nielsen & Moller' businesses in Queensland and Victoria with only a small number of persons becoming apprised of the 13 September facsimile through the 'grapevine' effect. In relation to the publication of the 13 September facsimile the applicants have alleged that it conveyed six separate imputations which were defamatory of the first applicant. These have been detailed in subparagraphs (a) --- (f) of paragraph 14 of the Third Further Amended Statement of Claim filed 27 October 2006. The imputations alleged mirror the representations alleged to have been made concerning the first applicant and spelt out in paragraphs [148], [152], [153], [154], [155] and [159] above. I do not intend to repeat my observations in respect of the first five of them beyond saying that I have carefully considered the specific parts of the 13 September facsimile relied upon by the applicants as allegedly conveying the imputations which have been pleaded in the context of the whole of the document. It appears to me that the words used in the 13 September facsimile would not, in their ordinary meaning, have conveyed to the ordinary reasonable reader the imputations alleged or any of them. In relation to the representational matter addressed in [159] above, I accept that the words used in the 13 September facsimile, in their ordinary meaning, would convey to the ordinary reasonable reader an imputation in respect of the Australian autoglass replacement market, that the first applicant implemented a predatory pricing policy by selling product at below cost, to control the Australian replacement autoglass market. However, I do not consider that the imputation in question was defamatory of the first applicant in the sense that the words used would tend to lower the first applicant in the estimation of right-thinking members of society generally. Robust competition is something upon which the economy thrives. It is praise-worthy. In the absence of any suggestion that by selling product below cost the first applicant was taking advantage of a substantial degree of power in the Australian autoglass replacement market for the purpose of eliminating or substantially damaging its competitors, the imputation could not be said to be defamatory. In my opinion the first applicant's claims for damages for defamation fail. In relation to the imputations said to have been conveyed by the 13 September facsimile, the ATO letter and the 15 September email which it is said were defamatory of the second applicant, I will deal with the second and third applicants' claims seriatim. Apart from its publication elsewhere the 13 September facsimile was published to about six automotive glass businesses in New South Wales. In relation to the 15 September email I have already found that it was published by the third respondent and then only to Curie Chen and Zhou Jie. Transfer pricing would involve FYG, as the first applicant's supplier of autoglass, charging the first applicant more for its product than was a proper price. The beneficiary of any transfer pricing would plainly be Cho Tak Wong's company, FYG, and not the first applicant. With some hesitation I would conclude that the words used in the 13 September facsimile would in their ordinary meaning convey to an ordinary reasonable reader an imputation that the second applicant used the first applicant to launder money to China for her personal gain, Mr Cho doing the same for his personal gain. The applicants submit that the publication of the 13 September facsimile conveyed an imputation of and concerning the second applicant that she conspired with the third applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. It appears to me that the words used in the 13 September facsimile would not, in their ordinary meaning, convey to the ordinary reasonable reader an imputation that the second applicant conspired with the third applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. There is no suggestion in the attachment to the fax that accounts were falsified. The words 'thus transferring this benefit to China' imply transfer pricing by FYG rather than the making of false entries in the first applicant's accounts with a view to stating the cost of sales at a higher figure than an invoiced figure. Furthermore, the words used give no indication of an agreement between the second applicant and the third applicant to perform an illegal act or to perform a legal act by illegal means. The imputation alleged has not been established. The applicants submit that the publication of the 13 September facsimile conveyed an imputation of and concerning the second applicant that she was a person convicted of two offences of providing false customs invoices who defrauded the Australian Taxation Office. In my opinion the words used in the 13 September facsimile, in their ordinary meaning, would have conveyed to the ordinary reasonable reader such an imputation. I consider that the imputation in question was defamatory of the second applicant in the sense that the words used would tend to lower the second applicant in the estimation of right-thinking members of society generally. Transfer pricing would involve FYG, as the first applicant's supplier of autoglass, charging the first applicant more for its product than was a proper price. The beneficiary of any transfer pricing would plainly be Cho Tak Wong's company, FYG, and not the first applicant. With some hesitation I would conclude that the words used in the ATO letter would in their ordinary meaning convey to an ordinary reasonable reader an imputation that the second applicant used the first applicant to launder money to China for her personal gain, Mr Cho doing the same for his personal gain. The applicants submit that the publication of the ATO letter conveyed an imputation of and concerning the second applicant that she conspired with the third applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. I would conclude that the words used in the ATO letter would not, in their ordinary meaning, convey to the ordinary reasonable reader an imputation that the second applicant conspired with the third applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. There is no suggestion in the ATO letter that accounts were falsified. The words 'thus transferring this benefit to China' imply transfer pricing by FYG rather than the making of false entries in the first applicant's accounts with a view to stating the cost of sales at a higher figure than an invoiced figure. Furthermore, the words used give no indication of an agreement between the second applicant and the third applicant to perform an illegal act or to perform a legal act by illegal means. The imputation alleged has not been established. The applicants submit that the publication of the ATO letter conveyed an imputation of and concerning the second applicant that she was a person convicted of two offences of providing false customs invoices who defrauded the Australian Taxation Office. In my opinion the words used in the ATO letter, in their ordinary meaning, would have conveyed to the ordinary reasonable reader such an imputation. I consider that the imputation in question was defamatory of the second applicant in the sense that the words used would tend to lower the second applicant in the estimation of right-thinking members of society generally. In my opinion the words used in the 15 September email, in their ordinary meaning, would have conveyed to the ordinary reasonable reader such an imputation. I consider that the imputation in question was defamatory of the second applicant in the sense that the words used would tend to lower the second applicant in the estimation of right-thinking members of society generally. The applicants submit that the publication of the 15 September email conveyed an imputation of and concerning the second applicant that she was implicated in a major taxation fraud. Alternatively, that she was reasonably suspected of being implicated in a major taxation fraud. As previously observed, the 15 September email refers to an investigation into 'possible taxation fraud' and later to 'NAGS possible frauds being found'. I never signed any accounts, Maggie Lo, falsely sent them to Tax office ... causing all directors NAGS to now become involved in very serious case against Australian Government Taxation Office. I consider that the imputation in question was defamatory of the second applicant in the sense that the words used would tend to lower the second applicant in the estimation of right-thinking members of society generally. The applicants submit that the publication of the 15 September email conveyed an imputation of and concerning the second applicant that her criminal conduct was such that it posed a risk to FYG of losing its Australian stock orders and payment for them. It is clear that the foreshadowed possibility of the loss of stock orders and payments was predicated upon the words 'if crime has been committed'. There was no allegation that crime had been committed. In my opinion the words used in the 15 September email, in their ordinary meaning, would have conveyed to the ordinary reasonable reader such an imputation. I consider that the imputation in question was defamatory of the second applicant in the sense that the words used would tend to lower the second applicant in the estimation of right-thinking members of society generally. He does not allege that he was defamed by the publication of the 15 September email. The applicants submit that the publication of the 13 September facsimile conveyed an imputation of and concerning the third applicant that he conspired with the second applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. It appears to me that the words used in the 13 September facsimile would not, in their ordinary meaning, have conveyed to the ordinary reasonable reader an imputation that the third applicant conspired with the second applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. There is no suggestion in the attachment to the fax that accounts were falsified. The words 'thus transferring this benefit to China' imply transfer pricing by FYG rather than the making of false entries in the first applicant's accounts with a view to stating the cost of sales at a higher figure than an invoiced figure. Furthermore, the words used give no indication of an agreement between the third applicant and the second applicant to perform an illegal act or to perform a legal act by illegal means. The imputation alleged has not been established. The applicants submit that the publication of the 13 September facsimile conveyed an imputation of and concerning the third applicant that he was a person convicted of two offences of providing false customs invoices who defrauded the Australian Taxation Office. In my opinion the words used in the 13 September facsimile, in their ordinary meaning, would have conveyed to the ordinary reasonable reader such an imputation. I consider that the imputation in question was defamatory of the third applicant in the sense that the words used would tend to lower the third applicant in the estimation of right-thinking members of society generally. It appears to me that the words used in the ATO letter would not, in their ordinary meaning, have conveyed to the ordinary reasonable reader an imputation that the third applicant conspired with the second applicant to defraud the Australian Taxation Office by falsifying the accounts of the first applicant and transferring the benefit to China. There is no suggestion in the ATO letter that accounts were falsified. The words 'thus transferring this benefit to China' imply transfer pricing by FYG rather than the making of false entries in the first applicant's accounts with a view to stating the cost of sales at a higher figure than an invoiced figure. Furthermore, the words used give no indication of an agreement between the third applicant and the second applicant to perform an illegal act or to perform a legal act by illegal means. The imputation alleged has not been established. The applicants submit that the publication of the ATO letter conveyed an imputation of and concerning the third applicant that he was a person convicted of two offences of providing false customs invoices who defrauded the Australian Taxation Office. In my opinion the words used in the ATO letter, in their ordinary meaning, would have conveyed to the ordinary reasonable reader such an imputation. I consider that the imputation in question was defamatory of the third applicant in the sense that the words used would tend to lower the third applicant in the estimation of right-thinking members of society generally. In their reply to the Defence to Third Further Amended Statement of Claim filed 28 November 2006 the applicants have asserted that the respondents were actuated by express malice in the publication of the matters complained of in that they were motivated by an ulterior purpose or foreign motive. The common law protects a defamatory statement made on an occasion where one person has a duty or interest to make the statement and the recipient of the statement has a corresponding duty or interest to receive it. Communications made on such occasions are privileged because their making promotes the welfare of society. But the privilege is qualified --- hence the name qualified privilege --- by the condition that the occasion must not be used for some purpose or motive foreign to the duty or interest that protects the making of the statement (per Gaudron, McHugh and Gummow JJ in Roberts v Bass [2002] HCA 57 ; (2002) 212 CLR 1 at [62] and [75]). A privileged occasion is, in reference to qualified privilege, an occasion where the person who makes a communication has an interest or a duty, legal, social or moral, to make it to the person to whom it is made and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential (per Lord Atkinson in Adam v Ward [1917] AC 309 at 334; see also Lange v Australian Broadcasting Corporation [1997] HCA 25 ; (1997) 189 CLR 520 ('Lange') at 570). The purpose of the law of defamation is to strike a balance between the right to reputation and freedom of speech (see Lange at [568]). Apart from a few exceptional cases, the common law categories of qualified privilege protect only occasions where defamatory matter is published to a limited number of recipients. If a publication is made to a large audience, a claim of qualified privilege at common law is rejected unless, exceptionally, the members of the audience all have an interest in knowing the truth. Publication beyond what was reasonably sufficient for the occasion of qualified privilege is unprotected. Because privileged occasions are ordinarily occasions of limited publication --- more often than not occasions of publication to a single person --- the common law has seen honesty of purpose in the publisher as the appropriate protection for individual reputation. As long as the publisher honestly and without malice uses the occasion for the purpose for which it is given, that person escapes liability even though the publication is false and defamatory. But a test devised for situations where usually only one person receives the publication is unlikely to be appropriate when the publication is to tens of thousands, or more, of readers, listeners or viewers (see Lange at [572]). A purpose or motive that is foreign to the occasion and actuates the making of the statement is called express malice. The term 'express malice' is used in contrast to presumed or implied malice that at common law arises on proof of a false and defamatory statement. Proof of express malice destroys qualified privilege. Accordingly, for the purposes of that privilege, express malice is any improper motive or purpose that induces the defendant to use the occasion of qualified privilege to defame the plaintiff (per Gaudron, McHugh and Gummow JJ in Roberts v Bass at [75]). The occasion has been misused. It is the motive or purpose for which the occasion is used that is ultimately decisive, not the defendant's belief in the truth of the matter (per Gaudron, McHugh and Gummow JJ at [79]). Improper motive in making the defamatory publication must not be confused with a defendant's ill-will, knowledge of falsity, recklessness, lack of belief in the defamatory statement, bias, prejudice or any other motive than duty or interest for making the publication. If one of these matters is proved, it usually provides a premise for inferring that the defendant was actuated by an improper motive in making the publication. Indeed, proof that the defendant knew that a defamatory statement made on an occasion of qualified privilege was untrue is ordinarily conclusive evidence that the publication was actuated by an improper motive. But, leaving aside the special case of knowledge of falsity, mere proof of the defendant's ill-will, prejudice, bias, recklessness, lack of belief in truth or improper motive is not sufficient to establish malice. The evidence or the publication must also show some ground for concluding that the ill-will, lack of belief in the truth of the publication, recklessness, bias, prejudice or other motive existed on the privileged occasion and actuated the publication (per Gaudron, McHugh and Gummow JJ in Roberts v Bass at [76]; see also per Kirby J at [185]). The defendant in his statement of defence traverses the falsehood of the statement alleged to have been made by him, and thereby takes the onus of justifying, but this he would have without such traverse. Each of the defamatory imputations referred to at [225], [231] and [235] were conveyed by the publication of the 15 September email. Similarly, in respect of the publication of the 13 September facsimile in Queensland, Victoria, South Australia, Western Australia, Tasmania and the Australian Capital Territory, the respondents have failed to establish that these imputations were true in substance and in fact. The truth defences have not been made out. Just as a communication to the Australian Securities and Investments Commission about maladministration, incompetence or possible dishonesty within a company would be protected by qualified privilege (see per Lawton LJ in Bryanston Finance Ltd v de Vries [1975] 1 QB 703 at 736) so also, in my opinion, would a communication such as the ATO letter be protected by qualified privilege, subject to the possible loss of such privilege due to malice on the part of the second or third respondents that may be proved by the applicants. It is apparent from the terms of the ATO letter itself that the second respondent was not well disposed towards the second and third applicants. One might say that he was personally aggrieved by their conduct in relation to the affairs of the first applicant. However, I do not consider that the communication by the second applicant of the ATO letter was other than for the common convenience and welfare of society. It was not actuated by a desire to injure the second and third applicants. The occasion for the qualified privilege had not been misused by the second respondent. I do not consider that the second respondent was actuated by malice in sending the ATO letter to the Australian Taxation Office. In my opinion the second respondent's conduct in publishing the ATO letter was reasonable in the circumstances within the meaning of s 22(1)(c) of the Defamation Act 1974 (NSW). In Bellino v Australian Broadcasting Corporation [1995] HCA 34 ; (1996) 185 CLR 183 at 221, Dawson, McHugh and Gummow JJ considered that the discussion of the conduct of any person holding public office, participating in the administration of justice or public affairs, offering goods or services to the public or otherwise engaging in public conduct that invites public criticism or discussion came within the term 'subject of public interest' within the meaning of the Criminal Code Act 1899 (Qld). In my opinion the contextual imputation defences under s 16 of the Defamation Act 1974 (NSW) fail. I turn now to the defences raised in paragraphs 27 --- 29 of the Defence to Third Further Amended Statement of Claim which rely upon the decision of the Court of Appeal in England in Polly Peck (Holdings) Plc v Trelford (1986) 1 QB 1000 ('Polly Peck'). 277 Polly Peck defences are not available in New South Wales, Queensland and Tasmania. They are available in respect of publications in Victoria, South Australia, Western Australia and the Australian Capital Territory. The difficulty with this apparently self-evident proposition is in deciding whether the two libels are indeed distinct in the sense that the imputation defamatory of the plaintiff's character in the one is different from the other. There are two different articles, so that strictly there are two separate causes of action, but when I look at the statement of claim it is quite obvious that the imputation of which Mr Nadir complains is the same, for in paragraphs 8 and 10 of the statement of claim, ... it will be seen that the sting of the libel is that he deceived or negligently mislead shareholders, investors and members of the general public as to the operation of his business enterprises. If the action succeeds, the jury will be asked to assess a single sum by way of damages. In cases where the plaintiff relies on the natural and ordinary meaning of words and pleads a false innuendo, the defendant is entitled to justify the words in any meaning that it is open to the jury to find that the words bear, and I do not see why the defendant should not plead that in their context the words are true. In cases where the plaintiff selects words from a publication, pleads that in their natural and ordinary meaning the words are defamatory of him, and pleads the meanings which he asserts they bear by way of false innuendo, the defendant is entitled to look at the whole publication in order to aver that in their context the words bear a meaning different from that alleged by the plaintiff. The several defamatory allegations in their context may have a common sting, in which event they are not to be regarded as separate and distinct allegations. The defendant is entitled to justify the sting, and once again it is fortuitous that what is in fact similar fact evidence is found in the publication. It seems to me that on the facts of this case there is no scope for the operation of the Polly Peck defence in those jurisdictions where it is available. I should add that I am by no means satisfied that paragraphs 27 --- 29 inclusive of the Defence to Third Further Amended Statement of Claim in fact raise Polly Peck defences. Certainly the facts do not fall within the Polly Peck principles. In the applicants' outline of their final submissions of 19 April 2007 it was submitted that an injunction should go restraining the respondents, their servants and agents from publishing any matter of and concerning any of the applicants that contained any of the representations pleaded by the first applicant in support of its case for relief under the Trade Practices Act and/or the Fair Trading Act . Were it appropriate to grant relief under one or other of those Acts, and in my opinion it would not be appropriate, I would not consider that the circumstances warrant injunctive relief such as has been proposed. (b) The first applicant is not entitled to damages for defamation (see [199] above). (c) By publishing the 13 September facsimile the first and third respondents conveyed a defamatory imputation of and concerning the second applicant that she used the first applicant to launder money to China for her own personal gain (see [206]-[207] above). (d) By publishing the 13 September facsimile the first and third respondents conveyed a defamatory imputation of and concerning the second applicant that she was a person convicted of two offences of providing false customs invoices who defrauded the Australian Taxation Office (see [212]-[213] above). (e) By publishing the 13 September facsimile the first and third respondents conveyed a defamatory imputation of and concerning the third applicant that he was a person convicted of two offences of providing false customs invoices who defrauded the Australian Taxation Office (see [243]-[244] above). (f) The second and third applicants are entitled to damages in respect of the publication of the 13 September facsimile in New South Wales, Queensland, Victoria, South Australia, Western Australia, Tasmania and the Australian Capital Territory (see [19]-[22] above). (g) By publishing the ATO letter, at the request of the third respondent, the second respondent conveyed a defamatory imputation of and concerning the second applicant in the same terms as the imputation conveyed by the 13 September facsimile and referred to at [206]-[207] above (see [217]-[218] above). By publishing the ATO letter, at the request of the third respondent, the second respondent conveyed defamatory imputations of and concerning the second and third applicants in the same terms as the imputations conveyed by the 13 September facsimile and referred to at [212]-[213] and [243]-[244] above (see [223]-[224] and [249]-[250] above). However, the publication of the ATO letter was protected by qualified privilege. In the circumstances neither the second applicant nor the third applicant has any entitlement to damages against the second respondent or the third respondent in respect of that publication (see [270] above). Where the law of the forum is governed by a statute and the law within Australia is itself lacking in uniformity, I doubt whether it could be presumed that the defamation law in China, including the Special Administrative Region of Hong Kong, is the same as it is in New South Wales. The relevant defamation law (if any) has not been proven. I would also note the findings made by me at [188]-[190] above in relation to the circumstances in which the 15 September email was transmitted to Mr Curie Chen and Mr Zhou Jie. Particulars in respect of the claims for aggravated and exemplary damages are set out in paragraphs (a)-(l) on the second and third pages of the Third Further Amended Application filed 27 October 2006. On the other side of the coin, the first and third respondents have pleaded, in mitigation of the second and third applicants' damages, their bad reputation, the truth of the imputations relied upon in, relevantly, the 13 September facsimile and the truth of the allegations contained in, relevantly, the 13 September facsimile. I have already made a number of findings of fact which bear upon the question of damages at [97]-[132] above. As pointed out in Carson the first two purposes are frequently considered together and constitute consolation for the wrong done to the relevant applicant. Vindication looks to the relevant attitude of others (per Hayne J in Rogers v Nationwide News Pty Limited [2003] HCA 52 ; (2003) 216 CLR 327 ('Rogers') at [60]; see also at [35]). A person's reputation is not to be valued more highly than life or limb. If an award of damages for defamation is greater than the amount that would be allowed for the non-economic consequences of the most serious physical injuries with permanently disabling consequences, it may be evident that the amount awarded for defamation is manifestly excessive. In this way, the comparison which s 46A requires limits awards for defamation. What it does not do, however, is identify where, within the outer limits of proper awards, a particular case should find its proper level. It does not, for example, say that some or all forms of defamation should attract awards less than (or greater than) an award that might be made for (say) the loss of a limb. It is of the first importance to recall the fundamental principle that the damages to be awarded for defamation must compensate for the effect of the defamation on the particular plaintiff. Likewise, it is fundamental that the damages for non-economic loss in personal injury awards must compensate for the effect of the injury on the particular plaintiff. Classifying kinds of defamation and kinds of personal injury, and using that classification to assert some relationship between the damages to be awarded in these cases would deny those fundamental principles. Nothing in s 46A permits or requires it to be done. In particular, they must stand in a proper relationship with awards for the non-economic consequences of personal injury. The relationship which s 46A(2) identifies is not, however, some precise or mathematical relationship between particular cases of defamation and personal injury or between particular classes of such cases. To do that would compare the incomparable. Nonetheless, s 46A(2) should be understood as having two particular consequences of relevance to the present appeal. The injury done by defamation, even if serious, is often evanescent. By contrast, some personal injuries are permanent and devastatingly disabling. One of the principal purposes of an award of damages for defamation is to vindicate the wrong that was done. By contrast, damages for personal injury can compensate, but cannot right the wrong that was done. Yet, in neither defamation nor in personal injuries is there any measure by which the compensation for the non-pecuniary loss which the particular plaintiff has suffered can be assessed except what is "reasonable". Treating cases where the damages allowable are capped by statute as included within the "general range" to be considered shows that those statutory limits imposed in cases of motor or workplace accident are not to be taken as being indirectly imposed as limits on the amount to be allowed in defamation. But the reference to the general range of damages does identify the highest sums awarded for the non-economic consequences of personal injury as what might be called a presumptive outer limit to awards for defamation. So much follows from the fact that rarely, if ever, will the harm done by a defamation be greater than the most serious form of physical injury which leads to permanent and serious disabilities. And if that represents the presumptive outer limit to awards for defamation, each particular award that is made must find a place within a range which is marked out in that way. In that case modest amounts had been awarded by the Primary Judge by way of compensatory and aggravated damages broken down as to damages for injury to reputation, damages for injury to feelings and aggravated damages. One matter which was addressed on the hearing of the appeal was the relevance of a defendant's failure to apologise in determining both ordinary compensatory damages and aggravated compensatory damages. The Court held that a failure to apologise could be taken into account on both aspects of the matter. In determining the quantum of damages in the present case one matter to be taken into account is whether the reputations of the second and third applicants suffered any material damage at all. It is also appropriate to bear in mind, as Hayne J said in Rogers , that the injury done by defamation, even if serious, is often evanescent. The injuries in this case would seem to me to be transient in nature. On the question of the claims made by the second and third applicants for aggravated damages it is undoubtedly the case that the first and third respondents were unwilling to apologise for their conduct in publishing the defamatory matter. Suggestions were put by senior counsel for the applicants to the third respondent that he hated the second and third applicants and that he attacked them on a racial pretext. These suggestions were denied by the third respondent and I accept his denial. I am not being racist towards your client. What I am merely stating is that she is a prosecuted criminal and she was born in China and she has immigrated to Australia and become a naturalised Australian citizen. That was the inference. By way of compensatory damages it would seem to me that the third applicant should be awarded $4,000 for injury to his reputation in New South Wales and $1,000 for injury to his reputation in each of Queensland, Victoria, South Australia, Western Australia, Tasmania and the Australian Capital Territory, a total of $10,000. In respect of injury to their respective feelings and health they should be awarded damages of $1,000 each for each jurisdiction in which the 13 September facsimile was published, a total of $7,000 each. In relation to aggravated compensatory damages each of the second and third applicants should be awarded $500 each for each jurisdiction in which the 13 September facsimile was published given the first and third respondents' failure to apologise and retract the defamatory material, a total of $3,500 each. In reaching these determinations as to the amounts to be awarded by way of damages I have had regard to the principles enunciated by Beazley, Giles and Santow JJA in Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 ('Marsden') at [1313] et seq. In dealing with damage to reputation their Honours said at [1370] that, in fulfilling the purpose of reparation for harm done to, and vindication of, reputation, it is necessary to know the reputation said to have been injured. In principle, a plaintiff with a bad reputation will be entitled to lower damages than a plaintiff with a high reputation, because the injury to the reputation will be less if the reputation is already diminished. In this regard it is important to remember that reputation is to be contrasted with character, that is, what a person is as distinct from what other people think of the person, but 'character' can properly be used in the same sense as 'reputation'. General knowledge that an applicant has a criminal record among the section of the community in which it is claimed that a defamatory imputation has been published forms part of an applicant's general reputation, which is of necessity brought into the field of relevancy by a claim by the applicant that his or her reputation has been injured (see per Hardie J in Wishart v Mirror Newspapers Ltd (1963) 63 SR (NSW) 745 at 756-7). As I understand the Defence to Third Further Amended Statement of Claim, the first and third respondents' case in respect of mitigation of damages was directed at the relevance of harm to reputation in the context of a person with a bad reputation. In the absence of evidence as to the reputation of the second and third applicants and having regard to the notoriety that would surround their convictions for very serious customs fraud offences, the clear inference is that they were people with diminished reputations as at September 2005. Exemplary damages are awarded rarely. They recognise and punish fault, but not every finding of fault warrants their award. Something more must be found. (See per Gleeson CJ, McHugh, Gummow and Hayne JJ in Gray v Motor Accident Commission [1998] HCA 70 ; (1998) 196 CLR 1 at [12] and [20]). Exemplary damages depart from the notion of compensation. They are separately assessed, and their purpose is to punish a respondent and teach a respondent that defaming an applicant does not pay. In assessing compensatory damages a jury must consider how much an applicant ought to receive whereas in assessing punitive damages a jury must consider how much a respondent ought to pay. Exemplary damages may be awarded, for example, when a newspaper respondent chooses to publish without belief in the truth of what it publishes because circulation will rise and enough money will be made to offset any damages, in the traditional words 'in contumelious disregard' of the applicant's rights (see per Beazley, Giles and Santow JJA in Marsden at [1317] and [1473]). In my opinion, publication by the third respondent of the 13 September facsimile on behalf of the first respondent did not demonstrate a contumelious disregard of the rights of the second and third applicants. It is apparent that the third respondent had a conviction that the second and third applicants had defrauded the Australian Taxation Office in relation to the disclosure of the taxable income of the first applicant. I do not consider the circumstances to be such as to warrant the imposition of exemplary damages in respect of publication of the 13 September facsimile in jurisdictions other than New South Wales. No submissions were advanced orally or in writing in respect of this claim. Kirby P, as his Honour then was, agreed with McHugh JA's reasons in that case. In most cases the plaintiff in a defamation action will not suffer any loss after the verdict or, at all events, he cannot be treated as suffering any loss after that time. Since ... the verdict must be taken to be sufficiently large to vindicate him in the future ... he ought not be treated as suffering any future loss so far as injury to his reputation is concerned. Speaking generally, I think that the plaintiff in a defamation action is entitled to interest on each of the ordinary elements of the award of damages in a defamation action. In particular, he is entitled to damages to vindicate him. A plaintiff in such an action sustains loss for each day that the defendant fails to pay the appropriate damages to him. However, it does not follow that the plaintiff is entitled to interest on the whole award. In many cases the award will reflect an amount for continuing injury to feelings and reputation to the date of verdict. Hence the amount awarded may, and usually will, be higher than the amount which would have been awarded as at the date of publication or even as at the date of the writ. Since it is unfair to plaintiffs to deprive them of interest for the period in which they have been deprived of their money, interest ought to be awarded to the extent that it is fair and proper. Speaking generally, the best approach is to treat the award as though the damages represent a loss spread over the period from the date of publication to trial. It is a process which does not achieve perfect justice for the plaintiff since he may have ceased to suffer actual injury well before the trial. But it seems to me to be the most practical approach to a difficult problem. ...In O'Sullivan v Komesaroff (Supreme Court of Victoria, 22 April 1983, unreported), Brooking J said that the assessment of interest "comes close to being an instinctive synthesis based on various rough calculations and broad assessments". I consider an appropriate lump sum amount to be included in the judgment for the second applicant to be $2,500 and an appropriate lump sum amount to be included in the judgment for the third applicant to be $1,800. The first applicant's claims for relief in respect of alleged defamation of it by the publication of the 13 September facsimile have also failed. The claims of the second and third applicants for damages for defamation against the second respondent in relation to the publication of the ATO letter have failed and the claims for damages for defamation by the second applicant against the third respondent for damages for defamation in respect of publication of the 15 September email have also failed. On the other hand, the claims for damages for defamation brought by the second and third applicants against the first and third respondents in respect of the publication of the 13 September facsimile have succeeded. However, before any order is made I propose to direct the parties to file and serve such written submissions as to costs as they may be advised so that the question can be addressed promptly and a decision reached as to whether the tentative view that I have mentioned is appropriate or some other order should be made. He did not appear thereafter. | publication of a facsimile in all states of australia and the australian capital territory by a company conveying defamatory innuendos about persons associated with a competitor business publication of a 'whistleblower' letter to the australian taxation office publication of an email to two officers of the principal supplier of the competitor business located in the special administrative region of hong kong and in another location within the people's republic of china availability of presumption as to the law, if any, in respect of defamation in the special administrative region of hong kong and elsewhere in the people's republic of china availability of defences compensatory, aggravated and exemplary damages claims for defamation run in parallel with claims for representations said to constitute misleading and deceptive conduct defamation trade practices |
The writ pursuant to which the vessel was arrested was issued by the court on 9 June 2006. It claimed $2.5 million as damages, interest, the arrest of the ship and an order for the return or cancellation of a standby letter of credit delivered by the plaintiff to the owners of the ship. The Federal Court's jurisdiction in respect of this claim arises under section 10 and section 17 and 4 (3)(d), (f), (o), (r) and (w) of the Admiralty Act 1988 (Cth). She exhibited a copy of what was said to be a charter party dated 19 April 2006 and a Liberian Permanent Certificate of Registry and a Certificate of Delivery of the Vessel. 5 The ship was arrested and the parties then agreed to its release on the provision by the owners of a letter of guarantee for $US3,500,000 issued by the Royal Bank of Scotland. Originally, the ship itself, by a notice of appearance filed on 14 June 2006 appeared conditionally. I granted leave to the corporate defendant to file an amended notice of appearance which provided that it appeared conditionally this morning. During the course of argument the defendant elected to appear unconditionally, having made the concession that the court was clearly seized of jurisdiction under the Admiralty Act 1988 (Cth). 6 Ms Wilmshurst supported the present application which is for, in effect, quia timet relief to protect the ability of the plaintiff to file its statement of claim in personam so as to invoke rights under Australian law, with affidavits sworn 20 and 22 June 2006. In her affidavit of 20 June 2006, Ms Wilmshurst exhibited a number of items of correspondence which had passed between solicitors acting for the owners and the charterers. The evidence establishes quite clearly that unless restrained, the owners will seek to move the High Court of Justice in England on the basis of cl 45 of the charter party to the intent that the plaintiff will be enjoined from pursuing these proceedings in this court. 7 Exhibit A before me is the judgment of Thomas J in Akai Pty Ltd v Peoples Insurance Co Limited [1998] 1 Lloyd's Rep 90. In that case his Lordship concluded that Peoples Insurance had not submitted to the jurisdiction of the courts of New South Wales. He held that the judgment of the High Court of Australia ( Akai Pty Ltd v Peoples Insurance Co Ltd [1996] HCA 39 ; (1996) 188 CLR 418) was not one that was recognised as giving rise to a decision binding on Peoples Insurance in accordance with the rules of private international law operative in England. He concluded that because the parties had freely bargained for the English choice of law and jurisdiction clauses, that bargain should be upheld, unless there were strong reasons for not doing so and should not as a matter of comity give effect to the decision of the High Court of Australia which overrode that bargain and that choice ([1998] 1 Lloyd's Rep at 100). The effect of allowing the Australian proceedings to proceed, his Lordship held, would deprive Peoples Insurance of the results of that bargain by imposing a set of statutory provisions which made the contract much less favourable to the insurer than English law provided. 8 That was because the operation of s 52 of the Insurance Contracts Act 1984 (Cth), which is an analogue of s 68 of the Trade Practices Act 1974 (Cth), prohibiting contracting out of the statutory jurisdiction granted to Australian courts in accordance with both Acts, could be avoided by the application by the rules of English private international law (see 188 CLR at 433 per Toohey, Gaudron and Gummow JJ). 9 In this matter, the plaintiff has not yet filed any claim in personam. Ms Wilmshurst deposed that she was concerned that any pre-emptive action by the defendant to enforce by proceedings in England, rights it has under English law would deprive the plaintiff of the opportunity to contend in this court for the imposition of conditions pursuant to section 7 of the International Arbitration Act 1974 (Cth) on the foreshadowed application by the defendant for a stay of these proceedings which has been made this afternoon. 10 Ms Wilmshurst was also concerned that conditions may not be able to be imposed pursuant to s 29 of the Admiralty Act 1988 (Cth), were this court satisfied that some or all of the dispute disclosed in the in personam action fell within the scope of the arbitration clause on its proper construction. Ms Wilmshurst deposed that she was currently undertaking factual inquiries as to whether there was a reasonable basis for the plaintiff to bring a claim under the Trade Practices Act 1974 (Cth) against the defendant which may or may not have accrued prior to entry into the charter party. She was concerned that if the relief now sought were not granted and the English court acceded to effect the defendant's application for an anti-suit injunction there was a risk that any Trade Practices Act 1974 (Cth) claim may not be entertained in the arbitration proceedings in London because of the combination of the arbitration clause and the governing law clause of the charter party. 11 The plaintiff also wanted to avail itself of the opportunity to have this court impose such conditions as, on the evidence, it may think would be appropriate pursuant to s 7(3) of the International Arbitration Act 1974 (Cth) in the event that the defendant did bring a stay application and that succeeded under s 7(2) of that Act. 12 The plaintiff has pointed to cl 5 of the charter party which provides that the vessel was to be employed in such lawful trades between safe ports and safe places within Australia, Japan, South Korea and Singapore. Charterers to provide the licences for the intended trade before delivery. Charterers to apply and to prove that they have received the licences for the intended trade. In an email passing between solicitors acting for the parties on 10 June 2006, the defendant's English solicitors referred to the vessel having been detained by the Australian Maritime Safety Authority up to that morning and that the owners were intending to sail it to Singapore for permanent repairs after discharging the cargo on board in accordance with the charterers request. It also referred to the fact that on 25 May 2006 the Australian Immigration authorities had ordered the vessel to leave for a port outside Australian waters and the authorities had decided not to allow the vessel to sail to any other Australian port until such time as the crew/visa permit position was resolved by charterers. Unless the vessel complied with that order, it was highly likely, so the email continued, that the crew would be thrown off the vessel and the vessel detained for an indefinite period of time. The email referred to hull damage that had occurred. Thereafter the parties engaged in correspondence which did not exhibit all the elements of politeness one might have hoped commercial solicitors would have shown one another in the ordinary course of their dealings. 14 Later, during the course of that correspondence, the English solicitors for the defendant wrote a number of emails in fairly terse terms threatening the initiation of English injunctive proceedings to prevent the plaintiff exercising such rights as it may have in this court. ) arbitration as provided by Clause 45 of the governing CP, we will proceed as previously notified and we will recover the costs of doing so against your clients. You have formal notice of our intentions. Nothing less will do. You are on Notice. 19 The basis on which the plaintiff seeks an injunction is, in effect, to preserve the subject matter of such rights as the plaintiff may have, having regularly invoked, as the concession of the unconditional appearance demonstrates, the jurisdiction of this court to decide the in rem proceedings. 20 The power of the court to protect its own processes is one that is not susceptible of definition in closed categories. The purpose for which the court, as a superior court of record, has inherent powers is to protect its processes is so that, inter alia, all persons may approach the court and so that its jurisdiction may be not merely invoked but exercised where it exists. See also Ridgeway v The Queen [1994] HCA 33 ; (1995) 184 CLR 19 at 60). And in some cases, it is that counterpart power of protection that authorises the grant of anti-suit injunctions. Thus, for example, if "an estate is being administered ... or a petition in bankruptcy has been presented ... or winding up proceedings have been commenced ... an injunction [may be] granted to restrain a person from seeking, by foreign proceedings, to obtain the sole benefit of certain foreign assets" ( Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 at 892. See also Bank of Tokyo Ltd v Karoon [1987] AC 45 at 60, per Robert Goff LJ, and the cases there cited; Allstate Ltd v ANZ Banking Group Ltd [No 1] (1996) 64 FCR 1 at 26, and the cases there cited). Similarly, as Gummow J pointed out in National Mutual Holdings Pty Ltd v Sentry Corporation ((1989) 22 FCR 209 at 232. See also, eg, Laker Airways Ltd v Sabena, Belgian World Airlines (1984) 731 F 2d 909 at 927; Re Siromath Pty Ltd [No 3] (1991) 25 NSWLR 25 at 29-30), a court may grant an injunction to restrain a person from commencing or continuing foreign proceedings if they, the foreign proceedings, interfere with or have a tendency to interfere with proceedings pending in that court. As with other aspects of that power, it is not to be restricted to defined and closed categories 112 . 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. Development continues. One example is the line of authority dealing with the stay of proceedings instituted in a second forum where there are pending proceedings in another forum and the continuance of the second proceedings would be an abuse of the process of the first forum ( Logan v Bank of Scotland (No 2) [1906] 1 KB 141; Maritime Insurance Co Ltd v Geelong Harbor Trust Commissioners [1908] HCA 37 ; (1908) 6 CLR 194; Oceanic Sun Line Special Shipping Company Inc v Fay [1988] HCA 32 ; (1988) 165 CLR 197; Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55 ; (1990) 171 CLR 538). Again, in Cardile v LED Builders Pty Ltd ((1999) [1999] HCA 18 ; 198 CLR 380 at 393 [25] ), Gaudron, McHugh, Gummow and Callinan JJ referred to the passage in the joint judgment in CSR Ltd v Cigna Insurance Australia Ltd ((1997) [1997] HCA 33 ; 189 CLR 345 at 391) where it was said of the grant of an anti-suit injunction that the counterpart of the power of a court to prevent the abuse of its processes was the power of the court to protect the integrity of those processes once set in motion. The law of contempt both in England and Australia enables courts to grant injunctions to protect the administration of justice by protecting them from interferences by outside influences. 25 In my opinion it is part of the court's inherent power to protect the efficacy of proceedings already on foot which the Admiralty Rules contemplate can be supplemented by the pleading of a statement of claim. That may include in personam claims and other claims outside those contemplated under the Admiralty Act 1988 (Cth). These proceedings, which have been regularly instituted should not be interfered with peremptorily by the threats which the defendant has made to enjoin the plaintiff from proceeding with its rights to invoke and have the court exercise its judicial power. 26 There is no doubt that the proceedings commenced by the issue of the writ in rem was a regular invocation of the jurisdiction of this court under the Admiralty Act 1988 (Cth). The court was therefore seized of a matter for the purposes of Chapter III of the Constitution . The scope of the controversy, while at the moment somewhat undefined, was something which the Admiralty Rules contemplated may not necessarily be confined to allegations in the writ. Once the defendant appears unconditionally, the Admiralty Act 1988 (Cth) and Admiralty Rules contemplate that the defendant may then be made subject to whatever claims are available under the Australia law against it. 27 The plaintiff has said that it wishes to investigate whether or not some claims under the Trade Practices Act 1974 (Cth) can be made in the statement of claim to be filed. That includes examination of whether there can be claims made as to pre-contractual representations or conduct which may give rise to actions under s 52 of the Trade Practices Act 1974 (Cth) and possibly ones under that section which arise in the course of the performance of the contract. Likewise under the Trade Practices Act 1974 (Cth), s 74 may be able to be invoked as to the contractual scope of the services to be provided under the charter party, although again that is a matter which the plaintiff has said it wishes to investigate. 28 The defendant says these are matters of speculation and that what I should do in exercising my discretion to refuse the injunctive relief is to have regard to the command of s 7(2) of the International Arbitration Act 1974 (Cth) that the action will inevitably be stayed. As I pointed out during argument, no application has been made under that Act at the present time although the orders I made earlier this afternoon permit the defendant to invoke that provision in an amended notice of motion which it must file by tomorrow, if it chooses to do so. 29 There being no application under the International Arbitration Act 1974 (Cth) before the court, I am not enjoined to grant any stay or to consider what conditions might be applied were such a stay to be granted. Rather I am considering whether or not to permit the plaintiff to have sufficient time to formulate a statement of claim in accordance with the Admiralty Rules and within the time permitted by those Rules, as extended by me today, so as to see whether it can be demonstrated that the in personam jurisdiction of the court has been engaged and whether, if an application is made under s 7(2) of the International Arbitration Act 1974 (Cth) conditions should be placed upon any stay that might then be granted to take account of such claims as the plaintiff may have agitated in the pleading once that has been formulated. 30 It is quite clear on the evidence that the solicitors for the parties have been engaged in the procedural battle as to who should or should not obey cl 45 of the charter party or whether it is enforceable. The plaintiff has indicated that it may wish to advance an argument that the copy of the charter party in evidence and such other copies of it as exist were not executed by the parties and that it is not, in fact, a contract in force or that it is not the entire agreement of the parties. So, that again, is another possible dispute that is open to be agitated in this court. 31 If the defendant were permitted to bring injunctive proceedings in London then on the evidence before me, which is uncontested, it is highly likely that the Commercial List Judge would grant an injunction on the basis and for similar reasons to that granted by Thomas J in Akai Pty Ltd v Peoples Insurance Co Ltd [1998] 1 Lloyd's Rep 90. If that were to happen then these proceedings would be unable to be pursued by the plaintiff at all and such rights as the plaintiff may have under the laws passed by the Parliament of the Commonwealth, and which the public policy of this nation regards as being ones which ought to be able to be availed of by persons who come before courts in this country, will be set at nought. 32 I am of opinion that it is in the interests of justice that the authority of this court to hear and determine the matter which has been raised in the evidence before me as being a controversy between the parties, and such other matters as the plaintiff may wish to agitate, be safeguarded by an interlocutory injunction. All of those matters should be allowed to at least be put in a form in which the court can consider whether its jurisdiction has been regularly invoked and whether there are any reasons for refusing to exercise that jurisdiction. 33 I am mindful that although the defendant argued strenuously that I should have only regard to the claims articulated in the writ, the material before me indicates that there is obviously a wider controversy or, a somewhat undefined controversy, as to exactly what those claims may be. Issues as to whether or not the crew was or was not relevantly licensed or the like and whether or not it was one party's or the other's responsibility to obtain immigration visas for them need not necessarily be matters that arise solely under the charter party, if it is in fact the contractual, and only contractual, relationship the parties have. 34 The proceedings were brought on quickly and the ship was arrested just immediately before its detention by the authorities was about to cease. Since then the solicitors have concentrated on the agitation of the inter-jurisdictional dispute. In Queensland v JL Holdings Pty Ltd [1997] HCA 1 ; (1997) 189 CLR 146 at 152-155, 164-165, the High Court made it quite clear that the pleadings and the rules were not the masters but were the servants of the interests of justice. If by oversight, or because of pressure of time, or otherwise the plaintiff has not hitherto been able clearly to articulate a formulated cause of action which could be maintained in this court but may not be able to be maintained in English courts, there should be some recognition that this court should allow its procedures to be invoked in a regular way and in a way in which rights, that do exist under Australian law, can be articulated and recognised. 35 I was of opinion that in order to protect the processes of this court and its ability to hear and determine what appears to me to be a bona fide dispute between these parties that the injunctive relief that I granted earlier this afternoon was appropriate. While ordinarily one would expect to see the precise definition of the issues in dispute and the controversy for the purposes of identifying the relevant constitutional matter under Chapter III of the Constitution of the Commonwealth in pleadings, r 22 of the Admiralty Rules recognises that indeed such a course is likely not to occur necessarily immediately the writ is issued. That is why there is a provision for time to be given to a plaintiff, after the writ in rem has issued, and after the defendant has appeared to it, to put on a statement of claim in personam. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim. In my opinion, the plaintiff ought to have a reasonable opportunity in order to do so. 38 No serious opposition was made by the defendant to the application of the plaintiff that it should be allowed till 5 July 2006 in order to put on a statement of claim were I otherwise to grant an interim injunction. I took the view that the interim injunction that I was minded to grant was one to preserve a particular subject matter, namely, the ability of the plaintiff to invoke and have the court exercise jurisdiction under Acts of the Commonwealth that would not be recognised in English proceedings and which it would then be prevented from being able to litigate. Inter alia, there was the potential, as adverted to by counsel for the plaintiff, of involving brokers as third parties or defendants to the proceedings in personam and that was another consideration that I had in mind when granting the order. 39 This court has recognised that rights granted to parties under the Trade Practices Act 1974 (Cth) are important considerations in determining whether or not stays should be granted under s 7 of the International Arbitration Act 1974 (Cth) and under contractual arrangements for arbitrations or choice of law or jurisdiction in other jurisdictional areas. Allsop J recently affirmed these matters in Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Limited [2005] FCA 1102 at [73] ; see also at [71]-[74] and [110]-[111]; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1 at 7 and 23-24. 40 It was for these reasons that I considered that I should grant limited interlocutory relief in the terms of the orders which I pronounced earlier. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | stay of action anti-anti-suit injunction quia timet relief application for injunction to restrain defendant obtaining injunction in a foreign court which would prevent plaintiff filing statement of claim in personam pursuant to r 22 of the admiralty rules so as to invoke australian jurisdiction under trade practices act 1974 (cth) where defendant threatening to take steps in english high court of justice to restrain proceedings in the federal court of australia arrest of vessel in personam claim jurisdiction admiralty & maritime |
By that decision, the AAT affirmed a decision of the Social Security Appeals Tribunal ("the SSAT") given on 18 April 2005, in which the SSAT set aside a decision by the applicant cancelling the respondent's newstart allowance. The "appeal" to this Court is in fact an exercise of the Court's original jurisdiction. 2 The respondent indicated at a directions hearing that he did not wish to participate in this proceeding, and no longer had any interest in the matter. Accordingly, I have heard argument only from the applicant. The respondent completed a Bachelor of Environmental Science degree at Deakin University in July 2004, and thereafter unsuccessfully sought employment. He was in receipt of newstart allowance from that time. He was advised by his university lecturers that his prospects of finding a job would be significantly enhanced if he were to undertake an honours year. He enrolled for that extra qualification in February 2005. 4 On 11 February 2005, a decision was taken by a Centrelink officer, acting as a delegate of the Secretary to the Department of Family and Community Services (which, at that time, had responsibility for newstart), to cancel the respondent's newstart allowance on the basis that he was no longer eligible for that benefit as he was undertaking full-time study. On 22 February 2005, that decision was affirmed by an authorised review officer. On 24 March 2005, the respondent lodged an appeal with the SSAT. As already indicated, he was successful in that appeal. He was also successful before the AAT. It was that decision that prompted the appeal to this Court. 5 It should be noted that no newstart payments were made to the respondent after 11 February 2005, when the benefit was cancelled. Accordingly, there is no issue as to recovery of any alleged overpayment in this proceeding. Section 593(1)(b) provides that one such qualification is satisfaction of what is described as "the activity test". 7 Section 601(1) provides that a person satisfies "the activity test" in respect of a particular period if that person satisfies the Secretary that, throughout the period, the person is actively seeking and willing to undertake paid work in Australia, other than paid work that is unsuitable to be undertaken by the person. 8 Section 601(2) provides that a person also satisfies the activity test in respect of a period if the Secretary is of the opinion that, throughout the period, the person should, inter alia, undertake a course of vocational training or participate in another course approved by the Employment Secretary which is likely to improve the person's prospects of obtaining suitable paid work, or assist the person in seeking suitable paid work. 9 Section 606 provides that a Newstart Activity Agreement (which is relevantly defined in s 604(1C)) shall contain certain terms. The person with whom such an agreement is entered is required to undertake one or more of a series of activities approved by the Secretary. 10 Section 613 deals with the conditions of eligibility of full-time students for a newstart allowance. Relevantly, these are s 613(2)(a) (that the person is enrolled in a course that the Secretary has required the person to undertake under s 601(2)) , or s 613(2)(b) (that the person is engaged in a course undertaken under a "Newstart Activity Agreement"). However, only the first two were ultimately pressed. 14 The applicant submits that, with regard to s 613(2)(a) , the respondent was not enrolled in a course that the Secretary had required him to undertake under s 601(2). As for s 613(2)(b) , the applicant submits that the respondent was not engaged in a course undertaken under a Newstart Activity Agreement. As neither condition was met, and s 613(2)(c) had no application, s 613(1) rendered the respondent ineligible for newstart allowance. 15 The applicant further submitted that the fact that both the SSAT and the AAT apparently considered the honours year to be a useful exercise, and one which was likely to improve the respondent's prospects of gainful employment, was simply irrelevant as a matter of law, so far as his eligibility for newstart allowance was concerned. 16 To be fair to the applicant, the argument was put with considerably greater sophistication than this at the hearing. Dealing firstly with the SSAT, which focussed predominantly upon s 613(2)(a) , it was submitted that there had been a failure on its part to address the question specifically before it, namely whether the cancellation decision should be set aside. Rather, the SSAT had reasoned simply that the honours year would improve the respondent's prospects of obtaining suitable paid work, and that this justified treating the conditions under s 601(2) as though they were satisfied. 17 However, s 601(2) is actually more complex than this. That was to ignore the requirement of s 601(2)(b) concerning notification, and s 601(2)(c) concerning compliance, neither of which had been met in this case. That being so, it was clear that the respondent had not enrolled in a course that the Secretary had required him to undertake under s 601(2) , within the meaning of s 613(2)(a). Accordingly, that exception to s 613(1) could not apply. 19 It was submitted that, when it came to the AAT's decision, the reasoning was, in a sense, even simpler. The AAT noted that s 606(5) provided for an activity agreement to be varied. Such an agreement did exist between the respondent and Centrelink prior to the cancellation of the respondent's newstart allowance in February 2005. In the AAT's view, the agreement should have been varied, and the honours course accepted as one that would satisfy the requirements set out in s 601(2). Alternatively, the course should have been regarded as one in which he was engaged, and which he would have undertaken under a Newstart Activity Agreement (had one been entered into), pursuant to s 613(2)(b). 20 As a further alternative, the AAT said that the honours course could have been regarded as "another activity that the Secretary regards as suitable for the person and that is agreed to between the person and the Secretary". Plainly, the AAT had in mind s 606(1)(g) in invoking this formula. 21 Paraphrasing the AAT's reasons for decision, the honours year of study in which the respondent had enrolled was regarded as a valuable activity, and one which should have been included in a Newstart Activity Agreement. Centrelink cannot in the circumstances be permitted to succeed in this review by pointing to the absence of such an agreement or the absence of the Secretary having decided, by way of requirement, that Mr Kelly undertake such a course. If so, there is no justification for that approach: Minister for Immigration, Local Government and Ethnic Affairs v Kurtovic (1990) 92 ALR 93 per Gummow J, and Attorney General (NSW) v Quin [1990] HCA 21 ; (1990) 170 CLR 1 at 18 per Mason CJ. See generally M Aronson, B Dyer and M Groves, Judicial Review of Administrative Action (3 rd ed, 2004) at 359-64. It may be noted that there is no suggestion in the present case of any abuse of power, or breach of promise, on the part of the applicant. 23 In the AAT's view, therefore, a Newstart Activity Agreement should have been created, or the previous agreement varied, to incorporate the honours year by way of a requirement on the part of the Secretary, and an undertaking on the part of the respondent. Additionally, or in the alternative, the Secretary should have regarded the honours year as "suitable" as an "activity" and which should have been included in a Newstart Activity Agreement pursuant to s 606(1)(g). The difficulty, so far as the respondent is concerned, is that the Secretary did not do so. 25 Even if the Secretary had formed the requisite opinion, there was no notification of that opinion to the respondent. Nor was there any compliance with any such notification. 26 In addition, the Secretary did not enter into a Newstart Activity Agreement with the respondent regarding the honours course, and did not vary an existing agreement to include a term whereby the respondent agreed to undertake such a course. 27 None of the conditions required in order to avoid the operation of s 613(1) were met. It is simply that, in their different ways, the SSAT and the AAT both considered that the Secretary ought to have formed the opinion referred to in s 601(2) , or ought to have entered into a Newstart Activity Agreement with the respondent, allowing for the honours course. 28 In my view, neither the SSAT, nor the AAT, was entitled to conclude that the conditions under s 613(2) had been met in circumstances where manifestly they had not. The fact that these bodies considered the honours course to be worthwhile, and one that ought to have been the subject of approval under s 601(2) , or the subject of a Newstart Activity Agreement under s 606 , cannot overcome this fundamental hurdle. 29 I would add that it is also difficult to see how something that manifestly did not occur can be deemed by a tribunal, with retrospective effect, to have occurred, at least in the context of statutory criteria that are strict, and clearly stated. The fact that there were several options available to the Secretary when dealing with the respondent's continuing right to claim a newstart allowance, does not mean that either the SSAT, or the AAT, was itself entitled to choose one or more of those options, and proceed upon the basis that it had been exercised. A statute that sets out strict conditions for eligibility for a particular benefit is not amenable to a construction that treats that which ought to have been done as though it had been done. 30 The second question of law raised in this proceeding does no more than restate the first question, albeit in a slightly different form. Both questions should be answered in favour of the applicant. 31 Accordingly, the "appeal" should be allowed. The decision of the AAT must be set aside. In lieu thereof, it is ordered that the decision of the SSAT be set aside, and the applicant's decision to cancel the respondent's newstart allowance affirmed. The applicant, very properly, did not seek any order for costs. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | eligibility for newstart allowance respondent a full-time student respondent enrolled for honours year newstart allowance not payable to persons enrolled in full-time course of study unless certain statutory conditions met conditions not met whether administrative appeals tribunal finding that applicant ought to have formed a particular opinion, or taken certain actions, sufficient to satisfy conditions social security |
Mr Chamberlain entered into two agreements with the second defendant, the Deputy Commissioner of Taxation (DCT), under which Mr Chamberlain was funded and indemnified against any adverse costs order by the DCT, in order to enable Mr Chamberlain to pursue proceeding 6867 of 2004 in the Equity Division of the Supreme Court of New South Wales (the Transactions Proceeding). As a result of prosecuting that proceeding Mr Chamberlain has recovered money which would not otherwise have been available to unsecured creditors in the liquidation of the Company. Mr Chamberlain now applies for: Further, and of a different order, Mr Chamberlain seeks an order under s 564 of the Act that the DCT be given an advantage over other unsecured creditors of the Company. The advantage sought is that the DCT be paid out of surplus funds remaining after payment of all priority debts and claims in the order prescribed by s 556 of the Act, 100% of the DCT's claim proved in the winding up, or, if that surplus is less than 100% of the amount of that claim, then the entire surplus. The first defendant, RG&H Investments Pty Limited (RGH), claims to be an unsecured creditor of the Company. It opposes the making of the order under s 564. The DCT appeared on the hearing but did not take an active role. Ms A Bryant, solicitor, appeared for Robert Hardy, Danny Hardy and Evelyn Hardy (see below). She indicated that her clients had no objection to the granting of the relief sought, and she was excused from further attendance. Mr Chamberlain's partner, Alan Nicholls, was appointed liquidator of the Company. Mr Nicholls subsequently resigned as liquidator. His resignation was to take effect on 20 July 2007. On 9 July 2007, the Supreme Court filled the vacancy to occur on 20 July 2007 by appointing Mr Chamberlain as liquidator under s 473(7) of the Act. The business of the Company was earthmoving and excavation. The Company was the corporate vehicle of members of the Hardy family. The directors and members of the Company were Robert Hardy, Danny Hardy and Evelyn Hardy (the Directors). The secretaries of the Company were Lynette Hardy and Jennifer Hardy. The Company entered into two series of transactions, both of which had the effect of reducing the Company's assets. The first transaction involved the formation of, and contributions by the Company to, a non-resident, non-complying superannuation fund (First Transaction). As part of the First Transaction, the Company borrowed money from the Directors and paid that money to them for their sole use and benefit personally. The second transaction involved the transfer of all of the assets (and certain of the liabilities) of the Company to related persons, being a partnership between Hardy Bros Civil Constructions Pty Ltd (HBCC) and Hardy Bros Nominees Pty Limited (HBN) (Partnership). The divesting of the Company's assets was for less than their fair market value. Their fair market value has been calculated by Alan Weeks, a partner of Deloitte Touche Tohmatsu, Chartered Accountants, to be $5,877,000. Mr Weeks has calculated the liabilities assumed by the Partnership to be $3,636,000. The Company's assets were therefore transferred for $2,241,000 less than their fair value. The Company borrowed $2,500,000 from the Directors which it contributed to that Fund. The Company claimed that amount as a tax deduction. The amount does not include interest. The DCT will seek to amend its proof of debt to claim interest if there is a surplus remaining after all unsecured creditors have been paid their admitted debts. In that case, as at 28 September 2009 interest of $1,034,000 would be claimed by the DCT, making a total of principal and interest as at that date of $2,334,273.53. This was achieved through a "restructure" (Restructure). The assets were transferred at their historical cost in accordance with the Company's financial statements as at 31 March 2001. An amount of $104,571 was ascribed to the Company's goodwill. As consideration for the transfer, the Partnership assumed responsibility for the Company's liabilities recorded in its financial statements as at 31 March 2001. As mentioned earlier, according to Mr Weeks's estimate, the undervalue was $2,241,000. Those assets comprised cash of $16 representing the Company's issued capital, and $350,000 representing (a) retained profits as at 30 June 2000 of $24,805.72, and (b) operating profit for the year ended 30 June 2001 of $325,194.28. On 2 July 2001 the Directors resolved that the Company declare a dividend of $350,000 payable to the holder of C class shares in the Company. As part of the Restructure, HBCC held the one and only C class share in the capital of the Company. Accordingly, the sum of $350,000 was paid to HBCC. On 22 August 2002 Mr Chamberlain demanded repayment of that sum from HBCC. HBCC repaid it by instalments over a period from 9 December 2002 to 22 April 2004. Based on that advice, on 21 December 2004 he and the Company commenced the Transactions Proceeding. The first and second defendants were the two companies, HBCC and HBN, that were members of the Partnership. The third, fourth, fifth and sixth defendants were the Directors and Lynette Hardy (the Hardys). The seventh to twelfth defendants were the Company's accountants (the Accountants). The Transactions Proceeding was complex. These director loans were outstanding at the time of the Restructure. As part of the Restructure the directors' loans were repaid. The Liquidator alleged that the repayment of the directors' loans constituted "unfair preferences" within the meaning of sections 588FA , 588FC and 588FE of the Corporations Act (Cth). (f) The Accountants who provided the advice in relation to the Hardy International Super Fund and the Restructure were in breach of their duty of care to the Company and were liable as accessories to the breaches of the duty by the directors. That was at a time shortly prior to its being listed for hearing. Four weeks had been set aside for the hearing in November and December 2008. The first to sixth defendants (HBCC, HBN and the Hardys) agreed to pay the plaintiffs $2,200,000 plus costs as agreed or assessed. The costs were agreed at $500,000. The total sum of $2,700,000 was to be paid by way of $500,000 within 30 days of execution of a Deed of Settlement and Release; $600,000 within 90 days of execution of that document; and the balance in equal monthly instalments of $60,000 each. The Hardys were to be admitted to proof in the liquidation in the amount of $375,000. Judgment was entered for the plaintiffs against the Accountants for $400,000. They were also ordered to pay the plaintiffs' costs of the proceeding against them as agreed or assessed. Those costs were agreed at $193,000. Accordingly, the total amount payable by the Accountants was $593,000. According to Mr Chamberlain, by about May 2007 these monies were exhausted in carrying out steps in the winding up. Mr Chamberlain therefore approached the DCT. At that time the DCT was the only creditor who had submitted a proof of debt. Mr Chamberlain enquired of the DCT about funding the Transactions Proceeding (which, it will be recalled, he and the Company had commenced on 21 December 2004) and indemnifying him against any adverse costs order in it. At the time, Mr Chamberlain was aware of a damages claim against the Company by RGH. Kemp Strang acted for RGH. Mr Chamberlain says that he raised the possibility of RGH's funding the Transactions Proceeding with Kemp Strang, but no offer of funding or of an indemnity was forthcoming. Mr JDM Graham of Kemp Strang gives a different account of events. He gives a detailed account of a meeting he had with Ms KP Farmer, the solicitor for Mr Chamberlain. The effect of Mr Graham's evidence is that he has no recollection of funding by RGH being requested; that he made detailed notes of his conversation with Ms Farmer; and that if the matter had been raised it would have been in accordance with his practice to include a reference to it in his notes: they included no such reference. Mr Graham does state, however, that Ms Farmer told him that Mr Chamberlain had sought funding to pursue the Transactions Proceeding from the DCT and was awaiting a reply from the DCT. The First Indemnity was dated 8 October 2007. By it the DCT agreed to indemnify Mr Chamberlain in respect of funding up to a maximum sum of $350,000 inclusive of GST. The First Indemnity provided for how this amount was to be paid and expended. It included an unlimited indemnity by the DCT in respect of any costs order made against Mr Chamberlain. The Second Indemnity was dated 18 September 2008. By the Second Indemnity the DCT undertook to indemnify Mr Chamberlain in respect of funding up to a maximum sum of $198,665.47 inclusive of GST, payable progressively. The Second Indemnity also contained an indemnity against any costs order made against Mr Chamberlain but subject to a limit of $1,973,400. Under both the First Indemnity and the Second Indemnity, Mr Chamberlain agreed that in respect of any amount recovered, he would apply under s 564 of the Act for an order "that the DCT receive priority in [the Second Indemnity says "for"] the distribution of any amounts recovered or received by the Liquidator". Neither Indemnity spelled out the nature or extent of the "priority" that Mr Chamberlain was required to seek in favour of the DCT. The DCT in fact funded Mr Chamberlain to the extent of $266,286.77 to prosecute the Transactions Proceeding. Mr Chamberlain has reimbursed the DCT in that sum. Mr Chamberlain has expressed the opinion in his affidavit that the DCT assumed a significant risk by entering into the First Indemnity and the Second Indemnity, including the risks of the substantial costs of Mr Chamberlain of pursuing the Transactions Proceeding and of the exposure to possible adverse costs orders. In the Transactions Proceeding each party was represented by solicitors and senior and junior counsel and retained various experts. The Transactions proceeding was fixed for a four week hearing in November/December 2008. The amount of $1,600,803.00 is held by him as cash at the bank. This will be increased by $1,095,000 if he receives the monthly instalments of $60,000 from the Hardys. As at 15 June 2009 they had paid $1,605,000 out of their total liability of $2,700,000. At the rate of $60,000 per month, it will take 19 months for them to pay the remaining $1,095,000. Until 6 November 2008, when RGH lodged its proof of debt, the DCT was the only creditor that had lodged a proof of debt. The plaintiff in the winding up proceedings was CGU, but it transpired that it was not a creditor and in fact was indebted to the Company for $67,929.92 (see [28] above). The Directors did not lodge their proof of debt for $375,000 until 2 March 2009. I noted earlier that the DCT's claim for interest will fall to be considered only if there is a surplus. Subject to that, the DCT seeks a priority distribution under s 564 for the sum of $1,300,273.53 (referred to at [13]-[14] above). In its proof of debt, RGH claims interest under s 563B of the Act on its claimed debt of $2,295,008. Mr Chamberlain has admitted the proofs of debt of the DCT and the Directors, but on 5 February 2009 he disallowed that of RGH. The Company constructed the dam. The work was completed in or about August 1999. On 16 August 2004 RGH commenced a proceeding in the Technology & Construction List of the Supreme Court of New South Wales (Construction List Proceeding) against Geolyse Pty Limited (Geolyse) and Parsons Brinckerhoff Australia Pty Limited (PPK). Neither defendant had any association with the Company or with the Hardys. Geolyse was a consulting engineer engaged by RGH to provide design works and supervision associated with construction of the dam. PPK was a geotechnical engineer retained by RGH to carry out a geotechnical investigation of the site. At the time of the commencement of the Construction List Proceeding, the Company had been wound up and a liquidator appointed. On 18 August 2006 the Supreme Court granted RGH leave under s 471B of the Act to proceed against the Company; ordered that the Company be added as third defendant; and ordered that no step be taken to enforce any judgment against the Company without the liquidator being informed and without the leave of the Supreme Court. Geolyse wished to plead proportionate liability pursuant to s 109ZJ of the Environmental Planning & Assessment Act 1979 (NSW). On 20 December 2006 the Company filed a submitting appearance. Geolyse and PPK then filed defences pleading s 190ZJ. When the Company filed its submitting appearance, RGH's Amended Summons dated 20 May 2006 made no allegations against the Company. However, on 27 March 2007 RGH filed a Further Amended Summons which included a claim against the Company based on the allegations made by Geolyse in its defence and apportionment claim. The Further Amended Summons was not served on the Company. In June 2008, the claims made by RGH against Geolyse and PPK were settled at mediation and the Construction List Proceeding was discontinued as against them on 7 July 2008. The sum of $2,295,008 claimed in RGH's proof of debt in the winding up of the Company was the balance remaining after a deduction of $730,000 received from Geolyse and PPK as part of RGH's settlement with those companies. On 17 October 2008 RGH filed a notice of motion seeking leave to file a Second Further Amended Summons to plead a cause of action against the Company in tort. It obtained that leave. The Second Further Amended Summons claims that RGH suffered loss and damage as a consequence of the Company's having allegedly breached obligations owed to RGH both in contract and in tort in respect of the construction of the dam. On 20 October 2008 the Company filed a notice of motion seeking leave to file a defence and affidavits and to take other steps to defend the claims made against it. On 6 November 2008 RGH lodged its proof of debt with Mr Chamberlain which, as noted earlier, he disallowed by notice of rejection dated 5 February 2009. By interlocutory process filed on 17 February 2009 in the Winding Up Proceeding, RGH sought an order that the rejection of its proof of debt be reversed (Proof of Debt Interlocutory Proceeding). On 23 February 2009 RGH filed a notice of motion seeking an order that the Proof of Debt Interlocutory Proceeding be entered in the Construction List and be heard with the Construction List Proceeding. The notices of motion and interlocutory process were listed for hearing before Hammerschlag J in the Construction List on 27 February 2009. His Honour ordered that the Proof of Debt Interlocutory Proceeding be transferred to the Construction List and be heard with the Construction List Proceeding, the evidence in each proceeding being evidence in the other. His Honour rejected the Company's submission that it would be appropriate for the Proof of Debt Interlocutory Proceeding to remain in the Corporations List and case managed by a judge in that list and for the Construction List Proceeding to be stayed. Apparently the Company obtained the leave to file a defence and affidavits and to take other steps to defend the claims. The Construction List Proceeding and the Proof of Debt Interlocutory Proceeding have been set down for a 10 day hearing commencing on 23 November 2009. The Company had nominal assets of only $16 and liabilities of $3,280,526, being amounts said to be due to the DCT (then $2,982,347) and CGU ($298,178). Subsequently, the DCT reduced the amount for which it was seeking to prove, and CGU was found not to be a creditor. Nonetheless, there would still have been no dividend. If the Transactions Proceeding had been discontinued or settled, Mr Chamberlain's view is that no dividend would have been paid to unsecured creditors after allowing for the costs of the winding up. If the Transactions Proceeding had been funded by a litigation funder, in Mr Chamberlain's experience the terms of the arrangement would have involved a disgorgement of 40%-50% of the net proceeds of the litigation to the litigation funder. Mr Chamberlain did not pursue either (a) or (b) above because the DCT had agreed to provide the funding and an indemnity against any adverse costs order, without claiming any proportion of the net proceeds of the litigation. If the DCT were not now to be afforded priority for its debt and all three creditors were admitted to prove equally in the winding up, Mr Chamberlain's estimate is that the three creditors would receive a dividend of approximately 60 cents in the dollar. His calculations are as follows: Est. Available Funds for Distribution Present Day $2,400,000.00 ATO Principal Claim Present Day $1,300,273.53 Hardy Bros. Available Funds for Distribution Present Day $2,400,000.00 Less: ATO Principal Claim Present Day (priority) $1,300,273.53 Funds Available to Unsecured Creds $1,099,726.47 Hardy Bros. Claim Present Day $375,000.00 RGH Claim Present Day $2,295,008.00 Total Unsecured Creditors Claimed $2,670,008.00 Dividend to unsecured Creditors 41% As noted earlier, the DCT will prove for interest, to which the DCT is entitled, if the other unsecured creditors are paid in full and there is a surplus available. If Mr Chamberlain's rejection of RGH's proof of debt is upheld, he expects that the remaining unsecured creditors will be paid in full. Finally, Mr Chamberlain states that even allowing for an advantage in favour of the DCT for its debt, the prosecution of the Transactions Proceeding has created a pool of funds of approximately $1,000,000 after taking into account the costs and expenses of the winding up, which would not otherwise have been available to creditors. Through their solicitors, the Directors have indicated that they do not object to the DCT being given priority to the extent of $1,300,273.63. The First Indemnity and the Second Indemnity were both agreements falling within the description contained in s 477(2B). Mr Chamberlain was therefore prohibited from entering into them except with the Court's approval or, relevantly, the approval of a resolution of the creditors. It is established, however, that approval may be granted nunc pro tunc : see Empire (Aust) Nominees Pty Ltd (in liq) v Vince (2000) 35 ACSR 167 ; Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 ( Newtronics ). Mr Chamberlain submits that the present case is a strong one for the giving of approval under s 477(2B) because as at the dates when both Indemnities were entered into the DCT was the only creditor that had proved in the winding up and could have resolved to approve Mr Chamberlain's making of the two agreements with itself. However, Mr Chamberlain's explanation for his delay in seeking approval is quite unsatisfactory. He says that although he was aware of the necessity of seeking the Court's approval, the DCT requested that he defer making the application as "it was conducting a review of all funding agreements entered into with liquidators and ... required time to carry out that review". This is a poor explanation, and a troubling one. First, Mr Chamberlain was aware of the prohibition yet contravened it knowingly --- twice! Second, Mr Chamberlain seems to have treated the DCT's direction as overriding the statutory mandate which he accepted was not rendered inapplicable by reason of the DCT's being the only known creditor. Third, Mr Chamberlain has not explained the length of the delay until this proceeding was commenced on 10 August 2009. Fourth, it is difficult to understand how the explanation proffered could apply to both the First Indemnity and the Second Indemnity. If Mr Chamberlain was aware on both occasions of the prohibition contained in s 477(2B), it is unlikely that he would have accepted at face value a statement by the DCT on or before the date of the Second Indemnity, that it was carrying out a second review or that the DCT was still carrying out the review that it had been carrying out some eleven months earlier. I will not grant the approval sought until I am satisfied that the original failure to seek approval and the delay in seeking to remedy that omission are adequately explained. The proceeding will be stood over to give Mr Chamberlain the opportunity of supplementing his explanation by further affidavit evidence from himself, an officer of the DCT, or otherwise as he may be advised. The considerations that are relevant to the grant or withholding of approval under s 477(2B) have been discussed in several cases: see, for example, Newtronics at [26]. In that case, Gordon J helpfully identified a number of the relevant considerations. I will not repeat them here. Subject to Mr Chamberlain's providing satisfactory evidence explaining his omission to obtain approval prior to the making of the two agreements, which may need to include affidavit evidence from a relevant officer of the DCT, I propose to grant the approval nunc pro tunc that he seeks and to make the ancillary orders to which I have referred. As a secondary position, RGH accepts that the DCT should be afforded some priority or advantage but contends that that priority or advantage should be by reference to the funds currently at Mr Chamberlain's disposal (cash at bank of $1,600,803) rather than what Mr Chamberlain may expect, and that there should be taken into account the full amount of RGH's claim to debt of $2,295,008. His Honour indicated that the cases in which 100% of the recovery has been awarded to the indemnifying creditor have had particular features which the Chief Justice discussed. I accept RGH's submission that it is premature for the application under s 564 to be determined at this stage. The considerations that lead me to this conclusion are set out in the following paragraphs. First, as just noted, it is not known with certainty what the final size of the fund available for unsecured creditors will be because, although the liquidator has cash in hand of $1,600,803.00, whether this amount will be augmented by the sum of $1,095,000 over the next nineteen months (bringing the amount available up to $2,695,803) by the monthly payments of $60,000 by the Hardys, depends upon whether they default. Mr Chamberlain has only their unsecured promise to make the payments. Second, while Mr Chamberlain does not seek an order disturbing the priorities provided for in s 556(1) of the Act, the amount of his remuneration, legal costs and disbursements and other expenses in defending the Proof of Debt Interlocutory Proceeding and the Construction List Proceeding will not be known until after those Proceedings are heard and determined. That amount would apparently enjoy priority over other unsecured creditors. Third, the Court is not in a position to determine the relativity between the DCT's debt and that of the other unsecured creditors so long as the Proof of Debt Interlocutory Proceeding and Construction List Proceeding remain undetermined. RGH may fail completely in those proceedings and therefore not be a creditor at all, or it may be a creditor to the full extent of its claim of $2,295,008 plus interest plus the costs of both Supreme Court proceedings, or it may prove to be a creditor for some intermediate amount. Fourth, there appears to be no urgency touching the determination of the application. Fifth, although the further affidavit evidence explaining Mr Chamberlain's delay in seeking the Court's approval under s 477(2B) will no doubt be prepared and admitted at an early date, the fact is that that hearing is likely to take place only two to three weeks before the commencement of the hearing in the Supreme Court on 23 November 2009. Mr Chamberlain's approach has been to treat the sum of $1,095,000 as if it were cash in hand that has been recovered as a result of the funding provided by the DCT, but it is not. I note in passing that the proposed advantage is not that the DCT is to be entitled to the instalments if and when they are paid and that it be paid the remainder of its debt ($1,300,273.63-$1,095,000 = $205,273.63) out of the cash in hand, leaving $1,395,529.37 as cash in hand to satisfy Mr Chamberlain's further remuneration, costs and expenses and other admitted creditors. If the application were to be determined now and the orders sought by Mr Chamberlain made, apparently he would immediately pay $1,300,273.63 to the DCT, leaving him with $300,529.37 as cash at bank. In addition, he would have the Hardys' unsecured promise to pay $1,095,000 over 19 months. Let it be assumed that the Hardys paid none of the monthly instalments and that RGH had total success in the Supreme Court proving as a creditor for $2,295,008 plus interest plus costs. In that case it would transpire that Mr Chamberlain's further remuneration, costs and expenses in this proceeding and, more significantly, in defending the Supreme Court proceedings, would almost certainly absorb the sum of $300,529.37. If not, those amounts together with RGH's legal costs and expenses associated with the Supreme Court proceedings would certainly do so. In the circumstances hypothesised, neither RGH nor the Directors would receive anything, and so it would transpire that DCT would have had 100% of the recovery. No doubt it is possible that the decision in the two Supreme Court proceedings will be reserved and in any event there is the possibility of an appeal to the New South Wales Court of Appeal. Nonetheless, the position will at least be somewhat clearer than it is at present if this proceeding is adjourned, first to a date to deal with the supplementary evidence in relation to s 477(2B) to which I referred, and then to a further date following the conclusion of the hearing in the Supreme Court. There are too many unknowns at present to enable the Court to decide Mr Chamberlain's application under s 564 with confidence that its order would be just. I certify that the preceding ninety-eight (98) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | application under s 477(2b) of corporations act 2001 (cth) (the act) for approval nunc pro tunc of two litigation funding agreements between creditor and liquidator whether liquidator had adequately explained omission to seek approval before agreements were entered into and his delay in remedying that omission application under s 564 of the act for order that funding creditor be paid in full out of monies recovered as a result of the funding agreements other main creditor's proof of debt had been rejected by liquidator pending proceeding by that creditor in supreme court of new south wales to establish its entitlement premature for court to deal with application under s 564 at this stage. corporations |
The evidence in each was evidence in the others, subject to all just exceptions on grounds of relevance. 2 The fourteen proceedings concern Part XIC (ss 152AA - 152EQ ) of the Trade Practices Act 1974 (Cth) (the Act) headed "Telecommunications access regime". That Part provides for a regulated access régime specific to telecommunications services. 3 The proceedings relate to access to two services that are "declared services" under s 152AL of the Act: the Line Sharing Service (also known as the High Frequency Unconditioned Local Loop Service) (LSS) and the Unconditioned Local Loop Service (ULLS). The applicant in each proceeding (Telstra) owns the lines over which the LSS and the ULLS are provided. 4 There was an access dispute between Telstra and the second respondent in each proceeding. The first respondent in each proceeding, the Australian Competition and Consumer Commission (ACCC), was the arbitrator. Some access disputes related to the LSS and the others to the ULLS. It will be noted that there are three proceedings, NSD 72/2008, NSD 78/2008 and NSD 719/2008, in which Primus is the second respondent. I will call the first "the Primus LSS proceeding" and the second "the Primus ULLS proceeding" in accordance with the convention just mentioned. I will call the third "the Primus ULLS (Connections) proceeding". 5 In certain circumstances Part XIC of the Act permits an access dispute to be arbitrated by ACCC (referred to as "the Commission" in the Act and in various parts of the evidence and in the parties' submissions). Arbitration takes place under Div 8 of Pt XIC. 6 In these fourteen proceedings Telstra challenges final determinations (FDs) made by ACCC in its arbitrations under Div 8 of the access disputes between Telstra and the 14 second respondents. 7 I have previously heard and determined three proceedings in which Telstra challenged FDs made by ACCC in relation to access disputes under Div 8: see Telstra Corporation Ltd v Australian Competition and Consumer Commission [2008] FCA 1436 ; (2008) 171 FCR 174 (Earlier Reasons) and Telstra Corporation Ltd v Australian Competition and Consumer Commission and Others (No 2) (2008) 251 ALR 372; [2008] FCA 1640. 8 In those proceedings, Telstra sought review of FDs made by ACCC in respect of LSS access disputes between Telstra of the one part and Request, Chime and Primus respectively of the other part. Mr A Robertson SC with Mr S J Free of counsel appeared for Optus and XYZed. I was told that those companies form part of the Singtel Optus group. Ms M Sloss SC with Mr M J Hoyne of counsel appeared for Agile, Adam, Amcom, Network, Macquarie, PowerTel, Request, Chime and Primus. Mr M J Hoyne of counsel appeared for TPG. 11 In all proceedings Dr J E Griffiths SC and Ms M N Allars appeared for Telstra. Mr J S Hilton SC and Mr M H O'Bryan appeared for ACCC. 12 Although any particular ground referred to in the Table may have borne different numbers in the respective applications for an order of review, the ground was mutatis mutandis the same as between the various proceedings in which reliance was placed upon it. 13 Accordingly, submissions were made by reference to the representative proceedings on the basis that a decision on the issues in them would also resolve the same issues in all of the proceedings of which they were representative. 14 The hearing took place in two tranches. The first tranche related to the Pooling and Allocation Method and the ULLS Model Terms grounds (A and B in the Table). The second tranche related to the Call Diversion, WACC, Line Costs, and 2007 LSS Pricing Principles grounds (C, D, E and F in the Table). It features in all proceedings except the Primus ULLS (Connections) proceeding; the ULLS Model Terms ground (B in the Table) is Ground No 3 in the Optus ULLS proceeding and does not form part of any of the LSS proceedings; the Call Diversion ground (C in the Table) is Ground No 4 in the Chime ULLS proceeding and does not form part of any of the LSS proceedings (it occurs only in the Optus ULLS proceeding, the Chime ULLS proceeding, and the Primus ULLS (Connections) proceeding); the WACC ground (D in the Table) is Ground No 6 in the Adam LSS proceeding and Ground No 2 in the Chime ULLS proceeding and occurs in all proceedings except for the Primus ULLS (Connections) proceeding; the Line Costs ground (E in the Table) is Grounds Nos 3 and 4 in the Adam LSS proceeding. It occurs in all of the LSS proceedings but does not form part of any of the ULLS proceedings; and the LSS Pricing Principles ground (F in the Table) is Ground No 2 in the Adam LSS proceeding, and occurs in all of the LSS proceedings but in none of the ULLS proceedings. 16 In the Earlier Reasons at [11]-[14] I referred to some technical matters and gave a summary at [15]-[46] of the provisions of Pt XIC that were relevant to the three proceedings the subject of the Earlier Reasons (the Earlier Proceedings). I will take those paragraphs as read, rather than encumbering these reasons with them. 17 Annexure A to these reasons is a list of acronyms and terms of present relevance. 18 One technical matter to which it is useful to refer at this stage is the nature of the LSS and the ULLS. One such network is the Public Switched Telephone Network (PSTN). Through the PSTN, Telstra provides to end-users various telephony and data services such as local, long distance, national and international calls and dial-up internet connections. Another Telstra network is its "Broadband" network. The PSTN and the Broadband network use what is called the Customer Access Network (CAN). Generally speaking, the CAN can be understood to be the network of connections between end-users, whether business or private, and some aggregation point within the network, which is usually a local exchange building. Connection between the end-user and that point within the network is normally achieved by way of "line" (or "metallic pair" or "twisted pair") of copper or aluminium wire, or where there is no fixed line, by radio. The copper or aluminium wire is often referred to as "unconditioned communications wire". It forms a continuous copper or aluminium path between the premises of end-users and exchanges and is commonly referred to as the Unconditioned Local Loop (ULL), "local loop" or, simply, "line". The word "unconditioned" signifies that the wire is bare or unqualified, that is, the equipment required to make it serviceable is not yet attached to it. They are provided to an access seeker such as any of the second respondents (access seekers) which provides them to a retail customer (end-user) over an Unconditioned Local Loop (ULL). The CAN is the generic expression that applies to all of the ULLs; the ULLs, taken together, constitute the CAN. The LSS and ULLS are provided by Telstra to the access seeker, not to the end-user. However, once the access seeker has access to the LSS or the ULLS, it becomes a "service provider" vis-à-vis the end-user, that is to say, it provides to the end-user the service that the LSS or the ULLS, as the case may be, permits it to provide. 20 In its declaration of the LSS as a declared service, ACCC also identified the LSS as the "High Frequency Unconditioned Local Loop Service". In substance, it enables an access seeker to supply both voice (telephony) and broadband services to end-users. On 18 May 2000, pursuant to ss 152AL(3) and 152AO , ACCC varied the description of the ULLS with effect on the date of gazettal, 24 May 2000. In March 2002 ACCC published its final report on pricing methodology for the ULLS, determining pricing principles for the ULLS in Chapter 4 (2002 ULLS Pricing Principles), and concluding that they should be based on total service long-run incremental cost (TSLRIC) principles. In August 2002 ACCC published its final report on whether the LSS should be a declared service under Part XIC (LSS Declaration Final Report), chapter 7 of which set out pricing principles for a declared LSS (2002 LSS Pricing Principles). On 7 October 2002, pursuant to s 152AL(3) , ACCC declared the LSS a declared service with effect on the date of gazettal, 16 October 2002 (LSS Declaration). In October 2003, pursuant to s 152AQB(2) , ACCC determined model terms and conditions relating to access to the ULLS in Ch 14 of Final Determination for model price terms and conditions of the PSTN, ULLS and LCS services (ULLS Model Terms or 2003 ULLS Model Terms). In the light of the new s 152ALA which came into force in December 2002, on 19 November 2003 ACCC specified an expiry date of 31 July 2006 for the ULLS and 31 October 2007 for the LSS, with effect on the date of gazettal, 3 December 2003 In March 2004 ACCC published a (revised) guide to the resolution of telecommunications access disputes (Access Dispute Resolution Guidelines), which included in section 7.4 guidelines under s 152DNA(8) relating to backdating of the date that the provisions of a final determination take effect. In August 2004 ACCC published its final report on the assessment of Telstra's proffered undertaking for the LSS. In December 2005 ACCC published its final report on the assessment of Telstra's proffered ULLS and LSS monthly charge undertakings (ULLS and LSS Monthly Charge Undertaking Assessment). In July 2006 ACCC published its final determination resulting from its inquiry into, relevantly, the ULLS Declaration. On 28 July 2006, pursuant to s 152AL(3) , ACCC re-declared the ULLS a declared service with effect on 1 August 2006 and expiring on 31 July 2009 (ULLS Re-Declaration). This is the declaration of the ULLS that was in force at times relevant to the present proceedings. In August 2006 ACCC published its final report on the assessment of Telstra's proffered ULLS monthly charge undertaking (ULLS Monthly Charge Undertaking Assessment). In October 2007 ACCC published its Review of the Line Sharing Service Declaration: Final Decision (LSS Declaration Review), Chapter 3 of which discussed LSS Pricing Principles. On 24 October 2007, pursuant to s 152AQA , ACCC determined pricing principles to apply to the LSS (2007 LSS Pricing Principles). They contained price related terms and conditions that consisted of indicative prices for the LSS applicable between 1 January 2008 and 31 July 2009. On 26 October 2007, pursuant to s 152ALA , ACCC extended the expiry date of the LSS Declaration to 31 July 2009 with effect on the date of gazettal, 29 October 2007 (LSS Extension Declaration). In November 2007 ACCC published its report as to the final pricing principles applicable to the ULLS ( Unconditioned Local Loop Service (ULLS) --- Final pricing principles (2007 ULLS Pricing Principles Report) ). On 21 November 2007, pursuant to s 152AQA , ACCC determined pricing principles specified in Schedule 1 to apply to the ULLS ( Pricing Principles for the Unconditioned Local Loop Service ) (ULLS Pricing Principles or 2007 ULLS Pricing Principles). (ii) The pooling method and the allocation method are methods which aggregate the costs of a number of services and average those costs across the lines over which those services are provided, rather than providing a method for identifying the direct costs of the relevant declared service (that is, the LSS). (iii) The First Respondent found that allowing the recovery of LSS specific costs over LSS lines would result in a higher access price than the pooling method and the allocation method on which the LSS annual charge was based. (iv) As a result, the pooling method and the allocation method do not allow the Applicant to recover LSS specific costs in the LSS annual charge, which is inconsistent with the matter referred to in s 152CR(1)(d) of the TPA . (v) In concluding that the pooling method and the allocation method allowed the Applicant to recover its costs, including the direct costs, associated with the LSS, the First Respondent misconstrued s 152CR(1)(d) of the TPA . (vi) In the result the Decision is invalid (or liable to be set aside) as infected by jurisdictional error and on the grounds stated in s 5(1)(f) and/or (j) of the ADJR Act . 25 The Pooling and Allocation Method ground is raised in thirteen of the fourteen proceedings, the exception being the Primus ULLS (Connections) proceeding. 26 In the application for an order of review filed in the Chime ULLS proceeding, the Pooling and Allocation Method ground was Ground No 1, which was, mutatis mutandis , the same as Ground No 5 in the Adam LSS proceeding set out above. 27 A Pooling and Allocation Method ground was raised by Telstra in the Earlier Proceedings. I dealt with it at [268]---[345] of the Earlier Reasons. In the Earlier Proceedings the Pooling and Allocation Method was raised by Telstra's Grounds 5(a), 5(b), 5(c) and 6. Of these, Grounds 5(a), 5(b) and 5(c) were forms of procedural ultra vires and failure to take into account a relevant consideration --- grounds that are not repeated in the present proceedings. However, Telstra's Ground 6 in the Earlier Proceedings was error of law in the form of a misconstruction of s 152CR(1)(d) of the Act to permit a conclusion that the Pooling and Allocation Method allowed Telstra to recover its costs, including its direct costs. 28 In respect of its present Pooling and Allocation Method ground, Telstra relies only on error of law in the form of a misconstruction of s 152CR(1)(d). 29 Virtually the entire argument took place by reference to the Adam LSS proceeding ACCC's Statement of Reasons accompanying its FD in relation to the Adam LSS arbitration (Adam LSS FD Statement of Reasons) was, relevantly, mutatis mutandis , identical to the Chime ULLS FD Statement of Reasons. Accordingly, I will refer to the Adam LSS proceeding as representative of all 13 proceedings in which an access seeker relies upon the present ground. Both DFD Consultation Papers referred to previous considerations of this issue. 31 Until 2005, ACCC dealt with specific costs by using the cost allocation method for which Telstra contends. Indeed, at [80] of the Adam LSS FD Statement of Reasons ACCC acknowledged that it could be argued that ACCC's 2002 LSS Pricing Principles were inconsistent with the pooling methodology. However, in its Telstra's Undertakings for the Unconditioned Local Loop Service --- Discussion Paper of March 2005 (ULLS Undertakings Discussion Paper), ACCC noted that the approach that it had been following had been called into question. Over a period from October 2004 to March 2007 ACCC embraced the Pooling and Allocation Method. I outlined the history in the Earlier Reasons at [292] ff. 32 Adam (and Chime) submitted to ACCC that it should adhere to the Pooling and Allocation Method as proposed in section 4.1.6 of the Adam LSS DFD Consultation Paper (section 4.1.8 of the Chime ULLS DFD Consultation Paper). 33 In its present submissions (to the Court) Chime also refers to the Request LSS FD Statement of Reasons dated 1 August 2007 (the subject of consideration in the Earlier Reasons), and the more recent Tribunal decision in relation to ULLS annual charges, Re Telstra Corporation Ltd (No 3) [2007] ACompT 3 at [387] - [413] . The 2007 ULLS Pricing Principles of 21 November 2007 also contained, mutatis mutandis , that principle. 36 I do not think it necessary to elaborate on the various prior considerations of the present issue save to note that since December 2005 ACCC and the Tribunal have consistently determined that the statutory criteria in Part XIC of the Act were better served by a pooling and allocation approach than by the method for which Telstra contends. 37 Submissions were also made by Optus and XYZed, and by TPG and Macquarie, but they did not refer to any additional instances of prior consideration of the present issue by ACCC or the Tribunal. 39 Earlier in the Statement of Reasons ACCC had noted (at [80]) that the 2007 LSS Pricing Principles expressly required the use of the "pooling approach". 40 In section 3.3.4 headed "Section 152CR(1)(d) The direct cost of providing access to the declared service", ACCC stated (at [129]) that it considered that the direct costs of providing access to a declared service were those incurred (or caused) by the provision of access, and included the incremental costs of providing access. ACCC also noted (at [132] and [133]) that more recently the Tribunal had considered that the direct costs criterion in s 152CR(1)(d) was concerned with ensuring that the costs of providing the service were recovered, and that the Tribunal had noted that direct costs could conceivably be allocated (and still recovered) in a number of ways, any of which would be consistent with s 152CR(1)(d): citing Re Telstra Corporation Limited [2006] ACompT 4 at ([139]). 41 In section 4.1.8 (at [392] ff) ACCC noted that the term "Specific Costs", when used in respect of the LSS, referred to the incremental cost of providing the LSS, and included the costs associated with ordering, provisioning and qualifying the LSS. ACCC referred to IT system development and operational costs, connection costs, wholesale management costs and indirect costs as categories of LSS-specific costs. ACCC accepted (at [393]) that some of those categories of costs were recovered through LSS connection charges or other charges that Telstra imposed, and so were not relevant to the calculation of LSS annual charges. 42 Under the heading "Cost allocation" within section 4.1.8, ACCC explained (at [396]) that, consistently with the Tribunal's views, it proposed an approach to cost allocation that, first, pooled the specific costs associated with (i) the LSS and (ii) the ULLS and (iii) Telstra's own internal costs of a nature equivalent to the specific costs of the LSS and ULLS; and, second, allocated this pool to a demand base that included all downstream ADSL services, including the LSS. ACCC noted that Telstra opposed this approach ([399] ff), while Adam supported it ([406] ff). Telstra submitted (as noted by ACCC at [400]) that pooling was inconsistent with the direct cost criterion found in s 152CR(1)(d), which required, according to Telstra's submission, that the specific costs of the LSS be recovered in the LSS access charges alone. 43 In the Earlier Reasons at [273]---[280], I gave a more detailed description of the nature of the Pooling and Allocation Method. 44 ACCC noted (at [411]ff of the Statement of Reasons) that it had previously adopted the "pooling approach", which was also consistent with the reasons of the Tribunal, in relation to both LSS and ULLS annual charges (ACCC referred to Re Telstra Corporation Ltd [2006] ACompT 4 at [150] and Re Telstra Corporation Limited (No 3) [2007] ACompT 3 [at 396]-[413]). ACCC stated (at [415]) that it concurred with the Tribunal's reasoning on the issue of cost allocation. 45 ACCC went on to note ([at 416]) that adopting the method proposed by Telstra would lead to a higher access charge than the Pooling and Allocation Method would do. ACCC explained, however, that contrary to Telstra's submission, this was not its motive for adopting the Pooling and Allocation Method; rather, its preference resulted from "its detailed consideration of the alternative approaches assessed against the subsection 152CR(1) criteria and the LSS pricing principles". ACCC concluded that the higher charges that result from Telstra's proposed method could not be supported by those criteria and the 2007 LSS Pricing Principles, and that having regard to them the Pooling and Allocation Method was to be preferred (at [417]). 46 At [418]-[450] of the Adam LSS FD Statement of Reasons, ACCC gave a detailed assessment of the Pooling and Allocation Method against all of the s 152CR(1) criteria. In this context, the criterion involves consideration of whether Telstra will be able to recover its 'LSS specific costs' inclusive of a normal risk-adjusted return on its capital employed. 49 Telstra's argument is framed in a similar way to the way in which it was framed in the Earlier Proceedings (see the Earlier Reasons at [283]-[284]). I dealt with that argument in the Earlier Reasons at [300]-[314] and concluded that ACCC did not misconstrue s 152CR(1)(d), which, properly construed, was not inconsistent with ACCC's adoption of the Pooling and Allocation Method. In the result, Telstra's error of law ground of review was not made out. 50 I am aware that it is necessary to maintain a distinction between the Earlier Proceedings and the present proceedings. They relate to different arbitrations, different FDs, and different FD Statements of Reasons. However, in oral submissions, senior counsel for Telstra conceded, as he was bound to do, that there was some overlap between the argument advanced in the Earlier Proceedings and that which he now advanced and which he described as "more refined". 51 With respect, I have had some difficulty in identifying distinguishing refinements in Telstra's present argument, notwithstanding the customary skill of senior counsel for Telstra. 52 Telstra seems to disavow, however, any suggestion that s 152CR(1)(d) is to be construed as requiring that an FD have the effect that the direct costs of providing access to the declared service be in fact recoverable through the access charge for that service. Telstra accepts that ACCC is at liberty to place what weight it thinks appropriate on different aspects of the evidence, and, it must follow, on the evidentiary support for the different criteria in s 152CR(1). Telstra insists, however, that ACCC must take into account the direct costs as being recoverable through the access charge to be made for the particular declared service. 53 I have difficulty with Telstra's argument. If the argument is that ACCC must take into account as one possibility , making direct costs recoverable through the access charge alone, the fact is that ACCC did take that possibility into account. It could hardly avoid doing so because that possibility was urged on it by Telstra. However, ACCC rejected it. 54 Forming attachments to the Adam LSS FD Statement of Reasons were certain cost models. These contained figures for various categories of costs and were the subject of confidentiality orders. Telstra does not dispute that they included the direct costs of providing access to the LSS. A similar observation applies to cost models that were attached to the Chime ULLS FD Statement of Reasons. 55 If Telstra's contention is that ACCC did not pause to note what the direct costs were before applying the pooling and allocation methodology, the cost models to which I have referred show that it did. 56 There are several answers to Telstra's submission. 57 First, as noted above, ACCC did take into account the direct costs of providing access to the LSS, by taking into account the direct costs particularised in the annexures to the Adam LSS FD Statement of Reasons (and to the Chime ULLS FD Statement of Reasons). 58 Second, if, as Telstra submits, ACCC is required to take into account the direct costs with a view to their being recovered out of the LSS access charge , then since the fixing of the amount of that access charge is itself a matter for ACCC, Telstra's submission seems to become, upon analysis, a submission that ACCC was required to fix the access charge at a level that would allow for full recovery out of the LSS access charge. Yet this is a submission that Telstra seems to disavow. In any event, I would reject it. Allowing for full recovery with the access charge is not the only way in which ACCC was able to take the direct costs into account. 59 Third, Telstra's complaint is in reality a complaint that ACCC did not take into account the direct costs to Telstra of providing access to the LSS, in the manner, to the extent, with the weight, and with the result, that Telstra would have preferred. ACCC took into account the s 152CR(1)(d) criterion but also other criteria, in particular, the promotion of the LTIE (para (a) of s 152CR(1)), and came up with the result that allowed for Telstra's recovering its direct costs of providing access to the LSS only as part of a pool of costs. The duty imposed on ACCC by s 152CR(1) to take into account, inter alia, the direct costs of providing access to the declared service was not inconsistent with ACCC's following that course and arriving at that conclusion. 60 Fourth, some of the criteria in s 152CR(1) pull in different directions, and it was a matter for ACCC, provided it genuinely took them all into account, to allocate influence and weight as between them. It was not required to allow the para (d) criterion full rein, unmitigated by the other s 152CR(1) criteria. 61 With respect, I see no relevant difference between the issues and submissions on the Pooling and Allocation Method ground in the Earlier Proceedings and in these proceedings, and I see no reason to depart from my reasons and conclusion in relation to that ground in the Earlier Reasons. 62 In addition to what I have said above, I adopt, mutatis mutandis , the Earlier Reasons at [300]-[314]. As can be seen from its title, this determination is relevant to the ULLS but not to the LSS. The ULLS Model Terms were determined under s 152AQB(2) of the Act which requires ACCC to make a written determination setting out model terms and conditions relating to access to each "core service". The ULLS is a core services but the LSS is not: see s 152AQB(1). 65 Section 152AQB(9) provides that ACCC must have regard to a determination under s 152AQB if it is required to arbitrate an access dispute under Div 8 in relation to a core service covered by the determination. Telstra relies on this provision. 66 Section 152AQB(10), however, provides that a determination made under s 152AQB has no effect to the extent that it is inconsistent with, relevantly, any determination by ACCC under s 152AQA of principles relating to the price of access to a declared service. 67 The ULLS access seekers contend that the ULLS Model Terms are inconsistent with the 2007 ULLS Pricing Principles) determined by ACCC under s 152AQA in November 2007, with the result that s 152AQB(10) causes the latter to prevail to the extent of the inconsistency. The procedure which ACCC is alleged to have failed to observe is the requirement in s 152AQB(9), that ACCC have regard to a determination made under s 152AQB, in this case, the 2003 ULLS Model Terms. 70 The second form of the complaint ((b) above) is a failure to take into account a relevant consideration, that is reflected in s 5(1)(e) coupled with s 5(2)(b) of the ADJR Act --- improper exercise of a statutory power in the form of a failure to take into account a relevant consideration. The relevant consideration is again that specified in s 152AQB(9), namely, the 2003 ULLS Model Terms. 71 The ULLS Model Terms ground is pressed as Ground 3 in the Optus, XYZed, PowerTel and Request ULLS proceedings, and as Ground 4 in the Primus and Macquarie ULLS proceedings. 72 As noted at [12] above, although the Chime ULLS proceeding is the representative proceeding in respect of all other grounds of review concerning the ULLS, it is the Optus proceeding that is the representative proceeding in respect of the ULLS Model Terms ground. Telstra no longer presses this ground in the Chime ULLS proceeding. Notwithstanding this, the parties' submissions frequently refer to "Chime". In fact, Chime's written submissions include submissions relating to the ULLS Model Terms ground, apparently because they were prepared before Telstra abandoned that ground in the Chime proceeding. For convenience I will also from time to time refer to certain submissions as having been made by Chime, but it will be understood that they are in fact made on behalf of PowerTel, Request, Primus and Macquarie, and that Telstra no longer presses the present ground in the Chime proceeding. 73 Independent submissions were made by Optus. 74 ACCC made no submissions in relation to the present ground. 76 Section 152AQA, referred to in subs (10), provides in subs (2) that the Commission must determine principles relating to the price of access to a declared service. 77 No regulation under subs (8)(b) has been made. Accordingly, unless sooner revoked, a determination under s 152AQB ceases to be in force at the end of the period of 5 years beginning on the day on which the determination was made (subs (8)(a)). The ULLS Model Terms were made in October 2003 (the evidence does not reveal the precise date in that month). Accordingly, the period of five years expired in October 2008. 78 Section 152AQB was inserted into Part XIC of the Act by the Telecommunications Competition Act 2002 (Cth), s 3 , Sch 2, Item 2. Telstra points to comments made in the Explanatory Memorandum relating to the Bill for that Act, which show that the purpose of s 152AQB was, through the making of model terms and conditions, to provide certainty as to ACCC's views on the terms and conditions of access that any FD made by ACCC in an arbitration under Div 8 would be expected to reflect. The model terms and conditions would be based on an assessment of the current market conditions and would be in a form that could be easily incorporated into an access undertaking. If a dispute about terms and conditions then arose between parties, any subsequent ACCC arbitration decision (determination) would be expected to reflect the model terms and conditions. For example, they will provide guidance to access providers and seekers involved in negotiating the terms and conditions of access to the core services, particularly as they would be taken into account by the Commission in any arbitration of access disputes that arise from such negotiations. As well, it is expected that these model terms and conditions would also guide to [sic] carriers considering providing access undertakings to the Commission in respect of core services. Parties will therefore have an up-front view of the likely outcome of a particular issue thereby encouraging the parties to reach commercial agreement on access or by access undertaking. Although ACCC had power also to set indicative prices for the 2006-07 and 2007-08 financial years (see s 152AQB(8)(a) set out at [75] above), it did not do so. Its construction of s 152AQB(8)(a) was that while a determination under s 152AQB remained in force for at least five years, ACCC had a discretion as to the number of years within that period for which indicative prices might be published, and it gave reasons for limiting the duration of the ULLS Model Terms to three years only (p 11). They provided for, inter alia, an adjustment mechanism for the years 2004-05 and 2005-06. 83 Bands 1 to 4 are references to a progression of geographical areas ranged according to the number of SIOs within them. Section 5(3) of the Legislative Instruments Act 2003 (Cth) (LI Act) provides that it is taken by virtue of that registration to be a legislative instrument. Section 12(1)(a) of the LI Act had the effect that the determination took effect from the day specified in the instrument for the purpose of its commencement --- in the present case 21 November 2007. All of the ULLS FDs were made after 21 November 2007. ACCC's reasons supporting the determination of the 2007 ULLS Pricing Principles were contained in the 2007 ULLS Pricing Principles Report . Unlike the 2003 ULLS Model Terms, the 2007 ULLS Pricing Principles did not contain indicative prices. 86 Telstra submits, first, that the 2007 ULLS Pricing Principles do not purport to apply retrospectively and have no operation in relation to the price of access in any period prior to 21 November 2007. Telstra submits that the effect of s 12 of the LI Act is that the ULLS Pricing Principles could only take effect prospectively. For this reason, according to Telstra, it is not to the point to enquire into any inconsistency between the 2007 ULLS Pricing Principles and the 2003 ULLS Model Terms. As at the relevant time in issue, the 2007 ULLS Pricing Principles determine only pricing principles, not indicative prices. They refer to the 2002 ULLS Pricing Principles and events since those pricing principles were determined, and consider what principles are now appropriate. The indicative prices referred to in paragraph 69 of the Chime Submissions were subsequently added to the 2007 ULLS Pricing Principles and commenced on 16 June 2008 (...). This was after all of the relevant final determinations were made. A variation to a legislative instrument made after the decisions under review were made and which only has prospective effect has no relevance to the matters here under review. 89 Chime points out that the 2007 ULLS Pricing Principles incorporate the Pooling and Allocation Method, which was not used in formulating the indicative prices found in the 2003 ULLS Model Terms. Chime submits that to the extent that the 2003 ULLS Model Terms are inconsistent with the 2008 ULLS Pricing Principles and Indicative Prices (which, according to Chime, they are in their totality) the latter prevail. In the result, according to the submission, the 2003 ULLS Model Terms, being inconsistent and incompatible with the indicative prices of 2008, cannot have any relevance. This determination does not specify Annual Charges to apply in Band 4. For the purposes of this schedule the price calculation date is 18 November 2005. These pricing principles follow earlier pricing principles that the ACCC specified for the ULLS in 2002 and which it re-affirmed in its model prices determination in 2003 [a footnote refers to the ULLS Model Terms, but Telstra submits that the reference is purely a descriptive reference to the ULLS Model Terms, and does not indicate active intellectual engagement. On 28 June 2007, the ACCC sought the parties' views on whether it should have regard to additional matters. The ACCC also has had regard to the various documents and matters that are referred to in this statement of reasons. [Telstra submits that this is merely recounting Telstra's submission to ACCC and does not demonstrate an active intellectual engagement with that submission. In this arbitration, the ACCC has considered the guidelines in deciding whether to backdate. The ACCC has also had regard to the ULLS Pricing Principles and the section 152CR criteria in deciding the terms to apply in the backdating period. By the time the relevant negotiations between Telstra and Optus commenced (at 18 November 2005), the ACCC had clearly expressed concerns with the ULLS monthly charges of $14 in Band 1, $22 in Band 2 and $40 in Band 3 (October 2004 and August 2005) [a footnote refers to ACCC, Assessment of Telstra's undertakings for ULLS and LSS --- Draft decision, August 2005; ACCC, Assessment of Telstra's undertakings for PSTN, ULLS and LCS --- Draft decision, October 2004]. Therefore, it could not be said that at any time during those negotiations Telstra was following any guidance the ACCC had issued. [Telstra says that the statement in this paragraph was made, not in relation to quantum, but in relation to backdating. The submission relates to the 2005-06 year alone, not to the 2006-07 year or 2007-08 year for which the Optus ULLS FD also fixed Annual Charges: it will be recalled that the indicative prices that formed part of the 2003 ULLS Model Terms did not extend beyond 30 June 2006 (see [81]-[82] above). 95 Telstra submits that in respect of the relevant "overlap" period, 18 November 2005 to 30 June 2006, ACCC made only fleeting reference to the ULLS Model Terms and did not have an active intellectual engagement with them, in particular with their indicative prices. 96 ACCC's power to make an FD is found in s 152DNA(1). I discussed the power to backdate in the Earlier Reasons at [552]ff. 97 ACCC determined the Annual Access Charges payable monthly in cl 1 of Sch 1 to the Optus ULLS FD (set out at [91] above) pursuant to the power given to it by s 152CP(1). The FD would normally have taken effect 21 days after the FD was made (on 21 April 2008): s 152DN(1). In exercising the power under s 152CP(1), ACCC was required to have regard to each of the matters referred to in s 152CR(1), the ULLS Pricing Principles (see s 152AQA(6)) and, subject to s 152AQB(10)(b), the ULLS Model Terms (see s 152AQB(9)). 98 The provision of cl 1 of Sch 1 was backdated by cl 3 to take effect from the date of commencement of negotiations, 18 November 2005, pursuant to ACCC's power given by s 152DNA(1) as constrained by s 152DNA(2). In exercising the backdating power, ACCC was required to have regard to any guidelines made under s 152DNA(8) and any other matters that ACCC considered relevant (s 152DNA(7)), the ULLS Pricing Principles (s 152AQA(6)) and the ULLS Model Terms (s 152AQB(9)). 99 Guidelines made by ACCC pursuant to s 152DNA(8) are found in section 7.4 of ACCC's Access Dispute Resolution Guidelines of March 2004. Paragraph 7.4.2 of the Access Dispute Guidelines is of particular relevance. That said, each case must be considered on its merits. In particular, the ACCC is likely to consider whether the manner in which the parties have conducted themselves before and during the arbitration provides grounds for not backdating the determination. Considering the parties' conduct in this way improves incentives for the access provider to offer reasonable price and non-price terms and conditions, and reduces incentives for the access seeker to notify a dispute in the hope that the final price will be lower and backdated. However, the ACCC would expect to reconsider this issue towards the conclusion of the arbitration to see if there are any grounds for modifying its views on backdating. In some circumstances it may be appropriate to provide that the same charges apply retrospectively and prospectively, while in others it may be better to have separate retrospective and prospective charges. For instance, if a price is cost-based, it may be appropriate to determine retrospective charges based on costs for the relevant year rather than current costs. These are matters on which the ACCC is likely to seek submissions from the parties. For instance, ACCC could have set those access charges at a level equivalent to the indicative prices found in the 2003 ULLS Model Terms. 101 The question is whether ACCC did "have regard to" the 2003 ULLS Model Terms in arbitrating the Optus ULLS access dispute, in particular, in determining the Annual Access Charge payable monthly in the 2005-06 period (in effect, the period from 18 November 2005 to 30 June 2006). The statutory obligation imposed on ACCC by s 152AQB(9) to have regard to the ULLS Model Terms was enlivened by nothing more than the fact that ACCC was required to arbitrate an access dispute under Div 8 in relation to the ULLS. This submission was noted by ACCC in the Optus ULLS FD Statement of Reasons at [170](d)] (set out at [93] above). 103 Telstra submitted to ACCC in the alternative that if there was to be a backdating, the periodic charges for past periods should be determined on the basis of ACCC's prior determinations (relevantly, the 2003 ULLS Model Terms). Telstra further submitted that, as set out in the Guidelines, it was possible to have separate retrospective and prospective charges. ACCC did not expressly refer to this submission in the Optus ULLS FD Statement of Reasons. ACCC discussed various matters that would have an impact on those charges, including network costs (section 4.1.8) and specific costs (section 4.1.10). 105 In section 4.1.11, ACCC set out the "Overall level of ULLS monthly costs". Paragraphs 708 and 709 within section 4.1.11 demonstrate that ACCC arrived at the monthly access charges by estimating the total amount of the ULLS monthly costs. This was done by adding the monthly network costs and the monthly specific costs in each of Bands 1, 2 and 3 in each of the financial years 2005-06, 2006-07 and 2007-08. The ULLS monthly charges were then set by rounding the estimated ULLS monthly costs up to the next 10 cents. 106 In section 4.1, ACCC did not give special consideration to the 2005-06 year or to the fact that the ULLS Model Terms set indicative monthly prices for that year. Rather, ACCC's reasoning in relation to the ULLS Model Terms and the 2005-06 period appears in the context of whether the access charges to be fixed should be backdated. 107 ACCC's views on whether to backdate, relevantly, the ULLS Annual Charges, were dealt with earlier at [178]ff of the Optus FD Statement of Reasons. 108 Importantly, at [185]-[187], ACCC explained why it had decided to backdate to 18 November 2005, even though the amounts would be inconsistent with the indicative prices in the 2003 ULLS Model Terms . In doing so, ACCC was dealing with the question of the quantum of the charges in the 2005-06 period, albeit in the context of backdating. The date 18 November 2005 was the date negotiations between Optus and Telstra had commenced. In my view Telstra did have regard to the 2003 ULLS Model Terms (including their indicative prices) as required by s 152AQB(9). 109 At [187] of the Optus FD Statement of Reasons (set out at [93] above), ACCC gave reasons why the indicative prices in the 2003 ULLS Model Terms should not stand in the way of the monthly access charges in the 2005-06 period being set in the same way as the charges for the period after 30 June 2006 to which the ULLS Model Terms did not extend. ACCC's reasoning demonstrates that, in its opinion, Telstra could not have relied on the indicative prices in the 2003 ULLS Model Terms, and that therefore those indicative prices should not bear on the access charges to apply in the 2005-06 period. 110 Senior counsel for Telstra submitted that ACCC's statement in [187] was not made in relation to quantum, and was made only in relation to backdating. I do not think that these are mutually exclusive categories. In any event in [187] ACCC referred to the monthly charges of $14 in Band 1, $22 in Band 2, and $40 in Band 3 under the 2003 ULLS Model Terms. ACCC had quantum in mind. 111 In stating that Telstra could not, as at 18 November 2005, have relied on the indicative prices that formed part of the ULLS Model Terms, ACCC referred (at [187]) to two ACCC documents which were published after the ULLS Model Terms were determined in October 2003. One was the Assessment of Telstra's undertakings for PSTN, ULLS and LCS --- Draft decision of October 2004. The other was the Assessment of Telstra's ULLS and LSS monthly charge undertakings --- Draft decision of August 2005. In the former there was extensive discussion of the 2003 ULLS Model Terms' indicative prices (at Appendix B pp 57-72). The conclusion is inescapable that ACCC had those indicative prices well and truly in mind when it fixed (inconsistently with them) the monthly charges for the period 18 November 2005 to 30 June 2006 in the Optus ULLS FD. 112 In my view, there was an active intellectual engagement by ACCC with the ULLS Model Terms, including their indicative prices, and ACCC did not fail to have regard to them as claimed by Telstra. It is inconsistent with the 2003 ULLS Model Terms which treated ULLS-specific costs as chargeable to the ULLS access seekers alone. 114 The 2003 ULLS Model Terms were determined prior to ACCC's adoption of the Pooling and Allocation Method (see [31] above). In view of this inconsistency, s 152AQB(10) of the Act had the effect that the ULLS Model Terms were not operative to the extent of the inconsistency. 115 The extent of the inconsistency between the 2007 ULLS Pricing Principles and the 2003 Model Terms is measurable. It is the extent to which the indicative prices in the 2003 ULLS Model Terms exceeded the charges fixed in the Optus ULLS FD. 117 The argument is that this is so because in June 2008 ACCC published the 2008 ULLS Pricing Principles and Indicative Prices, Appendix 3 of which set new indicative prices that were inconsistent with those in the 2003 ULLS Model Terms. The new indicative prices were indicative ULLS monthly charges for Bands 1, 2 and 3 in the years 2005-06, 2006-07 and 2007-08 that were identical to those that had been fixed by Schedule 1 to the Optus ULLS FD dated 21 April 2008 that had taken effect 21 days later, on 12 May 2008. 118 It is not conceivable that ACCC would come to a different decision if the matter were to be returned to it: cf Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 31 (per Gibbs CJ) and 40 (per Mason J). The reasoning expressed in the 2008 ULLS Pricing Principles and Indicative Terms, to which s 152AQA(6) would require ACCC to have regard, are inconsistent with the 2003 ULLS Model Terms over which they must prevail to the extent of the inconsistency: s 152AQB(10)(b). 120 Telstra, on the other hand, argues that it is not possible to identify parts of the Optus ULLS FD or of the Optus ULLS FD Statement of Reasons that can be excised so as to save the remainder, from invalidity. 121 I considered the issue of severance of a backdating provision of an FD in Telstra Corporation Ltd v Australian Competition and Consumer Commission (No 2) (2008) 251 ALR 372 ; [2008] FCA 1640 at [4] ff, and concluded (at [48]) that the provisions of the FDs relating to the backdated monthly access charges in those proceedings could be severed, with the result that those FDs remained effective in so far as they resolved all other aspects of the access disputes. The issue of the backdated monthly access charges was remitted to ACCC. 122 If I am wrong in concluding that ACCC did not fail to take into account the ULLS Model Terms, I would conclude that the charges in relation to the year represented in the column headed 2005-06 in Schedule 1 to the Optus ULLS FD (see [91] above) are severable, and adopt what I said in Telstra Corporation Ltd v Australian Competition and Consumer Commission (No 2) above, mutatis mutandis , in relation to the severance issue. It is Ground 4 in each of the Optus and Chime ULLS proceedings and Ground 1 in the Primus ULLS (Connections) proceeding. It is the only ground relied on in that proceeding. 125 The ground is that because of the inclusion of a call diversion charge the FD was not authorised by the Act and was made in excess of the jurisdiction conferred on ACCC by s 152CP of the Act. 126 Chime is the representative proceeding. The particulars of this ground in Telstra's application for an order of review in the Chime proceeding are that cl 10 and Schedule 4 of the FD purport to determine charges concerning "call diversion", but call diversion is a facility or service distinct from the ULLS and does not relate to access to the ULLS. It follows that in so far as the FD purports to determine terms and conditions concerning "call diversion" it is not a "determination on access" by Chime to the ULLS (see s 152CP(1) of the Act) and does not deal with a "matter relating to [such] access" (see s 152CP(2) of the Act). In the result, the FD is invalid (or liable to be set aside) as infected by jurisdictional error and on the grounds stated in ss 5(1)(c) and 5(1)(d) of the ADJR Act. 127 Clause 10 of the Chime FD specifies "ULLS call diversion charges as per Schedule 4". 128 Clause 1 of Schedule 4 states that except where the parties subsequently agree otherwise and subject to cl 2, the charges that are to apply "in respect of call diversion as part of a ULLS connection" are as specified in Part C of Customer Relationship Agreement 353 (see [133] below). (A Customer Relationship Agreement is sometimes referred to by the acronym "CRA". 130 Clause 3 provides that cll 1 and 2 do not apply to call diversion as part of the ULLS connection requested before the price calculation date or after the expiry date (see [132] below). 131 Clause 4 provides that the charges specified in cll 1 and 2 also do not apply to call diversion as part of the ULLS connection made in Band 4. The "Bands" are defined in cl 18 of the FD itself. Generally speaking, Band 4 refers to a sparsely populated exchange service area, that is to say, a geographically remote area. 132 Clause 5 identifies the "price calculation date" as 5 December 2007 and cl 6 identifies the "expiry date" as 30 June 2008. 133 Finally, cl 7 of Schedule 4 provides that a reference in that Schedule to "Customer Relationship Agreement 353" is a reference to the agreement of that name between Telstra and Chime current as at the date the FD was made, namely, 21 April 2008. 134 It is important to note that the ULLS call diversion charge is determined only in situations in which a call diversion occurs as part of a ULLS connection, and not where it occurs otherwise. (2) The determination may deal with any matter relating to access by the access seeker to the declared service including matters that were not the basis for notification of the dispute. (2) For the purposes of this Part, anything done by a carrier or carriage service provider in fulfilment of a standard access obligation is taken to be an aspect of access to a declared service. If a carrier or carriage service provider supplies declared services, relevantly the ULLS, whether to itself or to another person, the carrier or carriage service provider (relevantly, Telstra) is an "access provider", declared services are "active declared services" (s 152AR(2)), and the "standard access obligations" (SAOs) set out in s 152AR arise. 138 One of the SAOs is to the effect that the access provider must, if requested to do so by a service provider, supply an active declared service to the service provider in order that the service provider can provide carriage services and/or content services: s 152AR(3)(a). Another SAO is the obligation on the part of the access provider to take all reasonable steps to ensure that the technical and operational quality of the active declared service supplied to the service provider is equivalent to that which the access provider provides to itself: s 152AR(3)(b). Subsection (4A) of s 152AR provides that in order to avoid doubt, "ordering and provisioning" are taken to be aspects of the "technical and operational quality" referred to in s 152AR(3)(b). 139 Chime relies on these SAOs as showing that Telstra was obliged to provide the call diversion facility. 140 The provisions of the Act relating to arbitration where a carrier or carriage provider and an access seeker are unable to reach agreement on the terms and conditions upon which the SAOs are to be complied with were summarised at [35]ff of the Earlier Reasons. ACCC observed that the difference between the parties stemmed from their different interpretations of the Act, and in particular of s 152CP(2). 142 ACCC rejected Telstra's submission that it lacked jurisdiction to determine charges for call diversion in the context of ULLS connections, while acknowledging that not all ULLS connections require call diversion and that call diversion can be provided outside such connections (at [1710]-[1711]). ACCC considered that under certain circumstances ULLS call diversion is a required part of the provisioning process (Telstra disagrees) and that any such call diversion services are supplied by Telstra in satisfaction of its SAOs for the ULLS (para [1712]). 143 As just noted, ACCC recognised that call diversion is not required for all ULLS connections and can be provided independently of any ULLS connection. ACCC stated, however (at [1713]), that ULLS call diversion is "an essential part of the ULLS connection process when the service is completed using the D-ULLS connection process" (Telstra disagrees). Call diversion is required to facilitate an end-user's existing telephone number being "ported" as specified by the relevant Communications Alliance Ltd codes (at [1713]) (Telstra agrees). 144 ACCC rejected certain alternative ways suggested by Telstra of porting a number, characterising them as "highly impracticable compared to the ACIF code process" (at [1714]). "ACIF" is an acronym for the Australian Communications Industry Forum. ACCC stated that it did not consider that such an alternative process changed the fact that ULLS call diversion is required under the Communications Alliance Ltd D-ULLS connection process (at [1714]). 145 Finally, ACCC noted (at [1715]) that s 152CP(2) permits it to make determinations about "any matter relating to access by the access seeker to the declared service", and considered that call diversion was a matter relating to access by access seekers to the ULLS when call diversion occurred as part of a ULLS connection. Providing the call diversion facility is not part of the provisioning of the ULLS. It is something supplied after that provisioning is complete and after the access seeker has full access to the ULLS. (b) Call diversion is not "a matter relating to access" (s 152CP(2)). It is a service separate from the ULLS, yet, unlike the ULLS, it is not a declared service. Call diversion does not facilitate access to the ULLS but supports the porting of a telephone number which is governed by a separate legislative régime. There is some overlap between (a) and (b). 147 The starting point is the definition of the ULLS. It was set out at [21] above, but will, for convenience, be repeated. 148 The nature of call diversion was described in evidence given by Craig Hartley McAinsh, a Business Processes and Systems Manager in Telstra's Wholesale Customer Transfer Group, Adelaide, and by Stephen Charles Harris, a Senior Business Analyst in the Delivery Division of the SingTel Optus Group. The CDNO service keeps the number in use by allowing for all calls to that telephone number to be diverted to another telephone number whilst the CDNO service is in place. For example, if John Citizen decided to acquire his home telephone service (including access and local calls) from SingTel Optus instead of Telstra and SingTel Optus decided to provide the home telephone service using ULLS and John Citizen wanted to keep the same telephone number, then SingTel Optus would need to order a CDNO service from Telstra. Just say John Citizen's home telephone number is 05 9255 5555 and John Citizen decided that all calls to 05 9255 5555 should be diverted to his Optus mobile 0438 555 555. When the CDNO service is in place (whilst the ULLS is being connected) all calls dialled by third persons to John Citizen's telephone number 05 9255 5555 would be diverted to his Optus mobile, 0438 555 555. After the ULLS has been connected John Citizen's home phone number 05 9255 5555, is then ported to the new service applied by SingTel Optus using Telstra's ULLS. The call diversion service is sometimes referred to by the acronym "CDNO" which stands for "Call Diversion (Number Only)". According to Mr McAinsh, the CDNO service facilitates the supply of particular carriage services (such as local and long distance telephone calls) from the originating caller to the diverted telephone number: when the CDNO service is activated, the data in the network is programmed to direct a call made to the original number to the diversion number. Telstra also supplies call diversion on a wholesale basis to other carriers and carriage service providers in circumstances which indisputably have nothing to do with a request for the supply of the ULLS; call diversion is also used to facilitate the porting of a telephone number to a Local loop which is already being supplied to an access seeker by way of the ULLS under the "Category D porting process" described in the "LNP Code". "Porting" allows an end-user to change telecommunications suppliers but still retain the same telephone number, even though the new telecommunications service provider will provide the end-user with services using, at least in part, that service provider's own network infrastructure. In essence, Local Number Portability (LNP) is a régime by which a local telephone number can be reassigned to a new telephone line or service; call diversion is not necessary for the supply of the ULLS. In all cases, the ULLS is already being supplied to an access seeker before call diversion is supplied. Call diversion is unrelated to the steps taken to supply the ULLS to an access seeker. The only reason call diversion is provided is to facilitate LNP; as set out in more detail below, one of the order types by which an access seeker can request the supply of the ULLS, includes provision for an additional request for the separate supply of call diversion in order to facilitate the porting of a telephone number (under the Category D porting process). This order type is referred to as a "D-ULLS". D-ULLS is the only ULLS order type that involves call diversion; the practical significance of the Category D process is that it facilitates the porting of a local number to a Local loop that is already carrying the ULLS. It facilitates porting by enabling the underlying telephone service to remain active so that number porting can occur. The process has been developed in response to the requirement in the LNP Code requiring the quarantining of inactive telephone numbers (a requirement which is also reflected in the ROU Code and Numbering Plan, ...); and call diversion enables the porting of telephone numbers to take place by keeping a telephone number active after the underlying telephone service has been disconnected. The call diversion service is employed to divert calls that would otherwise have been received by the end-user via the Local loop (which is being supplied by way of the ULLS) to another nominated telephone number. The other nominated telephone number can either be a number on Telstra's own network or a number on another service provider's network. 152 Telstra emphasises that both the ULLS Declaration and the ULLS Re-Declaration simply refer to the unconditioned communications wire (normally bare copper or aluminium) as constituting the Unconditioned Local loop (ULL), and nothing more. As noted earlier, the word "unconditioned" refers to the fact that the wire does not have equipment attached to it enabling it to carry a telecommunications service. It is only once the access seeker's equipment is attached to a ULL that the access seeker can use the wire to supply the end-user with a telecommunication service. Rather than involving the bare use of a piece of physical infrastructure, call diversion [involves] supply of an active and functional telecommunications service. In particular, it involves (in the present context) Telstra supplying an active telecommunications service by which calls to one telephone number are directed to another number. This is in stark contrast to the ULLS which of its very nature does not involve Telstra supplying (and in fact, by its very nature, precludes Telstra from supplying) any such services. Telstra's submissions outline relevant provisions of the Telecommunications Act 1997 (Cth) that regulate LNP, the use of telephone numbers, and ULLS ordering and provisioning (paras 2.20-2.44). I do not find it necessary to recount those provisions or those of the various "Codes" under them. 155 Optus and Primus emphasise that the charge that is fixed in the FD for call diversion relates only to "call diversion as part of a ULLS connection". The charge is not in respect of call diversion that is provided subsequently and independently. It is not to the point, they say, that call diversion could be a declared service. They also point to the close connection that has been recognised in the industry between a ULLS connection and call diversion (see [174] below). 156 ACCC also submits that it is irrelevant, if it be the fact, that call diversion itself could have been declared a "declared service". ACCC points to the breadth of the chapeau to s 152CP(2) and to the examples found in paras (d) and (e) of that subsection. ACCC calls in aid of its construction of s 152CP the special nature of Div 8 arbitrations as exercises that are to take place in the public interest, not just the private interests of Telstra and the access seeker (ACCC refers to Telstra Corporation Ltd v Commonwealth [2008] HCA 7 ; (2008) 234 CLR 210 at [32] ff). 158 First, however, I will briefly refer to s 152CP(1). 159 The respondents submit that call diversion is an aspect of access to the ULLS so that the FDs' provisions relating to the call diversion charge were within the obligation that s 152CP(1) imposes on ACCC to make a determination "on" access, without the necessity of resort to s 152CP(2). Those parties rely on s 152AF(2) which provides that for the purposes of Pt XIC , anything done by a carrier or carriage service provider in fulfilment of an SAO is taken to be an aspect of access to a declared service. I do not find it necessary to decide that question or to accept or reject the non-Telstra parties' submission that the provisions relating to the call diversion charge were part of a determination "on" access within s 152CP(1). 161 I turn now to consider s 152CP(2). 162 There are indications that the legislature intended the expression "any matter relating to access" in s 152CP(2) to bear a broad meaning, not a meaning limited, as Telstra would have it, to matters concerned with technical and physical access to the wire. 163 It is trite that such expressions as "relating to", "in relation to" and "in respect of" are very wide and that their meaning will be determined by context: cf Hatfield v Health Insurance Commission (1987) 15 FCR 487 at 491; HP Mercantile Pty Ltd v Commissioner of Taxation [2005] FCAFC 126 ; (2005) 143 FCR 553 at [35] ; Australian Securities and Investments Commission v Narain [2008] FCAFC 120 ; (2008) 169 FCR 211 at [68] , [69]. The relationship which the expressions invoke is not a merely accidental or remote relationship (see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355 at [87] ) and must be a relevant relationship. The sufficiency of a particular relationship, association or connection is a matter for judgment, and depends on, inter alia, the subject matter, the legislative history and the facts in the particular case. 164 It is essential to recall that the FDs provide for a charge for call diversion only when it is "part of the ULLS connection" (see [127]---[134] above). The charge does not apply when call diversion is provided in other circumstances. For example, if a customer had two telephone services provided by the same service provider, such as a home telephone and a mobile telephone, and the customer wanted to be away from home for three months, he or she might wish calls to the home number to be diverted to the mobile number. The present FDs have nothing to say to the charge that Telstra might make in such circumstances. 165 When it is "part of the ULLS connection", however, call diversion is, in my view, a "matter relating to access by [an] access seeker to [a] declared service" within the meaning of s 152CP(2) of the Act. 166 Several considerations lead me to this view. 167 First, there is the Act's definition of "access". 168 Section 152AF(1) of the Act defines "access" for the purposes of Pt XIC as "access by a service provider in order that the service provider can provide carriage services and/or content services " (my emphasis). The access seekers emphasise the concluding purposive words in this definition. Access is provided in order that the access seeker can provide, relevantly, telephone services to an end-user. Telstra, on the other hand, emphasises the technical aspects of access, making the point that access to the unconditioned communications wire is complete once "cutover" or "jumpering" is complete, a step that is independent of call diversion. 169 The purposive aspect of access is repeated in s 152AR(3)(a): the first SAO is that an access provider must "supply an active declared service to a service provider who requests it in order that the service provider can provide carriage services and/or contents services". 170 In construing the expression "relating to" in s 152CP(2), I take into account the purpose of access: to enable a service of a certain kind to be provided to an end-user. In determining the scope of the words "relating to" in the expression "any matter relating to access", it is appropriate to have regard to the purpose of the provision of the telephony service to the end-user. It is relevant that the end-user demands call diversion as a condition of his or her acquisition of that service. 171 Second, a related consideration is the LTIE. Section 152AB(1) of the Act provides that the object of Pt XIC is to promote the LTIE of carriage services or of services provided by means of carriage services. In determining whether a particular thing promotes the LTIE of carriage services or services provided by means of carriage services, regard must be had to the extent to which the thing is likely to result in the achievement of the objective of, relevantly, promoting competition in markets for listed services: ss 152AB(2)(a), (b), (c). The LTIE are also a mandatory relevant consideration for ACCC in making an FD: see s 152CR(1)(a). 172 The significance of the meaning of the expression "relating to" in s 152CP(2) is to be ascertained in the light of these provisions. 173 If Telstra were to be unconstrained in the charge it might make for providing call diversion in response to a request by an access seeker for access to the ULLS, the LTIE would not be served because Telstra would be able to reduce the competitiveness of ULLS access seekers. This Code recognises "ULLS Call Diversion" as a relevant species of call diversion which is required in the context of ULLS ordering and provisioning. The Code provides that the minimum information to be contained in the Customer Authorisation for ULLS must include information as to whether the customer will require ULLS call diversion, and, if so, to which service number. (b) Clause 8.7 of the same Code provides that the gaining access seeker "must manage all Customer requirements and the interdependencies of ordering, provisioning and transferring ULLS and relevant ACIF Codes (eg LNP, commercial churn and multi-carrier preselection)". (c) Clause 8.9 of the same Code provides that transactions associated with the ordering, provisioning and customer transfer of the ULLS must be in accordance with the ACIF Industry Guideline ACIF G587:2002 [ULLS] IT Specification --- Transaction Analysis . That Industry Guideline covers the functional and technical base line requirements for ordering and provisioning of the ULLS (ie for the support of ACIF C569:2001), and contains numerous references to call diversion being sought and provided as part of the ULLS connection process. (e) The Access Agreement between Telstra and Optus pursuant to which Telstra had been supplying the ULLS to Optus since December 2005, dealt (in Table 4(hd) of Schedule 4) specifically with "Charges for Telstra Call Diersion [sic-Diversion] Service for Telstra Unconditioned Local Loop Service", and in Schedule 42D with "Telstra Call Diversion Unconditioned Local Loop Service. The Porting of the Service Numbers on ULLS Call Diversion must be in accordance with the Telstra LNP Number Transfer Service Schedule for Telstra Unconditioned Local Loop [CRA 352], the Telstra Call Diversion for Telstra Unconditioned Local Loop, the Telstra Call Diversion for Telstra Unconditioned Local Loop Service Schedule [CRA 353] and the LNP Code (as incorporated by those Service Schedules) [ACIF C540: 2007]. 175 The evidence to which I have referred above provides a further reason to construe the expression "any matter relating to access" in s 152CP(2) as embracing call diversion where it is provided as part of a ULLS connection. 176 Fourth, absent an arrangement for call diversion being in place before the end-user's existing service is cancelled, the end-user's existing telephone number cannot subsequently be transferred or "ported" to the access seeker (service provider), and so remain available to the end-user once the access seeker's equipment is connected to the Local loop. This consideration reinforces the view that call diversion, when provided as part of the ULLS connection, is a matter relating to access to the ULLS. Mr McAinsh's acceptance of these propositions was unremarkable: they were established by the documents referred to at [174] above. His testimony is not conclusive of the present issue but points in the same direction as the first four considerations mentioned above. 178 I turn now to several submissions that were made by Telstra. 179 There was some discussion in the evidence as to whether it is correct to say that call diversion takes place "contemporaneously" with the disconnection of the losing service provider's equipment and the connection of the gaining access provider's equipment. Telstra submits that it occurs after that process, called "cutover", is complete. The relevant industry code, C540:2007 (referred to at [174(d)] above) noted "[f]or the avoidance of doubt the call diversion is to be placed on the Telephone Number at the time of the ULLS Cutover implementation". Mr McAinsh said that the "cutover" of the ULL comprised the jumpering activity that is required "to actually physically cut it over to the access seeker's equipment" (T229). Mr Harris agreed that "cutover" refers to the work done by the technician or technicians in the exchange in "jumpering" the wires (T261). It was Telstra's submission that "provisioning" (see [138] above) is completed once the cutover or jumpering is completed, and that this precedes the provision of call diversion. 180 Where the end-user who wishes to commence receiving telephony services from the access seeker in question (the gaining service provider) desires to have the benefit of call diversion, the gaining service provider requests Telstra to provide call diversion at the time of applying to Telstra for access to the ULLS. On any reckoning the CDNO is provided on the same occasion and within a very short period following the cutover. 181 I do not think that the present issue is to be decided according to whether, technically, cutover is completed first, followed by the provision of call diversion. While the temporal relationship between the two is not irrelevant to the question whether the latter is a "matter relating to access by the access seeker to declared service" within s 152CP(2), that expression is not to be construed as requiring nothing less than contemporaniety or a certain maximum time gap. It suffices, for present purposes, to say that when an access seeker requests call diversion as part of its request for access to the ULLS, Telstra in fact provides the call diversion on the same occasion as, in connection with, and pursuant to a request for, the provision of the ULLS. 182 Subsections 152CP(2)(d) and (e) (set out at [135] above) empower ACCC to specify in an FD any terms and conditions of an access seeker's access to the declared service not referred to in paras (a), (b) and (c) (para (d)), and to require a party to extend or enhance the capability of a facility by means of which the declared service is supplied (para (e)). Section 152AC defines "facility" to have in Pt XIC the same meaning as it has in the Telecommunications Act 1997 (Cth). I accept Telstra's submission, however, that the provision of call diversion does not constitute an extension or enhancement of the capability of the line --- a concept which seems to contemplate a physical extension or enhancement. 183 Next, Telstra submits that s 152CP does not authorise the making of an FD determining terms and conditions in respect of a matter that was itself capable of being notified under s 152CM as the subject of an access dispute. Telstra submits that the amount to be charged by Telstra for call diversion is such a matter. 184 It seems to me, however, that a dispute in relation to the charge to be made by Telstra for call diversion, when associated with the granting of access to the ULLS , could have been the subject of a notification. Inability to agree on that amount in those circumstances would be inability to agree "about the terms and conditions on which the carrier or provider is to comply with [the SAOs]" within s 152CM(1)(c). 185 Telstra's present submission therefore raises no new point. If, contrary to my view, the dispute referred to could not be notified for the reason that the amount to be charged for call diversion is not a matter "relating to access" then, of course, Telstra's submission would have to be accepted. Telstra's reliance on s 152CM, however, does not advance matters on this question. 186 Telstra further makes much of the fact that, according to its submission, a call diversion facility is itself an eligible service capable of becoming a declared service (see s 152AL of the Act). Telstra contends that ACCC should not be permitted to circumvent the public inquiry and reporting obligations imposed on ACCC by s 152AL(3) in connection with a proposal to declare eligible services, by the device of dealing with call diversion in an FD relating to access to an existing declared service. 187 I am prepared to assume, without deciding, that "call diversion" is an eligible service capable of being declared a "declared service". This does not, in my view, prevent it from being dealt with in an FD relating to a dispute over access to an already declared service, in the limited circumstances where the facility is part of the connection to that declared service. 188 In the result, in my opinion, it was open to ACCC to conclude that call diversion, when part of a ULLS connection, was "a matter relating to access by the access seeker" to the ULLS. In the alternative, I would myself now conclude that the fixing of charges for call diversion in those circumstances was such a matter. 189 It is not established that by including the provision relating to call diversion, in the three ULLS FDs identified at [124] above, ACCC exceeded the jurisdiction conferred on it by s 152CP of the Act. Telstra's Call Diversion ground is not made out. Like the parties, I will refer to the Adam LSS proceeding, the Adam LSS FD and the Adam LSS FD Statement of Reasons as representative. The error of law is that ACCC based its determination of the WACC on a manifestly erroneous methodology involving economic principle. 193 Ground 6(b) is Wednesbury unreasonableness (cf Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223), both under the general law and as reflected in s 5(1)(e) when read with s 5(2)(g) of the ADJR Act. The FD is said to be illogical, irrational and perverse because it was based on a manifestly erroneous economic analysis. In the regulatory framework, the standard practice for calculating this fair return is by reference to an estimate of the regulated firm's WACC. 196 The CAPM is a standard economic model which is often used (including by Australian regulators) to estimate the normal return that would be required by the providers of equity capital. As noted above, ACCC used the CAPM as an element in its estimation of the WACC. 197 The CAPM operates on the assumption that investors are homogeneous in the sense that they are assumed to have the same information and views about the expected return from a particular asset, the variance of that return, and the correlation between the return from that asset and the returns from other assets. I will say more of this assumption below. ACCC used the standard or "Sharpe-Lintner" CAPM. 198 Equity supply schedules summarise the willingness of investors to provide equity capital to a firm. In the case of a flat or horizontal equity supply schedule, there is a single rate or range of rates, of return on equity on which all investors agree, so that a firm will be able to raise any amount of equity capital it requires so long as it provides this return. An upward sloping equity supply schedule, on the other hand, indicates that some investors will be satisfied with lower returns while others will require higher returns, so that as the firm requires more equity capital, it must pay ever higher returns in order to attract additional investors. Where expectations are heterogeneous, however, in order to raise additional capital (eg from A to D ) the firm will have to offer a greater return (indicated by E ). In the diagram, B indicates the quantity of equity capital at which according to both homogeneous and heterogeneous expectations, the same rate of return will be required. 200 The true location of both the flat and sloping supply schedules might be higher or lower than as they appear in the diagram, just as the true slope of the schedule for heterogeneous expectations may be more or less steep. 201 Where expectations are homogeneous, if a return less than that represented by the flat supply schedule is offered, no capital will be forthcoming (there will be a "capital strike"). Where expectations are heterogeneous, on the other hand, some, albeit less, capital will be raised if the rate of return offered is lowered. 202 The WACC cannot be precisely calculated: one can only make an estimate, which may be higher or lower than the WACC's true value. "Welfare asymmetry" refers to the proposition that the social welfare loss associated with overestimating the WACC may not be the same as the social welfare loss associated with underestimating it. This principle is further explained as follows. 203 A range of WACCs may be generated by varying the estimates of the various inputs into the calculation. If an estimate is below the WACC's true value, the supply of the service (or investment in infrastructure used to supply the service) may be reduced or even cease because the regulated entity is unable to earn a fair return. The reduction will consist of reduced capital expenditure, lower maintenance or a lower quality of service, with a consequent social welfare loss. On the other hand, if the estimate is higher than the WACC's true value, consumers will be faced with higher prices and will therefore reduce their consumption, again with a consequent social welfare loss. 204 Telstra's "welfare asymmetry argument" was that the WACC should be set so as to take sufficient account of the social consequences of underestimating the true WACC, in particular, destruction of the incentive to invest. ... the efficiency consequences of this are large. However, if investors expect to recover more than their efficient costs, the kinds of efficiency losses that would result are... second order losses [for example, consumers paying too much for broadband services]. Such losses are likely to be significantly smaller than the efficiency losses of no production. 206 ACCC addressed the WACC issue at [453]-[487] of the Adam LSS FD Statement of Reasons (cf [392]-[421] of the Chime ULLS FD Statement of Reasons. Although ACCC's reasons for rejecting Telstra's WACC submission were not identical as between the 13 proceedings in question, they were substantially similar. It is therefore appropriate to refer to the Adam LSS FD Statement of Reasons. 207 ACCC began (at [453]) by stating that the WACC is used to calculate a normal return on capital employed, and that in its August 2007 LSS DFD Consultation Paper, ACCC had proposed using a "post-tax vanilla" WACC ranging from around 8.5% to 9.5% over the relevant years. ACCC noted (at [454]) that it had drawn to attention, inter alia, the question of whether a mark-up should be included to reflect claimed asymmetries in the social consequences of under and over estimation (the welfare asymmetry argument). 208 At [459] ACCC noted Telstra's argument that the social consequences of underestimating the WACC were greater than those of overestimating it, so that the WACC should be set at "somewhat above the normal return". ACCC described this issue as being whether to provide for an "above normal" WACC value on the basis of Telstra's "welfare asymmetry argument" (at [460]). 209 ACCC observed (at [468]) that it had previously not accepted that there is welfare asymmetry in the social consequences of overestimating or underestimating the WACC, and referred to its FD entitled Assessment of Telstra's ULLS monthly charge undertaking of August 2006 (ULLS Monthly Charge Undertaking Assessment) at p 125. In that context Telstra had relied on the expert evidence of Professor Robert Bowman, and Optus had provided a responsive report by Jason Ockerby, then of Frontier Economics (now of the Competition Economists Group and Optus's expert witness in the present proceeding). AAPT, another service provider, had submitted a report of Associate Professor Neville Hathaway. At pp 125-131 (section D.7.3) of that document, ACCC had given its reasons for rejecting Professor Bowman's (and therefore Telstra's) welfare asymmetry argument. Among other things ACCC stated (at p 125) that the claims made by both Professor Bowman and Mr Ockerby were based around qualitative statements and counter-statements, and that there was lacking substantive and quantifiable evidence supporting Telstra's claim. 210 ACCC continued in the Adam LSS FD Statement of Reasons by stating (at [469]) that it remained of the view that an unbiased estimate of the WACC that allowed for a normal rate of return on capital was appropriate, given the regulatory criteria to which it was required to have regard. Telstra contends that the consumer gains from consumption of a service are substantial and that if the WACC is set too low these gains will not be realised insofar as the necessary investment is not undertaken. Conversely, Telstra states that if the WACC is set above the normal level, the investment will always be undertaken and that the consumption gains will be realised. However, Telstra acknowledges that there will be a 'second-order' welfare effect from overpricing of these services. In a nutshell, Telstra submits that the 'second-order' effects from overpricing will be less adverse to welfare than the consumption effects of the investment not occurring in the first instance. ACCC stated that Telstra's position was that the decision whether to invest would be common to all investors as typically they would require external financing for major projects, and, it can be inferred, that capital markets tend to hold a collective view of the expected viability of different investments. Put another way, the assumption made here is that all investors --- and by extension financiers in capital markets --- share a common view as to an appropriate WACC for an investment project. This implies that all investors have similar expected marginal costs and revenues (as this impacts the margin necessary for the project to be considered viable). In addition, it assumes that all potential investors have a homogenous risk profile. More generally, in the Commission's view, the decision as to whether or not to invest in a specific project can differ among different groups of investors, and over time, is dependant on factors such as the relative risk aversion and the expected returns required on different investments. As these are likely to differ among different investors and institutions, it is unlikely that there will always be a common view among investors and capital markets as to appropriateness of a particular return on capital. Rather investors will have different risk and return profiles for investment projects, and it is precisely the possibility to take advantage of these differences which arguably drive capital markets. For this reason, it is possible to observe in practice a combination of both high risk investments being undertaken at high rates of return, and at the same time, relatively low risk investments with correspondingly lower rates of return. The WACC (post-tax vanilla) ranged from a high of 9.66% (in 2000-01) to a low of 8.26% (in 2003-04). The WACC (post-tax vanilla) for the most recent year in the table (2007-08) was 9.25%. 215 In order to estimate the WACC, ACCC used the same standard CAPM that it had used in the past. This was the Sharpe-Lintner CAPM. Telstra submits (at para 3.14) that it is not disputed that this CAPM gives a flat supply schedule (a horizontal straight line) for equity capital. However, Dr Hird and Mr Ockerby say that the CAPM that was used by ACCC can also be derived using homogeneous expectations. 216 In Telstra's submission, ACCC's reasoning, expressed in [472] and [473] set out at [213] above, is based on the assumption of an upwardly sloping supply schedule (that is, the idea that different investors will insist on different returns if they are to commit equity capital to the firm) and associated heterogeneity of expectations. Telstra submits that both of these interrelated assumptions are fundamentally inconsistent with the CAPM which ACCC professed to use. 219 In support of proposition (a) (that a decision made on the basis of an erroneous methodology, principle of valuation or economic analysis is infected by error of law), Telstra refers to the following cases, which I need not discuss at this stage: Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 ; Brisbane City Council v The Valuer-General for the State of Queensland [1978] HCA 40 ; (1978) 140 CLR 41 ; Maurici v Chief Commissioner of State Revenue [2003] HCA 8 ; (2003) 212 CLR 111 ; Repatriation Commission v Harrison (1997) 78 FCR 442 ; NSW Coal Compensation Board v Nardell Colliery P/L [2004] NSWCA 35. 220 In relation to propositions (b) and (c), Telstra submits that it is not disputed that ACCC set the WACC by adopting the methodology of the standard CAPM, fundamental assumptions of which are (i) that all investors have homogeneous expectations, and (ii) that in equilibrium all investors have homogeneous expectations as to the required returns from a particular investment, irrespective of their risk preferences. Telstra also submits that it is not disputed that under the CAPM there is a flat supply curve, or schedule, for equity capital. 221 In relation to propositions (d) and (e), Telstra submits that ACCC rejected its welfare asymmetry argument on the basis of heterogeneity of investors' expectations and heterogeneity of investors' required return on capital, which would result in different required returns. In so doing, according to Telstra, ACCC adopted an upward sloping curve for the supply of equity capital. 222 In support of proposition (f), Telstra submits that ACCC's reasoning in rejecting the welfare asymmetry argument was inconsistent with fundamental assumptions of the standard CAPM on which ACCC had relied in determining the WACC. In considering the cost of equity capital, the ACCC has assumed a flat equity supply schedule. In considering the welfare asymmetry argument, the ACCC has inconsistently assumed an upward sloping supply schedule. Telstra emphasised that the CAPM and the concept of welfare asymmetry are inextricably linked, both being concerned with the derivation of the appropriate regulatory WACC in the relevant circumstances. 227 In support of proposition (a), Telstra refers to cases in which the ground of review often referred to as Wednesbury unreasonableness has been described. 228 In relation to Telstra's proposition (b), Telstra refers to the discussion of steps (b) to (f) in relation to Ground 6(a) above. 229 In respect of proposition (c), Telstra submits that ACCC's reasons for rejecting the welfare asymmetry argument were fundamentally illogical and perverse in at least two ways. 230 First, ACCC's reasons for rejecting that argument are illogical, considered on their own terms, because they are founded on the suggestion that Telstra could raise equity capital by offering lower returns to a sub-set of investors who were less risk adverse. Telstra refers (at paras 3.64, 3.65) to evidence given by Professor Gray to the effect that ACCC's suggestion could be borne out only if markets were in a state of disequilibrium or investors were irrational. In other words, according to Telstra, ACCC's reasons for rejecting the welfare asymmetry argument are illogical and perverse even if they are considered independently of the use of the CAPM. 231 Second, Telstra argues that ACCC determined the regulatory WACC by adopting directly opposed assumptions. It adopted the CAPM and its assumptions for the purpose of arriving at an estimate of the WACC, but for the purpose of rejecting the welfare asymmetry argument it adopted assumptions inconsistent with them. Again Telstra refers to evidence of Professor Gray (see below). It is illogical to adopt assumptions of homogeneity of investors' expectations and homogeneity of investors' required return, for the purposes of setting the WACC, but to abandon those assumptions when considering welfare asymmetry arguments. The result is a determination of the regulatory WACC to apply to the regulated asset base on the basis of internally opposed assumptions. Such a process can only be described as illogical and devoid of plausible justification. 233 I will refer to the parties making the Optus and XYZed submissions together simply as "Optus. " Optus emphasises that Part XIC of the Act does not, either expressly or by implication, require ACCC to consider the WACC or to make a finding about an appropriate WACC to be factored into its price determinations. 234 Determining a WACC is necessarily an inexact exercise involving estimation based on the application of available market data and various inputs to economic models. For the purposes of estimating returns on equity, ACCC applied a model known as CAPM. 235 ACCC expressed no view about the extent to which the assumptions underlying the CAPM, such as an assumption about the homogeneity of investors' expectations as to return and as to risk aversion, were realistic. There is nothing to suggest that ACCC considered any of those assumptions to be an accurate reflection of reality. 236 Optus characterises the essence of the welfare asymmetry argument that Telstra advanced before ACCC as being that ACCC should arrive at an estimate of the equity component of the WACC by applying the CAPM but then increase that figure. In other words, there was a distinction between a normal return and the increased return that Telstra was seeking in order to take into account its welfare asymmetry argument. As before, the efficiency consequences of this are large. However, if investors expect to recover more than their efficient costs, the kinds of efficiency losses that would result are ... second order losses ... . Such losses are likely to be significantly smaller than the efficiency losses of no production. Optus points out that ACCC did not accept that the capital strike proposition reflected how investment decisions were made in practice. ACCC thought that the decision whether or not to invest in a specific project could differ as between groups of investors and over time, depending on such factors as relative risk aversion and the returns required of different investments. For this reason, it is possible to observe in practice a combination of both high risk investments being undertaken at high rates of return, and at the same time, relatively low risk investments with correspondingly lower rates of return. 238 Optus submits that ACCC's rejection of the welfare asymmetry argument, despite ACCC having relied upon the CAPM, was not illogical because the argument raised a question whether it was realistic to assume that investors would behave in a uniform way based on homogeneous investment expectations, and ACCC thought that it was not realistic to make that assumption. 239 Optus agrees that the CAPM is a model based on certain assumptions, including an assumption as to the homogeneity of investor expectations, but submits that the use of an economic model does not indicate that its assumptions are necessarily accepted as an accurate reflection of reality. CAPM operates on the basis of other self-evidently unrealistic assumptions, such as that there are no transaction costs, no inflation and no personal income taxes. 240 Professor Stephen Faulkner Gray, Professor of Finance at UQ Business School, University of Queensland, an expert witness called by Telstra, stated in his affidavit that CAPM explicitly rules out differences of expectation among investors about the future prospects of Telstra or about the risks associated with an equity investment in Telstra. Optus submits that while it may be accepted that this is true in terms of the internal logic of CAPM, this says nothing about how ACCC could or should have approached the consideration of other issues affecting the WACC that were not part of the CAPM modelling exercise. 241 Optus submits that contrary to Telstra's submission, ACCC did not adopt or endorse an upward sloping supply curve for capital, or suggest that Telstra could raise equity capital by offering lower returns to a sub-set of investors who are less risk averse. According to Optus, ACCC's reasoning dealing with the welfare asymmetry argument does not touch on that issue. 242 Optus notes (para 49) Telstra's assertion in its submissions of a general principle of law that "[w]here a regulatory agency has power to set a regulated price and makes an error in a principle it applies in order to set the price, this constitutes an error of law". Optus contends that this submission should not be accepted because the matter depends entirely upon the terms in which the power to set the regulated price is conferred and the source of the principle which the regulator applies. The mere fact, according to Optus, that a regulatory agency such as ACCC chooses to have regard to certain models and factual considerations as part of the broader exercise of determining an access dispute which involves price terms, does not elevate any error made in the course of that exercise to the status of an "error of law", even if the label of "principle" is attached to the error. A complaint that ACCC erred in law by taking a particular reasoning step in rejecting the welfare asymmetry argument is not to the point because ACCC was not under a legal obligation to reason in a particular way. 243 Optus submits that while an error of principle in arriving at a value may amount to an error of law, the cases in which that has been held to be so have concerned statutory valuation exercises, and in any event the approach should be treated with caution: Optus cites Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5 ; (2008) 233 CLR 259 ( Walker Corporation ) at 269-272. Optus submits that in any event Telstra has failed to identify the "principle" which it says ACCC ignored or misapplied. Optus distinguishes the particular substantive principles considered in Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 and the related authorities cited by Telstra (see [219] above). In Walker Corporation the High Court (at 270) cautioned against importing into one case general "principles" derived from other cases that arose in different statutory contexts. Optus submits that Telstra has not identified in Pt XIC of the Act or in the common law a source of any "principles" that control the arbitral powers conferred on ACCC by Div 8 of that Part. 244 Optus submits that Telstra's "unreasonableness" ground has no support, in that the inconsistent reasoning Telstra alleges to have been adopted by ACCC in, on the one hand, applying the CAPM, and on the other making a determination that Telstra's "capital strike" argument was not a realistic reflection of investor behaviour, falls far short of establishing that ACCC made a determination that was so unreasonable that no reasonable decision maker could have arrived at it. 245 Optus submits that the Wednesbury unreasonableness ground of review does not extend to an error of reasoning in making a finding of fact about a matter that is one of many factual elements in the determination of an access dispute. They are only formulae, cannot take into account all of the real world effects, and their inputs are unknowns. (b) If it is, is there any illogicality in ACCC's using the CAPM to arrive at the WACC, then rejecting Telstra's welfare asymmetry argument on the basis, inter alia, that investors do not have homogeneous expectations? (b) Should that best estimate be adjusted to take welfare asymmetry into account? 249 In their written submissions, the non-Optus access seekers summarise the experts' evidence in relation to these questions, but submit that it is not necessary for the Court to resolve the debate between them. Those parties submit that if the Court should conclude that ACCC's approach is supported by a respectable body of economic thought, that suffices to defeat Telstra's claim based on error of law and Wednesbury unreasonableness. Nonetheless, they submit that the evidence and Telstra's submissions do not demonstrate illogicality in ACCC's reasoning process for a number of reasons on which they elaborate. 250 The non-Optus access seekers distinguish the valuation of land cases relied on by Telstra as turning on the terms of particular statutes. They note that Telstra purports to concede (as it must) that illogicality or unreasonableness do not necessarily constitute reviewable error unless there is a legal principle or statutory provision that attracts that consequence: they cite Re Minister for Immigration and Multicultural Affairs; ex parte Applicant S20 / 2002 (2003) 198 ALR 59 ; [2003] HCA 30 ( S20 ) at 61 per Gleeson CJ. Whether relying on Wednesbury unreasonableness or "illogicality, unreasonableness and perversity", as in S20 , one must identify a particular statutory provision or other legal principle that has been infringed. The non-Optus access seekers submit that Wednesbury unreasonableness is directed at outcomes, whereas S20 illogicality is directed at processes of reasoning: see S20 [2003] HCA 30 ; 198 ALR 59 at 76 per McHugh, Gummow JJ, 88 per Kirby J. 251 They also distinguish Application by GasNet Australia (Operations) Pty Ltd [2003] ACompT 6 ; [2004] ATPR 41-978 ; [2003] ACompT 6 (GasNet) at [47] as directed to the need to apply the CAPM in a conventional way. According to their submissions, the Tribunal was not there suggesting that the CAPM formula could be applied only in a way that was consistent with an acceptance of its underlying assumptions. Also as noted above, Optus led expert evidence from Jason Peter Ockerby, a director of the Competition Economists Group. The non-Optus access seekers led expert evidence from Dr Thomas Nicholas Hird, also of the Competition Economists Group. The three economists provided a "Joint Report of Experts" (Joint Report) to the Court. They also provided their own independent reports and gave extensive oral evidence. They required that a "value" or a value of a particular kind or an amount of "compensation" be determined, and in some instances the basic expressions were elaborated upon or defined. Accordingly, the argument was open in those cases that the statute had been misconstrued. 254 In contrast, the terms in which ACCC's function as arbitrator of an access dispute under Div 8 of Pt X1C of the Act are couched are of the broadest kind. Section 152CP(1) requires ACCC to make "a written determination on access by the access seeker to the declared service". Section 152CP(2) provides that the determination may deal with any matter relating to access by the access seeker to the declared service. Section 152CR(1) provides that ACCC must take the matters listed in that subsection into account, including, for example, the LTIE. Section 152CR(2) provides that ACCC may take into account any other matters it thinks are relevant. 255 There is no basis in the Act for a contention that ACCC was bound to consider the WACC or to arrive at an appropriate WACC in order to make a valid "determination on access". 256 In my opinion the kind of inconsistency or error with which Telstra charges ACCC is not an error of law. If there is an error or inconsistency at all, it is an error or inconsistency in ACCC's reasoning process, which does not necessarily constitute an error of law. 257 In para 6 of its amended application for an order of review, Adam referred to Wednesbury unreasonableness as "further or in the alternative" to the error of law ground, and gave the same particulars of both (see [194] above). In its submissions, however, while acknowledging substantial overlap between the two grounds, Telstra distinguished between them (see [218] (error of law) and [226] ( Wednesbury unreasonableness) above). 258 Observations made in Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 ( Eshetu ) and S20 are, in my view, relevant to both grounds. If these are merely emphatic ways of saying that the reasoning is wrong, then they may have no particular legal consequence. ... I should expand upon that, perhaps. The way every economic model works is to start with a set of assumptions that are necessarily unrealistic, which is why they are called assumptions. They are not descriptions of reality. Based on those simplifying assumptions, we apply an internally consistent set of logic or mathematical derivation, and that produces some outputs. When evaluating the use or worth of an economic model, we don't have any regard to the reality of the assumptions. We look at the effectiveness or the use to which the outputs can be put. So that might be, in terms of --- in this example, determining what an appropriate return would be for a regulated monopoly asset. All of the models in economics are based on a set of assumptions that try to simplify very complex phenomena into something that can be modelled. That is the whole reason for having those assumptions. Indeed, every assumption in every economic model is for that reason unrealistic. That is the whole point of having those assumptions. Did the CAPM formula used by ACCC assume homogeneity of expectations? 265 It is common ground between the three experts that the Sharpe-Lintner CAPM was originally derived by assuming that investors have the same expectations about the future prospects of each firm and its stock. Mr Ockerby and Dr Hird, however, say that the CAPM formula used by ACCC is consistent with heterogeneity as well as homogeneity of expectations. Professor Gray states in the report annexed to his first affidavit, that while there is nothing in the CAPM formula that rejects heterogeneity of risk aversion among investors, "all investors have the same belief about the probability [of] distribution of future payoffs from a particular asset" (para 46). The Professor (para 47) "there is a class of models that allows for heterogeneity of investor expectation. But these models are not the CAPM and have not been used by the ACCC to estimate the required return on equity capital". 266 In the Joint Report, the experts agreed (para 3(f)) that the Sharpe-Lintner CAPM pricing relation can be derived adopting assumptions different from those originally employed by Sharpe and Lintner, including the assumption as to homogeneity of expectations; "however other assumptions are required to arrive at the relation and the pricing relation may only hold approximately". In para 4 of the Joint Report the experts agreed "that the pricing relationship used by the ACCC is consistent with that originally developed by Sharpe and Lintner and also that subsequently derived using the assumption of heterogeneous expectations and other additional assumptions". 267 I do not find it necessary to resolve the conflict in the present respect as between Professor Gray on the one hand and Mr Ockerby and Dr Hird on the other: I am content to assume that the CAPM formula used by ACCC assumes homogeneity of expectations. See para 65 of its submissions to ACCC set out at [237] above. 269 As ACCC noted at [473] of the Adam LSS FD Statement of Reasons (set out at [213] above), ACCC considered that real world investment decisions were not reflected by the capital strike proposition. 270 I see no ground for criticism of ACCC's reasoning process by which it rejected Telstra's capital strike proposition. It was at liberty to consider that in the real world investors do not behave in the way in which the capital strike proposition would have them behave. Accordingly, in this respect ACCC did not behave unreasonably or irrationally, and neither error of law nor Wednesbury unreasonableness is made out. As a result, if the Commission and the Tribunal genuinely hold the view that investors have heterogeneous information and expectations, they cannot continue to rely on the models they have conventionally used to determine allowed rates-of-return. To do so would be to contradict the requirement the Tribunal has set out in earlier decisions that the CAPM be applied in a manner consistent with its underlying assumptions. In truth and reality, the use of different values for a risk free rate in the working out of a Rate of Return by the CAPM formula is neither true to the formula nor a conventional use of the CAPM. It is the use of another model based on the CAPM with adjustments made on a pragmatic basis to achieve an outcome which reflects an attempt to modify the model to one which operates by reference to the regulatory period of five years. The CAPM is not a model which is intended to operate in this way. The timescales are dictated by the relevant underlying facts in each case and for present purposes those include the life of the assets and the term of the investment. Section 8.1 set out the objectives according to which a "Reference Tariff" and "Reference Tariff Policy" were to be designed. I do not think that the Tribunal's observation at [47] set out above is relevant to the question whether ACCC was obliged, in order to be consistent, to accept as according with the real world the assumptions according to which the CAPM was formulated. 274 The Joint Report also set out a summary of the opinions of the respective experts on the key issues. 275 Professor Gray insists that in economics there must be internal consistency in the sense that "within a single economic framework the same approach has to be used and the same answer obtained for the same question" (T520). This, however, begs the question whether the CAPM and ACCC's rejection of the welfare asymmetry argument were addressing "the same question". 276 It is common ground that unrealistic assumptions underlay the CAPM model: see also the passage from Professor Gray's testimony quoted at [262] above. 277 Professor Gray accepted (inevitably) that at [473] of its Statement of Reasons, when rejecting Telstra's welfare asymmetry argument, ACCC was looking at a real world situation rather than one derived from a model. 278 Telstra's welfare asymmetry argument itself required ACCC to depart from the CAPM model by elevating the WACC in order to take into account the real world risk of a capital strike. ACCC's answer was that there would not be a capital strike in the real world because the real world was characterised by heterogeneity of investor expectations. 279 As Mr Ockerby explained, ACCC used the CAPM formula to arrive at its "unbiased" estimate of the required return on an investment in equity capital (Professor Gray agreed that the CAPM gives a "best" or "unbiased" estimate (T545, 556 ) and in doing so it located the equity capital supply schedule on the graph. It then relied on the upward slope of that schedule as the basis for rejecting the welfare asymmetry argument. It is important to appreciate that sloping equity supply schedules can be located at different heights on the graph. The height represents the cost of equity capital while the direction (horizontal or sloping) represents the amount of capital coming in at around that price. 280 Dr Hird similarly made the point (T526) that the cost of equity capital, according to the CAPM, does not vary with the size of the firm or the amount of capital to be raised. He explained that after making our best estimate of equity capital, the next step is to ask "if we get this wrong, what will happen?". The answer, illustrated by the slope of the equity supply schedule, is that if the estimate is too low, some investors will be lost, but not all will be, and if it is too high there may be different adverse consequences to competition. It is not, however, to use Dr Hird's term, a "knife edge", or to use the terms in which ACCC described Telstra's submission, an "all or nothing" situation. 281 ACCC found it useful to use the CAPM formula to arrive at the "unbiased" required return on an investment of equity capital, and was entitled to resort to the real world sloping nature of the equity supply schedule to reject Telstra's welfare asymmetry argument. 282 Senior counsel for Telstra pointed out that the exercise of arriving at the FD is carried out within the framework of the TSLRIC+ pricing methodology. However, Telstra's own capital strike proposition was an assertion of what was likely to happen in the real world (unsupported by evidence) and was answered by a real world heterogeneity of expectations. 283 It seems to me that the expression "assumptions" in relation to the CAPM is ambiguous. It may be that, outside the realm of economics, the word "assumption" is not the best word to refer to such things as homogeneity of expectations, no inflation and no personal income taxes. The CAPM does not assume those things in the real world in the sense that the CAPM loses its validity if they do not in fact reflect the real world. The CAPM makes assumptions in the sense of putting certain things to one side. The model can work and be a useful tool for the purpose of addressing only those things with which it deals. These are all six of the LSS proceedings. I will refer to Adam as representative. 286 Both grounds concern the access seekers' business plans, and, in particular, the question whether those business plans provided a justification for not including a contribution to line costs in the annual charge for access to the LSS (LSS Annual Charge). 287 "Line costs" refers to the cost of a line over which the LSS is sought or accessed, in particular, the cost of maintenance of the line. Since the LSS is provided only over the high frequency spectrum, other services, such as telephony, may be provided over the same line at the same time. Section 152DB of the Act, referred to in the Failure to Inquire Ground, is entitled "Procedure of Commission". These are the 2002 LSS Pricing Principles that were referred to at [23](4). Within Pt 7.3.2 headed "The costs of a line over which a LSS is provided", ACCC explained (p 87) that the LSS is provided over a subset of the full frequency spectrum of a line (or ULL), and that a key question was whether or not any allocation of the cost of the whole line should be recovered through the price of an LSS. 291 ACCC expressed the view that Telstra was already fully recovering the cost of the line through other sources of revenue (see the Earlier Reasons at [351]), and concluded that unless Telstra could show that this was not so, it would be inappropriate to include a contribution to line costs in the price of the LSS (pp 97-98). The Commission expects that parties' submissions will be responsive to the issues raised in this discussion paper or in other parties' submissions. Should a party not provide information on a particular issue when it could reasonably be expected to be in a position to do so, the Commission may draw the inference that what the party could have said on the point would not have assisted its case. 293 Section 4.1 of the Adam LSS DFD Consultation Paper was entitled "LSS annual charges". It outlined the background to the Adam LSS access dispute and ACCC's approach. In these circumstances, reductions ... in charges for other network services, such as wholesale line rental (WLR), are needed in order to avoid any such double dipping. Accordingly, the Commission is consulting the parties on whether there is a real prospect for rebalancing to take effect before 31 December 2007, which is [the] proposed date on which the proposed determinations would expire. ACCC stated that it sought submissions only on the issue whether a contribution to line costs could be implemented within the period for which the proposed FD was to operate. At that time, August 2007, it was proposed that the FD would expire on 31 December 2007 --- only a few months thereafter. ACCC stated that its preliminary view was that any such contribution should be recognised only prospectively and only following a rebalancing of LSS and WLR charges. ACCC further stated that it was, at that stage, seeking submissions only to the extent necessary to reach a view as to whether or not it would be appropriate for ACCC to include a contribution to line costs at all, not as to how any contribution should be calculated. On those occasions when the Commission has altered its regulatory approach to access prices, it has adopted a transition path approach, so as not to harm competition or efficient investment incentives. 295 ACCC asked the parties to calculate the effect and provide calculations for the hypothetical scenarios where monthly LSS charges increased, and monthly WLR charges associated with LSS lines decreased, by the amounts of $2.00 in Band 1, $7.10 in Band 2, and $15.50 in Band 3. The effect and calculations were to be based upon the number and geographical distribution of LSS and WLR services that the access seekers currently acquired. ACCC also asked the parties to provide forecasts up to 31 December 2007. The parties were asked to "attach a work paper showing their calculations". ACCC also asked them to consider whether, and if so how, the resulting change in monthly access charges would affect current or planned business operations, and any consequences for investment (made or planned) in DSL networks or alternative networks. There was no oral evidence. The nature of the present grounds makes it important to note in some detail the materials that were before ACCC. In Part 3, entitled "LSS Monthly Prices", Telstra submitted that the LSS Annual Charge (payable monthly) should include a service specific cost component and a line cost component. It submitted that inclusion of a contribution to line costs would be in the LTIE, the interests of Telstra, and the interests of access seekers. Telstra submitted that contrary to ACCC's earlier Chime LSS FD Statement of Reasons and Request LSS FD Statement of Reasons (see the Earlier Reasons at [346]-[417]), Telstra was not already recovering its line costs through wholesale line rental and its own retail line rental prices. The Commission signalled through the LSS Pricing Principles, and therefore well before DSLAM [Digital Subscriber Line Access Multiplexer] investments were made by LSS access seekers, that it may be appropriate for LSS prices to include some contribution to line costs. Consequently, LSS access seekers have been aware of the probability of having to contribute to line costs at the time of their investment and should have factored this risk into their business plans. In the Chime and Request FDs, the Commission expressed concerns as to the effect on access seekers [sic] business plans of the inclusion of line costs in the price of LSS. Given that Telstra is proposing a transitional price which has been operating in the market for some time, any business plans, on the basis of which access seekers have invested, will not be disrupted. It also submitted that a rebalancing was not called for but that if ACCC insisted on a rebalancing, Telstra could introduce a rebate mechanism within as little as two weeks. A difficulty of nomenclature has arisen. I will use the expression "access seekers" to refer generally to access seekers and in particular to all six access seekers to which the present grounds relate, reserving "Access Seekers", if used at all, for AAAP. 300 The AAAP submissions (also dated 20 September 2007) addressed the issue of any "Contribution to line costs" at 4.1.7. AAAP submitted that the LSS Annual Charge should not include a contribution to line costs, but that if ACCC should consider otherwise, assessment of any rebalancing of LSS and WLR charges could not be concluded before the end of the FD period as ACCC proposed (31 December 2007), or, as AAAP proposed, 30 June 2008. AAAP suggested that the assessment would take more than twelve months, and perhaps some years. In supplying LSS based services to end-users, AAAP have generally chosen to de-emphasise basic access in preference to broadband and VoIP voice solutions. As such, any rebalancing which involves an increase in the LSS price equal to the amount deducted from the WLR price will be 'net negative' to [AAAP]. With their existing business structure, it will be extremely difficult for [AAAP] and companies like them to compete with Telstra and other service providers which have a higher ratio of WLR to LSS customers. This will lead to an inevitable reduction in competition in the market for DSL services. However, this will essentially force access seekers to become full service providers rather than specialist broadband providers. (Whilst access seekers could theoretically provide only DSL services across the ULLS, if customers want to also obtain a traditional phone line from another service provider, there could be a situation where two parties are seeking access to the ULLS for different purposes and the customer must have two lines. Not only is this situation inefficient and not cost effective, but the network is not configured to readily support two lines per household in all locations. Rebalancing will therefore reduce competition in both markets. Primus's position is that it considers very few of its LSS customers will agree to obtain voice services from Primus. As such WLR/LSS rebalancing is likely to make these customers uneconomic. Amcom, Adam Internet and Agile do not resell voice services supplied over Telstra's CAN. Any WLR/LSS rebalancing would increase their costs with no benefit and mean that their current business models, based on providing broadband internet via the LSS, may become unviable. Telstra has no process for such migrations ... The only option for existing customers to be migrated to ULL based services is for the customer to cancel their service, have the LSS removed and then re-apply as a new customer. By doing so, broadband competition will be harmed and the [LTIE] will be diminished. This resulting increase in costs that would result from paying higher monthly charges to Telstra, would make this unviable if the [access seeker] was not recouping line rental charges from its retail customers. ... Provisioning: ... Faults: ... The resolution of faults on ULL services tends to be a more drawn out process. As stated above, competition in data services will be harmed and this development is not in the [LTIE]. For example in many cases today, a customer will have a different voice service provider. In each case and in each transition between voice service providers, the gaining service provider will need to know what broadband services a customer has and vary the line rental component accordingly to stop double dipping at both the wholesale and retail level. In each case, a table gave information including the number of LSS customers, the monthly cost increase on the basis of an increase of $2.00 in Band 1, $7.10 in Band 2 and $15.50 in Band 3, and the number of WLR customers. In this illustrative scenario [Amcom/Adam/Agile] will incur approximately [c-i-c] per month extra in LSS monthly charges, with no saving in WLR, given that it has no WLR customers. ["c-i-c" means "commercial in confidence". In this illustrative scenario Primus will incur approximately [c-i-c] per month extra in LSS monthly charges. Primus would recoup some of this costs [sic] by lower WLR costs, but is unable to comment on the applicable amount. It was a statement by Scott Hicks, Adam's Managing Director entitled "Opportunity Costs Analysis --- Adam Direct DSLAM Network". Mr Hicks's statement showed that Adam's business models were based on a certain assumed LSS price. He said that in December 2004, following a reduction by Telstra in the price for the LSS, Adam had reduced the expected LSS price that was used in its business models. 306 I discuss Mr Hicks's statement further at [354]ff below. There was no comparable statement in relation to any of the other access seekers. Thus, Network addressed the issue of any "Contribution to line costs" at 4.1.7. 308 Annexure 3 to Network's submission provided an "Illustrative scenario of LSS/WLR rebalancing" which was in the form of the scenarios provided by Amcom, Adam and Agile (see [303] above). Like those three access seekers, Network had no WLR customers. Telstra submitted, therefore, that an unsubstantiated submission by the access seekers should similarly be disregarded or rejected, and that if ACCC did not have sufficient evidence on which to determine a particular matter, it should invoke its investigatory powers under s 152DB(1)(b). 312 Telstra addressed the issue of the practical implementation of any rebalancing in Part 2 of its reply submissions. It there responded, inter alia, to the access seekers' assertions as to the difficulty of migrating from LSS to ULLs, and the problems associated with providing only DSL services across the ULLs. The Access Seekers submit that the logical effect of any rebalancing would be for access seekers to migrate services from LSS to ULLS, but asserts [sic] that "mass migration to ULL from LSS remains almost impossible" [Access Seekers' Submission, 4.1.7(ii)]. There are in fact no fundamental technical barriers to LSS to ULLS migration, however, Telstra has not had a managed migration process in place from LSS to ULLS as there has been very little demand to date for this service from access seekers. It is completely inappropriate for access seekers to complain about an absence of such a process, and yet to have not even requested it from Telstra on the basis of actual need. The Access Seekers assert that if an access seeker wants to provide only DSL services across ULLS, and the end user wants to purchase voice services from another service provider, then it could lead to two parties seeking access to the ULLS for different purposes and as a result, the customer would require two lines. This again is ill-conceived. In fact, in such a situation, a ULLS provider could provide wholesale line rental services over the ULLS so that another access provider could provide voice services to the end user across the same line. It also ignores many of the market developments around the provision of VOIP to end-users. More generally, the Access Seekers are being self-serving in their example because they offer no rationale whatsoever for why an access seeker wishing to supply an end-user via ULLS would not seek to meet all of the end-user's service requirements rather than arbitrarily limiting itself to a broadband-only business model. [AAAP] have obviously taken these indications of the Commission's likely approach into account in formulating their business plans . A dramatic shift in the Commission's approach, such as that advocated by Telstra, would clearly have a detrimental impact on [AAAP's] plans. 315 TPG's reply submissions did not address the issue of its business plans either. Annexure 2(b)(ii) was Mr Hicks's statement. By its letter, Telstra submitted that the information contained in Mr Hicks's statement (and in Telstra's reply submission) was relevant to the issues in other access disputes. Accordingly, Telstra requested ACCC to exercise its powers under ss 152DB, 152DBA and 152DC(1) of the Act "to make the appropriate directions so as to inform itself of the above two submissions for the purposes of the other access disputes". The information contained in the Adam Annexure, and Telstra's Reply to Adam, is highly relevant to the issues in other disputes, namely whether or not the price proposed by Telstra would affect the access seekers' businesses which in turn impacts on the statutory criteria such as the access seekers' interests and the promotion of competition. Telstra therefore considers that if the Commission were to draw upon this prior received information it will lead to the other access disputes being resolved in a more efficient and timely manner. Whilst Telstra considers that such an approach is inconsistent with Part XIC of the Act, given the consultation requirements under subsection 152DBA(3) of the Act, this does not apply to information which the Commission has obtained in the course of arbitrations. Accordingly, as the Adam Annexure is highly relevant to other LSS access disputes, it is most appropriate for the Commission to treat the Adam Annexure and Telstra's Reply to Adam in the same manner and use it in other arbitrations. ACCC advised that having assessed the material referred to in Telstra's letter, it had decided not to exercise the various statutory powers to which Telstra had referred, because it did not consider the information relevant or useful in its arbitration of the access disputes, or that introducing the information into the other arbitrations would be likely to result in their being conducted in a more efficient and timely manner. ACCC's timetable did not provide for it to do so but Telstra claimed that AAAP's reply submissions had raised new issues. 321 Telstra's responsive submissions asserted that AAAP had made numerous unsubstantiated claims. Telstra addressed various matters concerning line costs, but the precise issue of lack of evidence of the formulation of AAAP's business plans was not taken up again. In the Adam LSS FD Statement of Reasons, ACCC stated (at [317]) that it took the LSS Declaration Review into account in making the Adam LSS FD. 323 In Ch 3 of the LSS Declaration Review, ACCC noted that the pricing principles that s 152AQA requires ACCC to determine may contain indicative prices. 324 ACCC noted that charges for access to the LSS had not included a contribution to line costs since the original LSS Declaration of August 2002. ACCC referred to the 2002 LSS Pricing Principles that had been set out in Chapter 7 of the LSS Declaration Final Report (see [290]---[291] above). 325 ACCC concluded that Telstra was already fully recovering its line costs from a range of revenue sources and that therefore the price of the LSS should be set to recover only incremental specific costs --- not line costs. 326 ACCC considered that to include a contribution to line costs in the LSS Annual Charge would be to allow double dipping by Telstra. ACCC referred to other disadvantages, as it perceived them, of including a contribution to line costs, such as "allocative inefficiencies and decreased competition" (p 98). 1 "Price-related terms and conditions". One of the LSS Pricing Principles was that a "contribution to line costs would not be recovered in the LSS monthly price". One of these was the implications, if any, that the LSS Extension Declaration and the 2007 LSS Pricing Principles and indicative prices might have for the LSS FDs, including the terms of access to be specified in those FDs. Although the parties provided submissions dealing with some matters concerning line costs, such as the question whether Telstra was already recovering its line costs, they did not touch upon issues of immediate relevance. ACCC summarised the parties' submissions. It noted that the access seekers had submitted that including a contribution to line costs in the LSS Annual Charge would disrupt their current businesses, and that doing so without a transition path would cause them severe financial hardship. It also noted that each of the access seekers had provided details of the increase in monthly charges it would face if rebalancing occurred. ACCC referred to the access seekers' submission that the likely effect of including a line cost contribution would be to force data-only providers to switch to offering bundled voice services, and that the associated development of business processes would require time and resources which would divert the access seekers from competing strongly in the supply of DSL. 331 ACCC recorded that Telstra disputed that adopting Telstra's proposed pricing would lead to financial hardship for access seekers or be inconsistent with their business and investment decisions, and that Telstra had stated that the access seekers had failed to provide any evidence to support many of their contentions (foreshadowing the No Evidence Ground). ACCC noted Telstra's further submission that financial information supplied by one of the access seekers demonstrated that it could afford to pay Telstra's preferred level of access prices (a reference to Adam and the statement of its Managing Director, Mr Hicks). 332 ACCC then outlined its views. It stated "[f]or the reasons that follow, the Commission has decided that a line cost contribution should not be included in the [LSS Annual Charge] to be specified in the FD". 333 ACCC indicated that in reaching its views, it had had regard to the s 152CR(1) criteria and the 2007 LSS Pricing Principles. In addition, ACCC said that it had considered the 2002 LSS pricing principles as "another matter" under s 152CR(2), the parties' submissions, and the findings in the LSS Declaration Review, since its views there expressed "were based upon an assessment of the same criteria and principles". Although the parties disagree over the exact effect that would occur, such a change in approach to regulatory pricing of the LSS would require significant changes to LSS-based service providers' businesses. These business plans have developed in reliance upon the regulatory pricing principles applying to the LSS since 2002 . The Commission considers that this will be the case even if the change in regulatory approach results in prices that align with Telstra's charges. Again, LSS access seekers will have formed their business plans in the expectation that the Commission would act consistently with the LSS pricing principles (subject to any subsequent published views to the contrary), and so will have factored in the probability that as a result of arbitration, charges would be specified below those established by Telstra . The Commission considers that with a contribution to line costs in LSS charges to apply during the period of the FD, actual prospective LSS-based service providers will be less able to compete such as by commencing supply in additional service areas. This will be the case even if it was established that an access seekers' financial position meant that it could currently afford to maintain its current business operations and contribute to line costs. In any event, the Commission does not consider that the financial details provided by Adam [no doubt a reference to Mr Hicks's statement] demonstrate its current financial position, as Telstra has suggested in one part of its submission. These details concern cost reductions Adam anticipated when choosing to acquire the LSS from Telstra. It does not establish Adam's financial position. Further, as Telstra elsewhere notes, there is no information to suggest that Adam actually realised these cost savings. This will be the case if it is implemented too quickly. This disruption would likely lead to a lessening of competition in markets for downstream broadband/DSL services, in particular. It will likely take the access seekers time to implement necessary changes , as they would need to consider altering input services, and retail systems, and/or winning end-user voice business. The impediment to migration of existing services from the LSS to ULLS exacerbates this. To switch between platforms, the LSS disconnection and ULLS connection cannot currently be completed in a single step. This necessitates loss of service to the end-user, and additional cost to the service provider, and makes migration to the ULLS impracticable. However, unless adequate notice was given and LSS-based suppliers were able to arrange their businesses so as to continue to compete efficiently in the supply of downstream services then competition would be harmed. The Commission considers this will be the case even where the change in approach results in the continued application of Telstra's previous charges, as the Commission's published approach will have informed the access seekers' respective business plans and operations. ACCC determined not to consider further the inclusion of a contribution to line costs in the LSS Annual Charge for the period of the FD. 337 Although the Adam LSS FD Statement of Reasons has been referred to, similar findings were made and conclusions reached in each of the other relevant LSS arbitrations (Amcom, Agile, Primus, Network and TPG). 339 In this context, a finding involves an error of law when there is no evidence at all to support it ( Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 355-356 and 358 per Mason CJ ( Bond ). It is not sufficient, however, that the decision-maker draws an inference by illogical reasoning. Rather, it must be established that there was no evidence permitting the drawing of the inference by any process of reasoning ( Bond at 356). Finding 1, 2, 3 and 4. 342 In arbitrating an access dispute, ACCC is not bound by technicalities, legal forms or rules of evidence (see s 152DB(1)(a) set out at [288] above). 343 It is plain, and Telstra does not dispute, that s 152DB(1)(a) entitled ACCC to take facts stated in the parties' submissions into account even though they were not presented in a familiar evidentiary form, such as in a witness statement or in a documentary exhibit. Moreover, the scope of the material on which ACCC may rely is broader than evidence admissible under the rules of evidence. 344 Telstra distinguishes, however, between evidence and probative material on the one hand, and unsupported assertions on the other. Telstra points to various provisions within Pt XIC of the Act which, it submits, shows that it was contemplated that ACCC would have regard to the former and not the latter. 345 The proper question to ask is whether the material that was before ACCC, including the access seekers' submissions and the LSS Declaration Review, provided a basis on which ACCC was entitled to rely to make the four Findings. 346 In sum, Telstra argues that in the absence of any evidence of the access seekers' business plans, ACCC could not lawfully make the Four Findings. Telstra also contends that the access seekers bore the onus of proving the adverse impact to which they referred, citing Re Eckersley and Minister for Capital Territory (1979) 2 ALD 303 at [18], [19] and Re Martin and Commonwealth of Australia (1983) 5 ALD 277 at [41] in support. 347 Telstra draws attention to the fact that ACCC put the parties on notice that they were expected to provide evidence to support their contentions. No doubt Telstra is referring to passages from the Adam LSS DFD Consultation Paper set out at [292] and perhaps [294] and [295] above. It will also be recalled that Telstra alerted both ACCC and the access seekers to its complaint that there was no evidence to support the access seekers' assertions about their business plans (see [311] and [321] above). 348 In relation to the LSS Declaration Review, Telstra points out that ACCC's conclusions were drawn only from "submissions made by the access seekers", and that the access seekers did not point to any "evidence" that had been before ACCC in the context of the LSS Declaration Review. Telstra says that its submission about the inadequacy of the access seekers' submissions to ACCC to provide a basis for the Findings, applies equally to the findings recorded in the LSS Declaration Review. For this reason, Telstra argues that the LSS Declaration Review does not provide support for the Findings. 350 They also suggest that s 155(5)(b) of the Act and Div 137 of the Criminal Code Act 1995 (Cth) would have exposed them to penalties if their submissions to ACCC had contained false or misleading information. I have difficulty in understanding the relevance of this fact . If the no evidence ground is otherwise made out, it does not avail the access seekers to submit that I should infer that the reason for the absence of evidence was their fear of committing a criminal offence and that they should be excused. In any event, there is no evidence that they laboured under that fear. 351 The parties take different views of the meaning and scope of the word "business" as used in the Adam LSS FD Statement of Reasons. The access seekers argue that ACCC was referring to the "business activities" and conduct of the access seekers in a general sense, rather than to any specific financial modelling, including balance sheets and profit and loss statements. The access seekers say that the illustrative scenarios that they provided to ACCC show that in the case of all but one of them (Primus --- see [304]), the access seekers provided only broadband services (that is, they did not have any WLR customers). Furthermore, the access seekers argue that there was material before ACCC showing that that at the time of the Adam LSS FD Statement of Reasons there were difficulties in the access seekers' ability to change their businesses so as to be able to offset the additional cost resulting from a higher LSS price. 353 Therefore, the access seekers argue, the inferences drawn by ACCC were "reasonably open" (see Bond at 356). No profit and loss statements were necessary, so the access seekers contend, for those conclusions to be supportable. 355 It will be recalled that in his statement that was annexed to AAAP's submissions to ACCC (see [305] above), Mr Hicks referred to an assumed LSS price that was used in Adam's business models at certain times. Telstra submits that Mr Hicks's statement directly contradicted ACCC's findings (in the case of Adam) as distinct from merely not supporting it. Telstra does not specify the supposed contradiction. Telstra points out in addition that Mr Hicks's statement does not refer to any expectation on the part of Adam that the LSS price would not include a contribution to line costs. 356 Adam makes two submissions in response. First, Adam explains that Mr Hicks's statement was not made in the context of submissions on the issues of a contribution to line costs and a rebalancing, and for that reason does not address any expectation on the part of Adam. Rather, so it is asserted, Mr Hicks's statement was directed to the question of what Adam would have done with the additional monies that would have been available to it if the FD were to be backdated, and was directed to supporting a claim for interest to be worked out on the basis of the opportunity cost of its lost investment. In his statement, Mr Hicks sought to demonstrate that if Adam had had those additional monies, it would have undertaken greater investment which would have led to greater returns. 357 Second, Adam draws attention to the fact that although Mr Hicks's statement shows the assumed price of the LSS on which Adam based its business models, it does so only for the period prior to December 2004. Mr Hicks's statement does not address the change in expectations after 13 December 2004, when Telstra implemented an LSS charge of $9.00 per month. For example, TPG submitted that a line cost contribution "would potentially" require substantial planning and changes to TPG's business plans, and that its immediate introduction "would potentially" cause rate shock and "may" have certain adverse effects. In contrast, ACCC made the findings set out at [334] and [335] above which have been distilled into the Four Findings. 359 While not conceding that ACCC's findings go beyond TPG's submission, the access seekers argue that even if they do, ACCC is required to have regard to the interests of access seekers generally, not only the access seeker that is a party to the particular arbitration (see s 152CR(1)(c) --- "the interests of all persons who have rights to use the declared service"). This requirement has particular force, argue the access seekers, in the context of joint arbitrations, and acknowledges the desirability of all access seekers paying the same price for the same declared service. 360 Telstra replies that evidence in other arbitrations is not to be taken into account, and that para (c) of s 152CR(1) does not assist access seekers such as TPG, because ACCC's findings about which Telstra complains were made in the course of ACCC's consideration of paras (a) and (b), not para (c), of s 152CR(1). Within the area of operation of par (a) it is enough to show an absence of evidence or material from which the decision-maker could reasonably be satisfied that the particular matter was established, that being a lesser burden than that of showing absence of evidence (or material) to support the decision. 364 Understandably, in the report accompanying the DFD, ACCC accepted that a rebalancing would take time, have the potential to disrupt competition in DSL services, and would involve Telstra in restructuring its existing charges for other services. ACCC sought submissions from the parties as to whether there was a real prospect for a rebalancing to take effect prior to the proposed expiry date of the proposed FDs (which was then only a matter of months away; see [294] above). 365 I have previously traced the course of submissions that led to the making of the Adam LSS FD and will not repeat that summary. • access seekers would not be able to restructure their LSS business operations towards the provision of services using the ULLS within the period of the FD. 367 Adam, Agile, Amcom, Network and TPG did not sell telephony services and any rebalancing would not benefit them in the sense that they would suffer the inclusion of the line cost element in the charge for the LSS without being in a position to offset a reduction in the cost of WLR. The AAAP submissions stated that this meant that "their current business models, based on providing broadband internet via the LSS, may become unviable". Primus's position was that very few of its LSS customers would agree to obtain voice services from it with the result that those customers would become uneconomic to retain. 368 The evidence to which I have referred above was some evidence in support of the Four Findings. Some supportive evidence is sufficient to disengage the "no evidence" ground of judicial review. 369 It is not to the point that the submissions were a mixture of assertion of fact and argument. 370 Although not expressed as such, Telstra's submission seems to involve a submission that ACCC was not entitled to give any weight to the access seekers' submissions and that the access seekers' case before ACCC would have deserved to be given greater weight if supported by evidence in a conventional form such as written statements or documentary exhibits. It was, however, a matter for ACCC what weight was to be given to the submissions. 371 Once ACCC found that the access seekers had proceeded on the basis of the existing access prices that omitted any contribution to line costs, it followed that a rebalancing would not provide a set-off against the losses of all of the access seekers except Primus, and that the competitive disadvantage referred to above would ensue. I accept that better evidence could have been provided showing that the access seekers based their business plans, including their prices to end-users, on the existing (line cost free) LSS price. But the evidence referred to at [366] above was some evidence to that effect. 372 I agree with Telstra that TPG's submissions are not expressed as firmly as are those of AAAP and Network, but TPG did note the difficulties that would be caused by rebalancing, stating that a rebalancing "would potentially require substantial planning and changes to TPG's business plans and systems before it could be properly implemented". It said that immediate rebalancing could potentially cause "regulatory shock". TPG noted that a rebalancing might adversely affect both TPG's own interests (by jeopardising its then current business plans) and the LTIE, having regard to the fact that many of TPG's retail customers were on fixed-term contracts. 373 ACCC also relied on the LSS Declaration Review of October 2007. 374 I noted Telstra's submission in relation to ACCC's reliance on the LSS Declaration Review at [348] above. [ACCC, Review of the Line Sharing Service Declaration --- Final Decision , October 2007] The Commission reached its views in that public inquiry by reference to the subsection 152CR(1) criteria and information provided by Telstra and a wide cross section of other interested parties. The Commission has reached its views in this determination having regard to the subsection 152CR(1) criteria and the 2007 pricing principles for the LSS under subsection 152AQA(6) of the Act. The Commission also considered the 2002 LSS pricing principles as "another matter" under section 152CR(2) of the Act. The Commission has also considered all the submissions of the parties. As the Commission's views expressed in its final report concerning the extension of the LSS declaration were based upon an assessment of the same criteria and principles, the Commission has also considered the findings of that final report. To some extent the very arguments that had to be addressed in the present LSS arbitrations were the arguments that ACCC had been called upon to address in the LSS Declaration Review. 375 ACCC did not simply repeat its earlier views without considering the submissions of the parties to the arbitrations. It did address them and its course of reasoning was similar to that to be found in the LSS Declaration Review. It was inevitable that it would refer to that Review of only two months earlier. 376 It is unobjectionable that it took it into account. In brief, this analysis shows that [Adam] would have been able to use these funds to significantly increase its customer base through further investment in infrastructure and by offering lower prices to consumers. A copy of [Adam's] analysis is attached at Annexure 2(b)(ii) . ...Adam Internet submits that the appropriate interest rate that should be applied to backdated credits is contained in its analysis. This, however, could at most answer Telstra's submission based on the omission from the statement of any evidence of an expectation on the part of Adam that a contribution to line costs would not be included. 379 The question remains whether Mr Hicks's statement contradicts the Findings (in the case of Adam). In the absence of a precise identification of the contradiction, I have some difficulty in dealing with the submission. 380 I am not persuaded that Mr Hicks's statement contradicts the Findings. It shows that Adam adjusted the assumed price of the LSS in its financial models as the price of the LSS fell, up until 12 December 2004. Mr Hicks's statement is silent as to the subsequent period. The statement shows that when Telstra, on 12 December 2004, foreshadowed a price change, Adam entered the new price into its "existing cost model", and that the following day, 13 December 2004, Telstra announced that new price. I fail to see how this evidence contradicts evidence as to the implications for Adam of including a contribution to line costs in the LSS Annual Charge in late 2007. Nonetheless, the statements by TPG set out at [309]---[310] above provided some evidentiary basis for the making of the Four Findings in its arbitrations. Those statements made it clear that TPG did have in place "business plans and systems". Telstra seizes upon the use by TPG of the word "potentially", (see [309] above), but it was open to Telstra to take the view that TPG was using that word in order to signal that it had not worked out fully or in detail the extent of the change that would have to be made to its existing business plans and systems. 382 In any event, s 152CR(1)(c) made it permissible for ACCC to take into account, not only the interests of a particular access seeker, but the interests of all other access seekers, in relation to the particular declared service in question. Obviously it was desirable, in the interests of competitive neutrality that all entities accessing a declared service at the same time should be charged the same price for doing so. 385 Telstra contends that s 152DB(1)(b) had the effect, in the circumstances of the present case, of requiring ACCC to inquire into and investigate a particular matter. Telstra submits that this statutory duty may be no less than the duty developed at common law in connection with Wednesbury unreasonableness, and refers to Prasad v Minister for Immigration and Ethnic Affairs (1985) 6 FCR 155 at 169-170 per Wilcox J; Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20 ; (1995) 183 CLR 273 ; Minister for Immigration and Citizenship v Le [2007] FCA 1318 ; (2007) 164 FCR 151 at [60] - [79] ; Visa International v Reserve Bank of Australia [2003] FCA 977 ; (2003) 131 FCR 300 at [623] - [627] . That common law rule is that a failure by a decision maker to obtain "centrally relevant" information on a critical issue which the decision maker knows or ought reasonably to know is readily available, may be so unreasonable that no reasonable decision maker would have proceeded to make the decision without making an inquiry with a view to obtaining the information, in default of which the decision will be an invalid exercise of power. 386 Telstra, however, disclaims reliance on Wednesbury unreasonableness ( Wednesbury unreasonableness is recognised by the ADJR Act as a ground of review under ss 5(1)(e) and 5(2)(g) of that Act). 387 The access seekers submit that the duty under s 152DB(1)(b) can be no greater than the common law duty referred to above. This is because, so they argue, the legislative purpose and primary provision of s 152DB(1)(b) is to require ACCC to act as speedily as possible, while the remainder of para (b) sets a limit on this requirement. That remainder does not impose additional obligations on ACCC. 388 Telstra, on the other hand, argues that primacy must be given to the investigation and inquiry mandated by s 152DB(1)(b), and suggests that the duty to act with speed indicates the manner in which that inquiry and investigation are to be undertaken. Some of those broad objectives, at least if regarded in isolation, are antithetical to one another. The notions of "speed", "proper consideration of the dispute", "careful inquiry and investigation", "quick inquiry and investigation", "inquiry into and investigation of ... all matters affecting the merits" (emphasis added) and "fairness" pull in different directions: cf the discussion of ss 420 and 476 of the Migration Act 1958 (Cth) in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs (unreported, Federal Court of Australia, Lindgren J, 6 May 1997) at 39-41, and see Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [49] per Gleeson CJ and McHugh J. It may be noted in passing that achievement of the objectives depends not only on the diligence, awareness and qualifications of ACCC officers: it also depends on the levels of funding and workload of ACCC as they respectively exist at any particular time and from time to time. I do not imply, however, that these extraneous considerations have the potential to give rise to a fluctuating construction of s 152DB(1)(b). I find it difficult to conceive of circumstances in which a court would find that a failure to achieve the goal of speed or that of carefulness would, without more, provide a ground for the granting of relief in respect of an administrative decision. Surely the person aggrieved would have to show that the failure had had consequences in terms of one of the recognised grounds of judicial review. For example, absence of care (perhaps arising indirectly from excessive speed) could give rise to an overlooking of a relevant consideration or a failure to accord procedural fairness. It is not obvious what ground of judicial review, if any, might arise directly from a failure to act "speedily" or to inquire "quickly". It is another question whether the decision-maker could invoke the requirement of speed "in defence" against the consequences, in terms of grounds of judicial review, of a lack of care, but it is to be doubted. 390 Section 152DB(1)(b) does not give "primacy" to unqualified speed, because the provision obliges ACCC only to act as speedily as a certain "need" permits. Nor does the provision give primacy to that ill defined "need". 391 Telstra argues that even if the provision does require a "balancing act", in the arbitrations in question there was not necessarily a tension between the mandate to act speedily and the need to inquire and investigate. Telstra claims that ACCC's making of an inquiry for the business plans of the access seekers would not have caused any delay in the conduct of the arbitration. Further, Telstra submits that the access seekers would not have needed time in order to prepare such material, since, on the access seekers' own case, it already existed. 392 Telstra's submission referred to in the preceding paragraph raises an interesting point but it is not to be accepted. Even ignoring the time taken for ACCC to initiate the inquiry and to receive and consider the access seekers' responses, evidence comprising business plans and financial statements, is, at the best of times, voluminous, and no doubt the analysis of such information would have occupied some of the time and resources of ACCC. 393 Telstra submits that the language of s 152DB(1)(b) imposes an obligation on ACCC to investigate, and is not merely facultative (cf Minister for Immigration and Multicultural Affairs v SGLB (2004) 207 ALR 12 ; [2004] HCA 32 at [43] ). In my view, while s 152DB(1)(b) does not expressly impose an obligation to inquire and investigate, it assumes the existence of a "need to carefully and quickly inquire into and investigate the dispute and all matters affecting the merits, and fair settlement, of the dispute". That need is a matter that ACCC is required to take into account when it attempts to discharge the express obligation to act speedily. 394 I therefore accept that s 152DB(1)(b) implicitly requires ACCC, if it is not otherwise so required , "to carefully and quickly inquire into and investigate the dispute and all matters affecting the merits, and fair settlement, of the dispute". 395 Whatever the precise scope of that obligation, I do not think that ACCC was obliged to make any further inquiry in the present case because I am not persuaded that there was anything in Mr Hicks's statement that was "centrally relevant" information on a critical issue that ACCC was required to address. "Proper consideration" of the dispute and careful inquiry into and investigation of the dispute, even without reference to the calls for speed and quickness, did not demand further inquiry and investigation. 396 Even if I did consider that Mr Hicks's statement contained something of the kind described, I doubt that any duty of ACCC to inquire into and investigate it would have been imposed by s 152DB(1)(b), as distinct from by the general law. This is because of the inescapable conflict between "carefully" and "quickly". The general law may have imposed an obligation to inquire and investigate "carefully" but it would not, in the absence of special circumstances in a particular case, impose an obligation to investigate and inquire "quickly". 397 I respectfully suggest that exhortatory provisions of the present kind would be better placed and identified by the drafter as a statement of objectives rather than as substantive legislative provisions. The Failure to Inquire Ground is not established. The first two ways in which the challenge is put (Telstra's Grounds 2(a) and (b)) turn on the alleged invalidity of the 2007 LSS Pricing Principles which ACCC determined on 24 October 2007. The third way (Ground 2(c)) turns on their construction. 401 According to Ground 2(a), the 2007 LSS Pricing Principles were invalid because s 152AQA of the Act did not confer on ACCC power to determine new pricing principles when there was already a continuing and operative determination of pricing principles in relation to the same declared service, as there was in the present case in the form of the 2002 LSS Pricing Principles. Alternatively, s 152AQA did not empower ACCC to determine pricing principles that were inconsistent with a continuing and operative determination of pricing principles in relation to the same declared service, and the 2007 LSS Pricing Principles were in fact inconsistent in material respects with the continuing and operative 2002 LSS Pricing Principles. Yet ACCC made the LSS FDs on the basis that the 2007 LSS Pricing Principles were valid; indeed it had regard to them as a mandatory relevant consideration pursuant to s 152AQA(6) of the Act. In the result, each LSS FD was invalid (or liable to be set aside) as infected by jurisdictional error and on the grounds stated in ss 5(1)(f) and/or (j) of the ADJR Act. (As will appear below, Ground 2(a) was put rather differently in submissions from its formulation in the applications and amended applications. 403 Ground 2(c) also depends on the continued subsistence of the 2002 LSS Pricing Principles on 24 October 2007 when ACCC determined the 2007 LSS Pricing Principles. Ground 2(c) is argued in the alternative to Grounds 2(a) and 2(b) in that Ground 2(c) assumes that ACCC could lawfully take into account both the 2002 and 2007 LSS Pricing Principles in making each LSS FD, and does not depend on the invalidity of the 2007 LSS Pricing Principles. Ground 2(c) is that ACCC made the LSS FDs on the basis that s 152AQA(6) of the Act obliged it to have regard to the 2007 LSS Pricing Principles as a mandatory relevant consideration in respect of prices applicable to periods prior to the date on which they were determined. In the result, so Telstra claims, the LSS FDs were invalid (or liable to be set aside) as infected by jurisdictional error and on the grounds stated in ss 5(1)(f) and/or (j) of the ADJR Act. As will be seen, the 2007 LSS Pricing Principles were determined on 24 October 2007 in association with an extension of the expiry date of the LSS Declaration (from 31 October 2007 to 31 July 2009) that was effected by an instrument dated 26 October 2007 (the LSS Extension Declaration). Section s 152AQA(6) obliged ACCC to have regard to them in the circumstances to which that subsection applied. 406 Section 152DN provides that an FD has effect 21 days after it is made. The Adam LSS FD was made on 20 December 2007 and therefore had effect on 10 January 2008. 407 Section 152DNA relates to the backdating of FDs. There is no statement of the date of commencement or date of expiry of the 2002 LSS Pricing Principles. The preparation and publication of a report was a condition precedent to the making of the LSS Declaration: see s 152AL(3)(b). 409 In the 2002 LSS Pricing Principles, ACCC concluded that a TSLRIC pricing methodology was the most appropriate methodology for the pricing of an LSS (p 84). 410 ACCC considered that some form of incremental "LSS-specific" cost should be included in the price of an LSS (p 86). 411 Other matters with which the 2002 LSS Pricing Principles dealt are the question of the appropriate TSLRIC costing methodology for a ULL used to provide an LSS (section 7.3.2, pp 87-98) and geographic de-averaging (section 7.4.1, pp 99-100). 412 Section 7.5 is headed "Summary of pricing principles" and purports to summarise the earlier discussion. 413 I turn now to the 2007 LSS Pricing Principles. They were found in Part 1 of Schedule 1 to an instrument dated 24 October 2007. Part 2 of that Schedule comprised "Price related terms and conditions' and in fact consisted of indicative prices for the LSS to apply between 1 January 2008 and 31 July 2009. It will be recalled that s 152AQA(2) provides that a determination of pricing principles may contain price-related terms and conditions relating to the declared service. 415 ACCC's reasons underlying the 2007 Pricing Principles are found in Ch 3 of the LSS Declaration Review. 416 The 2007 Pricing Principles themselves, including the price-related terms and conditions, were brief --- Parts 1 and 2 of Schedule 1 each consisted of only one page. In contrast, the 2002 LSS Pricing Principles contained in Ch 7 of the LSS Declaration Final Report had consisted of a discursive discussion and did not contain indicative prices or any other "price-related terms and conditions relating to access to the declared service" (cf s 152AQA(2) of the Act). Indeed, Ch 7 is similar in length and style to Ch 3 of the LSS Declaration Review. 418 As noted earlier, the indicative prices for the LSS listed in Part 2 of Schedule 1 were to apply between 1 January 2008 and 31 July 2009 --- a period that was at the time (October 2007) entirely in the future. For example, the indicative LSS monthly charge was stated to be "$2.50 per service (1 Jan 2008 to 31 Jul 2009)". 419 The first of the four 2007 LSS Pricing Principles ("a TSLRIC+ pricing principles [sic] should be applied to the LSS") repeated something that was contained in the 2002 LSS Pricing Principles. 420 The second principle required that the specific cost component be calculated by a pooling and allocation method --- something that was absent from the 2002 LSS Pricing Principles. 421 The third principle excluded recovery of a contribution to line costs in the LSS monthly price. The 2002 LSS Pricing Principles had stated (p 102) that so long as Telstra continues to recover its line costs through other revenue sources, it was inappropriate to include any allocation of line costs in the price of the LSS, but that if Telstra were to alter its pricing structures so that it no longer fully recovered its line costs through the other sources, it might be appropriate to include an allocation of line costs in the price of the LSS. Accordingly, the price of the LSS should equal only Telstra's LSS-specific costs, which ACCC stated it believed should not vary according to different geographic regions. 422 The fourth principle, dealing with connection and disconnection charges, had no counterpart in the 2002 LSS Pricing Principles. 423 A fifth point of comparison is that the 2002 LSS Pricing Principles had expressly provided for geographic de-averaging, whereas the 2007 LSS Pricing Principles did not. In Ch 3 of the LSS Declaration Review, ACCC noted (p 102) that given its decision not to include a line cost component in the LSS charge, the question of averaging or deaveraging of LSS monthly charges was a moot point as "specific costs" were not geographically dependent. ACCC said that if a line costs component had been included, the monthly charge would have had to be de-averaged, and that in principle prices should be geographically de-averaged. ACCC stated that where the cost differential as between regions is not great, it may be appropriate to average connection charges geographically. Moreover, it said, the concentration of the LSS and ADSL services within Bands 1 and 2 meant that the use of an averaged connection changes was not likely to have a distortionary effect (p 103). 424 A sixth point is that, as noted at [413]---[414] above, the 2007 LSS Pricing Principles contained indicative prices whereas the 2002 LSS Pricing Principles did not. 425 The determination of the 2007 LSS Pricing Principles did not state when the determination was to come into effect. The instrument was registered on 14 December 2007 in the Federal Register of Legislative Instruments. It therefore had effect on and from 15 December 2007 by the operation of s 12(1)(d) of the LI Act. 428 ACCC stated (at [74]) that it had in fact taken into account both the 2002 and 2007 LSS Pricing Principles. It stated that it was required by s 152AQA(6) of the Act to have regard to the 2007 LSS Pricing Principles as these were the pricing principles currently applying to the LSS. It then added, however, that s 152CR(2) permitted ACCC to have regard to other matters that it considered relevant. This was its justification for taking into account the 2002 LSS Pricing Principles. 430 At [80], ACCC observed that it could be argued that some aspects of the 2002 LSS Pricing Principles were inconsistent with the "pooling approach" that had been ACCC's published approach to "specific cost" allocation since its December 2005 decision on Telstra's proffered LSS and ULLS access undertakings (ULLS and LSS Monthly Charge Undertaking Assessment). The 2007 LSS Pricing Principles expressly required the use of the "pooling approach". 431 Section 3.5 of the Adam LSS FD Statement of Reasons was headed "Period to which the final determination should apply". Within that section, ACCC stated (at [186]) that for reasons it gave, it had decided to backdate the determination. This assessment is provided in section 4 of this statement of reasons. ACCC noted that it had "also considered" the 2002 LSS Pricing Principles as "another matter" under s 152CR(2). 433 Finally, in footnote 38 to [781] on p 102, ACCC noted that s 152AQA(6) required it to have regard to the 2007 LSS Pricing Principles and that under s 152CR(2) it "may" have regard to other matters, such as the 2002 LSS Pricing Principles. Telstra attacks this statement on the basis that ACCC did not merely have a discretion to have regard to the 2002 LSS Pricing Principles. According to Telstra, the 2002 LSS Pricing Principles were the relevant consideration made mandatory by s 152AQA(6) and it was impermissible for ACCC to have regard to the 2007 LSS Pricing Principles, either at all (Grounds 2(a) and (b)) or, alternatively, in relation to any period prior to 15 December 2007 (Ground 2(c)). 434 I turn now to the terms of the Adam LSS FD itself. That FD, by para 7, specified the terms and conditions of access found in Schedules 1, 2 and 3; Schedule 1 dealing with LSS annual charges, Schedule 2 with LSS single connection and disconnection charges, and Schedule 3 with MNM. Paragraph 14 of the FD stated that the FD took effect 21 days from the date on which it was made and ceased to have effect on 31 July 2009. As noted at [406] above, the Adam LSS FD was made on 20 December 2007 and took effect on 10 January 2008. 435 Schedule 1 specified an LSS annual charge for the period from 14 July 2006 (the date of commencement of negotiations) until 31 July 2009 of $30.00 per LSS per annum ($2.50 per LSS per month). This was the indicative price that had been stated in the price-related terms and conditions associated with the 2007 LSS Pricing Principles for the period from 1 January 2008 to 31 July 2009 (see [414] above). By providing for an annual charge from 14 July 2006 to 15 December 2007, the Adam LSS FD contained a retrospective or backdated element. There is an element of backdating in that charge as fixed in Schedule 2 to the Adam LSS FD in respect of a period commencing on 1 July 2007. The charges specified in clause 5 are not to apply to disconnection in Band 4. Clauses 5, 5A and 6 are not to apply to disconnections that were made before 2 June 2005 or after 31 July 2009. Since Schedule 2 to the Adam LSS FD fixed that charge as from 1 July 2007, there is backdating in respect of a period commencing on 1 July 2007. 438 It will be noted that the backdating in the case of the LSS annual charge extends back to the commencement of negotiations on 14 July 2006, but the backdating in the cases of the connection and disconnection charges is only back to 1 July 2007. 439 The charges fixed for July 2008 (no doubt meaning 1 July 2008) to 31 July 2009 ($43.10 in the case of an LSS single connection charge, and $38.70 in the case of a LSS single disconnection charge) were the indicative prices that had been stated in the 2007 LSS Pricing Principles for that period (see [414] above), and so in that respect there was no backdating. It was likewise, in respect of the LSS monthly charge fixed from 1 January 2008 to 31 July 2009. 441 Ground 2(c) is independent of Grounds 2(a) and (b). As noted at [403] above, Ground 2(c) is consistent with the proposition that ACCC was entitled to have regard to both the 2002 and 2007 LSS Pricing Principles. Again it is also consistent with the proposition that the 2007 LSS Pricing Principles implicitly repealed the 2002 LSS Pricing Principles. Ground 2(c) is concerned with the construction and application of the 2007 LSS Pricing Principles. 442 Telstra relies on the common law presumption against retrospectivity. Consistently with the presumption in favour of prospectivity and against retrospectivity, the indicative prices were fixed in respect of periods which all began on 1 January 2008. 443 Section 12(1) of the LI Act is expressed to be subject to s 12(2). Section 12(2)(a) has the effect that a legislative instrument has no effect if, apart from subs (2), the instrument would take effect before the date on which it is registered and, as a result, the rights of a person as at the date of registration would be affected so as to disadvantage that person. In substance, this provision is designed to protect existing or accrued rights of persons where there is no express provision for retrospective operation. Telstra submits that if the 2007 LSS Pricing Principles had been expressed to have any retrospective effect, s 12(2)(a) would have raised a serious question as to the effectiveness of the backdated 2007 LSS Pricing Principles. 444 Telstra's submission is that s 152AQA(6) obliged ACCC to have regard to the 2007 LSS Pricing Principles only in relation to prices for a period from 15 December 2007, when the 2007 LSS Pricing Principles took effect. Indeed, since the indicative prices referred to periods from 1 January 2008 (see [413]---[414] above) this meant, in effect, only in relation to prices determined for a period from that date. Telstra submits that with regard to periods prior to 15 December 2007 (or in effect prior to 1 January 2008), s 152AQA(6) obliged Telstra to have regard to the 2002 LSS Pricing Principles alone. 445 In summary, in Telstra's submission s 152AQA(6) obliged ACCC to have regard to the 2007 LSS Pricing Principles alone, assuming them to be valid, in respect of periods after 15 December 2007, and to have regard to the 2002 LSS Pricing Principles alone in respect of periods prior to that date. Yet ACCC did otherwise in the Adam LSS FD to the extent of the period preceding 15 December 2007. 446 In support of its argument, Telstra refers to the power to make an interim determination given by s 152CPA of the Act. Telstra points out that if ACCC had been called upon to make an interim determination in the present cases prior to 15 December 2007, s 152AQA(6) would have required ACCC to have regard to the LSS Pricing Principles in force at that time, namely those of 2002. Telstra submits that if an FD made with regard to the 2007 LSS Pricing Principles were backdated to a time during the period of the currency of the interim determination, there would be an inconsistency between the bases on which the interim determination and the FD had been made. 447 Telstra submits that when ACCC fixes charges for a past period, it is exercising both the ss 152CP and 152DNA powers, but that even if it can be said to be exercising the s 152DNA power alone, s 152AQA(6) applies to pick up the LSS pricing principles that were in force during that past period. 448 I turn now to Telstra's submissions concerning Ground 2(a). 449 Telstra submits that the error of law in relation to Ground 2(a) was that ACCC gave effect to two determinations of pricing principles simultaneously, whereas s 152AQA(6) refers to a single determination. Whether the 2007 LSS Pricing Principles implicitly repealed or revoked the 2002 LSS Pricing Principles is beside the point. When s 152AQA(6) requires ACCC to have regard to "the determination" it is referring to the determination that is in force at the time when the duty to have regard to it is enlivened. 450 Telstra characterises ACCC's process in arriving at the Adam LSS FD as "picking and choosing" as between the 2002 and 2007 LSS Pricing Principles. It will be recalled that ACCC thought that s 152AQA(6) obliged it to have regard to the 2007 LSS Pricing Principles, while s 152CR(2) permitted it also to have regard to the 2002 LSS Pricing Principles (see [433] above). 451 Finally, I turn to Ground 2(b). 452 Telstra submits that its Ground 2(b) differs from its Grounds 2(a) and 2(c) by taking a position as to which LSS pricing principles were valid and effective when ACCC made the Adam LSS FD. Underlying Ground 2(b) is the proposition that the 2007 LSS Pricing Principles were invalid, having been made in excess of the power given by s 152AQA(1). As noted at [400]---[401], however, according to Adam's amended application for an order of review the alleged invalidity of the 2007 LSS Pricing Principles was also an element of Ground 2(a). 453 Be this as it may, Telstra's submission in support of Ground 2(b) is that: (i) the 2007 LSS Pricing Principles did not expressly or implicitly revoke the 2002 LSS Pricing Principles; (ii) it would be unworkable to identify particular sentences of the 2002 LSS Pricing Principles that were revoked; and (iii) ACCC itself did not treat the 2002 LSS Pricing Principles as having been revoked. On the contrary, it treated them as available to be taken into account, albeit under s 152CR(2). Adam submits that it is beside the point, for the purposes of s 152CP(2), that the 2002 LSS Pricing Principles were repealed by the 2007 LSS Pricing Principles. Counsel for Adam illustrates this by reference to hypothetical pricing principles issued by the Department of Justice in the United States of America addressing similar issues to those addressed by the 2002 and 2007 LSS Pricing Principles. Counsel submits that ACCC would be entitled under s 152CP(2) to take those US pricing principles into account, whether by agreeing or disagreeing with them. 455 Adam emphasises that s 152AQA(6) merely requires ACCC to "have regard to" a determination of pricing principles made under s 152AQA(1) --- not necessarily to apply those principles. In response to Telstra's charge that ACCC engaged in a "picking and choosing" of pricing principles as between those of 2002 and 2007, Adam submits that notwithstanding the pejorative expression, ACCC was required to engage in an active intellectual process when addressing the question of pricing principles and that the Adam LSS FD Statement of Reasons shows that it did so. 456 In relation to Telstra's Ground 2(b), Adam submits that the principle of implied repeal operated in relation to the 2002 LSS Pricing Principles, so that the making of the 2007 LSS Pricing Principles repealed the 2002 LSS Pricing Principles either in their entirety or to the extent of any inconsistency. 457 In relation to Telstra's Ground 2(c), Adam submits that backdating was an exercise of power under s 152DNA of the Act. What ACCC did, according to Adam, was to fix the charges on a forward looking basis and then to exercise the s 152DNA power. Adam submits that ACCC was entitled to consider (as it did) on the question of backdating, the 2007 LSS Pricing Principles, the 2002 LSS Pricing Principles, and the s 152CR(1) criteria. 459 ACCC submits that in accordance with subss 33(1) and (3) of the Acts Interpretation Act 1901 (Cth) (AI Act), the power given by s 152AQA to determine pricing principles may be exercised from time to time as occasion requires and is to be construed as including a power to revoke, amend or vary a determination of pricing principles. 460 ACCC refers to the ordinary principles of statutory construction that a later legislative instrument will repeal an earlier one by implication if the provisions of both cannot stand together, either because the two are inconsistent or because effect cannot be given to both. ACCC cites Mitchell v Scales [1907] HCA 66 ; (1907) 5 CLR 405 at 417 and Goodwin v Phillips [1908] HCA 55 ; (1908) 7 CLR 1. 463 ACCC submits that the power to make a determination on access given by s 152CP is exercisable only prospectively, so that when complying with the requirement of s 152AQA(6) to have regard to pricing principles in arbitrating an access dispute, ACCC will be making a prospective determination and no issue of retrospectivity will arise. 464 ACCC submits that in deciding whether to backdate the Adam LSS FD under s 152DNA, ACCC had regard (in accordance with s 152DNA(7)) to its published guidelines, the 2002 and 2007 LSS Pricing Principles, and the s 152CR criteria. 465 ACCC submits that it was entitled to have regard to the 2002 LSS Pricing Principles by reasons of s 152CR(2), just as it was bound to have regard to the 2007 LSS Pricing Principles by reason of s 152AQA(6). 466 ACCC submits that when exercising its power to backdate the Adam LSS FD, s 152DNA(7) allowed it to have regard to matters it considered relevant and those matters included, in the circumstances, the 2007 LSS Pricing Principles. Finally, ACCC submits that it is not the case that s 152AQA(6) gives anyone an accrued right to have an access arbitration determined in accordance with pricing principles that were current at the time of notification of the access dispute or at any other time. ACCC refers to Esber v Commonwealth [1992] HCA 20 ; (1992) 174 CLR 430 at 440. In the amended application, Ground 2(a) depended on the invalidity in whole or in part of the 2007 LSS Pricing Principles: see [400]---[401] above. The invalidity was said to arise from the fact of the continuing and operative 2002 LSS Pricing Principles or from inconsistency between them and the 2007 LSS Pricing Principles. 468 Telstra's submission, however, is that ACCC erred by having regard to both the 2002 and 2007 LSS Pricing Principles. 469 For the reasons that I will give in relation to Ground 2(b) at [480]ff below, I do not accept that the 2007 LSS Pricing Principles were invalid. Therefore, I do not think that Ground 2(a) as it was formulated in Adam's amended application for an order of review is made out. 470 Did ACCC err by having regard to both the 2002 and 2007 LSS Pricing Principles? It is important to note that s 152AQA(6) requires no more than that ACCC "have regard to" a determination of pricing principles, not that it implement or apply them. 471 ACCC paid close attention to the similarities and differences as between the 2002 and 2007 LSS Pricing Principles. While the 2002 and 2007 LSS pricing principles share common elements, the 2007 LSS pricing principles introduced particular changes. These were in the nature of refining the existing principles or adding points and detail. The 2007 LSS pricing principles also include indicative prices. This reflects the further regulatory consideration that has been given to the LSS following its declaration in 2002. 473 It is noteworthy that Telstra itself encouraged ACCC to have regard to the 2007 LSS Pricing Principles. Telstra submits that the indicative prices in the 2007 LSS pricing principles are likely to be more current than those in the DFD and the Commission should update its estimates to be consistent with the indicative prices. In my opinion, ACCC was correct in both respects. Section 152CR(2) permitted ACCC to have regard to pricing principles that, for whatever reason (including implied revocation), were not in force at the time of the making of the Adam FD, subject to ACCC's considering them to be relevant. 475 It is true that in the light of the mandatory nature of s 152AQA(6), it would seem odd if ACCC treated the two sets of pricing principles indiscriminately. Even apart from that provision, the more recently determined pricing principles represent ACCC's current or latest thinking. But the evidence does not suggest that ACCC failed to distinguish between the two. ACCC noted (at [74]-[80] of the Adam LSS FD Statement of Reasons) the ways in which the same issues were addressed in the 2002 and 2007 LSS Pricing Principles. In each instance of difference, ACCC preferred the more recent 2007 LSS Pricing Principles. 476 It may be difficult to conceive of ACCC deriving much assistance, except by way of historical explanation, from the 2002 LSS Pricing Principles in relation to a future period in respect of which the 2007 LSS Pricing Principles superseded the 2002 LSS Pricing Principles, that is to say, a period after 15 December 2007. In relation to a past period, however, ss 152DNA(1) and (2) make it clear that ACCC has a power to backdate to a specified date not earlier than the date of commencement of negotiations, and therefore make it clear that, by that indirect route, the 2007 LSS Pricing Principles can be taken into account even in relation to a period prior to the term of their currency. 477 It follows that Telstra's contention that the 2002 and 2007 LSS Pricing Principles each operated during a period to the exclusion of any possibility of consideration of the other for any purpose should not be accepted. 478 It is important to recall the special nature of an arbitration under Div 8 of Pt XIC of the Act. ACCC is not determining the outworking of existing legal rights and obligations but creating new ones. It is expressly required by s 152CR(1) to take into account considerations that go beyond matters peculiar to the immediate parties' interest, such as the promotion of the LTIE and the rights of all persons who have rights to use the declared service (the date of commencement of negotiations, however, is peculiar to the parties to the particular negotiation). The unusual character of a Div 8 arbitration explains the breadth of the matters that ACCC is able to take into account in arriving at its determination in the arbitration. 479 Ground 2(a), either as expressed in the amended application for an order of review, or as reshaped in Telstra's submissions, is not made out. Section 46 of the same Act provides that that Act applies to instruments made by an authority even if the instrument is not a legislative instrument within the meaning of the LI Act and is not a rule of court. I need not discuss the LI Act here: I discussed certain of its provisions in a different context at [84] and [443] above. 481 The 2007 LSS Pricing Principles did not expressly revoke the 2002 LSS Pricing Principles. It is well established, however, that the making of a later statutory instrument that is inconsistent with an earlier one revokes the earlier one to the extent of the inconsistency: see, for example Ward v Repatriation Commission (1997) 46 ALD 454 at 461 and the authorities there referred to, as well as Caloundra City Council v Netstar Pty Ltd [2008] 1 Qd R 258 at [8]-[14]. 482 In my view the determination of the 2007 LSS Pricing Principles by necessary implication revoked determination of the 2002 LSS Pricing Principles in toto and not merely to the extent of the inconsistency. to cover the subject matter that had been the subject matter of the 2002 LSS Pricing Principles, namely, the "principles relating to the price of access to a declared service [the LSS]" (cf s 152AQA(1) of the Act, and see on the implied repeal of legislation Mitchell v Scales [1907] HCA 66 ; (1907) 5 CLR 405 at 417; Goodwin v Phillips (1908) 7 CLR 1 at 7, 10); the 2002 and 2007 LSS Pricing Principles were made in exercise of the same statutory power; the LSS Declaration Review considered the 2002 LSS Pricing Principles and subsequent events, and discussed at length and comprehensively in the light of them the question of "appropriate pricing principles" to be determined; the 2007 LSS Pricing Principles re-stated the first of the 2002 LSS Pricing Principles rather than leaving it to remain stated in the 2002 LSS Pricing Principles. 483 If I am wrong in my conclusion that the determination of the 2007 LSS Pricing Principles impliedly revoked the determination of the 2002 LSS Pricing Principles in toto , then I would hold that the later determination impliedly revoked the earlier one to the extent of any inconsistency. 484 The fact that the 2007 LSS Pricing Principles revoked in whole or in part the 2002 LSS Pricing Principles does not mean, however, that ACCC was not at liberty under s 152CR(2) to take the earlier pricing principles into account. Even parts that were definitely supplanted by the later instrument still existed in the sense that they provided historical background and understanding of the 2007 LSS Pricing Principles, as well as a general discussion of arguments for and against particular pricing principles. The operative terms of the determination are that the pricing principles and price-related terms and conditions "are to apply to the Line Sharing Service (LSS)". The words "are to apply" suggest an operation in respect of future periods. An alternative construction is that, when dealing with the LSS in the future, one is required to regard the 2007 LSS Pricing Principles as associated with it. 486 There is nothing in Part 1 (Pricing Principles) of Schedule 1 of the 2007 LSS Pricing Principles to assist in the choice between these two constructions. The indicative prices in Part 2, however, are all set in respective periods commencing on 1 January 2008. 487 In my view the former construction is the correct one. It gives better effect to the presumption against retrospectivity. The 2007 LSS Pricing Principles are to operate and have effect in respect of prices to be charged in respect of future periods, that is to say, periods after 15 December 2007. 488 ACCC's approach in the Adam LSS FD Statement of Reasons was consistent with the view that the 2007 LSS Pricing Principles operated only in futuro and that s 152AQA(6) required it to have regard to them only in relation to the period after 15 December 2007. 489 The backdating issue was dealt with at some length by ACCC at [176]-[195] of the Adam LSS FD Statement of Reasons: at [183]-[187] in respect of annual charges, at [188]-[191] in respect of connection and disconnection charges, and at [192]-[195] in respect of MNM charges. In relation to annual charges, ACCC stated (at [183]) that they should be backdated to take effect from 14 July 2006, being the date of the teleconference between the parties concerning LSS charges when, as both parties acknowledged, the question of the LSS Annual Charges payable by Adam was raised. This was followed by an email on 27 July 2006 from Adam to Telstra seeking review of the LSS Annual Charge. 490 After several paragraphs, ACCC stated (at [187]) that in deciding the quantum of the LSS Annual Charge to apply during the backdated period, it had considered the s 152CR(1) criteria and the 2002 and 2007 LSS Pricing Principles. 491 At [188]-[191] ACCC gave reasons for its decision to backdate the connection and disconnection charges to 2 June 2005, the date Adam e-mailed Telstra requesting a review of those charges. Again ACCC stated (at [191]) that it had considered the s 152CR(1) criteria and the 2002 and 2007 LSS Pricing Principles. 492 Similarly, ACCC concluded that the MNM charges should be backdated to 9 June 2005, being a date on which Adam and Telstra were negotiating the MNM charges. At [195] ACCC stated that it had considered the s 152CR(1) criteria and the 2002 and 2007 LSS Pricing Principles. 493 There is nothing in the Adam LSS FD Statement of Reasons suggesting that ACCC considered that s 152AQA(6) made it mandatory for it to have regard to the 2007 LSS Pricing Principles in relation to the backdated period. ACCC correctly acknowledged (at [176]) however, that it was required by s 152DNA(7) to have regard to backdating guidelines formulated under s 152DNA(8) (the backdating guidelines were found in sections 7.4.2 to 7.4.6 of the Access Dispute Guidelines). 494 ACCC was at liberty when exercising the backdating power to have regard to such other matters as ACCC considered relevant: see s 152DNA(7)(b). It did so when it had regard to the 2007 LSS Pricing Principles. 495 In one way or another, Telstra's Ground 2(c) would constrain the power to backdate given by s 152DNA(1). the 2002 LSS Pricing Principles) to guide them; the parties may have entered into contractual arrangements in reliance on those pricing principles creating rights and obligations; and in making any interim determination under s 152CPA, ACCC would have been required by s 152AQA(6) to have regard to those pricing principles. However, subject to the limitations found in s 152DNA itself (see subs (2) and (7)) and those imposed by general law principles on discretionary and administrative decision-making, in my opinion the power to backdate must be given full effect. 496 Ground 2(c) is not established. The reason for the request was that the parties wished to have the opportunity to check whether the reasons contained any confidential information in respect of which an application for a suppression order might be made. I have taken care to ensure that they do not. 498 All 14 applications should be dismissed with costs. I certify that the preceding four hundred and ninety-eight (498) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. 2002 ULLS Pricing Principles Pricing principles for the ULLS that were contained in Chapter 4 of ACCC's final report on pricing methodology for the ULLS that was published in March 2002. 2003 ULLS Model Terms See ULLS Model Terms 2007 LSS Pricing Principles Pricing principles made by ACCC pursuant to s 152AQA of the Act, by an instrument that was dated 24 October 2007, and registered in the Federal Register of Legislative Instruments on 14 December 2007, supported by reasons in Ch 3 of the LSS Declaration Review. 2007 ULLS Pricing Principles Pricing principles for the ULLS determined by ACCC under s 152AQA of the Act on 21 November 2007 in Pricing Principles for the Unconditioned Local Loop Service . 2007 ULLS Pricing Principles Report ACCC's report of November 2007 on pricing principles in relation to the ULLS to be made pursuant to s 152AQA of the Act --- see 2007 ULLS Pricing Principles. AAAP Amcon, Adam, Agile and Primus, four access seekers who made a joint submission in the ACCC arbitrations. ACCC Australian Competition and Consumer Commission, the first respondent (also referred to as the Commission). Access Dispute Resolution Guidelines ACCC's Resolution of telecommunications access disputes --- a guide (revised version) made in March 2004, sections 7.4.2 to 7.4.6 of which contained backdating guidelines formulated under s 152DNA(8). Access provider Carrier or carriage service provider that supplies declared services to itself or other persons --- see s 152AR of the Act. For present purposes the only relevant access provider is Telstra. access seeker A service provider that makes, or proposes to make, a request for access to a declared service under s 152AR of the Act. In each of the present fourteen proceedings, the second respondent is an access seeker. ACIF Australian Communications Industry Forum. Act Trade Practices Act 1974 (Cth). Adam Adam Internet Pty Limited, the second respondent in proceeding NSD 70/2008. ADC Access Deficit Contribution. ADJR Act Administrative Decisions (Judicial Review) Act 1977 (Cth). ADSL Asymmetric Digital Subscriber Line. A compression technology that supports high speed digital services over conventional copper telephone lines. Agile Agile Pty Ltd, the second respondent in proceeding NSD 69/2008. AI Act Acts Interpretation Act 1901 (Cth) Amcom Amcom Pty Ltd, the second respondent in proceeding NSD 73/2008. Annual Access Charges The annual charge payable for access to a declared service, often payable monthly and sometimes referred to as a monthly access charge. Broadband Imprecise, but often used to refer to telecommunications capable of providing multiple channels of data over a single communications medium, typically using some form of frequency or wave division multiplexing. CAN Customer Access Network. The portion of the PSTN which comprises the transmission system connecting customers to an aggregation point within the network (usually a local exchange building). In Australia, that connection is normally achieved by copper wire pairs. CDNO Call Diversion (Number Only). Chime Chime Communications Pty Ltd, the second respondent in proceeding NSD 718/2008. Churn The transfer of a telecommunications customer from one provider to another, such as from Telstra to Request or from Request to Chime or from Adam to Telstra. DFD Consultation Paper A consultation paper that is provided by ACCC to the parties to an access dispute arbitration, accompanying ACCC's DFD in that arbitration. See DFD. DFD Supplementary Consultation Paper DFD supplementary consultation paper issued by ACCC to the parties to the ADAM LSS arbitration on 7 November 2007. DSL Digital Subscriber Line. DSL services are provided over the high frequency spectrum of a ULL. DSLAM Digital Subscriber Line Access Multiplexer D-ULLS (or DULLS) Diversion ULLS. A species of call diversion that is required in the context of ULLS ordering and provisioning. Earlier Reasons The reasons of the Court in Telstra Corporation Ltd v Australian Competition & Consumer Commission [2008] FCA 1436 ; (2008) 171 FCR 174 End-user A retail customer of a service provider. FD Final Determination. It is the various FDs in the 14 arbitrations under Div 8 of Pt XIC of the Act that are the subject of Telstra's challenge in the 14 proceedings. FD Statement of Reasons A statement of ACCC's reasons supportive of, and accompanying, an FD. Findings or Four Findings The four factual findings made by ACCC in each LSS arbitration, identified as "Findings 1,2,3 and 4" or "the Findings" or "the Four Findings" LI Act Legislative Instruments Act 2003 (Cth) Local loop Line between end-user's premises and a local exchange. LNP Local Number Portability. LSS Line Sharing Service (also known as the High Frequency Unconditioned Local Loop Service). The LSS was defined in the LSS Extension Declaration (the definition appears at [20] in these reasons). LSS Annual Charge Annual charge made or to be made by Telstra to the access seekers for access to the LSS, payable monthly, and sometimes referred to as "LSS monthly charge. With effect from 3 December 2003, the expiry date of the LSS Declaration was extended to 31 October 2007. By the LSS Extension Declaration, the expiry date of the LSS Declaration was further extended to 31 July 2009 (see LSS Extension Declaration). LSS Declaration Final Report ACCC's Line Sharing Service: Final Decision on whether or not a Line Sharing Service should be declared under Pt XIC of the Trade Practices Act 1974 published in August 2002 following ACCC's inquiry into whether or not an LSS should be declared under Pt XIC of the Act. LSS Declaration Review ACCC's Review of the LSS Declaration published in October 2007 which supported extension of the expiry date of the LSS Declaration resulting in the LSS Extension Declaration, and which contained in chapter 3 ACCC's reasons for the 2007 LSS Pricing Principles. LSS Extension Declaration This declaration of ACCC dated 26 October 2007 and published in the Gazette on 29 October 2007 extended the expiry date of the LSS Declaration from 31 October 2007 to 31 July 2009. LSS Monthly Charge Undertaking Assessment See ULLS and LSS Monthly Charge Undertaking Assessment. The 2002 LSS Pricing Principles were set out in Ch 7 of the LSS Declaration Final Report. The 2007 LSS Pricing Principles were determined by an instrument dated 24 October 2007 that was registered in the Federal Register of Legislative Instruments on 14 December 2007 with effect on and from 15 December 2007. LTIE Long-term interests of end-users. The object of Pt XIC of the Act is to promote the LTIE (s 152AB(1)) and the LTIE is a matter that ACCC must take into account in making a final determination in resolution of a dispute over access to a declared service (s 152CR(1)(a)). Macquarie Macquarie Telecom Pty Limited, the second respondent in proceeding NSD 105/2008. MNM Managed Network Migration. A transfer or migration of services that is achieved by a coordinated cancellation and connection of services --- to be distinguished from "single" disconnections and connections. Narrowband A reference to the low frequency spectrum or voiceband frequency spectrum. Network Network Technology (Aust) Pty Ltd, the second respondent in the proceeding NSD 75/2008. Optus Optus Networks Pty Limited, the second respondent in Proceeding NSD 717/2008. PowerTel PowerTel Limited, the second respondent in proceeding NSD 531/2008. Pooling and Allocation Method A method of arriving at the specific cost component to be included in the Annual Charge for access to the LSS according to which the specific cost of providing access to the LSS is pooled with the specific cost of providing access to the ULLS and Telstra's internal equivalent cost for ADSL, and the pool is allocated across the number of active LSS, ULLS and ADSL lines. Primus Primus Telecommunications Pty Limited, the second respondent in proceedings NSD 72/2008, 78/2008 and 719/2008. PSTN Public Switched Telephone Network. The switched telephone telecommunications network to which public customers can be connected. The infrastructure for basic telecommunications services (including telephones, switches, local and trunk lines, and exchanges), enabling any customer to call and communicate with any other customer. Request Request Broadband Pty Ltd, the second respondent in proceeding NSD 533 of 2008. SAOs Standard access obligations provided for in s 152AR of the Act. Service provider The provider of a service to an end-user. The service provider will previously have been an access seeker in respect of a declared service. SIO Service in operation. Telephony A generic term describing voice telecommunications. Telstra Telstra Corporation Limited, the applicant in each of the 14 proceedings. TPG TPG Internet Pty Ltd, the second respondent in proceeding NSD 77/2008. Tribunal Australian Competition Tribunal TSLRIC Total Service Long-Run Incremental Cost. TSLRIC+ TSLRIC plus a contribution to indirect and overhead costs. TSLRIC++ TSLRIC+ plus an additional amount as an ADC. ULL Unconditioned Local Loop. The bare or unqualified wire between the end-user's premises and the local exchange. The LSS and the ULLS are both provided over the ULL. ULLS Unconditioned Local Loop Service. The ULLS was defined in the ULLS Re-Declaration (the definition appears at [21] of these reasons). ULLS Declaration Declaration of the ULLS as a declared service under s 152AL with effect on 11 August 1999, by an instrument dated 4 August 1999 that was gazetted on 11 August 1999. The description of the ULLS as declared was varied by an instrument dated 18 May 2000 that was gazetted on 24 May 2000 with effect on that date. By an instrument dated 28 July 2006 that was gazetted on 9 August 2006, ACCC re-declared the ULLS as a declared service with effect on 1 August 2006 and expiring on 31 July 2009. ULLS Monthly Charge Undertaking Assessment ACCC's final report of August 2006 assessing Telstra's proferred ULLS monthly charge undertaking. ULLS and LSS Monthly Charge Undertaking Assessment ACCC's final report published in December 2005 on its assessment of Telstra's proffered ULLS and LSS monthly charge undertakings. ULLS Pricing Principles (or 2007 ULLS Pricing Principles) Pricing Principles applicable to the ULLS determined pursuant to s 152AQA of the Act on, and commencing on, 21 November 2007. ULLS Re-Declaration See the last sentence under "ULLS Declaration". ULLS Undertakings Discussion Paper ACCC's March 2005 Telstra's Undertakings for the Unconditioned Local Loop Service . WACC Weighted Average Cost of Capital. A reference to the average cost to Telstra of attracting equity and loan capital investment in its business, determined in accordance with a formula. WLR Wholesale Line Rental service. xDSL The "family" of DSL services, including ADSL services. XYZed XYZed Pty Limited, the second respondent in proceeding NSD 529/2008. | telecommunications industry 14 arbitrations between telstra corporation limited (telstra) and access seekers over terms and conditions of access to declared services div 8 of pt xic of trade practices act 1974 (cth) (act) challenge by telstra to the final determinations made by australian competition and consumer commission (accc) in the 14 arbitrations on judicial review grounds that were common to various combinations of the arbitrations (a) whether accc misconstrued s 152cr(1)(d) of act by adopting pooling and allocation method in dealing with specific costs (b) whether accc's failure to take into account model terms that it had determined under s 152aqb(2) of act involved procedural ultra vires and failure to take into account a relevant consideration (c) whether it was beyond the power conferred on accc by s 152cp of act to make a determination that included a charge for call diversion when call diversion was provided as part of a new connection whether call diversion when provided in those circumstances was a matter "relating to" access to the declared service within s 152cp(2) of act (d) whether accc erred in law by inconsistently using capital asset pricing model (capm) in order to estimate cost to telstra of equity capital while rejecting telstra's contention that there should be an uplift in the element to be included for weighted average cost of capital (wacc) to allow for welfare asymmetry connected with overestimating or underestimating the wacc whether use of capm involved acceptance of its underlying assumptions whether inconsistency established whether inconsistency in economic methodology an error of law (e) whether, by not including in the monthly charge to be paid by access seekers an element for line costs, accc erred in law and failed to observe s 152db(1)(b) of act construction of s 152db(1)(b) of act (f) whether later pricing principles for declared service impliedly revoked earlier ones whether accc erred by taking later ones into account whether later ones invalid by reason of having been made when earlier ones still in force and not expressly revoked whether later ones validly backdated into period when earlier ones had been on foot. administrative law |
The notice of motion is supported by an affidavit of Philip Madden. 2 The general background to the appeal is set out in the judgment of the Federal Magistrates Court of Australia ('FMCA') against which the appeal is brought ( Singh v Official Trustee in Bankruptcy (No 2) [2007] FMCA 739) and in a judgment of this Court ( In the matter of Khadem, A Bankrupt; Singh v Official Trustee in Bankruptcy [2007] FCA 495) ( 'Khadem' ) concerning an earlier appeal brought by Mr Singh against interlocutory orders made by the FMCA ( Singh v Official Trustee in Bankruptcy [2007] FMCA 306). 3 At one time Mr Singh's brother-in-law was a Mr Khadem (who was then married to Mr Singh's sister and later married to Ms Parvin Akter). Mr Khadem was made bankrupt. Shortly before that happened he transferred a Debenture Certificate #210711 to his then wife, Parvin Akter, who lives in Bangladesh. The Official Trustee in Bankruptcy applied to the FMCA for a declaration that the transfer to Ms Akter was void as against the Official Trustee in Bankruptcy. On 19 July 2005 an order to that effect was made with the consent of Ms Akter. 4 Ms Singh then claimed to be the beneficial owner of the funds secured by the debenture certificate (which recorded a loan of $33,000 to Provident Capital Limited and appears to have been an interest bearing investment). On 14 September 2005 the sum of the $38,466.28 was deposited into the bankrupt estate account. A claim was subsequently lodged with the Official Trustee by Moti Singh of 4/320 [sic] Glynburn Road, Kensington Gardens in State of South Australia who alleged that the funds held by the Official Trustee were in fact funds to which Mr Singh was the legal owner. The applicant asserts that whilst he was residing in New Zealand, he made an arrangement with the bankrupt to invest the sum of $33,000.00 in a debenture account with Provident Capital and to later transfer the debenture into the name of the bankrupt's estranged wife, Parvin Akter. The applicant further asserts that the funds were initially transferred to a mutual friend, Mr Humayon Kabir of 8B Panorama Road, Mount Wellington, Auckland in New Zealand by International Money Transfer Application dated 13 March 2003 issued by the National Bank of New Zealand. The applicant has not been able to provide documentary evidence to the Respondent to support his claim. The Official Trustee rejected the applicant's claim set out in paragraphs 4-6 above. The applicant appealed the Official Trustee's decision to the Federal Magistrate's Court Australia at Adelaide, South Australia under Section 178 of the Bankruptcy Act seeking orders that the funds held by the Official Trustee were the subject of a constructive trust in favour of the applicant and be returned to him with interest. Federal Magistrate Driver ordered that the Official Trustee invest the funds in an interest bearing account and to provide a report to the Court on whom the Official Trustee considered was the legal owner of these funds. During the course of those investigations the Official Trustee became aware of the bankruptcy of the applicant, which is being administered by the Official Assignee in New Zealand. The Official Assignee has since filed an Order in aid in the High Court in New Zealand. The order made on 19 July 2005 was accordingly vacated and the FMCA, as Mr Madden recorded, ordered the trustee to make further enquiries as to the legal owner of the money. On 23 November 2006 the affidavit of the Official Receiver was read. The facts disclosed that the applicant Mr Singh was an undischarged bankrupt in New Zealand. This raised the question of whether the Court should act in aid of the bankruptcy court of New Zealand, pursuant to s.29 of the Bankruptcy Act . I ordered that the Court invite consideration by a court exercising bankruptcy jurisdiction under the law of New Zealand whether that court should request assistance from this Court pursuant to s.29. I required the parties to bring my orders to the attention of Mr Singh's official assignee of his bankrupt estate in New Zealand and gave the official assignee photocopy access to documents filed in the proceedings. I directed that the Court would consider any request for assistance by a New Zealand court on 14 February 2007. The matter came before me again on 14 February 2007 at which time I received a memorandum from counsel for the official assignee of Mr Singh's bankrupt estate that was presented by the Official Trustee. That memorandum established that the official assignee wished to take steps in the High Court of New Zealand to obtain a letter of request but had not at that time done so. I directed that the hearing be adjourned to 17 May 2007 over the objections of Mr Singh. I also made orders for the filing of additional material. That application was discontinued by consent. The proceedings resumed before the FMCA on 17 May 2007. 8 Mr Singh's initial contention to the FMCA was that the funds had been paid to Mr Khadem by Mr Kabir on Mr Singh's behalf (in the sum of $NZ40,000) to be held on trust for Mr Singh and that he was entitled to the funds in his own right both in law and equity. However, before the FMCA Mr Singh later modified his position. He relied upon an affidavit from Mr Kabir which appeared to suggest that the bulk of the funds was properly to be regarded as a loan from Mr Kabir to Mr Singh. Secondly, the position of Mr Singh on his application has fundamentally changed. Originally, he sought orders for payment of the money to him on the basis that the funds had been paid by Mr Kabir to Mr Khadem to be held on trust for him and that he was therefore entitled to those funds in his own right both under law and equity. Now, following the disclosure of the interest of the official assignee in the money, Mr Singh relies upon the latest affidavit of Mr Kabir that all but NZ$1057.51 is the property of Mr Kabir and should be paid to him. A payment of anything more than NZ$1057.51 to Mr Singh would be inconsistent with the evidence upon which he now relies. I am not persuaded that even that amount should be paid to him as it relies entirely on a calculation by Mr Kabir unsupported by any documentary evidence and in the light of Mr Kabir's serious errors deposed to in his own affidavit. No payment should be made by this Court to Mr Kabir not least because it would be improper to give him a preference over other creditors of Mr Singh's bankrupt estate. The appropriate course is to dismiss the application under s.178 of the Bankruptcy Act with costs and I so order. The money will remain held in trust pursuant to the orders already made by the Court pending the outcome of the proceedings in the High Court in New Zealand. Accordingly Mr Kabir was given liberty to apply for further directions or orders and leave to appear by telephone on 14 August 2007. 10 Before that could occur Mr Singh, on 6 June 2007, filed his appeal in this Court against the dismissal of his application under s 178 of the Act (which had sought payment of all the funds in question to him). However, he now sought, amongst other orders, an order that the Official Trustee pay the whole of the funds to Mr Kabir. Application for such an order is an opportunity which the FMCA expressly reserved to Mr Kabir. 11 Mr Singh's appeal first came before me for directions on 29 June 2007. I raised with Mr Singh the apparent inconsistency between the order sought on appeal and that which he sought in his s 178 application. I queried how dismissal of that application could be challenged in the light of his present contention that all, not just the bulk, of the money was the property of Mr Kabir who had an opportunity to apply for it. I also discussed with Mr Singh the fact that he would be exposed to costs, apart from the cost of preparing the appeal papers. The matter was stood over for a little under a week to allow Mr Singh to consider his position. On 4 July 2007, at a further directions hearing, Mr Singh stated that he wished to proceed with his appeal. The appellant is to approach the registry to make arrangements for the preparation of an index to the appeal books and for the preparation and filing of appeal books. The matter is adjourned to a date to be fixed. 13 It will be apparent from what is set out above that the foundation for Mr Singh's claims to the funds held by the Official Trustee in Mr Khadem's bankrupt estate has altered over time. The modification to his position has appeared to coincide with the expression of interest in the matter by the Official Assignee in New Zealand. His latest position (that all of the funds held by the Official Trustee are the property of Mr Kabir) is inconsistent with any challenge to the order of the FMCA (which dismissed Mr Singh's application that all or part of the funds should be paid to him). 14 The notice of motion relied upon various provisions of the Federal Court Rules ('the Rules'): O 20 r 5(1) (a proceeding may be dismissed as frivolous or vexatious or an abuse of the process of the Court); O 52 r 18 (an appeal may be dismissed as incompetent); and O 52 r 38 (an appeal may be dismissed for want of prosecution --- see also s 25(2B)(ba) of the FCA Act). It also relied upon s 31A(2) of the FCA Act (a proceeding may be dismissed if there is no reasonable prospect of success). 15 Mr Madden's affidavit deposed to the fact that no index to the appeal book has been settled and that the appeal has not been progressed by Mr Singh since the direction made on 4 July 2007. At the hearing of the notice of motion Mr Singh did not appear. I gave leave to Ms Nash, who appeared for the Official Trustee in Bankruptcy, to file affidavits of service in court which deposed to service on Mr Singh of the notice of motion and date of hearing. I am satisfied, on the evidence before me, that Mr Singh was properly served and that adequate notice of the hearing of the notice of motion was given. 17 Mr Singh's failure to comply with the direction made more than nine months ago is unacceptable. No approach was made to the Court until the respondent filed the present notice of motion. I am satisfied, within the meaning of O 52 r 38 that Mr Singh has not done an act required to be done in accordance with directions made under the Rules and has not prosecuted his appeal with due diligence. The appeal is therefore liable to be dismissed for want of prosecution. In light of the fact that Mr Singh has progressively abandoned any claim to the funds in question it is also clear that an appeal against the order dismissing his claim has no reasonable prospects of success (s 31A of the FCA Act) and is an abuse of process (O 20 r 5(1) of the Rules). They are additional foundations for the order I will make. It is not necessary to decide whether the appeal is incompetent (O 52 r 18). Mr Singh must pay the costs of the Official Trustee in Bankruptcy. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. | failure to prosecute progressive abandonment of claim dismissed at first instance no remaining foundation for appeal abuse of process. no reasonable prospects of success. appeal practice and procedure |
In that decision the Tribunal affirmed the decision of a delegate of the first respondent not to grant to the applicant a protection (class XA) visa. He arrived in Australia on 18 September 2004 as the holder of a multiple travel student visa permitting him to stay in Australia until 21 February 2005. On 9 February 2005 the appellant lodged an application for a protection visa, claiming to fear persecution on the grounds of religion because he was a Coptic Orthodox Christian. The appellant claimed that he had suffered discrimination at university, in his employment, had been threatened whilst performing national service, and that more generally he feared that he may be harmed by Muslim extremists. On 23 February 2005 a delegate of the first respondent refused to grant a protection visa to the appellant. On 2 March 2005 the appellant applied to the second respondent for review of that decision. On 7 September 2005 the Tribunal affirmed the delegate's decision not to grant a protection visa, with formal reasons for decision being handed down on 29 September 2005. It is in relation to the Tribunal's treatment of that evidence which the appellant's case on appeal is primarily directed. The Tribunal then turned to its findings and reasons. It was prepared to accept that the appellant may have suffered discrimination, as he had claimed, at university and in relation to his employment opportunities. The Tribunal found, however, that any discrimination the appellant suffered in education or employment was not to a degree such that it would constitute serious harm, given that the appellant was able to graduate and also find employment. The Tribunal did not accept that there was a real chance that the appellant would face unemployment for reasons of his religion. The Tribunal also accepted that the appellant was attacked by a Muslim while in the army but found that, as the appellant had completed his military service, there was no real chance that he could suffer the threat of such a serious harm were he to return to Egypt. The Tribunal finds that tales such as this constitute "urban myths" which have no basis in reality and which are not supported by any credible media or other reports. The Tribunal is convinced that were such events to be occurring, then they would be widely reported in credible sources and that the Egyptian government would take immediate steps to deal with such crimes. In the light of this, the Tribunal finds that the state provides adequate protection to Coptic Christians. In the light of this, the Tribunal finds there is no real chance that [the appellant] might be harmed by the actions of Islamic militants aimed at Christians such as the [appellant] . The Tribunal acknowledges that there is evidence of some continuing low level discrimination and occasional societal prejudice. However, the Tribunal finds that any such harm an Egyptian Copt, such as the [appellant] , might suffer in the foreseeable future, is not so serious as to constitute persecution. In any event, this appears, according to the independent evidence cited above, to again be more of a problem in the past and one that the Egyptian government appears to be trying to address. In any case, it is hardly a difficulty that might be faced in the life of the [appellant] . That remained the position before the Federal Magistrate. The Federal Magistrate was required to consider five grounds of review. The first two, those relating to military service and the telephone conversations (described as information contained on a CD provided by the appellant to the Tribunal) are relevant to this appeal. In relation to the military service ground the appellant told the Federal Magistrate during the course of the hearing before him that he had in fact completed his compulsory military service but was subject to call-up for reserve duty until March 2013. His Honour held that the tender of a military certificate and call-up letter as additional documents did not comprise fresh evidence and, in any event, the certificate was available to the appellant before he applied for a protection visa. Even if they were fresh evidence he accepted that they were irrelevant to any ground on which certiorari could be granted and were therefore inadmissible. Accordingly the military ground did not succeed. In relation to the ground relating to 'information on CD' the Federal Magistrate embarked on examination of the references made in the transcript at the hearing before the Tribunal to the question of the telephone conversations. Examination of the transcript (the extracts of which are set out in his Honour's reasons) also shows that the appellant had responded on two occasions with 'okay' in response to an assertion from the Tribunal member that the Tribunal would not consider a translation and would rely on his description of the contents of the CD. In his reasons for not upholding the appellant's contentions on the CD information, his Honour relied on the appellant's response before the Tribunal that it was 'ok' for the Tribunal member to take account of the appellant's description of what was contained on the CD and that he would not listen to or arrange for the translation of its contents. Having had regard to the Tribunal's reasoning as set out above, his Honour concluded that the ground of review could not succeed. Further, he accepted submissions for the respondent before him that the Tribunal had been under no obligation to seek information from sources available to it. Further, that procedural fairness does not require the Tribunal to take upon itself the role of obtaining further information for the purpose of assisting the appellant to make his case: Lee and Moore JJ in WAIJ v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 80 ALD 568 at [19]-[22]. He said that an analysis of the transcript revealed that the Tribunal had not ignored or refused to consider the material on the CD in any relevant sense. The Tribunal had noted what the appellant said it contained and explained it would consider the appellant's evidence in that regard as substantive evidence in support of his case. Further, his Honour considered it was clear from the extracts from the Tribunal's reasons that such a course of action was in fact adopted and the Tribunal had taken it into account. The appellant before his Honour, had specifically elected not to refer in his submissions before the Court to the contents of the CD as supporting his case in any material or tangible respect. His Honour therefore found that the Tribunal did not dismiss the CD from its consideration and that its refusal to use the CD in the manner urged upon it by the appellant was justified or explained as envisaged in the reasoning in WAIJ 80 ALD at [53]. In the affidavit he states that it contains sound files which he had downloaded from a website of the US Copts Association relating to Copts. He attaches to the affidavit a copy of the background of the US Copts Association, recent media involvement of that Association and the background of its founder. In [7] of the proposed affidavit he sets out a brief explanation of each sound file, being eight in number. Each sound file relates in one way or another to alleged attacks on Coptic interests in Egypt by Muslims. The tests governing the admissibility of evidence at this stage in the appellate process have been addressed in Uddin v Minister for Immigration and Multicultural Affairs [2001] FCA 90 and NASB v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 24. The second condition has been variously expressed in the cases, but the point made in all of them is that it is not enough that the new evidence was relevant and otherwise admissible, and may have affected the result. Language referring to, at the lowest, 'probability', and at the highest, 'certainty', of a different result, has been used: cf R v Copestake; Ex parte Wilkinson [1927] 1 KB 468 at 477 ('of such importance as very probably to influence the decision' and 'of such weight as, if believed, would probably have an important influence on the result'); Orr v Holmes at 636 ('high degree of probability that the admission of the new evidence would result in a different verdict'); Florance v Andrew (1985) 58 ALR 377 at 381 ('such a different complexion on the case that a reversal of the former result ought certainly to ensue'); Arnotts Ltd v Trade Practices Commission (1990) 24 FCR 313 at 367-368 ((as agreed by the parties) 'almost certain that, ... , an opposite result would have been reached by the primary judge'). However, given that at that stage the appellant was not represented there is a prima facie inference open, not rebutted in these circumstances, that the explanation for lack of tender was the absence of professional qualification in the appellant. The more difficult question is whether the evidence could have had any effect on the outcome of the reasoning of the Tribunal. That is, whether there was a probability, possibly a strong probability, of a different result having been reached. There are two matters that concern me in that respect. The description given by the Tribunal of the effect of the evidence to which the appellant was referring is inadequate in two respects. The first is that it describes the recordings of telephone calls as all having been 'secret', whereas the affidavit makes apparent that that adjective is only relevant to one of them. Secondly, the description given by the Tribunal of the character of the evidence is that the calls were all made by criminals who are overheard plotting such things as the kidnapping of a 13 year old Coptic girl. This inadequacy of description of the contents of the CD is also followed through into the core paragraph of the Tribunal's reasoning quoted above, where the Tribunal continues the notion that all of the recorded telephone conversations are 'secret' and that they refer to 'widespread abduction of Coptic girls'. As will be seen from the description in the proposed affidavit of eight sound files, only the second satisfies that description of 'secret'. It is not apparent from the evidence given in the proposed affidavit that the kidnapping of girls is representative of the remainder of them. Rather, they are better characterised as involving alleged attacks on Coptic Christians by Muslims. Further, the affidavit provides information relating to the US Copts Association as the source of the information on the CD. The respondents submit that when regard is had to the reasoning of the Tribunal, particularly in the core paragraph, it is apparent that any more evidence going to the depth of the material to which the appellant was referring and its source would not with any sensible degree of probability lead to a different result. But for the Tribunal's inadequate description of what is in the recordings, I would accept that view. However, I believe that because of the inadequacies in the Tribunal's description (and therefore by inference perhaps its understanding of the effect of the evidence), I should hold the issue of the admission of the affidavit over until I have moved to consideration of the Tribunal's reasoning. I propose to consider that first before moving to the other expressions of the ground. 26 X 116 FCR was a case where the Tribunal held that because a diary relied on by the appellant in that case had not been translated, it could not take its contents into account. It is quite another to refuse to take into account a document that is asserted to be relevant to a specific issue on the ground that it has not been so translated. In the present case, it did not have the option of refusing to take into account the diary because it was not in English. That is because the Tribunal did not seek to ascertain what the diary said. The consequence of the approach the Tribunal adopted was that it ignored relevant material. These passages in the reasoning in X 116 FCR were considered and distinguished by Sundberg J in MZWKU v Minister for Immigration and Multicultural Affairs [2006] FCA 996. The appellant accurately explained their content, as appears at [11], and the Tribunal took that into account in the manner there appearing. As Gray J observed, the course to be taken by the Tribunal in a case where a document is presented in untranslated form depends on the circumstances of the case. Here the Tribunal had the benefit of the appellant's explanation of the content of the letters and why they were important to his case, and the Tribunal took what he said into account. As it happens, the explanation was accurate, as appears from [14]. The Tribunal did not fall into the error identified by Moore J of failing to seek to ascertain what the letters said or not taking steps that might give meaning to their contents. That is, it had taken into account the effect of what it thought the appellant had said the contents were. The respondents submit that the circumstances in the present appeal, where some limited explanations were given by the appellant to the Tribunal of what was on the CD, sit closely with the circumstances in MZWKU FCA 996. They maintain that WAIJ 80 ALD is to be, in any event, distinguished because what the Tribunal did not do here (as a consequence of the core paragraph) was to dismiss the content of the CD, the substance of which had been put by the appellant to the Tribunal member for consideration. As a consequence there was no ignoring of relevant material in the present case. In the event the evidence now in the affidavit had been before the Tribunal it arguably could have occasioned the Tribunal to examine its view on the credibility of the reports to which the appellant was referring. It would have been clear not all were 'secret'. It would have been clear that the reports did not all relate to widespread abduction of Coptic girls. Yet it cannot be said with any confidence that even that would have shaken the reliance the Tribunal placed on what it described as independent reports. Additionally, this was not a case before the Tribunal where it had no evidence on the content of the CD. It had the benefit of the appellant's explanation of the content. It took that explanation into account. This was not a case where, as a result of the refusal or disinclination to translate the CD, that the Tribunal ignored relevant material. On the contrary, it took the appellant's description of the content into account. The circumstances in this appeal are therefore distinguishable from those in X 116 FCR. To apply the dicta of Gray J or Moore J here would be to ignore the circumstances of this case. The description of the content of the CD given by the appellant removed the one circumstance in X FCR 116 which made availability of a translation imperative. In these circumstances I do not consider it can be safely concluded that the evidence now in affidavit form would very probably have produced a different result in the Tribunal. Leave should therefore be refused for admission of the affidavit on this appeal. It follows from the above reasoning that the appellant cannot succeed on this first aspect of this ground. It is because it is based upon such findings that the determination is an unreasoned decision. Such findings or inferences of fact become part of, and are not distinguishable from, the decision subject to judicial review. (See: S20/2002 per McHugh, Gummow JJ at [54] ; Bond per Mason CJ at 338, 359-360). A review culminating in such a decision would be a process lacking practical fairness or justice and would not be a process conducted according to law. However, if the Tribunal gets such information, the Tribunal must have regard to that information in making the decision on review. That is, that a fair, just and economical means of proceeding was not adopted by the Tribunal. It is not appropriate to proceed in accordance with the appellant's submission because s 420 of the Act is 'facultative, not restrictive' in its intent: Minister for Immigration & Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 at [49] . Compliance with its provisions is not a precondition to lawful decision-making. In short, it is not a "decision" at all within the statutory grant ( Miah [2001] HCA 22 ; (2001) 206 CLR 57 at 74-75 [51] - [54] , 81-83 [80]-[86], 102-103 [148]; Bhardwaj [2002] HCA 11 ; (2002) 209 CLR 597 at 605 [13] , 614-615 [51]; Plaintiff S157/2002 v The Commonwealth [2003] HCA 2 ; (2003) 211 CLR 476 at 506-507 [76] - [78] ). It is infected by "jurisdictional error". NAIS 223 ALR involved the issue of delay. The principles referred to by Kirby J and other members of the Court do not, in any event, provide authority for the view that the circumstances in the present appeal could be said to give rise to procedural unfairness. The appellant had the opportunity to put his case. It was resolved without any undue delay and without material departure from the requirements of procedural fairness. There is no basis in law for reading into the requirements of procedural fairness a duty to translate the information on the CD in the circumstances. There was no identification of a wrong issue or the asking of a wrong question in relation to the issue of military service. The Tribunal correctly asked, and reached a finding on, the question of whether there was a real chance that the appellant would suffer serious harm, by reason of his religion, were he to return to Egypt. It was legitimate for the Tribunal to consider, as one aspect of that factual inquiry, whether the appellant might return to military service in the future. | refugees appeal application for review of refusal to grant protection visa appellant sought to submit material to refugee review tribunal in a language other than english tribunal declined to receive material or to receive translation from appellant appellant provided oral description of content to tribunal tribunal relying on its understanding of that oral description whether tribunal in error of law in considering the appellant's description in all the circumstances whether procedural fairness denied migration |
Subsets and Splits