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2 I also ordered that the present application was to stand dismissed as at 2 November 2006 and I reserved liberty to all parties to apply. 3 Given that the applicants did not file and serve by the appointed date a new application in terms of the above order, those applications were dismissed. 4 The present application is said to be made by the applicants to reinstate the dismissed applications and to set aside the orders made on 26 April 2006 requiring the filing of a new application. It is opposed by the State. 5 The reinstatement application was heard by me on Tuesday 30 January 2007 in Brisbane. 7 The Kullilli # 2 claim was intended to be the only part of the area asserted to be Kullilli country that did not overlap with other claims and could therefore be progressed expeditiously to a consent determination. However, in fact the claim had a substantial area of overlap with the Boonthamurra country claim. Since commencement of the application there has been ongoing conflict with contiguous claim groups because the Kullilli have not been prepared to reduce the area of their claims in accordance with available anthropological evidence despite negotiations at a Land Summit conducted in 2006. Some members of the Applicant group engaged the firm of Drakopoulos Black to act on their behalf. However, that firm did not file prior to 1 November 2006 evidence indicating that a new application had been filed and served. But, on 4 November 2006, some further material was filed after the action was dismissed by operation of the Order of 26 April 2006. 9 The respondent, State of Queensland, opposes the reinstatement application. QSNTS supports the State in its opposition and has filed evidence and made oral submissions in support: see especially the Affidavit of Valerie Cooms, filed on 29 January 2007. The history of the matter is as follows. On 26 April 2006 the Court held a directions hearing in relation to a number of claims of which the present applications form part. At that hearing Colin Hardie of QSNTS was the solicitor on record for the applicant and sought orders from the Court. These orders were made on 26 April and entered on 8 May 2006 in the terms set out in paragraphs [1] and [2] above. On 4 July 2006 the applicant obtained an order from the Court releasing QSNTS from an undertaking to hold an authorisation meeting in order to commence a new application on the understanding that Messrs Drakopoulos Black, Solicitors, would be representing the applicant. It was noted that an authorisation meeting would be called by the applicant. A meeting was called on 5 August 2006 but it was inconclusive. No further order was sought from the Court prior to the date of dismissal on 2 November 2006 and as a consequence of this inaction the order came into force. 10 On 15 November 2006 the State was informed by the Deputy District Registrar that the matter was dismissed as of 2 November 2006 in accordance with the orders of 26 April 2006. On 13 December 2006 Drakopoulos Black Solicitors filed a Notice of Motion seeking to have the applications reinstated and this was supported by an Affidavit by Mr Black sworn on 27 November 2006 and other supporting material. Notwithstanding this indication the applicant remained legally represented on the record by QSNTS until the applications were dismissed on 2 November 2006. 13 Mr Black has filed an Affidavit attaching a copy of an authority of 4 November 2006, which was two days after the dismissal, confirming that his firm had been appointed to represent the Kullilli applicant. This authority is challenged as it was executed only by nine of the twelve persons who jointly comprised the applicant. Since the date of the applications, one of the members of the applicant group has died and two others have not signed the 'Authority' of 4 November 2006. By s 61(2)(c) of the Native Title Act 1993 (Cth), the Native Title Determination Application must be made by a person or persons authorised to make the application by a Native Title Claim Group and that person or persons jointly comprises the applicant. This means that there must be either an amendment to the application or a consent by all the claim group. In the present case there is real doubt as to whether this requirement has been satisfied. Then a decision about the matter can be made with agreement of 7 or more of the Applicants. ' (Emphasis added. The resolution contemplates an attempt being made to obtain agreement. That has not been done here. In other words, the power to enter into an arrangement with less than all members of the Group is contingent on consultation. Therefore, there is at least a real doubt as to the effectiveness of the authorisation relied on by Messrs Drakopoulos Black. 15 The State also cites a body of law which recognises that the role of the applicant is a representative one and it submits that it is not competent for only some of those persons comprising the applicant to obtain separate legal representation and act in other than by unanimous agreement: see 'Pooncarie' Barkandji (Paakantye People) v New South Wales Minister for Land & Water Conservation [2006] FCA 25 at [10] and Sampi v Western Australia (No 2) [2005] FCA 1567 at [24] - [27] . In these circumstances, in my view, there is a significant doubt whether Mr Black's firm has been duly authorised to act. I think the better view is that there is no such authority on the face of the present documents and the evidence before me. The order of dismissal has been entered in this case. There has been debate in this case whether the order for dismissal was interlocutory or final. In my view, the orders for dismissal effective as from 2 November, is final because it has the effect of dismissing the applications. However, having regard to the conclusion I have reached as to the exercise of my discretion it is not necessary to resolve this question. It is well settled that, although broad, the discretion conferred by O 35 r 7(2)(c) should be exercised in a judicial manner and only in exceptional circumstances: Dudzinski v Centrelink [2003] FCA 308 at [11] . This guideline is based on the principle of finality of litigation which counsels courts to exercise caution when considering whether orders previously made and final on their face and entered should be reopened for consideration and set aside. 18 One of factors to take into account is whether there has been any satisfactory explanation or realistic attempt to comply with the orders which were made more than 6 months ago. I am not satisfied in the circumstances of this case that any satisfactory attempt was made to comply with the orders and file a new application or to have the orders vacated with the consequence that the dismissal orders have come into effect. 19 It is imperative in this case that the overlap issue be resolved as soon as possible in order to enable resolution of not only these claims but also other claims in the area. At the Western Land Summit held on 26 March 2006 the applicant had executed agreements with the Budjiti, Boonthamurra and Wangkumarra applicant, with the consequence that, on their face, these agreements resolved the overlaps between the applications. These agreements had been filed in Court in support of the orders sought by the applicant in each matter and made on 26 April 2006. 20 Because the directions to the applicant to file a new application were part of a cluster-wide strategy that required the resolution of overlaps, it is important to ensure their efficacy. It was made perfectly clear on 26 April 2006 that the claims would be dismissed and that a new application had to be made. There was no application to prevent the dismissal made prior to 2 November 2006 despite an inconclusive meeting of the claim group on 5 August 2006. That meeting could not proceed as an authorisation meeting because of the inability of those present to agree who were the relevant Kullilli People. 21 If the present applications were to be reinstated it would create an overlap with a new application filed by the Boonthamurra People in response to orders made in their application and it would slow the progress of the application and result in overlapping applications being programmed for hearing, which is a consequence to be avoided. 22 On the other hand, if the application for reinstatement is dismissed the Kullilli People can bring fresh proceedings, which are properly authorised under the Native Title Act 1993 (Cth), for the recognition of native title which reflect the agreements identified above and which will remove the doubts inherent in the present circumstances. 23 There is real doubt surrounding the question whether there has been proper authorisation in relation to a number of matters, including the appointment Messrs Drakopoulos Black and the revocation of the instructions to QSNTS. It is therefore desirable in the interests of certainty and resolution of the claims in the cluster that there be a new and clear authorisation to the future progress of these matters. 24 Accordingly, in these circumstances and for the above reasons, I dismiss the application for reinstatement and refuse the application to set aside the order which came into effect on 1 November 2006. I make no order as to costs. | native title determination application native title act 1993 (cth), s 61 authority to make application persons "jointly" comprising the applicant agreement of all persons comprising the applicant. reinstatement application original dismissal final discretion to set aside interlocutory judgment in exceptional circumstances realistic attempt to comply with previous order federal court rules , o 35 r 7(2). native title practice and procedure |
2 In order to obtain such an extension there is the necessity to show at least some available argument in favour of an appeal. I think I can say that this matter is probably as bereft of such an argument as any I have ever seen. That is saying something. 3 The applicant arrived in Australia in 2002 and did not seek a protection visa until 2005 in circumstances where he had been apprehended by the authorities, having overstayed his visa. 4 He has made it clear in what he has said to me today that his grievance lies in what occurred to him at the time of his being taken into detention and in particular the loss of his belongings, including, so he says, a substantial sum of cash. 5 I have read the decision of the Tribunal. I have read the decision of the learned Federal Magistrate. There is no breath of a chance of any appeal succeeding. There is no arguable basis upon which a protection visa could have been allowed. 6 The application for extension of time is dismissed. I order that the applicant pay the costs of the first respondent. 7 I should make clear that whatever grievances the applicant has in relation to matters other than the grant of a protection visa are not before this Court. 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 for extension of time to file and serve notice of appeal dismissed migration |
Prior to 1999, the overseas marketing and export of wheat from Australia was controlled by the Australian Wheat Board ('Board'), which was a Commonwealth statutory authority. The Board was first established during the second world war under the Wheat Acquisition Regulations 1939 (Cth). After the war, the Board was established by the Wheat Industry Stabilization Act 1948 (Cth) and it has continued in existence under later Commonwealth legislation including, most recently, the Wheat Marketing Act 1989 (Cth) ('WMA'). As a result of amendments made to the WMA by the Wheat Marketing Amendment Act 1997 (Cth) and the Wheat Marketing Legislation Amendment Act 1998 (Cth), the control of wheat exports from Australia was transferred to AWB Limited ('AWB'). Since 1 July 1999, AWB has carried on business as the exclusive manager and marketer of bulk wheat exports from Australia. It is required to purchase all wheat that is offered to it by Australian growers for inclusion in a pool operated by AWB, provided that the wheat meets standards set by AWB. Growers are paid a purchase price that must be calculated by reference to the net return for the pool in which the wheat is included: s 84 of the WMA. AWB carries out these functions under the general supervision of the Wheat Export Authority which is the successor to the Board: see ss 5 , 5D, 57 and 84 of the WMA. By Letters Patent dated 10 November 2005, the Governor-General appointed the Honourable Terence Rhoderic Hudson Cole AO RFD QC ('the Commissioner') to inquire into, and report on, inter alia: (a) whether any decision, action, conduct, payment or writing of AWB, or any person associated with it, might have constituted a breach of any law of the Commonwealth, a State or Territory; (b) whether any decision, action, conduct, payment or writing of BHP Limited (now BHP Billiton Limited), BHP Billiton Petroleum Pty Limited, BHP Petroleum Limited, The Tigris Petroleum Corporation Pty Limited or The Tigris Petroleum Corporation Limited, or any person associated with one of those companies, in relation to specified shipments of Australian wheat to the Grain Board of Iraq, might have constituted a breach of any law of the Commonwealth, a State or a Territory; and (c) if the answer to either paragraph (a) or (b) above is in the affirmative --- whether the question of criminal or other legal proceedings should be referred to the relevant Commonwealth, State or Territory agency. Between 23 November 2005 and 20 March 2006, the Commissioner issued twelve notices to produce documents to AWB pursuant to s 2(3A) of the Royal Commissions Act 1902 (Cth) ('RCA'). In addition, various notices to produce documents were directed by the Commissioner to employees of AWB. From early 2006, AWB has maintained that a large number of documents falling within the scope of these notices are the subject of legal professional privilege. These proceedings were instituted on 30 May 2006, shortly before the Royal Commissions Amendment Act 2006 (Cth) ('the Amending Act') came into force on 15 June 2006. It is common ground that nothing in the RCA, as amended by the Amending Act, abrogates AWB's right to withhold documents caught by the notices to produce if they are properly the subject of legal professional privilege. The Commissioner is named as the first respondent. He has advised the Court that he intends to take no part in the proceedings and will abide any order made by the Court. The second respondent, the Commonwealth of Australia, has acted as AWB's contradictor. The principal relief sought by AWB in this proceeding is a declaration that the documents specified in revised lists of documents that have been filed with the Court are, or record, confidential communications that are protected from production to the Commissioner by legal professional privilege. This claim falls squarely within the Court's jurisdiction under s 39B(1) and (1A)(c) of the Judiciary Act 1903 (Cth). The Commonwealth does not suggest that the Amending Act deprives this Court of its jurisdiction to hear and determine AWB's claims for relief; on the contrary, it accepts that the Court has jurisdiction to determine whether the documents attract legal professional privilege. At the commencement of the hearing, some 1,450 original documents were in issue. During the course of the hearing, AWB withdrew its claim for a declaration that various documents were privileged and the Commonwealth accepted that other documents were the subject of legal professional privilege. As a result, the number of contested original documents was reduced by some 550 to approximately 900 documents occupying 28 lever arch folders. The trial of this proceeding was conducted on affidavit. In support of its privilege claims, AWB relied upon thirty-two affidavits. In addition, AWB relied upon specified exhibits to two affidavits sworn by Leonie Thompson of Arnold Bloch Leibler ('ABL') on 30 May 2006 and 19 June 2006 and certain background documents contained in Exhibit SMXD17 to the affidavit of Simon Daley, a solicitor acting for the Commonwealth, sworn 3 July 2006. The deponents included AWB executives and employees, AWB's in-house lawyers, and lawyers from three Melbourne law firms, Blake Dawson Waldron ('Blakes'), Minter Ellison ('Minters') and ABL, that were retained to advise AWB in connection with issues arising from AWB's supply of wheat to Iraq. None of the deponents were cross-examined. The Commonwealth did not rely upon any affidavit evidence. However, it tendered a substantial volume of documents and passages from the transcript of evidence given to the Commission. The documents at issue in this proceeding span a period of years from about 2002 to 2006. Over that period, AWB was involved in a number of investigations concerning its sale of wheat to Iraq under the United Nations' Oil-For-Food Programme ('OFF Programme'). AWB conducted two internal investigations, known as Project Rose and Project Water. In addition, AWB was exposed to investigations by the United States Senate, the Independent Inquiry Committee of the United Nations and ultimately the Commission. As many of the documents arise out of these investigations, it is necessary to describe their nature and scope in general terms. THE OIL-FOR-FOOD PROGRAMME Following the invasion of Kuwait by Iraq, the United Nations Security Council determined on 2 August 1990 that trade sanctions should be imposed on Iraq. In particular, the Security Council adopted Resolution 661 of 6 August 1990 ('Resolution 661') which provided, inter alia, that all States: (a) shall prevent the sale or supply by their nationals of any commodities or products to any person or body in Iraq or for the purposes of any business carried on in or operated from Iraq, 'but not including supplies intended strictly for medical purposes, and, in humanitarian circumstances, foodstuffs' ; and (b) shall prevent their nationals and any persons within their territory from removing or otherwise making available any funds or other financial or economic resources to the Government of Iraq or to persons or bodies within Iraq, 'except payments exclusively for strictly medical or humanitarian purposes and, in humanitarian circumstances, foodstuffs' . In April 1991, the Security Council passed Resolution 687 which provided that the prohibition against the sale or supply to Iraq of commodities or products other than medicine and health supplies would not apply to foodstuffs notified to the Committee established by Resolution 661. On 14 April 1995, the Security Council adopted Resolution 986 which established the OFF Programme. Funds standing to the credit of the escrow account were available to be used by Iraq for the purchase of humanitarian goods and services, including the purchase of food, in accordance with the conditions and procedures laid down by the United Nations. On 20 May 1996, the United Nations and the Government of Iraq entered into a Memorandum of Understanding in relation to the implementation of Resolution 986. Section II of that Memorandum provided for the Government of Iraq to adopt a distribution plan that was designed to achieve an equitable distribution of medicine, health supplies, foodstuffs and other materials to the Iraqi population throughout the various Governates of Iraq. THE INDEPENDENT INQUIRY COMMITTEE On 21 April 2004, following allegations of fraud and corruption in relation to the administration of the OFF Programme, the Secretary-General of the United Nations appointed an Independent Inquiry Committee ('the IIC') to investigate the administration of the OFF Programme. The chairman of the IIC was Paul Volcker, a former chairman of the United States Federal Reserve. The other members of the IIC were Mark Pieth of Switzerland, an expert on money laundering in the Organisation for Economic Co-operation and Development, and Justice Richard Goldstone of South Africa, a former chief prosecutor of the United Nations International Criminal Tribunals for the former Yugoslavia and Rwanda. The IIC issued its final report, entitled 'Manipulation of the Oil-for-Food Programme by the Iraqi Regime', on 27 October 2005 ('the Final Report'). The IIC found that Iraq had received illicit income totalling about US$1.8 billion from companies that obtained oil and humanitarian goods contracts. It also found that the largest source of illicit income for the Iraqi regime came from payments made by companies that Iraq selected to receive contracts for humanitarian goods under the OFF Programme. These payments were disguised by various subterfuges and were not reported to the United Nations by Iraq or by the participating contractors. In its Final Report, the IIC said that the illicit payments developed in mid-1999 from Iraq's effort to recoup the costs it incurred to transport goods to inland destinations after their arrival by sea at the Persian Gulf port of Umm Qasr. The IIC said that, rather than seeking approval from the United Nations for compensation for such costs from the OFF Programme's escrow account, Iraq required humanitarian contractors to make such payments directly to Iraqi-controlled bank accounts or to front companies outside Iraq that in turn forwarded the payments to the Government of Iraq. The IIC observed that, not only were these side payments unauthorised, it was also an easy matter for Iraq to impose 'inland transportation' fees that far exceeded the actual transportation costs. The IIC also stated that, by mid 2000, Iraq instituted a broader policy that applied a 10 per cent surcharge on all humanitarian contracts, in addition to any requirement that contractors pay inland transportation fees. The surcharge was described in most cases as an 'after sales service fee'. The IIC said that one conduit for the payment of inland transportation fees to the Iraqi regime was a Jordanian company called Alia for Transportation and General Trade Co ('Alia'). The IIC stated that Alia was owned partly by Iraq's Ministry of Transportation and acted as a collection agent for the Government of Iraq to receive inland transportation payments from certain humanitarian goods suppliers. The IIC found that the actual transportation of goods from the port of Umm Qasr to inland destinations in Iraq was in fact provided by Iraqi Government employees, and not by Alia. In its Final Report, the IIC made a number of specific findings in relation to AWB. It found that AWB paid transportation fees to Alia from December 1999 through until about May 2003 when the OFF Programme came to an end as a result of the invasion of Iraq by US and coalition forces. In connection with AWB's first three contracts from late 1999 to mid 2000, inland transport fees ranged between $10.80 and $12.00 per metric tonne ('pmt'). The rates rose to between $14.00 and $15.00 pmt in 2000 and then sharply increased in contracts from 2001 to 2003 to between $45.00 and $56.00 pmt. The IIC also found that AWB did not advise the United Nations that it was making payments to Alia for inland transportation costs. These payments were channeled to the Government of Iraq by Alia. Both AWB and Alia deny that AWB knew of Iraq's partial ownership of Alia, and there is no evidence to contradict these denials. AWB also denies knowing that Alia did not actually transport its wheat from Umm Qasr and that Alia remitted the money paid by AWB to the Government of Iraq. On the one hand, there is no evidence that Alia told AWB that it was not performing transport services for AWB's wheat or that it was channeling AWB's payments to the Government of Iraq. On the other hand, numerous aspects of the AWB-Alia relationship, as well as the nature of many of the documents received by AWB and discussed above, suggest that some employees of AWB were placed on notice of facts strongly suggesting that AWB's payments were in whole or in part for the benefit of the Government of Iraq. Of particular significance is the degree to which Alia's trucking prices rose sharply beyond what would apparently be a reasonable transportation fee and without other apparent justification. Such increases, in conjunction with AWB's knowledge that Alia had been nominated in the first place by the Government of Iraq, should have signaled AWB officials to the probability that the Government of Iraq stood to illicitly benefit financially from AWB's payments to Alia. In addition, IGB [the Iraqi Grain Board] and ISCWT [the Iraqi State Company for Water Transport --- ie the port authority] initiated or were party to communications concerning AWB's payment of Alias fees, and AWB was warned that the Government of Iraq would not allow its ships to unload until Alia was paid. In addition, AWB made a large number of documents available to the IIC investigators. Certain disclosures by AWB to the IIC represent one ground upon which the Commonwealth contends that there has been a waiver of legal professional privilege by AWB over some of the documents at issue in these proceedings. PROJECT ROSE Project Rose commenced in about June 2003 when James Cooper ('Cooper'), the then general counsel of AWB, was asked to initiate an internal investigation of AWB's trading activities in Iraq. The internal investigation began following the publication of a letter dated 3 June 2003 from Alan Tracey ('Tracey'), president of a lobby group known as US Wheat Associates, to Colin Powell, then the US Secretary of State, in which Tracey alleged that prices in contracts for the sale of wheat under the OFF Programme had been inflated and that some of the sale proceeds might have gone into the accounts of Saddam Hussein's family. Cooper engaged Christopher Quennell ('Quennell'), a consultant employed by Blakes in its Melbourne office, to advise in relation to AWB's internal investigations. AWB's dealings with Iraq during the operation of the Oil-for-Food Program. In this proceeding, Quennell gave evidence on affidavit that his understanding of his instructions was to review available evidence and interview potential witnesses for the purpose of advising AWB as to its legal position in respect of its sale of wheat to the Grain Board of Iraq ('GBI') under the OFF Programme. He added that the scope of his task and instructions evolved as the matter progressed, particularly following the announcement by the Permanent Investigations Committee of the United States Senate ('PSI') of its intention to conduct an investigation and then the appointment of the IIC by the United Nations to conduct an independent inquiry into the OFF Programme. In due course, the board of AWB received a briefing on Project Rose on 25 May 2004. Project Rose is the code-name for the AWB Group's internal investigation of AWB's wheat exports to Iraq and AWB's involvement in the United Nations Oil for Food Program (OFF) in regard to which allegations of impropriety had been made in the public arena. (The Board noted that a copy of the briefing presentation would be filed with the Board papers). There had been sporadic media commentary since that time, and a number of inquiries (all of which remain unconfirmed) had been reported as follows: UN independent inquiry into the OFF program; Interim Iraqi Governing Council Investigation (reportedly to be conducted by KPMG); US House of Representatives Investigation; and a US Senate Committee on Foreign Relations Investigation. The presentation said that Blakes had taken a 'factual snapshot' by reviewing 14 international sales and marketing ring binders, 100 chartering files and more than 30,000 AWB emails for 1999 and 2000, interviewing AWB personnel and conducting an audit of documents held by AWB (USA). It set out Blakes' findings in terms similar to those recorded in the board minutes. In addition, it referred to findings that wheat contracts from July 1999 to December 2002 included a trucking fee payable to Alia that had been nominated by GBI; that the same trucking fee was payable under each contract regardless of the destination of the cargo or the distance transported; and that the trucking fee increased from time to time for no apparent reason. The presentation also stated that Richard Tracey QC (as his Honour then was) had given legal advice in conference on 25 May 2004 that there was no evidence of breach of the relevant United Nations resolution on sanctions and no evidence of breach of Australian domestic law. The evidence before this Court makes it clear that Project Rose was a continuing process of review and reporting that extended beyond the board meeting of 25 May 2004 and throughout 2004 and 2005. For instance, Mr Tracey QC provided memoranda of advice on 31 March 2005 and 12 August 2005 in relation to Project Rose and the question whether AWB had paid inflated prices for transport or port charges in breach of the United Nations' sanctions or Australian domestic law. Its scope also broadened to include the provision of legal advice and assistance in connection with the PSI investigation, the inquiry undertaken by the IIC and, lastly, the inquiry that is being undertaken by the Commission. As time passed, Blakes, Minters and ABL each provided advice and assistance to AWB under the umbrella of Project Rose. Although the immediate focus of Project Rose shifted from time to time between allegations that were publicly made against AWB, the PSI investigation, the IIC investigation, and the Commission, it always involved an ongoing review and investigation of documents and other evidence to determine whether AWB, or any of its employees, had made payments to the Iraqi regime in breach of the United Nations' sanctions or engaged in any other wrongdoing in connection with the sale of wheat to Iraq under the OFF Programme. PROJECT WATER Cooper instructed Quennell to commence the investigation known as Project Water on 12 August 2004. It involved a review of all matters concerning The Tigris Petroleum Corporation Limited ('Tigris'). The Commonwealth contends that AWB and Tigris entered into a transaction whereby AWB agreed to inflate the prices in two contracts (A1670 and A1680) for the supply of 1,000,000 mt of wheat to GBI, as a means of extracting funds from the United Nations' escrow account to repay a debt of approximately US$8 million which GBI owed to Tigris and to provide AWB with the funds required to make a rebate payment to GBI of approximately US$2 million ('the Tigris transaction'). Before the Commission, Cooper gave evidence that on or shortly before 12 August 2004 he was asked, either by Andrew Lindberg ('Lindberg') or Sarah Scales ('Scales'), to undertake a review of AWB's dealings with Tigris. Lindberg was AWB's managing director, and Scales was the general manager of AWB (International) Limited ('AWBI'). AWBI is the subsidiary of AWB that is responsible for international wheat sales and marketing. He said that Scales wanted the review undertaken because a sum of money of over US$8 million was being held in an account of AWBI, and she was not comfortable in approving the payment of that sum to Tigris without understanding all of the circumstances of its receipt by AWBI. As a result, on 12 August 2004 Cooper and two members of his legal division, Rosemary Peavey ('Peavey') and Rosalyn Santen ('Santen'), initiated a telephone call to Quennell. In the course of that telephone conversation, Cooper asked Quennell to commence a review of all dealings with Tigris, with particular focus on whether it was proper to make a payment to Tigris of the money held in AWBI's account. Quennell's review took about three months. Then in December 2004, AWB paid the sum of US$7,087,202.24 to Tigris and retained a fee of US$500,000.00 for assisting in the repayment of the debt. Some evidence suggests that Project Water, as such, came to an end in December 2004, while other evidence suggests it was an ongoing investigation. But, whether or not the description of Project Water strictly applied, AWB and its legal advisers continued to investigate and review the facts and circumstances of the Tigris transaction during 2005 in order to determine whether it involved any wrongdoing by AWB or any of its employees. THE INQUIRY BY THE UNITED STATES SENATE PERMANENT SUB-COMMITTEE ON INVESTIGATIONS In mid 2004, the PSI announced that it proposed to conduct an investigation into the OFF Programme. AWB retained Minters and several US law firms to advise it in relation to the PSI investigation. The evidence indicates that Blakes also provided some advice to AWB in connection with this investigation. THE MAIN ISSUES As argued before me, the case focused on three issues. The first issue is whether AWB has established its claim that legal professional privilege attaches to each of the documents that remain in contest. The only head of privilege that AWB relies on is the privilege that attaches to documents brought into existence for the dominant purpose of obtaining or giving legal advice. In AWB Limited v Honourable Terence Rhoderic Hudson Cole [2006] FCA 571 ( 'AWB v Cole' ), I held that litigation privilege was not available to protect documents brought into existence in contemplation of the Commission and none of the parties has disputed that decision. AWB has not contended that legal professional privilege is available solely because documents were brought into existence in contemplation of inquiries being undertaken by the PSI or by the IIC. The second issue is whether, assuming privilege attaches, that privilege has been waived by virtue of AWB's disclosure of the gist or substance of certain legal advices which it obtained. I will have to determine whether waiver should be imputed to AWB as a matter of law and, if so, what is the extent of that waiver. The Commonwealth contends that the waiver extends to all documents that relate to Project Rose and Project Water. The third issue is whether legal professional privilege attaches to documents that came into existence in connection with AWB's settlement of a claim by GBI for a rebate of approximately US$2 million on account of the fact that earlier shipments of wheat by AWB had been contaminated by iron filings ('the iron filings claim'). The Commonwealth contends that the iron filings claim is inextricably linked with the Tigris transaction, in that the prices for wheat contracts A1670 and A1680 were inflated to cover both the amount of the iron filings claim and the repayment by GBI of the debt which it owed to Tigris. It said that AWB proposed to pay the iron filings claim directly to Alia as an addition to inland transport fees, but spread over several contracts. The Commonwealth argued that the inflation of the contract prices to cover the iron filings claim was concealed from the United Nations and that it involved a contravention of the United Nations' sanctions. In these circumstances, the Commonwealth contends that AWB cannot maintain its claim to privilege over the legal advice it obtained in relation to the iron filings claim as that advice was obtained in furtherance of a fraud, wrongful conduct or sham transaction. AWB contends that there is no evidence which would permit this Court to conclude that the arrangements for payment of the iron filings claim involved a breach of the United Nations' sanctions or any breach of Australian law, or that the relevant advice was given in furtherance of any improper conduct. It submitted that the documents relating to the iron filings claim over which privilege is claimed go to the issue of the legality of the payment and were not created in furtherance of any sham or fraud. LEGAL ADVICE PRIVILEGE --- GENERAL PRINCIPLES Under the legal advice limb of legal professional privilege, a document will attract privilege if it was brought into existence for the dominant purpose of giving or obtaining legal advice: Esso Australia Resources Limited v Commissioner of Taxation [1999] HCA 67 ; (1999) 201 CLR 49 ( 'Esso' ) at 64-65 [35]; Daniels Corporations International Pty Ltd v Australian Competition & Consumer Commission [2002] HCA 49 ; (2002) 213 CLR 543 ( 'Daniels' ) at 552 [9]. In order to attract that privilege, the communications must be confidential and the legal adviser must be acting in his professional capacity: see Minet v Morgan ; Wheeler v Le Marchant ; Smith v Daniell ; Bullivant v Attorney-General (Vict. ) ; Jones v Great Central Railway Co ; O'Rourke v Darbishire ' . I reviewed the relevant authorities and extracted the principles which govern legal advice privilege in my decision in AWB v Cole at [60]-[63] and [85]-[110]. I adhere to what I said in that case. I do not propose to engage in a lengthy discussion of the authorities concerning legal advice privilege in these reasons for judgment, other than to the extent necessary to address the arguments advanced by the parties. The general principles that I consider relevant to the disposition of this case can be summarised as follows: (1) The party claiming privilege carries the onus of proving that the communication was undertaken, or the document was brought into existence, for the dominant purpose of giving or obtaining legal advice. The onus might be discharged by evidence as to the circumstances and context in which the communications occurred or the documents were brought into existence, or by evidence as to the purposes of the person who made the communication, or authored the document, or procured its creation. It might also be discharged by reference to the nature of the documents, supported by argument or submissions: see Grant v Downs [1976] HCA 63 ; (1976) 135 CLR 674 ( 'Grant v Downs' ) at 689; Commissioner of Taxation v Pratt Holdings Pty Ltd (2005) 225 ALR 266 at 278 [30] ( 'FCT v Pratt Holdings' ); and AWB v Cole at [63]. (2) The purpose for which a document is brought into existence is a question of fact that must be determined objectively. Evidence of the intention of the document's maker, or of the person who authorised or procured it, is not necessarily conclusive. It may be necessary to examine the evidence concerning the purpose of other persons involved in the hierarchy of decision-making or consultation that led to the creation of the document and its subsequent communication: see AWB v Cole at [110]. (3) The existence of legal professional privilege is not established merely by the use of verbal formula: Grant v Downs at 689 per Stephen, Mason and Murphy JJ. Nor is a claim of privilege established by mere assertion that privilege applies to particular communications or that communications are undertaken for the purpose of obtaining or giving 'legal advice': National Crime Authority v S (1991) 29 FCR 203 at 211---212 per Lockhart J; Candacal Pty Ltd v Industry Research & Development Board (2005) 223 ALR 284 (' Candacal' ) at 298 [70]; Seven Network Limited v News Limited [2005] FCA 142 at [6] ---[8]. If assertions of that kind are received in evidence in support of the privilege claim, their conclusionary nature can leave unclear what advice was really being sought. There will be cases in which a claim of privilege will not be sustainable in the absence of evidence identifying the circumstances in which the relevant communication took place and the topics to which the instructions or advice were directed: Kennedy v Wallace [2004] FCAFC 337 ; (2004) 142 FCR 185 ( 'Kennedy v Wallace' ) at 189---190 [12]---[17] per Black CJ and Emmett J and at 211---212 [144]---[145] and at 215---216 [166]---[171] per Allsop J; see also Southern Equities Corporation Ltd (in liq) v Arthur Andersen & Co (No 6) [2001] SASC 398. (4) Where communications take place between a client and his or her independent legal advisers, or between a client's in-house lawyers and those legal advisers, it may be appropriate to assume that legitimate legal advice was being sought, absent any contrary indications: Kennedy v Wallace (2004) 208 ALR 424 at 442 [65] per Gyles J; affirmed on appeal, Kennedy v Wallace at 191-192 [23]-[27] per Black CJ and Emmett J. In Kennedy v Wallace , Black CJ and Emmett J inclined to the view that in the ordinary case of a client consulting a lawyer about a legal problem in uncontroversial circumstances, proof of those facts alone will provide a sufficient basis for a conclusion that legitimate legal advice is being sought or given. (5) A 'dominant purpose' is one that predominates over other purposes; it is the prevailing or paramount purpose: AWB v Cole at [105]-[106]; FCT v Pratt Holdings at 279-280 [30] per Kenny J. (6) An appropriate starting point when applying the dominant purpose test is to ask what was the intended use or uses of the document which accounted for it being brought into existence: Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 ; (2004) 136 FCR 357 at 366 [35] per Finn J. (7) The concept of legal advice is fairly wide. It extends to professional advice as to what a party should prudently or sensibly do in the relevant legal context; but it does not extend to advice that is purely commercial or of a public relations character: Balabel v Air India [1988] 1 Ch 317 ( 'Balabel' ) at 323 and 330; Nederlandse Reassurantie Groep Holding NV v Bacon and Woodrow [1995] 1 All ER 976 ( 'Nederlandse' ) at 983; Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48 ; [2005] 1 AC 610 ( 'Three Rivers' ) at 652-653 [43]-[44], 657-658 [59]-[60], 681 [114] and 683 [120]; Dalleagles Pty Ltd v Australian Securities Commission (1991) 4 WAR 325 ( 'Dalleagles' ) at 332-333; DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 1191 ; (2003) 135 FCR 151 ( 'DSE' ) at 161-173 [25]---[71]; and AWB v Cole at [100]-[101]. (8) Legal professional privilege protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of the client, such as research memoranda, collations and summaries of documents, chronologies and the like, whether or not they are actually provided to the client: Daniels at 563 [44] per McHugh J; Commissioner of Australian Federal Police v Propend Finance Pty Ltd [1997] HCA 3 ; (1997) 188 CLR 501 ( 'Propend' ) at 550 per McHugh J; Dalleagles at 333---334 per Anderson J; Trade Practices Commission v Sterling (1979) 36 FLR 244 ( 'Stirling' ) at 245---246 per Lockhart J; and Kennedy v Lyell (1883) 23 Ch D 387 at 407; Lyell v Kennedy (1884) 27 Ch D 1 at 31 per Bowen LJ; Propend Finance Pty Ltd v Commissioner of Australian Federal Police (1995) 58 FCR 224 at 266 per Lindgren J. (9) Subject to meeting the dominant purpose test, legal professional privilege extends to notes, memoranda or other documents made by officers or employees of the client that relate to information sought by the client's legal adviser to enable him or her to advise: Stirling at 246. The privilege extends to drafts, notes and other material brought into existence by the client for the purpose of communication to the lawyer, whether or not they are themselves actually communicated to the lawyer: Saunders v Commissioner of Australian Federal Police (1998) 160 ALR 469 at 472. (10) Legal professional privilege is capable of attaching to communications between a salaried legal adviser and his or her employer, provided that the legal adviser is consulted in a professional capacity in relation to a professional matter and the communications are made in confidence and arise from the relationship of lawyer and client: Waterford v Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 at 96 per Dawson J; see also Deane J at 79---82. Some cases have added a requirement that the lawyer who provided the advice must be admitted to practice: see Dawson J in Waterford at 96; GSA Industries (Aust) Pty Ltd v Constable (2002) 2 Qd R 146 at 150; Glengallan Investments Pty Ltd v Arthur Andersen (2002) 1 Qd R 233 at 245. However, in Commonwealth v Vance (2005) 158 ACTR 47, the Full Court (Gray, Connolly and Tamberlin JJ) did not regard the possession of a current practising certificate as an essential precondition to the availability of legal professional privilege: at [23]---[35]. The same view was taken by Lee J in Candacal at 303 [99], by Gillard J in Australian Hospital Care (Pindara) Pty Ltd v Duggan [1999] VSC 131 at [111] , and by Downes J in Re McKinnon and Secretary, Department of Foreign Affairs and Trade [2004] AATA 1365 ; (2004) 86 ALD 780 at 785 [51] . (11) Legal professional privilege protects communications rather than documents, as the test for privilege is anchored to the purpose for which the document was brought into existence. Consequently, legal professional privilege can attach to copies of non-privileged documents if the purpose of bringing the copy into existence satisfies the dominant purpose test: Propend at 507 per Brennan CJ, 544 per Gaudron J, 553-554 per McHugh J, 571-572 per Gummow J, and 587 per Kirby J. In Propend at 512, Brennan CJ added a qualification to this principle: if an original unprivileged document is not in existence or its location is not disclosed or is not accessible to the persons seeking to execute the warrant, and if no unprivileged copy or other admissible evidence is made available to prove the contents of the original, the otherwise privileged copy loses its protection. (12) The Court has power to examine documents over which legal professional privilege is claimed. Where there is a disputed claim, the High Court has said that the court should not be hesitant to exercise such a power: Esso ; see also Grant v Downs at 689. If the power is exercised, the court will need to recognise that it does not have the benefit of submissions or evidence that might place the document in its proper context. The essential purpose of such an inspection is to determine whether, on its face, the nature and content of the document supports the claim for legal professional privilege. AWB'S LAWYERS AND THEIR RETAINERS The Commonwealth contended that Project Rose and Project Water were purely factual investigations and therefore should not be regarded as attracting any legal professional privilege. In advancing this contention, the Commonwealth tended to assume that factual investigations by lawyers, such as a review of documents and interviews of persons involved in the matter under investigation, can be separated from the ultimate legal advice given by the lawyers as a result of their factual investigation. Leaving aside any question of waiver, this seems to be an unduly narrow approach to the scope of legal advice privilege. In my view, it finds no support in the authorities. In recognition of the fact that legal professional privilege is a fundamental common law right, the courts have eschewed an overly narrow or technical approach to the identification of communications or documents that fall within the scope of legal advice privilege. As I said in AWB v Cole at [127]---[133], the legal advice limb of the privilege extends beyond material that is literally a communication, or a record of a communication, of legal advice or instructions. In Propend at 569, Gummow J said that the privilege extends to any document prepared by a lawyer or client from which one might infer the nature of the advice sought or given. The principle extends to internal documents or parts of documents of the client, or of the lawyer, reproducing or otherwise revealing communications which would be covered by privilege: Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd [1992] 2 Lloyd's Rep 540 at 540 per Saville J. Where a lawyer has been retained for the purposes of providing legal advice in relation to a particular transaction or series of transactions, communications between the lawyer and the client relating to that transaction will be privileged, notwithstanding that they do not contain advice on matters of law; it is enough that they are directly related to the performance by the lawyer of his or her professional duty as legal adviser to the client: Minter v Priest [1930] AC 558 at 581---586; Balabel at 330; Nederlandse at 983 and Dalleagles at 332---333. In Dalleagles , Anderson J said at 332---333 that professional discourse in a professional capacity between a solicitor and his client with reference to the transactions covered by his instructions should be regarded as prima facie for the purpose of giving and receiving advice. In his Honour's view, this would apply to any communication that is on its face a communication of a professional nature from the solicitor to the client or his agent touching the subject matter of the solicitor's engagement and any communication from the client to the solicitor in connection with that engagement. These propositions were referred to, with approval, by Allsop J in DSE at [51]-[52] and by Branson J in Wenkart v Commissioner of Federal Police (unreported, Federal Court, Branson J, 11 November 1996). In DSE , Allsop J said that there was no substantive difference between the views expressed in Balabel and Dalleagles : at [51], [52] and [71]. Allsop J also observed that what underlies the expression of opinion in those cases is the recognition that the obligation of the lawyer to advise, once retained, is pervasive. In his Honour's view, it would be rare that one could, with any degree of confidence, say that a communication between client and lawyer, in the circumstances of a retainer requiring legal advice and the directing of the client by a legal adviser, was not connected with the provision or requesting of legal advice. Indeed, too literal a requirement of identifying legal advice as express advice about the law would place undue emphasis on formalism and undermine the privilege. Rix J (as his Lordship then was) expressed much the same view in Hellenic Mutual War Risks Associated (Bermuda) Ltd v Harrison [1997] 1 Lloyd's Rep 160 at 168. In Three Rivers , the relevant legal context consisted of a commission of inquiry into the part played by the Bank of England in the collapse of the Bank of Credit and Commerce International SA. The House of Lords upheld the Bank of England's claim that legal advice privilege attached to documents that had been generated for the purposes of providing information to the Bank's legal advisers to enable them to prepare submissions and evidence, and to advise on the nature, presentation, timing and content of the Bank's responses to the inquiry. Relevant passages from the speeches in the House of Lords are extracted in my decision in AWB v Cole at [92]---[96]. In this case, the relevant legal context consisted, initially, of public allegations that AWB had acted in breach of United Nations' sanctions by making improper payments to the Iraqi regime. Those public allegations were soon followed by a series of investigations by the IIC, the PSI and the Commission. Blakes was retained for the purpose of advising whether, as a matter of law, there was any substance in the allegations of improper conduct by AWB. As the various investigations were announced, Blakes' retainer was extended to the provision of advice in connection with them. AWB specifically extended Blakes' retainer to include the provision of advice in relation to AWB's dealings with Tigris. It is unclear whether Blakes provided any substantial advice to AWB in connection with the Commission. The catalyst for AWB's engagement of Minters appears to have been the announcement of the PSI investigation. From about 1 July 2004, Minters advised AWB in relation to the PSI investigation. However, Minter's engagement extended more widely than the provision of advice concerning the actual conduct of the PSI investigation; it included a comprehensive review by Minters of all of the documents and other evidence surrounding AWB's sales of wheat to Iraq under the OFF Programme. A key objective of this review was to determine whether there was any evidence that AWB or any of its employees had made payments to Iraq that contravened the United Nations' sanctions or engaged in any other wrongdoing in connection with the OFF Programme. Minter's engagement was subsequently extended to the provision of advice and assistance to AWB in connection with the IIC investigation. Minters' wider role in reviewing and analysing the available documents and evidence, which included interviewing employees or former employees, continued during the period of the IIC investigation. Minters played a prominent role in liaising with the US law firms which AWB retained to act for it in connection with the PSI and IIC investigations. Minters and Blakes acted in tandem in providing advice in connection with the PSI and IIC investigations and in their ongoing review and investigation of the facts and circumstances surrounding AWB's wheat exports to Iraq. Both law firms were involved in interviewing present and former employees of AWB and AWBI. In about February 2005, AWB retained ABL to act for it in relation to the IIC investigation and subsequently in relation to the Commission. Throughout 2005, ABL worked closely in conjunction with Blakes and Minters. All three firms were involved in analysing and reviewing the facts and obtaining evidence from potential witnesses, with a view to determining whether there was any evidence that AWB or its employees had made payments to Iraq in breach of the United Nations' sanctions or engaged in any other wrongdoing in connection with the OFF Programme. The evidence does not contain any letters of retainer, or any other documentary record of the precise scope of the retainers, under which the three firms acted for AWB. The affidavit evidence contains the briefest description of each retainer. The work performed by the three firms overlapped very substantially and, if there were any lines of demarcation, they were very blurred. Nonetheless, the scope of the work performed by each firm can be discerned with reasonable clarity from the affidavit evidence and the documents referred to in AWB's revised list of documents. I am satisfied that Blakes, Minters and ABL were engaged professionally to provide legal advice and assistance within the scope of their respective retainers as described above. In each relevant context, I consider that it would be inappropriate and artificial to attempt to sever the factual investigations carried out by the lawyers from the legal advice they provided under their retainers. As I have said, a key purpose of those factual investigations was to enable Blakes, Minters and ABL to determine whether there was any evidence that AWB, or any of its employees, had made payments to Iraq in breach of the sanctions or engaged in any other wrongdoing in connection with its sale of wheat to Iraq. By that means, the three law firms placed themselves in a position to advise AWB as to the risks it confronted and the course of action it should take in relation to the investigations. I do not see any reason why professional communications between AWB and its lawyers concerning the investigations by the IIC, the PSI, and the Commission should be incapable of attracting legal advice privilege. In these contexts, the concept of legal advice includes advice as to what AWB should prudently and sensibly do in connection with the relevant investigation. Advice of this kind is capable of attracting legal advice privilege, notwithstanding that a particular communication is part of a continuum and does itself contain any specific advice on matters of law or any specific request for such advice. AWB'S AFFIDAVIT EVIDENCE The Commonwealth contended that AWB had failed in its attempt to prove legal professional privilege because it had not adduced any proof as to AWB's dominant purpose in seeking or obtaining legal advice. AWB largely relied upon evidence given by in-house and external lawyers involved in the particular communications at issue. The Commonwealth submitted that evidence proving the lawyer's understanding of the purpose of the particular communication and that he or she was giving legal advice affords no evidence of the client's dominant purpose. There is no real substance in this criticism. Dominant purpose must be determined objectively, but it is not uncommon for the relevant purpose to be established by evidence given by the maker of the statement or another person responsible for commissioning the relevant document or bringing it into existence, such as a solicitor: see Mitsubishi Electric Australia Pty Ltd v Victoria WorkCover Authority [2002] VSCA 59 ; (2002) 4 VR 332 at [14] ; Grant v Downs at 677 and AWB v Cole at [110]. The Commonwealth objected to the admissibility of statements in AWB's affidavits where the deponent asserted that particular documents recorded 'legal' advice or were brought into existence for the purpose of obtaining, or giving, 'legal' advice. It submitted that the description 'legal' was a conclusionary assertion or opinion based on other facts and circumstances that were not disclosed by the deponent. AWB argued that the word 'legal' ought to be received on the ground that it was an opinion or description about the relevant facts and circumstances as perceived by the deponent. Alternatively, where the deponent was legally qualified, AWB argued that the description represented an opinion that was based on the deponent's specialised knowledge, training and experience within the meaning of s 79 of the Evidence Act 1995 (Cth). After hearing submissions from counsel, I ruled that I would not exclude the word 'legal' where it was used by a lawyer to characterise the relevant advice or communication. In those circumstances, the presumption referred to in Kennedy v Wallace would be available: see [44] (4) above. In addition, the description would, I think, be admissible as an opinion, based on specialised knowledge, within the meaning of s 79 of the Evidence Act . On the other hand, I rejected the term 'legal' in affidavits where the deponent was not legally qualified. In those affidavits, the use of the term amounted simply to a conclusion or opinion by a lay person that was based, in most instances, on facts which were not fully disclosed in the affidavit. Further, I held that the evidence was not admissible under s 78 of the Evidence Act ; that provision is concerned with lay perceptions of things or events, such as a person's apparent age or state of intoxication: see S Odgers, Uniform Evidence Law, 7 th edn, Lawbook, 2006, pp 281-282. At the time I made this ruling, I observed that where I had not struck the expression 'legal' from the affidavits, the weight that would be attached to that description in any particular affidavit would depend on the circumstances in which the communication took place; the description might be entitled to little or no weight in the absence of further evidence as to the circumstances surrounding the relevant communications or the topics to which the advice was directed: see Kennedy v Wallace at 189---190 [12]---[17] and 211---212 [144]---[145] and 215---216 [166]---[171]. DOES PRIVILEGE ATTACH? During the course of the hearing, AWB and the Commonwealth reduced the number of documents which are in contest. On the first day of the hearing, AWB announced that it no longer pressed for a declaration of privilege in respect of a significant number of documents in its list. In doing so, AWB did not concede that the documents are not protected by legal professional privilege. As finally revised, those documents are as follows: 27-29, 37-39A, 43, 53, 54, 61, 73-76, 109, 118, 119A, 125, 134, 141, 142, 146A-149, 153, 191-193, 195, 198, 202, 203, 212, 214, 216, 223, 236, 242-244, 248, 249, 272, 287, 289, 312, 314, 325, 328, 329, 335, 360, 363, 364, 366, 367, 369-373, 383, 396, 397, 409, 411, 415, 429, 458, 466, 469, 474, 489, 512, 528, 531, 532, 535, 540A, 545, 546, 597, 598, 604, 606-670, 673, 674, 676, 677, 678, 680, 682-689, 690, 692, 693, 695, 697, 698, 705, 716-720, 723, 726, 728, 734, 735, 746, 750, 767, 774, 776, 778, 782, 783, 786, 789, 791, 793, 795, 796, 803, 805, 825, 832-834, 836, 838, 839, 841-846, 848, 853-855, 858, 859, 862, 864, 871, 874, 875, 878, 880, 884, 886, 890, 890AO, 896, 897, 916, 917, 920, 922, 926, 927, 937, 938-941, 943-946, 949, 954-955, 967-969, 993, 993A, 996, 999, 1007-1008, 1010, 1014-1024, 1027, 1034-1050, 1052-1055, 1057-1058, 1060-1069, 1072, 1082, 1084-1085, 1102-1111, 1113B, 1122, 1125-1143, 1153, 1154, 1156, 1157, 1164-1182, 1188, 1189, 1203, 1205, 1208, 1210, 1211, 1220, 1223, 1224, 1241, 1242, 1263-1292, 1294, 1295 and 1298. Both AWB and the Commonwealth submitted that the consequence of AWB's announcement was that the Court need not made any ruling as to the status of these documents. Many of the documents relate to the Tigris transaction. In paragraphs [90]-[108] of its written submissions, which were filed shortly before the commencement of the trial, the Commonwealth argued that all of the documents in AWB's revised list that recorded any legal advice in relation to the Tigris transaction attracted the fraud exception to legal professional privilege. Alternatively, it submitted that any privilege attaching to those documents had been waived by AWB. Following AWB's announcement, the Commonwealth and AWB also submitted that the Court need not consider or rule upon any of the arguments raised in paragraphs [90]-[108] of its written submissions. On the joint submission of AWB and the Commonwealth, I made an order that paragraphs [90]-[108] should be excised from the Commonwealth's written submissions when those submissions were made available by the Court for public inspection. The Commonwealth accepted AWB's claim to legal professional privilege over a number of the documents in the list. The documents are as follows: 1-11, 13, 16-19, 23-25, 34-36, 40, 42, 44-52, 57-60, 62-72, 80, 86-88, 99, 128, 511, 891-895, 898-915, 918, 919, 921, 923-925, 928-936, 937AA-937AI, 937AK-937AO, 1100, 1101, 1191-1194, 1197-1199, 1201, 1202, 1204, 1207, 1209, 1212, 1216, 1217, 1219, 1227, 1228, 1230, 1233, 1235, 1236, 1238, 1244, 1245, 1251, 1253, 1254, 1257-1259, 1296 and 1302-1304. The remainder of the documents in AWB's revised list are in issue. The Commonwealth submitted that in respect of a number of documents (eg 1190 and following), it understood AWB to be contending those documents were listed as privileged documents in error because they are not within the scope of existing notices to produce. Although the basis for this 'understanding' was never identified, the Commonwealth submitted that the question whether these documents fall within the scope of the notices is not before the Court and, accordingly, the privileged status of those documents does not arise for determination in these proceedings. I do not agree. On the material before the Court, I am bound to proceed on the basis that, but for the documents that are no longer pressed and those that are conceded, AWB seeks a declaration over all of the documents in its list because they fall, or may fall, within the scope of notices to produce issued by the first respondent. In determining claims of legal professional privilege, the Court will look to the substance of the matter, having regard to the context, the nature of the document, the evidence that is led in support of the claim of privilege, any cross-examination of the claimant's witnesses and, if necessary, the content of the document as revealed by inspection. The documents over which AWB claims privilege can be categorised in various ways, such as communications to and from Blakes, or Minters, or ABL containing legal advice; information obtained from AWB's records and employees by AWB's in-house counsel for the purpose of giving or obtaining legal advice; instructions provided by the in-house lawyers to external lawyers for the purpose of obtaining legal advice; and documents brought into existence by lawyers so as to assist them in the provision of legal advice. But, ultimately, the categories provide limited assistance. It is necessary to examine the evidence concerning each relevant document over which privilege is claimed and to examine that evidence in the light of the relevant context. I have also inspected each of the original documents over which AWB has claimed privilege. Applying the legal principles discussed above, I have identified the documents which, in my view, have not been proven to be the subject of legal professional privilege. I will defer listing these documents at this stage, as many of them are affected by the waiver issue. I will need to consider waiver and the fraud exception before I express any view about the remaining documents. My conclusions, listing each affected document, are set out towards the end of these reasons. AWB'S DISCLOSURES IN RELATION TO PROJECT ROSE The Commonwealth contends that AWB has waived privilege in relation to its Project Rose documentation by reason of: (1) the disclosures by Hargreaves and other AWB executives to the Australian Government from 24 March 2005 onwards; (2) the disclosures by Lindberg to the IIC in the course of his interview with IIC investigators on 28 February 2005; (3) its production of various documents to the Commission under notices to produce after waiving claims of legal professional privilege, including legal advice that Blakes gave to AWB's board of directors on 25 May 2004, instructions given to, and advices obtained from, Mr Tracey QC in the period from May 2004 to August 2005, and the instructions given to, and the expert opinion obtained from, Sir Anthony Mason AC KBE in relation to the applicability of Resolution 661; and (4) the evidence that Lindberg gave to the Commission in the course of its public hearings. In the paragraphs that follow, I have set out my factual findings concerning these disclosures. DISCLOSURES BY HARGREAVES Peter Hargreaves ('Hargreaves') was a senior executive of AWB who acted as the manager of Project Rose. On 24 March 2005, Hargreaves made a power point presentation to officers of the Department of Foreign Affairs and Trade ('the Department') in Canberra that reported on the IIC visit to AWB in February 2005. Alia was regarded as a company providing a genuine service which saved Australian wheat growers considerable demurrage costs, and They only became aware of a possible connection when the allegations were raised in the media well after the OFF Program ended. Advised IIC that AWB's own legal review had found no evidence of: corruption by AWB or individuals side payments or after sales payments to individuals of the former regime, or payments by the regime to former or existing AWB representatives IIC advised they had found no evidence to the contrary. AWB representatives assured the IIC they knew nothing of any connection between Alia and the former regime until well after the OFF Program ended and allegations first began to appear in the media Unreasonable expectation should AWB have known or inquired of any connection with the former regime? AWB saw nothing untoward --- paying for a service that was genuinely needed to improve efficiency of humanitarian program --- also reduced demurrage --- a big cost to growers It was no secret the Iraqis were paying for inland trucking --- it was stated on the contracts UN contractors Contechna were inspecting the port operation including the discharge into Alia trucks No concerns were raised with AWB by the UN, Contechna or any other body throughout the life of the OFF Program Was AWB aware of any payments being channelled from Alia to the old regime? The uncontested evidence before me includes a statutory declaration by Anastasia Carayanides, a Minister Counsellor (Commercial) at the Embassy in Washington, who attended the briefing by Hargreaves. AWB has not been involved in paying bribes in Iraq. I think the IIC will conclude that AWB was not knowingly involved in breaching sanctions, or at worst that it was unwittingly involved. " When someone asked what he meant by that statement, he replied in words to the following effect: "The IIC is looking at the use of a fictitious trucking company. But I'm confident that AWB does not fall in that category. " To my knowledge, Mr Hargreaves referred to Alia by name for the first time either in this meeting or in the meeting on 15 June 2005 (see paras 36-37 below). AWB has conducted an internal audit and an independent legal review by a law firm, and both had found no wrongdoing. It has not been involved in breaking sanctions. All of AWB's contracts were approved by the UN. No-one in AWB is aware of paying kickbacks to Iraq. Alia unloaded ships at Umm Qasr directly on to its trucks and delivered the wheat throughout the country. As far as AWB knew Alia was not a front company. AWB was not aware of Alia channelling money to Iraq". In the course of this meeting, Hargreaves was asked whether the amount paid by AWB to Alia for trucking services was reasonable. Alia was providing a real service, and AWB was paying for that service. It was the only trucking company that was reliable and that AWB could use to off load wheat into trucks at Umm Qasr. No one in AWB knew of any money being channeled to the Iraqi regime through Alia. AWB had conducted an independent legal review which hadn't turned up any wrongdoing". The interview was also attended by Cooper and Leonie Thompson of ABL. [ No basis was given for the assumption that AWB had been dismissive as alleged ]. He asked LINDBERG what actions AWB had taken to determine if there existed any truth to these allegations. LINDBERG said that he had asked COOPER to conduct a "legal review" and that COOPER had assembled a team to look into the matter. The review, LINDBERG said, had found nothing that would substantiate claims of fraud or corruption and had identified no payments to individuals in the Government of Iraq by AWB or vice-versa. LINDBERG said that AWB would "obviously" have been concerned had COOPER's team uncovered evidence of improper or unlawful conduct. Apparently, the IIC investigators interviewed a number of other AWB officers and employees, but their records of interview have not been tendered in evidence before me. AWB made its executives available for interview by the IIC, and also made documents available for inspection by the IIC, under the terms of a Memorandum of Understanding between the IIC and AWB dated 25/26 February 2005. The Memorandum records that AWB agreed to cooperate with the IIC and to disclose information in accordance with its terms. The IIC may request, in writing, further documents that it considers relevant. In responding to the IIC's document requests, AWB has advised that it may take into account that certain documents may be commercially sensitive, subject to legal professional privilege, or expose AWB or its employees, officers, or representatives (past or present) to breaches of Australian law. In the event that AWB decides to withhold documents for any of the aforementioned reasons, it will so advise the IIC in writing, and the parties may agree to additional terms for production. The IIC's review of all documents provided by AWB will be governed by the AWB Data Room Protocol, a copy of which is attached to this memorandum. At the IIC's request, except in exceptional circumstances (addressed further in paragraph 7), AWB will furnish the IIC with copies of documents that the IIC reviews in the AWB Data Room and determines are necessary for purposes of its inquiry. The IIC will maintain in strict confidence the documents provided by AWB, and it will not provide copies of the documents to third parties. However, AWB agrees that the IIC may use documents provided by AWB for the purposes of its investigation and for any report. However, AWB agrees that the IIC may use information that it gathers in the course of AWB interviews as well as the fact of these interviews for the purposes of its investigation and for any report. The IIC will provide AWB with reasonable notice of its request to interview any current AWB employee, officer, or representative as well as reasonable notice of any former AWB employee, officer, or representative for whom the IIC desires AWB's assistance in locating and interviewing. With respect to the IIC's interview of a person who worked for AWB in connection with the Programme, the parties understand that each interview will be on the record and for attribution. In advance of the interview, the IIC will submit a list of the subject areas to be addressed with the witness. At each interview, two representatives of the IIC will be present. A witness may have --- at the witness's choosing --- a personal legal counsel. In addition, if the witness agrees, up to two representatives of AWB may be present at each interview. A witness will advise the IIC prior to the interview who will be present on his behalf. There was evidence presented by the IIC in the most recent letter. Mr Downer noted the letter claimed that Alia was a front company. He enquired what was the role of the Iraqi State Company for Water Transport (ISCWT). Mr Lindberg replied it was the port authority, which had responsibility for discharging goods from ships. Alia was not a front company and had provided transportation services. The AWB had been unaware of any wrongdoing and had used its services in good faith. Mr Downer said AWB needed to provide evidence. Mr Lindberg said AWB had been seeking additional information from the IIC about the claims, before providing a written response to the 26 September letter. The so-called evidence did not support the facts. AWB had provided explanations to the IIC which had been ignored. AWB could demonstrate that it had paid no kickbacks. Nor had AWB breached the sanctions regime. This had been confirmed by independent legal advice both in Australia and overseas (Richard Tracy in Australia and a Cornell University Professor who had previously participated in drafting the sanctions regime). AWB had acted in accordance with the sanctions regime and that this had been supported by legal advice. There is, in my view, no substance in this objection. The document constitutes a business record which is admissible under s 69 of the Evidence Act . The definition of 'business' in clause 1(1) of Part 2 of the Schedule to the Evidence Act includes an activity engaged in or carried on by the Crown in any of its capacities. The document was tendered by the Commonwealth as evidence of the fact that the statements it records were made by Lindberg. The minute was prepared by Marc Innes-Brown, the head of the Department's Iraq Task Force, who was present at the meeting. The representation in the minute that Lindberg made the statements attributed to him was therefore made by a person who had personal knowledge of what statements were made by Lindberg. Lindberg was questioned about the minute at the Commission and did not dispute its accuracy in any respect. BLAKES' SLIDE PRESENTATION I have already referred to the presentation which Blakes made to AWB's board on 25 May 2004. The slides recording Blakes' presentation were originally withheld from production to the Commission on grounds of legal professional privilege. The objection was withdrawn in two stages. First, on or shortly before 6 April 2006, AWB withdrew its claim for legal professional privilege over the presentation, other than one page headed 'Legal advice'. This page set out the advice given by Mr Tracey QC in conference on 25 May 2004. On 7 April 2006, AWB withdrew the balance of the claim, basically because of the presentations which Hargreaves made to the Australian Government. SENIOR COUNSEL'S ADVICE When AWB revised its privilege claims and produced Blakes' presentation to the Commission, it also produced a memorandum of advice by Mr Tracey QC dated 12 August 2005 confirming the advice he gave in conference on 25 May 2004, together with the instructions and bundle of documents on which he founded that advice. Mr Judd, senior counsel for AWB, informed the Commission that AWB had taken the view that, as Mr Tracey QC's advice was based upon a review of documents, and turned on the question whether or not the documents disclosed evidence, the advice could not be separated from the documents. Therefore, AWB had determined to produce the bundle of material on which Mr Tracey QC had based his advice. Mr Tracey QC's instructions from Blakes were dated 12 May 2000 but this appears to be an obvious error; the date should have read 12 May 2004. They requested him to advise whether, based on the documents and information provided to him, AWB and AWBI may have contributed to a contravention by Australia of its obligations under Resolution 661 or contravened any Commonwealth or State legislation. In the instructions to counsel, Blakes said that it had deliberately included a significant number of AWB's documents for 1999 and 2000 as this was the key period during which the trucking fee was discussed. The documents included correspondence between AWB and GBI, AWB and other participants in the Iraqi wheat market, AWB and various shipping companies engaged to perform the ocean carriage of the wheat, and AWB and the Department. The instructions set out extracts from a number of AWB documents which, according to Blakes, contained comments as to the validity or otherwise of AWB's payment of trucking fees to Alia. The instructions discussed the genesis of AWB's payment of trucking fees to Alia. Cost of discharge at Umm Qaser and land transport will be USD 12 per metric ton to be paid to the land transport co. For more details contact Iraqi Maritin [sic] in Basrah. The discharge cost will be a maximum of US$12.00 and shall be paid by sellers to the nominated Maritime Agents in Iraq. This clause is subject to UN approval of the Iraq distribution plan. The instructions also stated that subsequent contracts between AWB and GBI (eg A4970, A4971 and A4972 dated 20 January 2000) continued to include a provision to the effect that the discharge costs would be a maximum amount (eg US$15 pmt) and was to be paid by the sellers to the nominated maritime agents in Iraq. However, the signed contracts that were submitted to the United Nations (eg A4970, A4971 and A4972) did not include the above provision. Omitting any reference to discharge costs, the shipment clause in the contract submitted to the United Nations merely stated that the 'cargo will be discharged free into truck to all silos within all Governates of Iraq at the average rate of 3,000 mt per day. ' From January 2000, all AWB contracts submitted to the United Nations followed the same format and made no specific reference to the payment of a discharge cost or a trucking fee. The instructions also said that the trucking fee in respect of contracts A4653, A4654, A4655 and A4822 was paid directly by AWB to Alia. For a time thereafter, payment of the trucking fee was effected by whichever shipping company had undertaken to provide the ocean carriage. However, after 25 July 2000 the procedure was then changed so that AWB remitted the funds direct to Alia. We have not seen any contract between AWB and Alia. We have seen no evidence to indicate whether or not the trucks used to transport wheat after its discharge at Umm Qasr were provided by Alia. We have seen no explanation as to how the trucking fee was calculated or the basis upon which the trucking fee was subsequently increased. The trucking fee does not appear to have been calculated with regard to the differing distances between Umm Qasr and the various Governorates [sic] (cf. Tab 14). A breach of that resolution would only have occurred if the trucking fees had been paid to the IGB or the Iraqi Government and then only if it was not paid for a legitimate commercial purpose. Whilst some of the material with which I have been briefed raises suspicions that there may have been a perception within the AWB that any payment of the trucking fee may have contravened Resolution 661 and that it was necessary to make the payment to Alia in order to avoid any suggestion that the payments, if made directly to the IGB, would have been in breach of the Resolution, there is absolutely no evidence in the material provided to me that any of the money paid by the AWB to Alia was ever forwarded to the IGB or any other arm of the Iraqi government. It was for this reason, that, despite some misgivings I answered the question posed for advice in the negative. On this occasion, Blakes instructed Mr Tracey QC that it had now ascertained the basis of calculation of the increase in trucking fees that was applied to AWB's contracts after 2 November 2000. Specifically, Blakes instructed Mr Tracey QC that an additional 10 per cent had been added to the price of wheat by way of an increase in the trucking fee. All subsequent contracts were priced on the same basis, ie a base price inclusive of a trucking fee, with 10 per cent of the base price then being added to the trucking fee. Mr Tracey QC was asked to advise whether his previous advice, to the effect that there was no evidence of a breach of the relevant UN resolution on sanctions, and no evidence of a breach by AWB of Australian domestic law, remained unchanged. Whether the money was so used can only be determined by an investigation of the finances of the Jordianian trucking company which was the recipient of the trucking fees. If this was not the case then a question arises as to why the assertion was made. Was it a deliberate attempt to mislead AWB management or did he make an honest mistake? What it does suggest is the need for further enquiries (if this is possible) to determine all the facts surrounding the payment of the trucking fee and, in particular, whether any part of it found its way to the IGB or any Iraqi officials. They were produced to the Commission after AWB determined that privilege over the documents had been waived by Hargreaves' disclosures to the Australian Government. Mr Tracey QC provided a further memorandum of advice on 31 March 2005 confirming oral advice which he provided to his instructors the previous day. I have been asked to examine these documents with a view to advising whether the contents of any of them lead me to change [my] earlier advice that, on material earlier examined, there was no evidence of a breach by Australia (as a result of conduct by AWB) of UN Resolution 661 and no evidence of a breach by AWB, its officers and/or employees of Australian domestic law. The payments were known to the UN Sanctions Committee and to the Australian Mission to the United Nations. AWB was advised by the Australian Mission that this fee for normal port agency services did not violate current sanctions procedures. In confirming my earlier advice about breaches of Security Council Resolution 661 I have assumed that this advice was correct. The terms of these communications add to the concern which I expressed in my email of 8 June 2004. However, I note my instructions that there is no evidence of any payments of the kind contemplated in the documents briefed having been made. There is also some comfort for AWB in the repeated refusals of its officers to agree to the paying of US50¢ per metric ton port fees as demanded by Iraqi authorities (for example, documents collected under tabs 8 and 8A) but AWB's position was subsequently undermined by its agreement to incorporate the port fees into the inland transport fee which it paid to Alia (see under tab 11A). FURTHER REPORTS TO AWB'S BOARD OF DIRECTORS After 25 May 2004, the board of AWB received further reports concerning Project Rose. The evidence includes the redacted minutes of a meeting of the joint board committee of AWB and AWBI held on 27 April 2005 which is headed 'Project Rose --- Joint Board Committee'. The minutes note that the managing director briefed the committee on Project Rose, but the balance of this entry has been excised on the ground that it is protected by legal professional privilege. There was no suggestion before me that the complete minutes have been produced to the Commission. Cooper and Quennell exchanged emails on 27 July 2004. Scott Chesterman ('Chesterman') of Minters was copied into the exchange of emails. The subject matter of the emails was 'RE: Project Rose --- AWB Board briefing for tomorrow'. The emails show that Cooper consulted both Quennell and Chesterman about the contents of the proposed AWB board briefing. Two passages have been excised from Quennell's email to Cooper of 27 July 2004 on the ground of legal professional privilege. The decision was subsequently taken (by management) not to go down that route. The document includes a page headed 'Initial Legal Advice' which is otherwise blank, presumably on the ground that it is still the subject of a claim for legal professional privilege. His father led a rebellion against the British mandate in Iraq in 1920 and against a British-backed government in 1935. The evidence in this Court also includes a handwritten note dated 10 March 2005 of a joint meeting of directors of AWB and AWBI. The note is headed 'Project Rose' and it shows that the joint boards were briefed on matters relating to the payment of trucking fees to Alia and the question of any breach by AWB of Resolution 661. LEGAL ADVICE CONCERNING RESOLUTION 661 AWB also produced to the Commission the instructions which ABL gave to Sir Anthony Mason on 16 September and 20 October 2005, and Sir Anthony Mason's expert opinion dated 24 October 2005. That the IGB negotiated the trucking fees directly with Alia, without any involvement on AWB's part, was also consistent with the IGB's responsibility, on behalf of the MOT [Ministry of Transport], to ensure the equitable distribution of wheat throughout the country, in accordance with the state-controlled PDS [Public Distribution System] administered by MOT. I infer that Professor Wippman is the Cornell University professor who Lindberg identified in the course of his meeting with Minister Downer on 4 October 2005. AWB has maintained its claim that privilege attaches to these documents. The instructions to Sir Anthony Mason did not contain any specific reference to legal advice that AWB had obtained in the course of Project Rose. They did, however, state that there was no evidence available to AWB during the currency of the OFF Programme to suggest that payments made to Alia were, or might have been, remitted to the Iraqi regime or to individuals in the regime. LINDBERG'S EVIDENCE TO THE COMMISSION The Commonwealth contended that in the course of his evidence to the Commission, Lindberg voluntarily, repeatedly and at times non-responsively disclosed the gist or substance of legal advice that AWB had obtained in the course of its Project Rose investigations. In support of this submission, the Commonwealth tendered relevant extracts from the transcript of Lindberg's evidence to the Commission. AWB initially objected to the tender of any passages from the Commission transcript on the ground that it was hearsay, or irrelevant, or alternatively it reflected evidence given under compulsion that ought to be excluded by the Court in the exercise of its discretion under s 135 of the Evidence Act . However, AWB withdrew its objection during the course of the hearing. The transcript shows that Lindberg explained the origins of the Project Rose review, and the conclusions it reached, without any objection being raised by AWB's counsel that the evidence intruded into areas protected by AWB's legal professional privilege. Lindberg told the Commission that, following public allegations that AWB had paid kickbacks to the Iraqi regime, he asked Cooper to institute inquiries to ascertain whether any of those allegations could be substantiated. Lindberg said he understood that the review commenced in mid 2003 and that Cooper was assisted by legal advisers. The purpose of the review was to determine whether the allegations had any substance in fact, that is to say whether they were true. So I'm not sure it's accurate to say that it concluded; it undertook certain investigations and it reported periodically, and it didn't find any evidence to substantiate the allegations. There certainly were reports, oral reports, quite extensive reports given to both the boards of AWB International and AWB Limited and there were a number of reports, and the findings of those reports are recorded in the minutes and the basis of those findings has been communicated in letters that have been sent to the government and elsewhere. Can you recall whether or not, in the course of any of these oral reports, anything was said about whether or not the AWB had engaged in conduct in breach of the UN sanctions ? Clearly we found nothing that led us to believe that we weren't operating through the authorised process. He also said that he became aware during the course of Cooper's legal review that trucking fees were incorporated into the contract price and paid to the trucking company. When asked about the allegation in the draft report by the IIC that contracts had been inflated by 10 per cent because of a direction from the Iraqi regime, Lindberg said he only became aware of that fact as a result of the IIC investigation and in preparation for the Commission. Lindberg said that '[t]hey found no evidence of payments being made by AWB so characterised ... There were inland transport payments, but no 10 per cent service fee payments'. It is likely to represent a fraction of the evidence available to the Commission. Nonetheless, it represents the evidence that the Commonwealth has relied upon for its contention that there has been a wholesale waiver by AWB of legal professional privilege in relation to the Project Rose investigations. The Commissioner has not adduced any additional evidence in this Court. Consequently, I must determine whether legal professional privilege has been waived in relation to Project Rose documents on the basis of the evidence before me. AWB'S DISCLOSURES IN RELATION TO PROJECT WATER The Commonwealth contends that AWB has disclosed the gist of legal advice which it obtained in connection with Project Water and, consequently, it should be taken to have waived privilege over other documents associated with Project Water. It relies upon: (a) the broad terms in which AWB made disclosures to the IIC and to the Australian Government in the course of 2005, as discussed above; and (b) the disclosures which AWB made to the Commission through oral evidence given by its officers and employees and the production of documents. I have already described the general nature and scope of Project Water. Acting on Cooper's instruction, Quennell commenced the investigations known as Project Water on 12 August 2004 and those investigations resulted in a report to AWB's board on 14 December 2004. In his evidence to the Commission, Cooper said that Quennell briefed him on his findings and that he relied on Quennell's advice. On 10 September 2004, Cooper gave Lindberg a report on the state of the Project Water investigation. Cooper also said that, as a result of Quennell's investigations, he learnt that wheat contracts had been inflated to incorporate an amount relating to the debt owed to Tigris by GBI. Cooper attended a board meeting of AWB on 14 December 2004 at which the board was briefed as to the results of the investigation of the Tigris matter. On the other hand, the evidence given by Lindberg and Scales to the Commission attributed this statement to Cooper. Lindberg's evidence to the Commission was that he asked Cooper to institute a legal review to determine how AWB should deal with the money it had received. Lindberg was cross-examined on the basis that the file note of 14 December 2004 recorded a statement made by Cooper. Lindberg told the Commission he could not recall who made the statement. Lindberg told the Commission that the contract price of wheat was inflated in certain contracts to allow for the recovery of the Tigris debt from GBI. The contracts were sent to the United Nations for approval and approval was obtained. And the question arose what to do with that money. After taking advice, it was decided that the money should be paid because, after all, it was for a wheat debt and a wheat cargo delivered under the sanctions program, and people will say that that was done with the full knowledge ... of the United Nations and the government at the time. He said that AWB took advice as to whether or not it was legal to make the payment to Tigris. He also said that the legal advice did not relate to the lawfulness or otherwise of the conduct of the AWB employees who had inflated the prices which were reflected in the contracts. Having a view that it was for the payment --- basically the delayed payment for a wheat shipment, having the understanding that that had occurred - ... with the understanding of the UN and our government in the first place going in --- we recovered the money and, having recovered the money, and there were various options talked about, and I wasn't aware of what the final option was or how it occurred, the detail of how it occurred --- having recovered the money, we took advice about what to do about it and it was decided to pay it. In her evidence to the Commission, Scales said that she went to see Cooper because she wanted to make sure that everything was legal and there was an agreement to support the payment to Tigris of the money that was sitting in AWBI's account. She said that she wanted external legal advice because she was concerned about whether any United Nations' sanctions had been breached and whether it was therefore appropriate for her to authorise payment to Tigris. She confirmed that Cooper set in train a process of obtaining external legal advice that involved a review of the whole Tigris event. She said that she believed that it was Cooper who made the statement to the AWB board that is recorded in Cooper's file note of 14 December 2004. After legal advice had been obtained, Scales and Cooper signed the authorisation for the sum of US$7,087,202.24 to be paid out of AWBI's account to Tigris on 6 December 2004. The Commonwealth submits that these disclosures (which are discussed at [72] to [115] above) were expressed in such broad terms that they should be regarded as encompassing both the outcome of the Project Rose investigations and the outcome of Project Water. IMPUTED WAIVER The crux of the Commonwealth's case is that AWB has disclosed the gist or substance, and in some cases the entirety, of legal advices it obtained as a result of the Project Water and Project Rose investigations. In these circumstances, the Commonwealth contends that the law will impute a waiver of privilege over associated documents. It argues that the associated documents comprise documents that were brought into existence as a result of the Project Rose and Project Water investigations respectively or, at the very least, all of the investigatory reports, documents and communications that directly or indirectly represented the foundation for the advices that have been disclosed by AWB. The kind of waiver that is in issue in this case is commonly referred to as imputed or implied waiver. The former expression is preferable, as it reflects the way in which the High Court expressed the governing legal principles in Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1 ( 'Mann' ). Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank , the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. Under the test propounded in Mann , it is inconsistency between the conduct of the client and the maintenance of the confidentiality that the privilege is intended to protect which effects a waiver of the privilege. Fairness has become a subsidiary consideration; it may be relevant to the court's assessment of inconsistency in some contexts but not in others. In Commissioner of Taxation v Rio Tinto Limited [2006] FCAFC 86 (' Rio Tinto' ) at [44], the Full Court (Kenny, Stone and Edmonds JJ) said that there was a good deal of doubt whether the language used by the majority in Mann worked any real change in the principle which governs imputed waiver. This observation was made somewhat tentatively and was not material to the Court's decision. My own view is that a test expressed in terms of inconsistency more readily accommodates the variety of situations in which questions of imputed waiver can arise than a test expressed in terms of fairness. The criterion of fairness is readily understandable in the context of inter partes litigation, but it is difficult to apply sensibly in other contexts: see the observations by McHugh J in Mann at 40 [128] and Toohey J in Goldberg v Ng [1995] HCA 39 ; (1995) 185 CLR 83 (' Goldberg v Ng' ) at 110. AWB submitted that this Court should hold that there has been no imputed waiver because the Commonwealth has made no attempt to identify why it would be unfair or inequitable for AWB to maintain privilege in the underlying investigations. This submission immediately raises the question --- unfair or inequitable to whom? I doubt that any question arises of fairness to the Commission --- it is an arm of the executive government charged with the investigation of specified matters. Nor does any question arise of fairness to the Commonwealth. Fairness presupposes a balancing of interests between parties who are in dispute. In that context, partial disclosures raise a question of fairness because there is the capacity to mislead one party to the dispute to his or her detriment. These concepts do not translate easily to the present case: cf McHugh J in Mann at 40 [127]-[128]. There is also the difficulty that, outside the framework of an inter partes dispute, fairness is truly a term of 'indeterminate reference': Mann at 40 [129] per McHugh J, citing RJ Desiatnik, Legal Professional Privilege in Australia , 1999, p 122. Mann anticipated that there will be cases in which considerations of fairness have little or no role to play. This is such a case. The broad question posed by Mann is whether, and to what extent, AWB's disclosures are inconsistent with the maintenance of confidentiality in the documents which are at issue in these proceedings. This question wraps up several subsidiary issues, in particular whether AWB's disclosures involved, on each occasion, a disclosure of the gist or substance of its legal advice, whether AWB consciously deployed that advice so as to advance its own commercial or other interests, and, if so, whether that disclosure has resulted in an imputed waiver of privilege over any and what associated materials. In any application of Mann , the starting point must be an analysis of the disclosures or other acts or omissions of the party claiming privilege that are said to be inconsistent with the maintenance of confidentiality in the privileged material: see Rio Tinto at [45]. The disclosures in question here were made variously to the IIC, to the Australian Government, to the Commission and in some instances via the procedures of the Commission to the public at large. In my opinion, there is no reason why these disclosures cannot support a finding that AWB has waived legal professional privilege over associated material. AWB submitted that imputed waiver cannot arise in the context of a commission established under the RCA. Alternatively, it submitted that the coercive and inquisitorial context in which the alleged waiver has taken place is an important factor which strongly militates against waiver. These submissions ignore the voluntary disclosures that AWB made to the Australian Government. In any event, I am not persuaded that AWB's disclosures to the Commission and the IIC are incapable of giving rise to an imputed waiver. Leaving aside any question of waiver, AWB was entitled to maintain legal professional privilege in the course of proceedings before the Commission and, by and large, it sought to do so. To the extent that AWB has already produced documents to the Commission containing legal advice or instructions, it did so because it recognised that actions it had taken outside the Commission had the consequence of waiving privilege over those documents. As for the oral evidence that the Commonwealth now relies upon, Lindberg, Cooper and Scales were senior executives of AWB when they gave that evidence to the Commission. There is nothing before me to suggest that they were not speaking as executives of AWB when they gave their evidence, or that their evidence fell outside the scope of their authority from AWB. Further, their evidence was given in the presence of AWB's legal representatives, without any objection being raised on grounds of legal professional privilege. Lindberg, Cooper and Scales may have been compelled to give evidence at the Commission, but they were under no compulsion to reveal the gist or substance of legal advice that had been obtained by AWB. In these circumstances, I infer that the relevant evidence given by Lindberg, Cooper and Scales was given with the authority or acquiescence of AWB. I also infer that AWB was content for the evidence to be given at public hearings of the Commission, having regard to its own commercial interests. The evidence before me makes it clear that AWB was concerned to defend its integrity and commercial reputation in the course of the Commission's hearings. I infer that AWB made the assessment that it would advance its commercial interests if it were to be known publicly that it had undertaken extensive legal reviews and that, as a result, it had obtained legal advice that there was no evidence that it had engaged in any improper or unlawful conduct in breach of the United Nations' sanctions. AWB was content for information of this character to be disclosed publicly in relation to both Project Rose and Project Water. It would, of course, be a different case if the documents and information that the Commonwealth relies upon were disclosed under legal compulsion. On any view, the fact that documents and information were disclosed under compulsion would be very relevant to the question whether the person claiming privilege had engaged in inconsistent conduct. There is, moreover, authority to the effect that a production of documents or evidence under compulsion will not result in any waiver of privilege: Goldman v Hesper [1988] 1 WLR 1238 ( 'Goldman' ); Trans America Computer Co Inc v IBM Corporation 573 F2d 646 (9 th Cir 1978) ( 'Trans America' ) at 651. AWB's disclosures to the IIC were not made under legal compulsion. They were made by choice under a confidentiality regime negotiated by AWB. The Memorandum of Understanding between AWB and the IIC provided that AWB could withhold documents from the IIC on grounds of commercial sensitivity or legal professional privilege, or if there was a risk that AWB, its officers or employees would be exposed to breaches of Australian law. It also provided that any interviews conducted by the IIC of AWB officers or employees could be undertaken in the presence of a personal legal counsel and/or up to two representatives of AWB. AWB thereby retained the right to object to any question that intruded into areas protected by legal professional privilege. On the evidence before me, including in particular the various briefings which Hargreaves gave to the Australian Government, it is clear that AWB decided that it needed to cooperate, and be seen to cooperate, with the IIC so as to retain the support of the Australian Government and to protect and defend its commercial reputation. I do not agree with AWB's submission that, even if its disclosures were not compelled by law, the inquisitorial context in which they took place is a factor which strongly militates against waiver. In Australia, legal professional privilege is a fundamental common law right that can be asserted outside the context of adversarial litigation. It can, for instance, be invoked to resist the production of documents in answer to a search warrant or the giving of information or the production of documents pursuant to coercive statutory powers or notices: Daniels at 552-553 [9]---[11] and 563 [44]; Baker v Campbell [1983] HCA 39 ; (1983) 153 CLR 52. As legal professional privilege can be invoked outside the context of judicial or quasi-judicial proceedings, logic suggests that it should be capable of being waived if the claimant engages in conduct that is inconsistent with the maintenance of the confidentiality that the privilege is intended to protect. It should not matter whether the conduct takes place within, or outside, the framework of the proceedings or investigatory process in which a demand has been made for the production of privileged documents or information. The crucial question is whether the conduct is inconsistent with the maintenance of confidentiality. The disclosure of privileged communications to a third party can result in an imputed waiver of privilege, even if there is no intention of waiving privilege and the disclosure is for a limited and specific purpose. In Mann , the Chief Minister of the Australian Capital Territory conveyed legal advice, on a confidential basis, to a member of the Territory's Legislative Assembly to enable him to consider the reasonableness of the Government's decision to settle certain legal proceedings. The majority decision turned on the fact that the disclosure to a member of the Legislative Assembly was not regarded as disclosure to a third party. They said that Goldberg v Ng illustrates that, depending on the circumstances, the disclosure of a privileged communication to a third party for a limited and specific purpose, and on terms as to confidentiality, can have the consequence of waiving privilege. McHugh J dissented. In his view, any disclosure of privileged material to a third party who is a stranger to the privileged relationship (ie to a person who is not the lawyer or the client) should have the consequence that privilege in that material is waived as against the world: at 34 [108], 37-38 [118], 42 [133]-[134]. Whether the communication will be disclosed in the future to a stranger to the privilege is entirely within the control of the client. At that stage, the client will determine whether his or her interests are best served by retaining the privilege or disclosing the communication. But it is difficult to see how the possibility of voluntary disclosure will prevent the client being candid with his or her lawyer. The person may be encouraged to do so, as in Goldberg v Ng , by an expectation that the stranger will not further disclose the communication. But in my opinion, if privileged material is voluntarily disclosed to a stranger to the privileged relationship, the fact that it may be received under an obligation of confidence should not be relevant to whether privileged is waived. In Goldberg v Ng , the respondents sued their solicitor, Goldberg, for failure to account for monies received and disbursed by him as their solicitor. They also made a professional conduct complaint against him to the Law Society of New South Wales. In answer to the complaint, Goldberg prepared statements, with annexures that included a draft brief to counsel, and submitted them to the Society's professional conduct department. In doing so, Goldberg told the Society that the statements and the annexures were confidential and he wished to retain his legal professional privilege in them. The Society dismissed the complaint on the ground that there was no evidence of professional misconduct or unsatisfactory professional conduct. Subsequently, in the course of the Supreme Court proceedings instituted by the respondents against Goldberg, the respondents served a subpoena on the Society requiring it to produce documents relating to the complaint against Goldberg. All of the members of the High Court held that there had been no express or intentional waiver by Goldberg of his legal professional privilege in the statements and annexures. The issue that divided the Court was whether waiver should be imputed by operation of law. Deane, Dawson and Gaudron JJ held at 100-102 that it should because the professional complaint and the Supreme Court proceedings were but different emanations of the one dispute, and Goldberg's provision of the statements to the Society was voluntary and for the calculated purpose of demonstrating the reliability of his denial of the alleged failure to account. Their Honours analysed the issue in terms of 'fairness', but they could equally, and perhaps more appropriately, have done so in terms of inconsistency. Toohey and Gummow JJ dissented in separate judgments. Each expressed the view that waiver should not be imputed because the disclosures by Goldberg were made to a third party for a limited and specific purpose. Toohey J said at 110 that the following factors militated strongly against any implied or imputed waiver: first, Goldberg disclosed material to the Society because of a complaint against him on an undertaking by the Society that the contents would be kept confidential; secondly, the disclosure was made in the context of the Society's investigation of a complaint in pursuance of its statutory powers and, consequently, it could be regarded as having been made for the purposes of the Act; and thirdly, the disclosure was confined to the Society. Gummow J said at 123 that, as the disclosures were made in the context of compulsory statutory processes, the circumstances of the case supplied no sufficient reason for depriving Goldberg of privilege, even allowing for the advantage he sought to gain by making the disclosure. The case of Restom v Battenberg [2006] FCA 781 provides an example of a case where disclosures to a third party triggered a waiver of legal professional privilege. In the course of bankruptcy proceedings, the debtor claimed privilege over a letter that passed between his Australian and Scottish solicitors. Stone J held that the disclosure of the contents of the letter to the Scottish Employment Tribunal was inconsistent with the maintenance of confidentiality in the letter and constituted a waiver of privilege. In Network Ten Ltd v Capital Television Holdings Ltd (1995) 36 NSWLR 275, which predated Goldberg v Ng and Mann , Giles J held that a limited and specific disclosure of privileged material, on terms of confidentiality, did not result in a loss of privilege. In Australian Rugby Union Ltd v Hospitality Group Pty Ltd (1999) 165 ALR 253, Sackville J said that it follows from Goldberg v Ng that the disclosure of a privileged communication for a limited purpose and subject to a confidentiality requirement may, or may not, amount to a waiver of privilege, depending on the circumstances of the case: at 262-263 [42]-[43]. On the facts of that case, Sackville J held that a disclosure of legal advice to the solicitors and representatives of two other companies, on strict terms as to confidentiality and for the purpose of those other companies obtaining legal advice, did not result in an imputed waiver. His Honour distinguished Goldberg v Ng as a case in which the disclosure was made to gain an advantage over the opposing party in related litigation: at 263 [45]. There are several English cases in which disclosure to a third party for a limited and specific purpose has not resulted in a loss of privilege: British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 1 WLR 1113 ( 'British Coal' ); Goldman ; and Gotha City v Southeby's (No 1) [1988] 1 WLR 1114. In British Coal , Neill LJ (with whom Stocker LJ and Dillon LJ agreed) held that the disclosure of documents by the plaintiff to the police to assist in a criminal investigation and criminal trial did not constitute a waiver of the privilege. Its action in regard to both the category A and the category B documents was in accordance with its duty to assist in the conduct of the criminal proceedings, and could not properly be construed as an express or implied waiver of its rights in its own civil litigation. Indeed, it would in my view be contrary to public policy if the plaintiff's action in making the documents available in the criminal proceedings had the effect of automatically removing the cloak of privilege which would otherwise be available to them in the civil litigation for which the cloak was designed. Taylor LJ (with whom Woolf LJ and Lord Donaldson MR agreed) said that once a party puts forward privileged documents as part of his case for costs, the privilege is relaxed temporarily and pro hac vice . If the taxing officers felt compelled by natural justice considerations to disclose part or all of the contents of a privileged document to the opposite party, that disclosure would be for the purposes of the taxation only and would not amount to a waiver that prevented the owner of the document from reasserting privilege in any subsequent context: at 102. McHugh J took a stricter view in Giannarelli v Wraith (No 2) [1991] HCA 2 ; (1991) 171 CLR 592. His Honour noted that in Victoria, unlike in England, a litigant can refuse to produce documents to the taxing master on the grounds of legal professional privilege. However, McHugh J said that if the litigant choses to produce privileged documents to the taxing master, then the litigant will be taken to have waived privilege and must let the opposing parties see the documents. His Honour did not countenance any middle course under which privilege could be waived solely for the purposes of the taxation and then re-asserted in some other context: at 607. The general rule adopted in the United States is that any voluntary disclosure of privileged communications by a client to a third party breaches the confidentiality of the attorney-client relationship and therefore waives the privilege, not only as to the specific communication disclosed but as to all other communications relating to the same subject matter: see Weil v Investment/Indicators Research and Management Inc 647 F2d 18 (9 th Cir 1981) at 24; United States v Aronoff 466 FSupp 855 (DC NY 1979) at 862 [9]-[10]; In re Sealed Case 676 F2d 793 (DC Cir 1982) (' re Sealed Case' ) at 809 [6]---[7]; United States v AT & T Co 642 F2d 1285 (DC Cir 1980) at 1299; cf Diotima Shipping Corp v Chase, Leavitt & Co ., 102 F.R.D. 532 (D Me 1984); von Bulow v von Bulow , 114 F.R.D. 71 (SD NY 1987); and T Harman, Fairness and the Doctrine of Subject Matter Waiver of the Attorney-Client Privilege in Extrajudicial Disclosure Situations (1988) University of Illinois Law Review 999. The US courts have also considered whether a disclosure of privileged material to government investigators will have the consequence of waiving privilege. In re Sealed Case , the United States Court of Appeals for the District of Columbia considered whether a corporation that had submitted its own investigating counsel's report into alleged bribes and improper payments to the Internal Revenue Service and the Securities and Exchange Commission ('SEC') pursuant to voluntary disclosure programs had thereby impliedly waived its privilege over documents which were clearly identified in the report. The Court held that, by revealing part of privileged communications to the agencies to gain a commercial advantage, the corporation had made a disclosure which was inconsistent with the maintenance of confidentiality. Accordingly, the Court held that the corporation had waived privilege as to all other communications relating to the same subject matter. Thus, since the purpose of the attorney-client privilege is to protect the confidentiality of attorney-client communications in order to foster candor within the attorney-client relationship, voluntary breach of confidence or selective disclosure for tactical purposes waives the privilege. Disclosure is inconsistent with confidentiality, and courts need not permit hide-and-seek manipulation of confidences in order to foster candor. In doing so, it declined to follow the decision in Diversified Industries Inc v Meredith 572 F2d 596 (8 th Cir 1977) ( 'Diversified Industries' ) at 611 in which the Eighth Circuit Court of Appeals held that disclosures to the SEC under a voluntary disclosure program did not constitute a waiver to anyone but the SEC. It noted that the decision in Diversified Industries was rejected in Permian Corp v United States 665 F2d 1215 (DC Cir 1981) at 1220-1222 on the ground that it unnecessarily expanded the scope of attorney-client privilege: see also In re Weiss 596 F2d 1185 (4 th Cir 1979) at 1186. Like the District Columbia Circuit, the First, Third, Fourth, Sixth and Federal Circuit Courts of Appeal have rejected the approach adopted by the Eighth Circuit in Diversified Industries : see AM Pinto, Cooperation and Self-Interest are Strange Bedfellows: Limited Waiver of the Attorney-Client Privilege through Production of Privileged Documents in a Government Investigation (2004) 106 West Virginia Law Review 359, p 372; RH Porter, Voluntary Disclosures to Federal Agencies --- Their Impact on the Ability of Corporations to Protect from Discovery Materials Developed During the Course of Internal Investigations (1990) 39 Catholic University Law Review 1007, pp 1029-1052. The US courts have accepted that there will be no imputed or implied waiver of privilege if the disclosure of the privileged material is involuntary and compelled by law: see eg Trans America. The Canadian courts apply a waiver test that is based on considerations of fairness and consistency: see S & K Processors Ltd v Campbell Ave Herring Producers Ltd (1983) CPC 146 (BCSC) at 150; Professional Institute of the Public Service of Canada v Canada (Director of the Canadian Museum of Nature) [1995] 3 FC 643 ; British Columbia (Securities Commission) v BDS (2000) BCJ No 2111 (BCSC), affirmed (2003) 226 DLR (4 th ) 393; and RD Manes and MP Silver, Solicitor-Client Privilege in Canadian Law , Butterworths, 1993, p 207. As in the United States, waiver will not be imputed if privileged material is produced to a government regulator under compulsion of law. Putting to one side its provision of Mr Tracey QC's advices and instructions and its briefings to the Australian Government, AWB disputed that the disclosures it made to the IIC and the Commission disclosed the gist or substance of legal advice that AWB obtained as a result of Project Rose or Project Water. It contended that these disclosures did no more than refer to the existence of legal advice, without disclosing its substance. Alternatively, AWB argued that the record of Lindberg's interview with the IIC, and the evidence given to the Commission by Lindberg, Cooper and Scales, cannot be related to any particular piece of legal advice, other than that provided by Mr Tracey QC. The applicable principles are set out in my decision in AWB v Cole at [135]---[139]. The authorities draw a distinction between a mere reference to the existence of legal advice, which will not usually amount to a waiver, and cases in which the gist or substance of the legal advice has been disclosed: see Maurice at 481, 488 and 493; Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd [1996] HCA 15 ; (1996) 70 ALJR 603 at 607; Ampolex Ltd v Perpetual Trustee Co (Canberra) Ltd (1996) 40 NSWLR 12; Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 at 376-377; and Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 ; (2004) 140 FCR 101 (' Bennett' ) at 104-105 [6]---[9]. In Bennett , the Full Court (Tamberlin, Emmett and Gyles JJ) held that legal representatives of the Australian Customs Service had waived privilege in legal advice by stating openly that they had given advice to Customs that a particular regulation did not prohibit public comment by an officer on matters of public administration. The trial judge had held that a disclosure of the legal position or stance that a lawyer had advised a client to take was not inconsistent with the maintenance of confidentiality in the communication giving the advice. The trial judge also appeared to draw a distinction between statements which disclose the conclusion or logical result of legal advice, and statements which disclose the content of the legal advice and its reasoning: see Tamberlin J at 105 [10] and Gyles J at 118 [61]. The Full Court rejected this approach. Gyles J stated at 119 [65] that the voluntary disclosure of the gist or conclusion of the legal advice amounts to waiver in respect of the whole of the advice to which reference is made, including the reasons for the conclusion. It may perhaps have been different if it had been simply asserted that the client has taken legal advice and that the position which was adopted having considered the advice, is that certain action will be taken or not taken. In those circumstances, the substance of the advice is not disclosed but merely the fact that there was some advice and that it was considered. However, once the conclusion in the advice is stated, together with the effect of it, then in my view, there is imputed waiver of the privilege. The whole point of an advice is the final conclusion. This is the situation in this case. In Nine Films and Television Pty Ltd v NINOX Television Ltd (2005) 65 IPR 442, the applicant contended that the respondents had waived privilege in various legal advices because of the way in which the respondents had publicly referred to the advice. Tamberlin J held that there had been no waiver. He concluded that the mere assertion that advice had been taken, and the fact that action is then taken by the client, is not sufficient, unless the two are linked in such a way that it is apparent that the advice is that specified action should be taken. On a fair and reasonable reading, the statement to the effect that senior counsel had been engaged and that he had reviewed matters in detail and that steps were being taken based on his recommendations is not sufficient to amount to a waiver of the legal advice. The substance or content of the advice is not disclosed with specificity or clarity. Questions of waiver are matters of fact and degree and, in this instance, I am not persuaded that the conduct, assertions or admissible evidence are sufficient to warrant the necessary implication that legal professional privilege has been waived. The issue was whether a statement in a discovered document that '[o]ur legal advice is that the risk of damages being awarded against Optus is low' had the consequence of waiving privilege in the legal advice that it referred to. Sackville J held that it did; the statement voluntarily disclosed the gist or conclusion of the legal advice: at [12]. In Rio Tinto Ltd v Commissioner of Taxation (2005) 224 ALR 299, the Commissioner of Taxation filed particulars with the Court stating that the Commissioner would be relying on specified grounds 'which have been confirmed by Senior Tax Counsel... and supported by AGS... and opinions obtained from counsel'. The taxpayer contended that the Commissioner had thereby waived privilege in the legal advice of the Australian Government Solicitor and the opinions of counsel. Sundberg J held that these references voluntarily disclosed the conclusion or substance of the advice and consequently privilege had been waived. Sundberg J's decision went on appeal to the Full Court, but the Full Court's decision turned on the alternative ground of issue waiver: Rio Tinto at [72]. The Full Court considered that, in the particulars, the Commissioner had made an assertion that put the contents of the documents containing legal advice in issue, or necessarily laid them open to scrutiny, with the consequence that there was an inconsistency between the making of the assertion and the maintenance of the privilege. AWB submitted that the reasoning in Bennett was unsound, particularly the holding that the disclosure of the conclusion stated in legal advice will amount to a waiver of the whole of the advice. AWB did not refer to any authorities that supported this submission and I reject it. In my view, it is well established that a voluntary disclosure of the gist, substance or conclusion of legal advice will amount to a waiver in respect of the whole of the relevant advice. ASSOCIATED MATERIAL Turning to the scope of any imputed waiver, it is well established that a voluntary disclosure of privileged documents can result in a waiver of privilege over those documents and associated material. The test applied to determine the scope of any waiver of associated material is whether the material that the party has chosen to release from privilege represents the whole of the material relevant to the same issue or subject matter: Maurice at 482 and 484 per Gibbs CJ, 488 per Mason and Brennan JJ, and 498---499 per Dawson J. Once disclosure has taken place by introducing part of the document into evidence or using it in court it cannot be erased. To allow an individual item to be plucked out of context would be to risk injustice through its real weight or meaning being misunderstood. Doland Ltd v Blackburn Robson Coates & Co waiver of privilege with respect to a conversation between solicitor and client, which took place before litigation was contemplated, was held to extend to any other communications in relation to the subject-matters of the conversation, although the implied waiver was held not to cover similar documents which came into existence for the purpose of prosecuting the litigation. This decision was not followed in General Accident Corporation Ltd v Tanter where a distinction was drawn between the waiver of privilege before a trial and the further waiver of privilege by calling evidence in a trial. In the latter situation the waiver was held to extend to the transaction constituted by the privileged communication but not to the subject-matter of that communication arising upon other privileged occasions. General Accident Corporation Ltd v Tanter has been criticized for the distinction which it draws between waiver by the tender of evidence of a privileged communication and waiver by the disclosure of the communication in some other way and for the restriction which it places upon the extent of associative waiver: see Phipson on Evidence , par 15-20. In Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation [No 2] , a broader view was taken by Mustill J that " ... where a party chooses to deploy evidence which would otherwise be privileged the court and the opposition must, in relation to the issue in question, be given the opportunity to satisfy themselves that they have the whole of the material and not merely a fragment". This view was approved by the Court of Appeal in Great Atlantic Insurance Co v Home Insurance Co . In the United States it has been widely held that voluntary disclosure of the content of a privileged attorney communication constitutes waiver of the privilege with respect to all other such communications upon the same subject-matter: Weil v Investment/Indicators, Research and Management and the cases there cited; Diotima Shipping Corp v Chase, Leavitt & Co ; United States v Aronoff ; In re Sealed Case . As we apprehend it, where legal professional privilege is waived in relation to one piece (or part) of advice, the privilege is impliedly waived in relation to another if - and only if - that other is necessary to a proper understanding of the first. As established by the High Court (at least since Mann v. Carnell ) the test in such cases is whether it would be "inconsistent" for a party to rely upon, and so to waive legal professional privilege in respect of, the one without also being taken to have waived privilege in respect of the other. But, with great respect to their Honours, the proposition concerning waiver of associated material is expressed too narrowly and in a way that is not consistent with the test propounded by the High Court in Maurice . The principle propounded by the Court of Appeal may work adequately enough in some circumstances, particularly where privilege is sought to be maintained over one part of a single piece of legal advice, but in other circumstances it will not give effect to the principles explained in Maurice. As I have indicated, I am satisfied that counsel relied upon instructions which they were given and, it would appear, relied upon medical reports in a way which influenced the content of the advice which they gave. Accordingly, insofar as there are documents which were relied upon in the preparation of the advice falling within categories 1, 2, 3 and 5 of the notice to produce, the service of the affidavit impliedly waived privilege in those documents. To my mind, that disclosure waived his privilege both in the advice itself and the documents which were used by counsel and which influenced the content of the advice. Waiver having occurred, the fact that the advice was not ultimately tendered is, to my mind, not relevant. Having sought an advantage, the plaintiff was bound by the course he had taken and accordingly is amenable to producing the relevant documents in response to an appropriate notice to produce. His Honour held that the disclosure brought about an implied waiver of other legal advices obtained by the other joint venturers in relation to the mining leases. His Honour said at 509 that it was significant that the disclosures were made for the benefit of the joint venture as a whole and, although there was no direct evidence on the point, he considered that it was difficult to imagine that the disclosures would have occurred against the wishes of the other joint venturers or indeed without their consent. In England, the principle has been applied to documents which underpin or support expert evidence: see Dunlop Slazenger International Ltd v Joe Bloggs Sports Limited [2003] EDWCA Civ 901; Mayne Pharma Pty Ltd v Debiopharm SA [2006] EWHC 164 (Pat); and L'Oreal SA v Bellure NV [2006] EWHC 1503 (Ch). Several English cases illustrate the practical operation of the principle. In Nea Karteria Maritime Co Ltd v Atlantic & Great Lakes Steamship Corporation (No 2) [1981] Com LR 138 (' Nea Karteria' ), a lawyer gave evidence that he had conducted an interview on the basis of a list of questions prepared by the plaintiffs' lawyers. While privilege was waived with respect to the witnesses' answers, the plaintiffs sought to maintain privilege with respect to the list of questions: at 139-140. They were in a sense an agenda for the meeting. They formed the basis for one-half of the exchange between the lawyer and [the witness]. Evidence to that effect having been given by the lawyer, it seems to me that privilege must have been waived for those questions. And I think the interests of justice, which I believe to underlie the authorities on this part of the case, demand that the opposition and the court should have an opportunity to satisfy itself as to the accuracy of the evidence given to the lawyer as to the way in which he conducted the interview. The issue may be confined to what was said or done in a single transaction or it may be more complex than that and extend over a series of connected events or transactions. In each case the question for the court is whether the matters in issue and the document or documents in respect of which partial disclosure has been made are respectively severable so that the partially disclosed material clearly does not bear on matters in issue in respect of which material is withheld. The more confined the issue, for example as to the content of a single document or conversation, the more difficult it is likely to be to withhold, by severance, part of the document or other documents relevant to the document or conversation. Mann J added at 607 [18] that once the transaction has been identified the cases show that the whole of the material relevant to that transaction must be disclosed. It is not open to a waiving party to say that the transaction is simply what the party has chosen to disclose; the court will determine objectively what the real transaction is so that the scope of the waiver can be determined. His Lordship also said that the application of these principles will be very fact sensitive and will vary from case to case: at 607 [19]. WAIVER HAS BEEN ESTABLISHED At [70] to [126] above, I set out my findings as to the precise terms in which AWB disclosed the results of its legal reviews and legal advice it had obtained to the Australian Government, the IIC and the Commission. Overall, I am satisfied that by means of these disclosures, AWB deployed the gist or substance of legal advice it had obtained. Moreover, I am satisfied that AWB made a conscious and voluntary decision to deploy this legal advice in its dealings with the Australian Government, the IIC and the Commission because it considered that it was in its commercial interests to do so. These actions are inconsistent with the maintenance of confidentiality in the legal advice. Having regard to the nature, purpose, terms and extent of its disclosures, I am also satisfied that AWB acted inconsistently with the maintenance of confidentiality over the associated material which underpinned the legal advice. While these overall conclusions are relevant and important, I have taken the view that it is necessary and appropriate for me to make specific findings as to the nature and consequences of each such disclosure. I turn to that task. In his various statements to the Australian Government, Hargreaves did not merely refer to the existence of legal advice. Nor did he simply disclose the legal advice which had been obtained by AWB from Mr Tracey QC. He described in some detail the findings and conclusions that had been arrived at by AWB's own legal review. In my opinion, Hargreaves thereby disclosed to the Australian Government the gist or substance of legal advice that AWB had obtained (as at the relevant dates at which he made his disclosures) that there was no evidence of: corruption by AWB side payments or after sales payments by AWB to the former Iraqi regime any knowledge on the part of AWB that Alia was connected with the Iraqi regime or that payments were being channelled by Alia to that regime any conduct by AWB that resulted in breaches of the United Nations' sanctions any other wrongdoing or improper conduct by AWB in connection with the supply of wheat to Iraq under the OFF Programme. When Hargreaves gave his briefings to officers of the Australian Government, he expressed himself in terms that were apt to refer, and which a reasonable listener would have understood as referring, to the combined effect of all of the legal advice that AWB had received as at the date of the relevant briefing. Hargreaves would not have been understood as referring only to a particular piece of historical advice, regardless of whether it was overtaken, or qualified, or supported by later advice. His assertions purported to represent the current state of affairs. Hargreaves' memorandum of 25 June 2005 makes it quite clear that his statements to the Australian Government were based upon all of the legal advice AWB had obtained, and not simply the advice it had obtained from Mr Tracey QC. It cannot be disputed that Hargreaves disclosed the substance of the legal advice which Blakes provided to AWB's board on 25 May 2004. AWB has already formed that view and acted on it by producing Blakes' power point presentation to the Commission. But in my view the consequence of Hargreaves' disclosures cannot be confined to Blakes' advice of 25 May 2004 and Mr Tracey QC's advices. Through the remainder of 2004 and until Hargreaves had his last meeting with Ms Carayanides in the period between 16 June 2005 and September 2005, Hargreaves met with Australian Government representatives several times and continued to make assertions that AWB's independent legal review had not identified any wrongdoing by AWB. The evidence shows that Blakes and Minters continued the legal review in 2004 and 2005 and provided ongoing legal advice to AWB. It is not open to a waiving party to say that the disclosures relate simply to one advice and not others, or that the relevant transaction is simply what the party has chosen to disclose; the Court will determine objectively what has been disclosed: see Fulham at 607 [18]. Hargreaves' memorandum of 25 June 2005 makes it plain that he deliberately deployed AWB's legal advice in his dealings with the Australian Government. He did so as part of AWB's strategy to secure the continued support of the Federal Government, both generally and in relation to AWB's dealings with the IIC and the United States Government. Hargreaves also deployed the advice in pursuit of the objectives that he set out in his memorandum; they included protecting and defending the reputation of AWB both within Australia and overseas, and minimising any attack by US wheat interests on AWB's position as the exclusive manager of wheat exports from Australia. Given these strategic objectives, it was important for AWB to disclose, indeed to stress, that it had conducted an extensive independent legal review which had found no evidence of any wrongdoing by AWB in connection with its exports of wheat to Iraq. By disclosing its legal advice to secure these objectives, AWB assumed the risk that it would be held to have waived legal professional privilege in connection with legal advices it obtained in the course of the legal review. Having regard to the legal principles governing waiver, I consider that any legal advice that AWB obtained from Blakes or Minters prior to Hargreaves' last meeting with Ms Carayanides on any of the subject matters, or relating to any of the issues, described at [180] above, has been waived by reason of the disclosures made by Hargreaves. Those subject matters and issues are wide enough to encompass the Tigris transaction and the iron filings claim. If AWB obtained legal advice during this period on those subject matters, or relating to those issues, from persons other than Blakes or Minters such as ABL, Mr Tracey QC or others, that advice has also been waived by Hargreaves' disclosures. I am satisfied that the disclosures to the IIC involved a disclosure by AWB of the gist or substance of legal advice that it had obtained by 28 February 2005. The disclosure occurred at two points. First, when Lindberg was interviewed on 28 February 2005, the interview took place in the presence of AWB's legal representative. AWB had the ability to object to any statements by Lindberg that intruded into areas covered by legal professional privilege. No objection was raised to Lindberg's statement that the legal review conducted by Cooper had found nothing that would substantiate claims of fraud or corruption by AWB or payments by AWB to individuals in the Government of Iraq. Secondly, AWB was directly involved in providing the record of interview, as revised by Lindberg and AWB's lawyers, to the IIC. In my opinion, the record of interview describes the gist or substance of legal advice which AWB had obtained as a result of its legal review. As with Hargreaves, Lindberg's assertions purported to describe the current state of affairs, ie, as at 28 February 2005. There is no reason to read his assertions as if they were confined to legal advice obtained from Mr Tracey QC. It extends, in my view, to any legal advice obtained by AWB from Blakes, Minters and Mr Tracey QC, and any advice from others, prior to 28 February 2005 that deals with the same subject matters or relates to the same issues as the advice that Lindberg described. I am satisfied that the disclosures to the IIC were made deliberately and consciously by AWB with a view to obtaining a finding from the IIC that AWB had not engaged, or at least had not knowingly engaged, in conduct that involved making payments to the Iraqi regime in breach of the United Nations' sanctions. Lindberg and AWB went out of their way to stress that the company had undertaken a legal review which had found nothing to substantiate claims of fraud, corruption or improper payments to the Iraqi regime. The disclosures were made with the knowledge and intention that they would be referred to by the IIC in its final published report. Accordingly, I find that AWB consciously and voluntarily deployed its legal advice with the object and intention of furthering the company's commercial and other interests. AWB contended that the disclosures which Lindberg made at his meeting with the Minister for Foreign Affairs on 4 October 2005 were confined to the advice given by Mr Tracey QC. This is a possible interpretation of the Department's minute, but in my view Lindberg's statements are not to be read, and would not have been understood, so narrowly. Later in the meeting, Lindberg said that AWB had acted in accordance with the sanctions regime and that this had been supported by legal advice. This statement was expressed broadly and was not confined to 'independent legal advice'. In my view, Lindberg disclosed, and a reasonable listener would have understood that Lindberg was disclosing, the gist or substance of all of the legal advice that AWB had obtained up to 4 October 2005 in relation to the question whether AWB had acted in accordance with the sanctions regime. The disclosure extends to Mr Tracey QC's memorandum of advice dated 22 September 2005 and Professor Wippman's advice dated 27 September 2005. At the meeting with the Minister for Foreign Affairs, Lindberg, Stewart and other representatives of AWB were providing AWB's answer to the IIC's draft findings, as communicated to AWB in the IIC's letter of 26 September 2005. The minute shows that AWB's representatives were very concerned to explain AWB's claims of innocence and to secure the Government's ongoing support. Lindberg told the meeting that the IIC had ignored AWB's explanations and that the so-called evidence relied on by the IIC did not support its factual findings. In support of these contentions, Lindberg asserted that AWB had legal advice confirming that AWB had not acted in contravention of the sanctions regime. I infer that AWB made a conscious and voluntary decision to deploy this legal advice at the meeting with the Minister so as to secure the ongoing support of the Australian Government. In doing so, it assumed the risk of any consequential waiver of legal professional privilege. In my opinion, Blakes' presentation to AWB's board on 25 May 2004 constituted legal advice for the purposes of the doctrine of legal professional privilege. AWB withdrew its claim of privilege and produced the complete presentation to the Commissioner in April this year. The presentation not only discloses the substance of the legal advice from Blakes, but also some of its detail and foundations. In my opinion, one consequence of this disclosure is that AWB has waived privilege over any other legal advice that it obtained prior to 25 May 2004 in relation to the same subject matters or the same issues as Blakes addressed in its presentation. AWB contends that Lindberg's evidence to the Commission on 17 January 2006 did not disclose the gist or conclusion of any legal advice. I disagree. In my opinion, it disclosed the gist or substance of legal advice that AWB had previously obtained as to whether AWB had engaged in conduct in breach of the United Nations' sanctions and whether AWB had paid inland transportation fees to Alia as a conduit for the payment of money to the Iraqi regime. In the course of his evidence, Lindberg went out of his way to assert that the legal review that Cooper had instituted, assisted by external legal advisers, had reported periodically and did not find any evidence to substantiate the allegations that AWB had made payments in breach of the sanctions. In one instance at least, Lindberg's assertions to this effect were not directly responsive to the question asked of him by counsel assisting the Commission. Lindberg gave these answers in the presence of counsel for AWB without any objection being raised on grounds of legal professional privilege. I am satisfied that, by means of this evidence, AWB voluntarily deployed the legal advice that it had obtained prior to 17 January 2006. I infer that it did so because it considered it was in its interests for it to be publicly known that AWB had conducted an extensive legal review which had found no evidence of any wrongdoing. In his evidence, Lindberg specifically referred to a series of periodical reports from those undertaking the legal review: 'there were a number of reports, and the findings of those reports are recorded in the minutes and the basis of those findings has been communicated in letters that have been sent to the government and elsewhere'. I find that in his evidence to the Commission Lindberg was referring to the combined effect of all of the legal advice that AWB received during the course of the internal review as periodical reports were made to the boards of AWB and AWBI. It follows, in my view, that Lindberg's evidence has the consequence that AWB has waived privilege over any legal advice that it obtained in the course of the review that goes to the same subject matters, or relates to the same issues, as the legal advice that Lindberg described in the course of his evidence. In relation to Mr Tracey QC's advices, AWB produced his written advices of 8 June 2004, 31 March 2005 and 12 August 2005 to the Commission early in April 2006. In my view, the consequence of this production is that AWB must be taken to have waived legal professional privilege in any other legal advices that it obtained prior to Mr Tracey QC's last advice of 12 August 2005 in relation to the same subjects or issues. As already mentioned, I also consider that, quite separately, AWB has waived privilege over the advice it obtained from Mr Tracey QC on 22 September 2005 in relation to Resolution 661. As a result of the Project Water investigations, the directors of AWB obtained legal advice from Cooper at the board meeting on 14 December 2004 that the Tigris transaction complied with all necessary laws and involved no breaches of law. A handwritten note of that advice has been produced to the Commission. AWB was entitled to claim that this note was protected from production to the Commission by legal professional privilege. It did not claim privilege. I infer that it did not do so because it wanted it to be known publicly that AWB had advice as of 14 December 2004 to the effect that the Tigris transaction complied with all necessary laws and involved no breaches by AWB. Having disclosed the gist or substance of its legal advice in this manner, it would be inconsistent to allow AWB to maintain confidentiality and privilege in any other legal advices that AWB obtained prior to 14 December 2004 dealing with the same subject matter or the same issues. The advice that Cooper gave to AWB's board on 14 December 2004 related specifically to the Tigris transaction. However, I consider that the other disclosures that I have already discussed were expressed in such broad terms that they encompassed any advices concerning the Tigris transaction and/or the iron filings claim. As a result, I consider that there has been a waiver of other advices about the Tigris transaction, such as Mr Tracey QC's memorandum of 26 October 2004 (document 353A). The cumulative effect of AWB's disclosures is that, down to 17 January 2006 when Lindberg gave evidence to the Commission, AWB was openly claiming that its legal advice showed that there was no evidence that it had engaged in any wrongdoing in connection with its supply of wheat to Iraq under the OFF Programme, including wrongdoing of the kind described at [180] above. I find that AWB made these claims to advance its commercial interests. AWB's conduct is inconsistent with the maintenance of confidentiality in any advices dealing with the same subjects or issues. In addition, Lindberg, Cooper and Scales gave evidence to the Commission that AWB obtained legal advice that the proceeds of the inflated prices in contracts A1670 and A1680 should be disbursed to Tigris to the extent of approximately US$7 million. That evidence was given in the presence of AWB's legal representatives without any objection being raised on grounds of legal professional privilege. Again, I infer that AWB was content for it to be publicly known that it had obtained that legal advice. Having disclosed the gist or substance of that advice, AWB is bound to disclose any other legal advices it obtained in relation to the same subject or same issue. AWB's revised list of privileged documents contains several advices relating to the Tigris payment. They include documents 337 and 385. Documents 1088, 1089, 1092, 1093 and 1094 record the substance of those advices in minutes of meetings held by the AWB and AWBI boards in December 2004 and February 2005 and the chairman's running sheets for the February 2005 meetings. The evidence which Lindberg, Cooper and Scales gave in public before the Commission is inconsistent with AWB's attempt to maintain privilege in these documents. One question which remains to be dealt with is whether the scope of the waiver that must, in my view, be imputed to AWB is to be confined to any other legal advice that AWB obtained prior to the date of the relevant disclosures that addressed the same subject matters or issues as the advice that AWB voluntarily disclosed. In my opinion, the waiver is not so confined. It extends to the documents and information which were taken into account in formulating, or which otherwise underpinned or influenced, the legal advice that AWB has chosen to disclose. The Commonwealth argued that AWB's disclosures are broad enough to encompass any legal advice which AWB obtained, and any documents which AWB's lawyers reviewed or created, in the course of the Project Rose and Project Water investigations. The difficulty with this way of approaching the boundaries of the waiver of associated material is that the terms 'Project Rose' and 'Project Water' have an indefinite and imprecise ambit. According to the authorities discussed above, the limits of any waiver of associated material depend upon the nature of the advice that has been disclosed, what was represented by means of the disclosure, and the character of the transaction that gave rise to the disclosed legal advice. Regard must also be had to the way in which AWB's legal advice was described in the various disclosures. Essentially, by means of the disclosures, AWB was asserting that a detailed legal review had been undertaken, and that it had concluded that there was no evidence of any wrongdoing or other improper conduct by AWB in connection with its sale of wheat to Iraq under the OFF Programme. In my opinion, the nature and character of this disclosure is inconsistent with the maintenance of confidentiality in those documents which were taken into account by AWB's legal advisers in arriving at the advice they gave. To adapt the language used by McClellan CJ at Common Law in Thomas at [17] and [20], AWB's disclosures of its legal advice effect a waiver of privilege in the documents which were reviewed for the purposes of that advice or which influenced its content. Furthermore, AWB emphasised the breadth of its internal review in its various disclosures. In my view, AWB thereby waived privilege in documents which define the scope of the review or which reveal what investigations were in fact undertaken in the course of the review. Much the same answer follows if one asks what was the legal exercise or transaction that gave rise to the disclosed legal advice: see Factortame at 598-599; and Fulham at 604 [11] and 607 [18]. Having regard to the form of the legal advice disclosed by AWB, the relevant legal exercise or transaction encompassed a review of original documents and witness interviews, as well as summaries, chronologies or other analytical documents prepared by the lawyers, with a view to determining whether there was any improper or wrongful conduct by AWB. Material of this kind underpinned or influenced the legal advice which AWB has chosen to disclose, and it is not severable from that advice. There is a certain symmetry in defining the boundaries of the waiver of associated material in this way. Documents brought into existence in the course of a lawyer's factual investigation are, prima facie, capable of attracting legal professional privilege where the investigation is being undertaken for the dominant purpose of providing legal advice. If the client voluntarily discloses the gist or substance of the legal advice that is founded upon such investigations, the rationale for according privilege to the investigative material will have disappeared. While I would go further, the approach that I have described is not unlike the approach that AWB has already taken in connection with the production to the Commission of Mr Tracey QC's memoranda of advice and instructions. In the case of Mr Tracey QC's oral advice of 25 May 2004 and his confirmatory memorandum of 12 August 2005, AWB determined, correctly in my view, that the underlying documents supplied to Mr Tracey QC must also be produced. AWB considered that the form of Mr Tracey QC's advice (ie there was no evidence of wrongdoing) meant that it was impossible to separate his legal advice from the copy documents that were supplied to him as part of his instructions. The evidence before me does not reveal whether AWB adopted the same approach to Mr Tracey QC's advice of 31 March 2005. When he was asked to provide this advice, copy documents were supplied to Mr Tracey QC as part of his instructions but there is no evidence, one way or the other, as to whether those copy documents have been produced to the Commission. The substance of Mr Tracey QC's advice was that nothing in the documents supplied to him as of 31 March 2005 had caused him to vary his earlier advice of 25 May 2004. This advice cannot be separated from the documents that were supplied to him and, accordingly, AWB's express waiver of privilege in his advice extends to all of the documents and instructions supplied to him. The applicable principle can also be illustrated by reference to the advice that Blakes gave in its presentation of 25 May 2004. The advice that there was no evidence of any wrongdoing by AWB that involved a breach of the United Nations' sanctions was explicitly founded upon a review of a large number of documents and interviews of AWB personnel. Having regard to the form of its advice, it is impossible to separate Blakes' advice from the underlying documentation and interviews. However, the witness interviews and other materials that Blakes relied upon to formulate its advice have not been produced to the Commission and are still the subject of claims for legal professional privilege. In my opinion, those claims of privilege are not maintainable; privilege has been waived by (inter alia) the production of Blakes' advice. The same approach must be adopted to any advices that Blakes provided after 25 May 2004 on the question whether any evidence had emerged of any wrongdoing or improper conduct on the part of AWB. Another question which remains to be dealt with is the extent of any waiver that arises from AWB's production to the Commission of the instructions to Sir Anthony Mason. In its particulars setting forth its objections to AWB's privilege claims, the Commonwealth contended that these disclosures had brought about a waiver of legal professional privilege in relation to Project Rose. It tendered the instructions which ABL provided to Sir Anthony Mason on 16 September and 20 October 2005 and the expert opinion which Sir Anthony Mason provided dated 24 October 2005. However, the Commonwealth did not direct any submissions to this aspect of its waiver case, either orally or in its written submissions. Nor did AWB address any oral or written submissions to the consequences which flowed from its production to the Commission of the instructions to, and the advice obtained from, Sir Anthony Mason. It must be borne in mind that AWB is seeking a declaration that all of the documents set forth in its revised list of privileged documents are the subject of legal professional privilege. These documents include documents by which AWB obtained legal advice both in Australia and in the United States concerning the applicability of Resolution 661. The instructions to Sir Anthony Mason summarised the gist or substance of the very same legal advice. In these circumstances, I have concluded that the Court must take account of the evidence that has been placed before it. By disclosing the instructions given to Sir Anthony Mason, AWB has in my opinion disclosed the substance of legal advice it had obtained, as at 20 October 2005, both in Australia and in the United States, as to the applicability of Resolution 661. This disclosure encompasses Mr Tracey QC's memorandum of 22 September 2005 and Professor Wippman's advice of 27 September 2005. Thus far, I have identified the principles which define the boundaries of the waiver that is to be imputed to AWB, including the boundaries of any waiver of associated material. The remaining task in disposing of the waiver arguments is to determine precisely what documents fall within these boundaries. I have carried out that task by inspecting the documents over which claims of privilege have been made, reviewing the evidence concerning each document, and applying the principles identified above. As a result, I have determined that AWB has waived any legal professional privilege that would otherwise attach to the documents as listed under the heading 'Conclusions' below. THE IRON FILINGS CLAIM Communications between a lawyer and client which facilitate a crime or fraud are not protected by legal professional privilege. This principle is often referred to as the 'fraud exception' to legal professional privilege, but this does not capture its full reach: Attorney-General (NT) v Kearney [1985] HCA 60 ; (1985) 158 CLR 500 (' Kearney' ) at 515; Propend at 546; Clements, Dunne & Bell Pty Ltd v Commissioner of Australian Federal Police (2001) 188 ALR 515 (' Clements' ) at 521-522 [30]. The principle encompasses a wide species of fraud, criminal activity or actions taken for illegal or improper purposes: see North J's review of the authorities in Clements at 522-526 [35]-[44]. The scope of conduct caught by the principle has been articulated in a variety of ways, often without particular precision: Propend at 545. Classic formulations have spoken of communications in furtherance of a 'crime or fraud': R v Cox and Railton (1884) 14 QBD 153 (' R v Cox' ) at 165; a 'criminal or unlawful proceeding': Bullivant v Attorney-General (Vic) [1901] AC 196 (' Bullivant' ) at 201; 'any unlawful or wicked act': Annesley v Anglesea (1743) 17 St Tr 1139 at 1229; and 'all forms of fraud and dishonesty such as fraudulent breach of trust, fraudulent conspiracy, trickery, and sham contrivances': Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553 at 565. In Kearney , the High Court applied the principle to deny legal professional privilege to legal advice obtained by the Northern Territory Government which was prima facie a 'deliberate abuse of statutory power' to defeat a land claim under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth). In his reasons for judgment, Gibbs CJ (with whom Mason and Brennan JJ agreed) stated at 515 that 'legal professional privilege will be denied to a communication which is made for the purpose of frustrating the processes of the law itself, even though no crime or fraud is contemplated. ' Some authorities have expressed the principle as applicable to prevent a 'fraud on justice' in a broad sense. The concept of a 'fraud on justice' was adopted by Lander J in Gartner v Carter [2004] FCA 258 (' Gartner v Carter' ) to deny protection to a communication between a lawyer and client for the purpose of the client putting assets beyond the reach of the legitimate claims of secured creditors: at [130] and [139]-[140]. The principle extends to 'trickery' and 'shams'. A 'sham' refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471; see also Beazley v Steinhardt (1999) 106 A Crim R 21; affirmed on appeal in [1999] FCA 1255 (' Beazley' ). The recent case of Australian Securities & Investments Commission v Mercorella (No 3) [2006] FCA 772 provides an example of the denial of legal professional privilege to documents in furtherance of a sham transaction. In that case, creditors of a managed investment scheme claimed privilege over documents relating to securities obtained from the defendant and certain companies in the scheme. The transactions were allegedly entered into so as to advance those creditors' interests over the interests of other creditors to the scheme. Mansfield J found that the communications were prima facie in furtherance of a sham and, as such, were not privileged. The [creditors] engaged in the transactions reflected in the Deed, and the granting of the securities within the structures it created, to secure or advance their interests over others who had advanced money to [the first defendant] or to the Scheme. There is a prima facie case that the "restructure" of the advances so that they appear as advances to the partnership of Ajay and Opey is a sham. Where a client is engaged in fraudulent conduct, communications with his or her lawyer in furtherance of the fraud are not privileged, regardless of whether the lawyer is a party to the fraud or not: Clements at 562 [213]. The principle applies to communications passing between a client and lawyer where the lawyer is innocent of the fraud or improper purpose: R v Bell; Ex parte Lees [1980] HCA 26 ; (1980) 146 CLR 141 at 145. Further, the fraud need not be that of the client or the lawyer; it may be that of a third party: Capar v Commissioner of Police (1994) 34 NSWLR 715; R v Central Criminal Court; Ex parte Francis & Francis [1989] AC 346, cited with approval in Clements at 562-565 [217]-[218]. It is important to bear in mind that the fraud exception is based on public policy grounds. The principle is sufficiently flexible to capture a range of situations where the protection of confidential communications between lawyer and client would be contrary to the public interest: see Kearney at 514-515; R v Cox at 614. This aspect of the principle is reflected in the statement that '[t]he privilege takes flight if the relationship between lawyer and client is abused': Clark v United States (1933) 289 US 1 at 15; see also Kearney at 514 and 524. In Barclays Bank , communications between the client and his lawyer in relation to the setting up of transactions at an undervalue so as to prejudice the bank were held to be 'sufficiently iniquitous for public policy' to require those communications to be discoverable. They may well have thought that the transactions would not fall to be set aside ... either because they thought that the transactions were not at an undervalue or because they thought that the court would not find that the purpose of the transactions was to prejudice the bank. But if this is what they thought then there is a strong prima facie case that they were wrong. Public policy does not require the communications of those who misapprehend the law to be privileged in circumstances where no privilege attaches to those who correctly understand the situation. In Propend at 514, Brennan CJ expressed the test as being one of 'reasonable grounds for believing' that the relevant communication was for an improper purpose. The requirement has also been described as one of a 'prima facie case': Butler v Board of Trade [1971] 1 Ch 680 (' Butler' ) at 689; cf Baker v Evans (1987) 77 ALR 565 at 574. In Kearney at 516, Gibbs CJ approved the test formulated in O'Rourke v Darbishire [1920] AC 581 at 604, namely that 'there must be something to give colour to the charge'; 'the statement must be made in clear and definite terms, and there must further be some prima facie evidence that it has some foundation in fact'. The High Court in Propend applied this test: at 514 per Brennan CJ, at 521 per Dawson J, 534 per Toohey J, 546 per Gaudron J, 556 per McHugh J, and 592 per Kirby J. It is not necessary to prove an improper purpose on the balance of probabilities. The 'prima facie' test arguably reflects the fact that issues of legal professional privilege are usually dealt with in the interlocutory stages of a proceeding, but the authorities have not departed from that formulation where a declaration is sought in relation to privilege issues: Butler ; Propend; Beazley . It must also be established, on the same prima facie basis, that the communication which is the subject of the claim for privilege was made in furtherance of, or as a step preparatory to, the commission of the fraud or wrongdoing. In Butler, Goff J found at 687 that a letter written by the plaintiff's lawyer which volunteered a warning that the plaintiff may incur serious consequences if he did not take care was not shown to be 'in preparation for or in furtherance of or as part of any criminal designs on the part of the plaintiff': see also Zemanek v Commonwealth Bank of Australia (unreported, Federal Court, Hill J, 2 October 1997). In Propend , the High Court considered whether a charge of improper purpose must be based on evidence that is admissible in the proceeding. The only evidence of alleged illegality before the trial judge in Propend was the sworn information which supported the issue of a search warrant for the relevant documents. The Court held that, while the sworn information was admissible to establish the basis upon which the warrant was issued, it was not admissible to show that the copy documents were not privileged: see at 514 per Brennan CJ, 557 per McHugh J, 576 per Gummow J, 547 per Gaudron J, and 593 per Kirby J. The iron filings claim refers to a claim by GBI for a rebate of US$2,016,133.00 on account of the fact that earlier shipments of wheat by AWB to GBI had been contaminated by iron filings. Lindberg agreed to pay this sum to GBI in settlement of the iron filings claim in about October 2002 during the course of a visit to Bagdad. An email dated 7 November 2002 from Chris Whitwell of AWB ('Whitwell') to Lindberg and others reporting on the trip to Iraq in October 2002 stated that the responsible Iraqi Minister had asked for repayment of the iron filings rebate through the 'inland transport mechanism'. The same email referred to the fact that the Iraqi Minister was seeking cabinet approval for repayment of the Tigris debt. At the outset of this case, the Commonwealth contended that any legal advice that AWB obtained in connection with the Tigris transaction was waived by virtue of AWB's production to the Commission of a partly masked memorandum of 7 February 2003 dealing with the subject of the iron filings payment and Tigris petroleum fee. On the first day of the hearing, AWB announced that it was no longer seeking a declaration of privilege in respect of documents connected with the Tigris transaction which the Commonwealth sought to challenge on the basis of the fraud exception. Subsequently, AWB made it clear that this concession did not extend to six documents relating to the iron filings rebate payment. During the course of the hearing in this Court, AWB produced an unmasked copy of the memorandum of 7 February 2003 and provided it to the Commonwealth. The Commonwealth tendered the memorandum as an exhibit in this proceeding, without any objection from AWB. The memorandum contains a fairly full description of the way in which AWB planned to pay the iron filings claim to GBI. In addition, for the record IS & M has negotiated (through an uplift in price] the recovery of a USD 8.375 million outstanding debt to Tigris by IGB through this contract. AWB will repay this debt back to Tigris less an agreed recovery fee of USD 500 K on a pro rata basis as tonnage is shipped. IGB have agreed to raising the contract price by the debt amount and when payments are made under the Letter of Credit AWB will pay Tigris its debt less AWBs recovery fee. Now that the new contract has been concluded ISM need a sign off to organise this payment when shipments start. Instead, we are repaying part of the contract price for the 8 vessels following a re-negotiation of the sale price due to a downgrading of the grain (which potentially contained iron filings). Furthermore draw down from the escrow account is only allowable under strict conditions. Those conditions include, at clause 8(a)(iii) that the goods to which payment is referable shall have arrived in Iraq. In this case, the goods have already arrived in Iraq and HAVE been paid for in full. However, the Resolutions are SILENT on the procedure for any repayment of part of the price in circumstances where there has been a quality complaint (and a subsequent renegotiation of price). This is a commercial and political issue, which AWB's management will need to consider. In Public affairs opinion as long as the repayment is legal and could not be seen to be breaking UN Sanctions then we should proceed (with the proviso that we have an independent legal opinion to that effect - see above legal opinion). IS & M on the other hand do not want them involved and feel confident that this issue could be handled without the need for the OIP to be consulted. IS & M also believe that failure to refund this agreed debt in this way would have serious implications for the execution of the new contracts. AWBI are aware of all the issues laid out above and in light of the commercial imperative of this situation agree with the recommendation as laid out below. They do however insist that the Managing Director is appraised of the situation. IS & M will also look to obtain written agreement from IGB to the payment in the format agreed by legal however it is not guaranteed. The timing of such a disclosure is important and we would recommend that nothing be done until at least Letters of Credit are in place for these contracts. Given that this is unlikely to happen until after a war with Iraq it may allow us a further chance of renegotiation with a new regime. A surcharge of US$8.375 pmt was added to each contract in respect of the Tigris debt, as shown by an email from Nigel Edmonds-Wilson to Scales and others at AWB dated 12 December 2002. The same email shows that in each contract the inland transportation fee was set at US$51.15 pmt. At the Commission, Mr Geary of AWB gave evidence that the prices in these two contracts were inflated to cover a component for the Tigris debt and a component for the US$2 million iron filings rebate. He also said that the United Nations was not advised at any stage that the prices for wheat in these two contracts had been inflated in this way so as to cover the Tigris debt and the iron filings claim. To adopt the words of Viscount Finlay in O'Rourke , the evidence gives ample 'colour to the charge' that the prices in these two contracts were falsely misrepresented. The evidence shows that the prices in the two wheat contracts were inflated as a means of extracting money from the United Nations' escrow account. Having regard to the terms of the memorandum of 7 February 2003, there are reasonable grounds for believing that, having extracted approximately US$2 million from the escrow account to meet the iron filings claim, AWB planned to pay that money in instalments to GBI via the mechanism of inland transportation fees. The material before me, including Whitwell's email of 7 November 2002 and his memorandum of 7 February 2003, indicates clearly that AWB knew that paying inland transportation fees to Alia was a means of making payments to the Iraqi Government. This plan was concealed from the United Nations. The planned payments of the iron filings claim were never carried into effect because the invasion of Iraq intervened. Scales gave evidence to the Commission that the iron filings money has never been paid and remains in AWBI's accounts. However, the fact that the payments were never made to the GBI will not prevent the application of the fraud exception so long as there is sufficient evidence that the communications were in furtherance of, or preparatory to, the commission of the fraud or impropriety in the broad sense described above: see Butler; and Clements at 562 [213]. In my view, the evidence establishes a more than adequate prima facie case that AWB knowingly and deliberately disguised the true nature of the prices in contracts A1670 and A1680. If it be relevant, I also consider that the evidence establishes the foregoing matters on the balance of probabilities and to a level of satisfaction commensurate with the seriousness of the allegation: see Briginshaw v Briginshaw [1938] HCA 34 ; (1938) 60 CLR 336 at 362 per Dixon J. No question arises here of evidence which would not be admissible in a final hearing: cf Propend . AWB argued that there was no evidence that the transaction furthered any particular fraud, iniquity or illegality. It submitted that it is common ground that the United Nations' resolutions were not in terms incorporated into Australian law. AWB submitted that, consequently, the fraud exception is not available to take the documents out of the operation of the doctrine of legal professional privilege. This narrow approach is at odds with the authorities that stress the wide range of fraudulent or iniquitous activities that fall within the principle. I have inspected the six documents that were said to relate to the iron filings claim. My inspection of AWB's documents revealed a further four documents that fall within this category and are still the subject of a privilege claim. I am satisfied that these 10 documents are not privileged. The documents were, prima facie, brought into existence in furtherance of an improper and dishonest purpose, viz inflating the prices of contracts A1670 and A1680 so as to extract payments out of the United Nations' escrow account that would then be utilised, in part, to satisfy a compensation claim by GBI. Prima facie, the evidence establishes that the transaction was deliberately and dishonestly structured by AWB so as to misrepresent the true nature and purpose of the trucking fees and to work a trickery on the United Nations. It would be contrary to public policy for the privilege to enure in communications of this kind. The 10 documents in question are listed below in my conclusions. There is an alternative basis for rejecting AWB's claim for privilege over the 10 iron filings documents. AWB's disclosure of the memorandum of 7 February 2003 and its tender by the Commonwealth as an exhibit in these proceedings, without any objection or claim to confidentiality by AWB, effects a waiver over the subject matter of the legal advice set out in the memorandum. My inspection of the 10 documents relating to the iron filings claim confirms my view that those documents relate to the subjects and issues that are canvassed in the memorandum of 7 February 2003. If, contrary to my view, any privilege subsisted in any of the documents, it has been waived by AWB. When the Commonwealth tendered the unmasked version of the memorandum of 7 February 2003, I asked Mr Judd why AWB's production of that document did not waive any privilege that subsisted in documents relating to the iron filings claim. Mr Judd's response was that the Commonwealth did not put its case on that basis. I do not think that is entirely correct. In the particulars of its case, the Commonwealth contended that AWB's disclosure of the masked version of the memorandum of 7 February 2003 worked a waiver of any privilege in documents relating to Project Water and the Tigris transaction. The Commonwealth has never varied from the position that the iron filings claim was an integral part of the Tigris transaction. However, the Commonwealth did not in its closing address make any submission that privilege over the six documents had been waived by the production of the unmasked memorandum. To that extent, Mr Judd's response was correct. Despite these matters, I have concluded that the Court cannot ignore the effect of the evidence before it, especially as AWB is seeking a declaration that the 10 documents are privileged. CONCLUSIONS It is not feasible in these reasons for judgment, when so many documents are at issue, to set out separate reasons for the decision I have reached on each particular document. I have reached the conclusions set forth hereunder after inspecting all of the documents in AWB's revised list of privileged documents and by applying the legal principles and factual findings identified above. AWB has not made out its claim for privilege in respect of the following documents: 229, 245-247, 279, 280, 362B, 469A, 495, 542, 565, 586, 675, 784, 867, 872, 890AN, 1090, 1091, 1095, 1096, 1098, 1099, 1118 and 1262. These documents fall into the following categories : (a) documents for which there is no evidence of purpose to satisfy the dominant purpose test (documents 229, 469A, 542 and 565); (b) documents where the evidence does not satisfy the dominant purpose test, having regard to the nature and content of the document and the vague and formulaic evidence contained in the relevant segments of the affidavit evidence (documents 279, 280, 495, 675, 784, 867, 872, 890AN, 1095, 1096, 1098, 1099, 1118 and 1262); (c) a document that was provided to a third party and therefore was not a confidential communication for the dominant purpose of obtaining or giving legal advice (document 362B); (d) documents which are partly not proven and partly waived (documents 245-247, 586, 1090, 1091 which are discussed further below). The waived documents are included in the list at [237] below. In addition, there are 10 documents relating to the iron filings claims. They are as follows: 30, 31, 32, 32A, 33, 41, 594, 595, 595A and 596. Privilege does not attach to these documents as they were brought into existence in furtherance of a fraud or other impropriety. Alternatively, any privilege has been waived by AWB. These documents are included in the list at [237] below. AWB has waived any legal professional privilege that subsisted in the following documents: 12, 301-33, 41, 56, 77-79, 81-85, 100-106, 110-117, 120-124, 126, 127, 129-132, 136, 137, 139, 140, 161, 213, 229, 235, 240, 241, 245-247, 250, 252, 253, 257-259, 263, 265-268, 271, 279, 280, 283, 284, 290, 292, 294-301, 308-310, 313, 326, 327, 330-333, 335A-342, 344, 348, 353A, 355-357, 359, 361, 362A, 365, 375, 377-380, 385, 386, 394, 422, 423, 424, 425, 432, 443, 445-449, 455, 461, 463, 465, 469A, 486, 487, 495, 507, 508, 513, 523, 524, 533, 534, 541-544, 547, 548, 553-555, 557, 563, 565, 568-579, 582-590, 592, 594-596, 599, 601-603, 675, 681, 681A, 689A, 689B, 699-704D, 704J-704P, 704T, 704X, 704AA, 704FF, 704KK, 711-715, 721, 722, 725, 729-733, 736-739, 749, 753, 755-757, 762, 771, 788, 794, 798, 815, 817, 820, 823, 824, 837, 840, 847, 867, 890AA, 890AD, 890AE, 890AH, 890AI, 890AJ, 890AK, 890AM, 890AN, 890AP, 890AQ, 1005, 1006, 1009, 1011-1013, 1025, 1026, 1028-1030, 1032, 1033, 1051, 1056, 1059, 1070, 1088-1096, 1098, 1099, 1119- 1121, 1123, 1124, 1144-1152, 1161-1163, 1183-1187, 1221, 1222, 1262 and 1297. In broad terms, the documents over which privilege has been waived comprise documents falling within the following categories: documents which define the scope of AWB's internal review or which identify what investigations were carried out; summaries, chronologies and other documents which record or analyse the results of those investigations; witness statements and other notes or records of interviews of AWB personnel; records of meetings and periodical reports concerning the findings of the review; and documents seeking advice, or comprising or recording advice provided to AWB, as to whether AWB or any of its employees engaged in wrongdoing in connection with wheat sales to Iraq under the OFF Programme, including any wrongdoing in connection with the Tigris transaction. As I have explained, waiver does not turn on whether the documents attracted the description 'Project Rose' or 'Project Water'. On inspection, I determined that numerous documents marked 'Re: Project Rose' or the equivalent fall outside the scope of any waiver as they related to distinct matters about which AWB sought or obtained legal advice, such as the powers and jurisdiction of the PSI and IIC investigators, other US legal issues, the memorandum of understanding between the IIC and AWB, representation of AWB employees at IIC hearings, the powers of the Wheat Export Authority, and issues of directors' and officers' insurance and corporate governance. There are a number of documents where, on inspection, I have determined that the document is only capable of attracting privilege as to part (the balance of the claim for privilege not having been proved), but that such privilege has been waived. These documents require some further explanation: (a) Documents 245 and 246 are drafts of an information paper dated 13 August 2004. Document 247 substantially replicates the draft information paper in a power point presentation format. AWB claims privilege in two parts of each of these documents, as indicated on the face of the documents. In substance, AWB contended that these parts attracted privilege because they recorded legal advice. On inspection I concluded that the claim is not established in respect of the first part of the documents. I have determined that the second part claimed attracts privilege but AWB has waived privilege in respect of that second part. (b) Document 586 is a table of various legal advices in the possession of Blakes. AWB contended that the table recorded legal advice. On inspection I concluded that this claim is not sustainable , save for the entries listed at 23, 24 and 25 of the table which disclose the substance of legal advice given by Mr Tracey QC. I have determined that AWB has waived privilege in respect of entries 23, 24 and 25 of the table. (c) Documents 1090 and 1091 are, respectively, the minutes of AWB and AWBI board meetings dated 22 February 2005. AWB claims privilege in two parts of each of these documents, as indicated on the face of the documents. It contended that these parts recorded legal advice. As to the first part claimed, this is not borne out by my inspection. I have determined that the second part claimed attracts privilege but AWB has waived privilege in respect of that second part. There are also a number of documents which I have determined to be privileged only as to part of the claim made by AWB. After inspecting the documents and applying the principles I have discussed, I have determined that certain parts of the documents are privileged, while privilege in another part or parts of the documents has not been proved or it has been waived. It is necessary to deal with each of these documents: (a) Document 138 contains three pages of handwritten file notes. Privilege has not been established in respect of the first page of the document. If (contrary to my view) privilege is attracted, it has been waived. Privilege is established in respect of the second page of the document. Privilege has not been established in respect of the third page of the document; or if privilege is attracted, contrary to my view, it has been waived. (b) Document 251 is a document consisting of a number of entries in a spreadsheet. AWB claims privilege in certain parts of the document, as indicated on the face of the document. AWB has waived privilege in respect of the parts claimed on pages 367, 368, 380, 390, and the first of the two parts claimed on each of pages 388 and 395. The page numbering refers to the system that AWB has adopted for its document control purposes. Otherwise, the document attracts privilege to the extent claimed. (c) Document 376 is a handwritten file note headed 'Iraq Report for JIS'. I have determined that the document attracts privilege, but that AWB has waived privilege in respect of the part of the document that relates to the Tigris transaction, namely the second entry commencing with the words 'completion of Iraq mkt. access arrangements' and concluding with the words 'confirm there is compliance'. (d) Documents 503, 520, 522, 526, 527 and 965 contain various drafts of a briefing paper initially prepared by ABL. I have determined that each of the documents attracts privilege, but that AWB has waived privilege in respect of the part of each document under the headings 'Legal Review' and 'Key Messages'. (e) Document 516 is another draft of the briefing paper referred to in the preceding subparagraph. I have determined that the document attracts privilege, but that AWB has waived privilege in respect of the part of the document under the heading 'Legal Review'. (f) Document 691 is a record of a meeting attended by various internal AWB employees and external lawyers. AWB said that the document attracted privilege in part. Dr Fuller gave evidence that it recorded legal advice of Leonie Thompson. I have determined that the passage on page 028 of the document opposite the entry 'Leonie T' is privileged. As to the remainder of the document, it does not record any legal advice and is not privileged. (g) Document 696 is a record of a meeting attended by various internal AWB employees and external lawyers. AWB claimed that the document was part privileged, and relied on Dr Fuller's evidence that it recorded legal advice given by Leon Zwier. I have determined that the passage on page 037 of the document opposite the heading 'Leon Zwier' (to the balance of the page) is privileged. Privilege has not been established in respect of the remainder of the document. If any privilege attached to the remainder, it has been waived. (h) Document 704S is a record of various matters discussed between AWB's external and internal lawyers. I have determined that AWB has waived privilege over the six lines commencing with the entry which includes the words 'iron filings case'. The balance of the document is privileged. (i) Document 704II is a handwritten record of various conversations on 20 and 28 September 2004. On the face of the document, it appears that a claim for privilege is made only over the part of the document which is dated 28 September 2004. Privilege has been established over the entry dated 28 September 2004. However the evidence of Ms Peavey in relation to document 704II addresses the entry of 20 September 2004. If privilege is claimed over the part of the document which is dated 20 September 2004, it has not been established. (j) Document 1097 is the minutes of a meeting of the AWB and AWBI joint board committee. There are two parts of the document over which a claim for privilege is made on the ground that they record legal advice. On inspection I determined that the part of the document consisting of the first bullet point under the heading 'Project Rose' is privileged. However, privilege has not been established over the third bullet point. If privilege is attracted over that part of the document, it has been waived. Document 1297 is a redacted copy of an email from Cooper to Lindberg and Scales, copied to Quennell, dated 16 November 2004. It appears that the redactions mask those parts of the document over which a claim for privilege is made. Prima facie, the document appears to be within the scope of the waiver I have identified and applied in these reasons for judgment. However, I propose to invite further submissions from the parties as to whether document 1297 is in contest and, if so, I will direct that an unredacted version of the document be filed with the Court for its inspection. As for the remaining documents, AWB has in some instances claimed privilege over the entire document and in other instances it has only claimed privilege over a designated part or parts of the document. AWB has established that legal professional privilege attaches to the following documents to the extent claimed by it: 20, 21, 55, 89-98, 107, 108, 119, 133, 135, 143-146, 150-152, 154-160, 162-190, 194, 196, 197, 199-201, 204-211A, 215, 217-222, 224-228, 230-234, 237-239, 254-256, 260-262, 264, 269, 270, 273-278, 281, 282, 285, 286, 288, 293, 302-306, 311, 315-324, 334, 343, 345-347, 349-353, 354, 358, 362, 368, 374, 381, 382, 384, 387, 388-393, 395, 398-408, 410, 412-414, 416-421, 423A, 426-428, 430, 431, 433-442, 444, 450-454, 456, 457, 459, 460, 462, 464, 465A, 467, 468, 470-473, 475-485, 488, 490-494, 496-502, 504-506, 509, 510, 514, 515, 517-519, 521, 525, 529, 530, 536-540, 549-552, 556, 558-562, 564, 566, 567, 581, 591, 593, 600, 605, 671, 672, 673A, 679, 694, 696A, 704E --- 704I, 704Q, 704R, 704U-704W, 704Y, 704Z, 704BB-704EE, 704GG, 704HH, 704JJ, 706-710, 724, 727, 740-745, 747, 748, 751, 752, 754, 758-761, 763-766, 768-770, 772, 773, 775, 777, 779-781, 785, 787, 790, 792, 797, 799-802A, 804, 806-814, 816, 818, 819, 821, 822, 826-831, 835, 849-852, 856, 857, 860, 861, 863, 865, 866, 868-870, 873, 876, 877, 879, 881-883, 885, 887-889, 890AB, 890AC, 890AG, 890AIA, 890AL, 890AR-AZ, 890BA-890BG, 937AJ, 937AP, 942, 947, 948, 950-953, 956-964, 966, 970-992, 994, 995, 997, 998, 1000-1004, 1071, 1073-1081, 1082A, 1083, 1086, 1087, 1112-1113A, 1114-1117, 1118A, 1152A, 1155, 1158-1160, 1190, 1195, 1196, 1200, 1206, 1213-1215, 1218, 1225, 1226, 1229, 1231, 1232, 1234, 1237, 1239, 1240, 1243, 1246-1250, 1252, 1255, 1256, 1260, 1261, 1293 and 1299-1301. COPY DOCUMENTS AWB has filed a list of duplicate privileged documents. The list is Exhibit JM5 to the affidavit of John Mitchell sworn 28 July 2002. Each document in the list is a duplicate of an identified document in AWB's list of privileged documents. The duplicates fill 17 lever arch folders. AWB has sought a declaration that the documents in this list are, or record, confidential communications that are protected from production to the Commissioner by legal professional privilege. At the hearing, neither AWB nor the Commonwealth directed any substantive submissions to the status of these duplicate documents. In its written submissions, AWB referred to the principles enunciated in Propend as to the circumstances in which a copy of an unprivileged document can itself attract legal professional privilege. In those written submissions, AWB contended that the qualification which Brennan CJ expressed in Propend at 512 does not represent the law. The Chief Justice's qualification was that if the original unprivileged document is not in existence or its location is not disclosed or it is not produced, and if no unprivileged copy or other admissible evidence is available to prove the contents of the original document, then privilege cannot be maintained over the copy. However, AWB did not make any submissions as to how, or why, this qualification might be relevant to its claims. AWB adopted the position that the status of the duplicate documents depends on my decision as to the status of the corresponding original document. The Commonwealth did not make any submission to the contrary at the hearing, although its written submissions contended that AWB had failed to identify the purpose for which particular duplicates were created, or to establish that they were kept confidential. It would seem a harsh result if AWB were to lose the benefit of privilege in original documents simply because it has not explained or is unable to explain the circumstances in which copies were made. In large organisations and within law firms, it is hardly unexpected that multiple copies of privileged documents will be brought into existence and that, long after the event, it may be difficult to adduce evidence as to the circumstances in which the copies were made. The submissions of the parties were so cursory that I did not gain any meaningful assistance from them. However, I have reached the following conclusions. Where I have held that specified original documents do not attract legal professional privilege, no case has been made out that duplicates of those documents are entitled to privilege. Where I have held that specified original documents attract legal professional privilege, I have concluded that privilege attaches to the duplicates. The duplicates come from the custody of AWB, and there is nothing to suggest that the duplicates were dealt with, or communicated, in ways that would deny the privilege claim. Furthermore, the material before me does not identify any specific grounds for concluding that the duplicates do not attract privilege. A number of documents in AWB's revised list of privileged documents are said to be duplicates of other documents in the list. There is no evidence as to some of those documents (documents 291, 307 and 580) and others have been removed (documents 26 and 1031). Consequently, I have not made any findings about those documents; it is unclear whether they remain in contest. It is necessary to make specific reference to a number of other duplicate documents in the list: (a) Document 582 is a copy of document 140. I have determined that AWB has waived any privilege attaching to the documents. (b) Document 998 is a copy of document 995 and document 1001 is a copy of part of document 1000. I have determined that the originals are privileged. For the reasons given at [247] above, privilege attaches to the copy documents. (c) Document 1006 is said by Chesterman to be a copy of document 1005. My inspection of the documents has revealed that this is not the case. There is therefore no evidence capable of supporting the claim for privilege in respect of document 1006. However, even if there were evidence that document 1006 attracted privilege, I am satisfied that AWB has waived the privilege. RELIEF I have determined that specified documents are not the subject of legal professional privilege and that other documents attract legal professional privilege. The Court has power to make declarations to this effect. I propose to give AWB and the Commonwealth an opportunity to make submissions as to the form of any declarations that should be made to give effect to these reasons for judgment. AWB's second further amended application also sought declarations relating to the construction and validity of the Amending Act. In addition, AWB sought a declaration that the exercise of powers by the Commissioner under s 6AA(2) of the RCA, while these proceedings are pending before this Court, would constitute a contempt of Court, and injunctions restraining the Commissioner from making a decision under s 6AA(2) of the RCA. No live issues arise concerning these claims for relief: see AWB Ltd v Honourable Terence Rhoderic Hudson Cole (No 2) [2006] FCA 913. Neither AWB nor the Commonwealth put any submissions to me, whether orally or in writing, concerning these claims for relief. It is unnecessary to address them further. Accordingly, the only orders I propose to make at this stage are as follows: (1) Within 3 business days AWB and the Commonwealth file an agreed minute of orders that give effect to these reasons for judgment. If AWB and the Commonwealth are unable to agree upon appropriate orders, within 3 business days AWB and the Commonwealth shall each file and serve a minute of the orders that it contends are necessary and appropriate to give effect to these reasons for judgment. (2) The proceeding be adjourned to Monday 25 September 2006 at 10.15am for any argument as to the orders. | legal professional privilege documents required to be produced by notice under royal commissions act 1902 (cth) whether documents brought into existence for the dominant purpose of giving or obtaining legal advice whether documents brought into existence in furtherance of fraud or improper purpose waiver of privilege imputed waiver associated material waiver whether privilege has been waived by disclosures made by applicant to independent inquiry committee into the united nations oil-for-food program, australian government and royal commission evidence |
The Minister for Immigration and Multicultural Affairs conceded that there was jurisdictional error in the decision of the Refugee Review Tribunal ("the Tribunal") of 25 February 1999. Nonetheless, his Honour refused relief on the basis of the appellant's unwarrantable delay in bringing the application for review to the Federal Magistrates Court. The Tribunal had affirmed the decision of a delegate of the Minister of 20 October 1997 refusing to grant the appellant a protection visa. 2 The appellant claimed to be a citizen of the People's Republic of China who had arrived in Australia on 30 August 1997. He applied for a protection visa on 19 September 1997. In his application, in response to the four major questions under the section "Your reasons for claiming to be a refugee", was written "Please refer to the statement that will be provide [sic] later". No such statement was received by the Department of Immigration and Multicultural Affairs ("the Department"). On 20 October 1997, the Department wrote to the appellant advising that his application had been refused essentially for the reason that the appellant had not made any claims in relation to having a well founded fear of Convention based persecution. Under the section headed "Your reasons for making this application" in the form, was written "Please see my statement. I will provide later". On 8 January 1999, the Tribunal wrote to the appellant informing him that it was not prepared to make a favourable decision on the material it had, and invited him to attend a hearing. However, details of the time and date of the hearing were not provided. The letter asked the appellant to complete an enclosed "response to hearing offer" form and return it by 29 January 1999. No response was received. On 26 February 1999, the Tribunal wrote to the appellant informing him that the Tribunal had decided he was not entitled to a protection visa, enclosing the decision and reasons for decision of 25 February 1999. The Tribunal had not received any further information or statement from the appellant, notwithstanding what he had said in his application. The Tribunal affirmed the delegate's decision because it was "unable to establish any relevant facts" on the basis of the limited material before it. 4 By letter received 9 August 1999, the appellant wrote to the Minister in effect asking the Minister to exercise the power under s 417 of the Act by substituting the Tribunal's decision with a decision granting a protection visa. On 16 February 2000, the Department replied to the appellant advising that the Minister had decided, on 8 February 2000, not to exercise his power. In 2005, the appellant was placed in Immigration Detention following his apprehension for breach of visa conditions. With the assistance of a solicitor appointed to advise him under the Federal Court Advice Scheme, an amended application was lodged on 11 October 2005. Two grounds were raised. The first was that there had been no valid application for a protection visa, and the Tribunal had no power or authority to make the decision it did. The second, expressed in the alternative, was an allegation that the Tribunal failed to exercise its jurisdiction by failing to invite the applicant to a hearing in accordance with s 426 of the Act as then in force. 6 The Minister conceded that by reference to Xie v Minister for Immigration and Multicultural Affairs [1999] FCA 1480 ; (1999) 167 ALR 188, jurisdictional error had been made by the Tribunal, as alleged in the second ground. That then raised the question of whether relief should be refused because of the delay in bringing the application. Evidence was given by the appellant seeking to explain the delay. The Federal Magistrate did not accept the explanation as truthful or reliable. In particular, his Honour did not accept that the appellant was completely unaware of the Tribunal's decision. No written submissions were filed by the appellant. 8 The power to refuse relief for unwarrantable delay is a discretionary power. In an appeal from the exercise of such a power, it is necessary for the appellant to demonstrate that there was some error of principle or some fundamental misapprehension of the facts when the discretionary power was exercised. The appellant has not pointed to any such error in this appeal. 9 I have read the reasons for judgment of the Federal Magistrate. It is not apparent to me that any error attended the exercise of the discretionary power to refuse relief. 10 The appeal should be dismissed with costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. | no point of principle migration |
2 and Irrwanyere Mt Dare native title claim groups (together, the claimants), over claim areas along the northern border of South Australia. The WY claim area also covers the south west corner of Queensland. Each of the corresponding claim areas include part of the Witjira National Park (the Park) and each of the claim areas overlaps with one or more of the other claim areas. 2 The Park was reserved as a National Park and vested in the Crown under the provisions of the National Parks and Wildlife Act 1972 (SA) (NPWA). Prior to this reservation and vesting in 1985, the whole area now comprising the Park was held under various pastoral leases, pastoral permits, water reserves and miscellaneous leases or was vacant crown land. 3 The Park is currently the subject of two leases. The first is a 99 year lease between the Minister for the Environment and Natural Resources and Irrwanyere Aboriginal Corporation ("the IAC") over the whole area of the Park save for the area covered by the Mt Dare Lease and two other areas that have been "fenced out" to adjoining pastoral leases. The lease is dated 5 October 1995 subject to a Deed of Variation dated 13 August 2007 (the lease as varied being "the IAC Lease") and is made pursuant to section 35 of the NPWA for the purposes of the use and occupation by Aboriginal people having traditional association with the Park, the enhancement of the cultural and social aspirations of those people and to achieve the management objectives set for the Park under the NPWA . The IAC Lease is further expressed not to have any extinguishing effect on the native title rights and interests of those Aboriginal people. 4 The second lease over the Park between the Minister for Environment and Planning and Driveline Pty Ltd dated 1 July 1989 ("the Mount Dare Lease") is over the area of land in and about Mt Dare Homestead as described in that lease. The Mount Dare Lease is made pursuant to section 35 of the NPWA and is for the purpose of a tourist facility. It was held by the Indigenous Land Corporation ("ILC") at the time the SAD66/2005 Irrwanyere Mount Dare Determination Application was made. 5 Since 1995, the Park has been managed in accordance with the Management Plan adopted pursuant to the NPWA for the Park dated October 1995. 6 The parties to these determinations agree that section 47A of the Native Title Act 1993 (Cth) (" Native Title Act ") applies to the native title claims to the extent that they relate to the determination areas save as to those two areas that have been "fenced out" to adjoining pastoral leases and that all prior extinguishment over the determination area save as to those two areas is to be disregarded. A determination of native title would not affect the validity of the reservation of the determination areas as a National Park or its vesting in the Crown or of the grant of the IAC Lease. 7 The Parties executed an Indigenous Land Use Agreement ("the ILUA") and a Co-Management Agreement ("the CMA") relating to the Park on 13 August 2007. 8 The parties to each of the applications for determination of native title who have interests in those parts of the claim areas that cover the Park have reached an agreement and have applied under s 87 and 87A of the NTA for three determinations by consent over those parts of the claims that cover the Park (the determination area). Despite there being different claimants for each claim, the proposed native title holders are identical across the determination area, being those Lower Southern Arrernte and Wangkangurru persons who have a traditional connection to the determination area, as described in schedule 2 of each of the Determinations. The determination area covers the whole of the Park, the whole of the Irrwanyere Mt Dare native title claim and part of the other three native title claims. Maps of the determination area are included in schedule 1 of each of the Determinations. 2 claims were filed on 21 August 1997, 30 September 1998 and 26 May 1998, respectively. On 25 March 2002, O'Loughlin J referred the WY claim to the National Native Title Tribunal (NNTT) for mediation, with the Eringa and Eringa No. 2 claimants being entitled to participate. The NNTT has regularly reported on the progress of that mediation, most recently on 29 February 2008. 10 One issue dealt with in that mediation was an overlap between the WY, Eringa and Eringa No. 2 claims. The area of the overlap was primarily over the Park, the lease over which is held by the IAC. The IAC is comprised of members of each of the claimants with a claim over the Park. During negotiations facilitated by the NNTT in February 2005, the claimants agreed that the IAC would assume responsibility for each of the claims in the overlap area. With the overlap issue thus resolved, the NNTT facilitated further negotiations between the legal representatives of the claimants, South Australian Native Title Services Ltd (at the time known as the Aboriginal Legal Rights Movement), and the State of South Australia with a view to achieving a consent determination over the Park. 11 At the mediation in February 2005, the claimants also agreed that the IAC should lodge a further application for native title over the part of the overlap area which comprises the Mt Dare homestead lease. That application (the Irrwanyere Mt Dare claim) was filed on 30 March 2005 and was made specifically for the purpose of securing rights under section 47A of the NTA (the lease was at the time held by the ILC). 12 As a result of the above events, the parties in each of the four claims were able to come to an agreement, and now seek a determination of native title over the Park, by consent. The proposed orders would effectively split the determination area into three non-overlapping segments. Those segments would then become separate proceedings over which determinations of native title could be made. I note that the native title holders will be identical for each of the segments. 14 I consider the orders sought under s 67 to be appropriate. Accordingly, I make the orders as sought by consent of the parties. Determinations in the other proceedings are sought under s 87A. The purpose of s 87A as articulated in the Explanatory Memorandum to the Bill inserting the section is "to facilitate resolution of part of a claim by agreement where certain interest holders agree to a determination being made". The provision is intended to "assist to prevent those parties with interests that only relate to part of the claim area, and other parties with less significant interests in relation to the overall claim, from blocking resolution of the claim in relation to a separate part of the claim area". 16 Under both section 87 and 87A , in order to make the proposed consent determinations, the Court must be satisfied that it has the power to do so, and that it is appropriate to make the orders sought. 17 Both sections require that the period of notice under s 66 of the NTA must have elapsed and s 87 also requires that a signed copy of the agreed orders be filed with the Court. The relevant notification periods under s 66 expired on 7 May 2001 (WY), 13 March 1998 (Eringa), 17 September 2003 (Eringa No. 2) and 1 February 2006 (Irrwanyere Mt Dare). A copy of the orders upon which the parties have agreed was filed in each proceeding to which they are relevant on 13 November 2007. The minutes of consent orders relating to s 67 were filed later on 28 November 2008. 18 Section 87A(3) states that the Registrar must give notice to the other parties to a proceeding that the proposed determination of native title has been filed with the Court. On filing of the draft orders a registrar of the Court notified the parties to the WY, Mt Dare and Eringa claims that the proposed consent determinations had been filed in compliance with subsection 87A(3). The registrar enclosed a copy of the proposed determination and informed parties that they would have 14 days to file an objection. An identical letter was sent to the parties in the Eringa No. 2 claim on 21 February 2008. 2 and WY claims) and Hamilton Station (respondent in the Eringa and WY claims). The representative's letter stated that there are areas of Witjira within the determination area that are fenced into Macumba and Hamilton Stations "as if they were part of their respective leases" and "areas within the respective pastoral leases that are fenced into the Park as if they formed part of the Park". The representative noted that these areas are to form part of future pastoral ILUA negotiations and as a consequence, her clients have no objection to the proposed Consent Determination over the Witjira Park. • a letter dated 27 November 2007 from Blake Dawson Waldron (BDW) acting for Telstra (respondent in the Eringa and WY claims). That letter indicated that, subject to resolution of some drafting issues which have now been addressed, Telstra does not object to the determination. Telstra has no interests in Wangkangurru/Yarluyandi Part A Proceeding. Telstra does have interests in the Irrwanyere Mt Dare Proceeding and these have been included in the determination and Telstra does not seek to become a party to that claim. • a letter dated 7 December from MacDonnells Solicitors acting for Ergon Energy Corporation (respondent in the WY claim) indicating that Ergon consents to the proposed determination in WY Part A. However, their interests have been explicitly dealt with in the proposed determination, of which they have been notified. The lessees have indicated that they do not object to the making of the consent determination, and as such do not seek to be joined as parties to the Eringa Part A Proceeding or the Wangkangurru/Yarluyandi Part A Proceeding. Consequently, I am satisfied that those persons are not required to be signatories to the agreement, and that the requirements of s 87A(1)(c) are otherwise met. Consequently, I find that the Court has the power to make the orders sought. It remains to now consider whether it is appropriate to make those orders. Consequently, I find that the Court has the power to make the orders sought. It remains to now consider whether it is appropriate to make those orders. Further, the connection which the peoples concerned have with the land or waters must be shown to be a connection by their traditional laws and customs. ... "traditional" in this context must be understood to refer to the body of law and customs acknowledged and observed by the ancestors of the claimants at the time of sovereignty. ... acknowledgment and observance of those laws and customs must have continued substantially uninterrupted since sovereignty. 27 In support of the application for a consent determination of native title, the State of South Australia has filed written submissions on behalf of all of the principal parties in each of the four claims. The link of the claimants to the land and waters of the park at the time of sovereignty is evidenced by numerous ancestors of the contemporary claimants who were born at various places in the area during the late nineteenth century. 29 The continued existence and vitality of the societies' traditional laws and customs is said to have traditionally been passed down through patrifilial association, which more recently evolved into a cognatic form, though with an emphasis in the Lower Southern Arrernte claimants on patrifilial association where that can be established. Accordingly, the manner in which the claimants have gained rights and interests is systematic and traditional. 30 The claimants have demonstrated that the individual societies are united in their acknowledgment and observance of traditional laws and customs by providing contemporary evidence of ways in which that is achieved. That included, for the Lower Southern Arrernte, claimants evidence concerning an age based hierarchy, visiting and cleaning sacred sites, teaching children about bush tucker in the Park, gender and other restrictions on ritual and religious information and behaviour, handing down of names, initiation ceremonies, particular kinship terms, songs and stories. For the Wangkangurru claimants, the evidence concerned a regional system of authority, age based hierarchy, belief in spiritual sanctions, handing down of names, kinship terms, the passing down of knowledge, stories and the use of bush tucker. 31 The claimants have maintained their connection with the area by the inheritance of rights from an ancestor. Other forms of physical connection exist through members visiting and cleaning sacred sites, teaching children about bush tucker in the Park, a claimant acting as a park ranger, and regular camping trips in the Park for the purpose of teaching dreaming stories to children. A number of claimants have also played an important role in the Park's land management. 32 The evidence shows that a number of 'core' and 'contingent' rights arise from the traditional laws and customs of the claimants. The core rights include the right to claim country as ones own, the right to acquire ownership and authority over knowledge and songs associated with the country, the right to speak for country, the right to be asked for permission to access country by 'non-owners', and the right to make decisions about country. Contingent rights are said to include the right to access and occupy the country, and the right to use the resources of the country. 33 The purpose of ss 87 and 87A of the Act is to facilitate and encourage the resolution of native title claims by agreement between the parties. Necessarily, the Court adopts a different approach to the task of deciding whether it is appropriate to enter a determination reached by agreement than it brings to the task of deciding whether native title should be recognised in a contested matter. In each case the definition of native title is the same. The Act requires the Court to set out details of the matters mentioned in s 225 in all determinations whether reached by agreement or contest. Although there needs to be some foundation upon which the Court can exercise its jurisdiction, in matters in which the parties have reached agreement on the terms of a determination the Court will have particular interest in whether the agreement has been freely entered into and on an informed basis: Nangkiriny v State of Western Australia [2002] FCA 660 ; (2002) 117 FCR 6 ; Ward v State of Western Australia [2006] FCA 1848 ; Lovett on behalf of the Gunditjmara People v State of Victoria [2007] FCA 474. If that question is answered in the affirmative, the Court will consider the fact that an agreement has been reached as weighing in favour of the making of a determination of native title: James on behalf of the Martu People v State of Western Australia [2002] FCA 1208. 34 The evidence provided in these matters supports the claimed connection of the claimants to their country. The determination sought does not appear in any way to be unfair or unjust. All parties to the agreement were legally represented and there is no suggestion that any party entered the agreement otherwise than by their own free will. Consequently, I consider that it is appropriate to make orders for the determination of native title over the determination area in the terms proposed. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | determination of native title by consent native title |
The Commission alleges that the first respondent, Cambur Industries Pty Ltd ('Cambur Industries'), engaged in the practice of resale price maintenance, contrary to s 48 of the Act. The second respondent, Mr John James Caulfield, is alleged to have been directly and knowingly concerned in, and party to, each and every contravention by Cambur Industries. Mr Caulfield is an employee of Cambur Industries. 2 Cambur Industries and Mr Caulfield have filed a joint Defence, and they have been represented by one firm of solicitors and one counsel. I will refer to them as the respondents, except where it is necessary to distinguish between them. 3 In their Amended Defence filed and served on 2 February 2006, the respondents admitted in substance the allegations made against them by the Commission. 4 I will set out my findings of fact based on the pleadings, including the admissions, and on the evidence put before me by way of affidavits. Neither party sought to cross-examine any of the deponents of the affidavits. 5 The issues which are in dispute are the fixing of the appropriate pecuniary penalties under s 76 of the Act, and one or two related factual matters. It is agreed by the parties that it is appropriate for me to make declarations, but it is necessary for me to carefully consider the form of the declarations which should be made. There is a dispute between the parties as to whether I should grant injunctions against the respondents. Cambur Industries has proffered an undertaking to maintain a trade practices compliance programme and I must consider the terms of that undertaking. 6 The Commission asked me to incorporate in the orders the findings of fact made for the purpose of determining the appropriate penalties and other remedies. I do not think that it is appropriate to do that for a number of reasons. First, it would make the orders of the court unnecessarily lengthy and it would raise the question of what findings should or should not be included. Secondly, such a course would create a risk of inconsistency between the findings in the orders and the findings in the reasons for judgment: Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (ACN 008 799 040) (2001) ATPR 41-802. Reference was made by the Commission to s 83 of the Act, but that section does not suggest that such a course is necessary or appropriate. The findings of fact in the reasons for judgment can be proved in the manner contemplated by the section. The company's business is divided into three divisions, which correspond to those different types of goods. The evidence is that for the most part the divisions operate separately. 8 The electrical goods supplied by Cambur Industries include kitchen products manufactured under two well-known brand names, Bamix and Magimix, such as stick mixers, juicers, food processors and coffee machines. The coffee machines are referred to as 'dual branded' Nespresso/Magimix. The contraventions in this case relate to the supply of the Bamix and Magimix products and the Nespresso/Magimix coffee machines. I will refer to these products as 'the Cambur products', except where it is necessary to distinguish between them. 9 The head office of Cambur Industries is in Victoria and the company has a regional office in New South Wales. The company has salespeople in Victoria, New South Wales and Adelaide. In the other States and Territories it operates through commission agents. Cambur Industries has about 35 employees, of whom approximately 60 per cent are full-time employees and 40 per cent are part-time employees. 10 The electrical goods division of Cambur Industries has four employees, one of whom is Mr Caulfield, who is the sales and marketing manager. The other three staff members report to him and he in turn reports to the managing director. Mr Caulfield is 57 years old and has worked as a salesperson for a number of years. Mr Caulfield and his wife have a small shareholding in Cambur Industries. Mr Caulfield is effectively the product manager for the Bamix and Magimix products, including the Nespresso/Magimix coffee machines. At the time of the conduct that contravened the Act, he was the one who made the decisions on behalf of Cambur Industries about the marketing and distribution of the Cambur products. At the time of the contravening conduct, Mr Caulfield was working in South Australia. 11 Mr Leigh Spencer Jeffs is the managing director and major shareholder of Cambur Industries. At the time of the contravening conduct, Mr Jeffs was working in Victoria. 12 In the financial year ended 30 June 2005, the sales revenue of Cambur Industries from all activities was $10,592,482. The gross profit was $7,719,173 and the net profit after expenses was $458,891. His opinion is that Cambur Industries is a mid-size player in the gift and homewares market, although, in monetary terms, its share is 'tiny'. As far as the market for electrical products is concerned, Cambur Industries' share of the total market for stick mixers, food processors and coffee machines is, according to Mr Jeffs, 'very small' and, in his opinion, in the order of approximately 3.3 per cent. The Commission did not put forward any evidence on the question of the market share of Cambur Industries in the electrical products market, but it did suggest that there were deficiencies in the evidence of Mr Jeffs. The evidence on market share is imprecise, and it goes no further than supporting a general finding (which I make) that the market share of Cambur Industries in the electrical products market is, and was at the time of the contravening conduct, relatively small. 15 Cambur Industries sold Cambur products to a number of retail outlets in South Australia and it is the conduct of the company and Mr Caulfield in relation to two retailers carrying on business in South Australia that is alleged to have contravened s 48 of the Act. 16 Pete N Peppa Pty Ltd conducts a business under the name 'Pete N Peppa'. It has a shop in Rundle Mall, Adelaide, where it sells kitchenware products and homeware products. The business commenced trading on 13 June 2003. The two directors of Pete N Peppa are Mr Peter Milosevic and Mr George Caroscio, and the manager of the shop is Ms Janet Beth Hunter. 17 Tabletop and Kitchen Pty Ltd conducts a business under the name 'Tabletop and Kitchen' from various premises in Adelaide, including a shop in Gawler Place. It also sells kitchenware products and homeware products. Mr William Mitchell is the managing director of Tabletop and Kitchen and Ms Elizabeth Gilbert is employed by the company as a buyer. 18 It is convenient at this point to set out the provisions of the Act which define the practice of resale price maintenance. The practice of resale price maintenance is the practice identified in Part VIII of the Act: s 4. I did not understand either party to submit that the precise number of contraventions was of particular significance. I will adopt that approach, but, at the same time, because I think it is relevant to the fixing of the pecuniary penalties, I will identify the number of acts of engaging in the practice of resale price maintenance and the period over which the conduct occurred. It purchased Cambur products in its own right and sold those products to the public. From time to time, it received documents from the respondents consisting of Bamix stockist's order forms, Magimix price list or order forms, promotional leaflets for Cambur products and authorised stockist's newsletters. Those documents contained prices specified, suggested or recommended for Cambur products. I will refer to these prices as 'the specified prices'. 23 In May 2003, Mr Caulfield went to the shop and took Pete N Peppa's first order for Cambur products from Mr Milosevic. In the course of his conversation with Mr Milosevic, Mr Caulfield showed him a Bamix stockist's order form and a Magimix price list or order form. Mr Caulfield said words to the effect that Pete N Peppa would purchase Cambur products from Cambur at Cambur's wholesale price and Cambur would provide Pete N Peppa with the list of recommended retail prices. Mr Milosevic asked Mr Caulfield about discounting Cambur products and, in response, Mr Caulfield said words to the effect that Pete N Peppa would not need to discount Cambur products and that Cambur Industries did not like discounting. 24 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries. 25 On or about 6 June 2003, Mr Caulfield went to the shop and gave Mr Milosevic a folder containing, among other things, Bamix stockist's order forms and Magimix price list or order forms. Mr Milosevic asked Mr Caulfield if Pete N Peppa could set a price for Cambur products between the wholesale price and the specified prices. Mr Caulfield said 'no'. 26 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. 27 The folder of documents previously referred to also contained a Cambur Newsletter dated July 2003 for authorised stockists. The newsletter included a statement to the effect that the Bamix cassette Swiss-line (Model 7BA00240D) would retail at $349. 28 It is admitted by the respondents that, by providing the Cambur Newsletter, Cambur Industries, through Mr Caulfield, attempted to induce Pete N Peppa not to engage in advertising Cambur products at prices less than prices specified by Cambur Industries. 29 On three occasions between October 2003 and January 2004, Cambur Industries, through Mr Caulfield, told Pete N Peppa that Pete N Peppa could not discount various Cambur products. The first occasion was in October or November 2003 and occurred during a meeting at the shop between Mr Caulfield and Mr Milosevic. Mr Milosevic asked Mr Caulfield if it would be possible for Pete N Peppa to have special offers on Nespresso coffee machines in the period leading up to Christmas. Mr Caulfield told Mr Milosevic that Nespresso coffee machines were not to be discounted and that Cambur Industries had a deal with Nescafe that the machines were not to be discounted. He also told Mr Milosevic that Cambur Industries did not discount and that Nescafe would discount the Nespresso coffee machines if they felt it was necessary. 30 The second occasion was in early November 2003 and occurred after Mr Milosevic had obtained information that Tabletop and Kitchen was discounting Bamix products. Mr Milosevic made a telephone call to Mr Caulfield and asked him why Tabletop and Kitchen was discounting when he had told Pete N Peppa not to discount. Mr Caulfield said that that was impossible, because no one discounted Cambur products, and that he would make some telephone calls. About two hours later, Mr Caulfield made a telephone call to Mr Milosevic. He told Mr Milosevic that it was a mistake, that he had just been to Tabletop and Kitchen, and that there were no Bamix products on sale. He told him that no one discounts Bamix products and that Pete N Peppa was not to discount or price-match on Bamix products. He said that Cambur's prices were firm and that Cambur Industries did not discount any Cambur products. 31 The third occasion was on 19 January 2004, when Mr Caulfield visited the shop and spoke to Mr Caroscio. Mr Caroscio told Mr Caulfield that Pete N Peppa would like to discount its Nespresso coffee machines because it had not been able to sell them. Mr Caulfield said that under no circumstances was Pete N Peppa to discount Cambur products, that Bamix and Magimix products had a market reputation that needed to be protected, and that Bamix and Magimix did not want Cambur products falling into the category of discounted items. Mr Caulfield told Mr Caroscio that Cambur products were premium products and needed to be sold at a premium price, and that all other retailers were in the same situation so that Pete N Peppa was not being singled out. He told Mr Caroscio that the reason Pete N Peppa was not allowed to discount was so that everyone sold Cambur products at the same price. He told Mr Caroscio that Pete N Peppa was not allowed to advertise or display sale signs that showed Cambur products at a discounted price. He told Mr Caroscio that Pete N Peppa had already agreed verbally when it became a stockist of Cambur products that it would not advertise discounts on Cambur products below the prices set out in the various forms, promotional leaflets and newsletters. 32 The allegations concerning these three occasions are admitted by the respondents. In its proposed declarations, the Commission alleges that the three occasions give rise to one act of attempting to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. I am prepared to proceed on that basis. 33 In early August 2003, Mr Caulfield conducted a training session in relation to Cambur products at the shop. The training session was attended by Mr Milosevic and staff of Pete N Peppa. During the training session, Mr Milosevic asked Mr Caulfield if there was any flexibility at all around the specified prices. Mr Caulfield said that Pete N Peppa was not to discount Cambur products. Mr Caulfield said that if any Cambur products were discounted, Cambur Industries would come into the shop and take the Cambur products off the shelf and that Cambur Industries would provide no warnings to Pete N Peppa. 34 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Pete N Peppa that it would not continue to supply Cambur products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries, and attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. This is a case of one act falling within two paragraphs in s 96(3) of the Act (ie, s 96(3)(a) and (b)). For the purposes of determining the number of acts of engaging in the practice of resale price maintenance, it is to be treated as one act. 35 In about mid-November 2003, Pete N Peppa had discounted all the Nespresso coffee machines that it had on display, and it had placed a sign on the machines offering the machines for sale at less than the specified price. Within three or four days of the sale commencing, Mr Caulfield visited the shop and told Mr Milosevic that he had heard that Pete N Peppa was discounting the Nespresso coffee machines and that Pete N Peppa could not discount the machines. He told Mr Milosevic that he needed to take the sign off the machines straight away. He told Mr Milosevic that Pete N Peppa must not discount the Nespresso coffee machines, and that it was part of Cambur Industries' policy not to discount the machines. He told Mr Milosevic that if the Nespresso coffee machines were to be discounted, they were to be discounted by Cambur Industries and not by retailers, and that if Pete N Peppa discounted, Mr Caulfield would remove all Cambur products from Pete N Peppa's premises. He told Mr Milosevic that if Pete N Peppa lost the Nespresso coffee machines, it would cease to be a retailer of all Cambur products. 36 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Pete N Peppa that it would not continue to supply Cambur products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries, and attempted to induce Pete N Peppa not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. Again, this is a case of one act falling within two paragraphs in s 96(3) of the Act (ie, s 96(3)(a) and (b)). 37 On or about 3 May 2004, Pete N Peppa again offered for sale some of its Nespresso coffee machines at below the specified prices. On 10 May 2004, Mr Caulfield visited the shop and asked Mr Caroscio 'what was the meaning of' discounting the Cambur products. He said to Mr Caroscio that he should be aware that Cambur products were not to be discounted and that Pete N Peppa was not allowed to discount Cambur products. He told Mr Caroscio that Cambur Industries had a market to protect and that other retailers were complaining that Pete N Peppa was discounting Cambur products. He told Mr Caroscio that other retailers were asking why Pete N Peppa was allowed to discount but not them, and that those retailers were getting customers asking them why they were not discounting when Pete n Peppa was discounting. Mr Caroscio told Mr Caulfield that Pete N Peppa had no option but to discount the Nespresso coffee machines because Pete N Peppa had been unable to sell them. Mr Caulfield said that he would take the Nespresso coffee machines back and give Pete N Peppa a credit for them. Several days after 10 May 2004, Mr Caulfield collected four of the machines and Cambur Industries subsequently gave Pete N Peppa a credit for those machines. 38 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Pete N Peppa that it would not continue to supply Cambur products to Pete N Peppa unless Pete N Peppa agreed not to sell and advertise Cambur products at prices less than prices specified by Cambur, and attempted to induce Pete N Peppa not to sell and advertise Cambur products at less than prices specified by Cambur Industries. Again, this is a case of one act falling within two paragraphs in s 96(3) of the Act (ie, s 96(3)(a) and (b)). 39 It is also alleged by the Commission that during each of the conversations in early August 2003, mid-November 2003 and 10 May 2004, outlined above, Mr Caulfield told Pete N Peppa that Pete N Peppa could not discount Cambur products. I would not treat these as separate contraventions of the Act. The statements are 'part and parcel' of acts or conduct previously identified as contraventions. 40 On 13 June 2004, Pete N Peppa had a birthday sale, and as part of that sale it offered, among other things, a store-wide discount of 5 per cent off all electrical products, including Cambur products. On or about 28 June 2004, Mr Caulfield went to the shop and spoke to Mr Caroscio. He asked him 'what was the meaning of' selling Cambur products at a 5 per cent discount. He told him that Pete N Peppa was not allowed to discount Cambur products and that other retailers were complaining that Pete N Peppa was discounting. He told Mr Caroscio that nobody else was allowed to discount Cambur products, so 'why should Pete N Peppa be allowed to'. Cambur is not doing business with Pete N Peppa any more. Pete N Peppa is no longer a stockist. Pack everything up of Cambur's and send it back. Cambur will give Pete N Peppa a credit. Mr Caulfield made a telephone call to Mr Caroscio later that day and said to Mr Caroscio that Pete N Peppa was no longer a stockist of Cambur products and that Cambur Industries was not going to supply Pete N Peppa with the goods it had ordered. 42 The respondents submitted that Cambur Industries had experienced difficulties in securing payment of its accounts from Pete N Peppa. It was suggested that this was also a reason for the withholding of the supply of Cambur products to Pete N Peppa. That was not put forward to qualify the admission as to the substantial reason, but was said to be relevant to penalty. 43 There is evidence that Cambur Industries did experience difficulties with Pete N Peppa in terms of obtaining payment of its accounts. I am prepared to accept that that was a matter in Mr Caulfield's mind at the relevant time. However, I find that, the predominant reason for the withholding of supply was that alleged by the Commission. That conclusion follows, I think, from the course of events leading up to the withholding of supply and the contents of a telephone conversation in October 2004 between Mr Caulfield and Mr Milosevec, to which I refer below (at [87]-[88]). 44 The Commission alleges that, by all of the conduct in relation to Pete N Peppa referred to above, Cambur Industries, through Mr Caulfield, used a statement of price or statements of prices that were likely to be understood by Pete N Peppa as the price below which Cambur products were not to be sold and advertised for sale. This allegation is admitted by the respondents. However, I would not treat this as a separate contravention because the conduct relied on is part of the individual contraventions referred to above. 45 Although, as I have said, the parties focused on a course of conduct between Cambur Industries and Pete N Peppa, it is appropriate in assessing the pecuniary penalty to note that the respondents' conduct involved eight acts of engaging in the practice of resale price maintenance over a period of about 16 months. Like Pete N Peppa, it purchased Cambur products in its own right and sold those products to the public. From time to time, it also received documents from the respondents consisting of Bamix stockist's order forms, Magimix price list or order forms, promotional leaflets for Cambur products and authorised stockist's newsletters. Those documents contained prices specified, suggested or recommended for Cambur products. I will refer to those prices as the specified prices. 47 On 26 December 2001, Tabletop and Kitchen advertised in the Adelaide Advertiser newspaper a 10-50 per cent off store-wide sale with no exceptions. The sale was held from about 27 December 2001. On or about 29 December 2001, Mr Caulfield went to the shop in Gawler Place and had a conversation with Mr Mitchell. He said to Mr Mitchell that he had 'done the wrong thing' by advertising the sale and providing a discount on Cambur products and that Mr Mitchell was to remove Cambur products from the shelves. By reason of that conduct, during the period from early January 2002 to about 13 July 2005, Tabletop and Kitchen refrained from offering Cambur products for sale at prices less than the specified prices. 48 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. 49 On 26 December 2002, Tabletop and Kitchen again advertised in the Adelaide Advertiser newspaper a 10-50 per cent off store-wide sale with no exceptions. The sale was held from about 26 December 2002. Before the sale was advertised and commenced, Mr Gilbert made a telephone call to Mr Caulfield to notify him of the sale. Mr Caulfield told Mr Gilbert that Tabletop and Kitchen had to remove Cambur products from the floor of the shop in Gawler Place for the duration of the sale. By reason of that conduct, from about 26 December 2002 to about 13 July 2004, Tabletop and Kitchen continued to refrain from offering Cambur products for sale at prices less than the specified prices. 50 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. 51 In about late June to early July 2004, Mr Mitchell telephoned Mr Caulfield to inform him that Pete N Peppa was discounting Cambur products and he asked Mr Caulfield to deal with the discounting. Mr Caulfield told Mr Mitchell that he would take immediate action. By reason of that conduct, during the period from about late June 2004 to about 13 July 2004, Tabletop and Kitchen continued to refrain from offering Cambur products for sale at prices less than the specified prices. 52 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries. 53 In or about May or June 2002, Ms Gilbert contacted Mr Caulfield by telephone and informed him that Ms Athanasea Retsas, trading as Cookaholic's, was advertising some Bamix products at 10 per cent off the specified prices. Mr Caulfield said to Ms Gilbert that Cookaholic's conduct was 'not on' and that if Cookaholic's made the offer again, its stock would be taken away. He said that the conduct of Cookaholic's would not be repeated. By reason of that conduct, during the period from about May 2002 to about 13 July 2005, Tabletop and Kitchen continued to refrain from offering Cambur products for sale at prices less than the specified prices. 54 It is admitted by the respondents that, by that conduct, Cambur Industries, through Mr Caulfield, made it known to Tabletop and Kitchen that it would not continue to supply Cambur products to Tabletop and Kitchen unless Tabletop and Kitchen agreed not to sell and advertise Cambur products at prices less than the prices specified by Cambur Industries, and induced Tabletop and Kitchen not to sell and advertise Cambur products at prices less than prices specified by Cambur Industries. Again, this is a case of one act falling within two paragraphs of s 96(3) of the Act (ie, s 96(3)(a) and (b)). 55 The Commission alleges that, by all of the conduct referred to above, Cambur Industries, through Mr Caulfield, used a statement of price or statements of prices that were likely to be understood by Tabletop and Kitchen as the price below which Cambur products were not to be sold and advertised for sale. This allegation is admitted by the respondents. Again, as with Pete N Peppa, I would not treat this as a separate contravention, because the conduct relied on is part of the individual contraventions referred to above. 56 Although the parties focused on a course of conduct between Cambur Industries and Tabletop and Kitchen, it is appropriate in assessing the pecuniary penalty to note that the respondents' conduct involved the four acts of engaging in the practice of resale price maintenance. 57 The respondents admit that, by his conduct, Mr Caulfield was directly and knowingly concerned in and/or a party to each and every contravention by Cambur Industries of s 48 of the Act. 58 I turn now to consider the pecuniary penalties which should be imposed. What follows is taken from the reasons for judgment of Burchett and Keifel JJ in NW Frozen Foods v Australian Competition and Consumer Commission (1996) 71 FCR 285. 63 First, the effect of the respondent's conduct on the function of markets and other economic effects of the conduct will generally be regarded as a significant matter, and the court is likely to be assisted by views put forward by the Commission, or by experts called on behalf of the parties (at 290). In this case, the Commission put forward no direct evidence as to the effects of the respondents' conduct on the function of the relevant market. 64 Secondly, deterrence (both general and personal) is important in assessing the appropriate penalty. It has been described as a 'principal purpose' of s 76 and a factor of 'particular significance' (see the cases referred to at 293). However, at the same time, it is important that the penalty imposed is not oppressive. 65 Thirdly, cooperation and the implementation of a compliance programme by the contravener is also an important matter in fixing the appropriate penalty. That follows from the fact that the circumstances in two cases are rarely the same or equal. 67 The fifth point is perhaps an observation more than anything else. Burchett and Keifel JJ expressed the view that the penalties imposed by s 76 are not criminal sanctions and their purpose, established now by a long line of cases, is not punishment (at 296-297). Carr J, on the other hand, considered that the question was an open one (at 299). 68 Section 76 identifies four matters which are relevant to the determination of the appropriate pecuniary penalty. Other factors have also been identified, such as the respondents' financial position and any profit made by the contravening company. A number of the matters overlap and, clearly, the significance or weight to be accorded to any particular matter will depend on the circumstances of the particular case. 71 As to the nature and extent of the acts constituting the contravening conduct, in the case of Pete N Peppa I have found that there were eight acts which contravened s 48 of the Act. Those acts occurred over a period of about 16 months and the conduct culminated in the withholding of supply of Cambur products. In the case of Tabletop and Kitchen, there were four acts which contravened s 48. Those acts occurred over a period of about three-and-a-half years from January 2002 to July 2005, during which time, as a result of the respondents' conduct, Tabletop and Kitchen did not discount Cambur products. 72 As to any loss or damage suffered as a result of the contravening conduct, there are two groups which may have suffered loss or damage and they are the retailers and consumers. There is no precise evidence of loss or damage suffered by either group. As far as retailers are concerned, it was suggested that retailers other than Pete N Peppa or Tabletop and Kitchen may have been induced not to discount. Certainly there is evidence to suggest Mr Caulfield was speaking to other retailers about the price of Cambur products, but I do not think that I could find on the evidence that other retailers suffered loss or did not discount so that they or consumers suffered loss and damage. Mr Milosevic of Pete N Peppa gives some general evidence of loss and damage suffered by Pete N Peppa when he says that the Bamix and Magimix products were the best on the market and Pete N Peppa lost money because they were not selling them and were sending customers to other stores. There is no evidence from Mr Mitchell or Ms Gilbert of Tabletop and Kitchen of the effect of the contravening conduct on the business of Tabletop and Kitchen. I am prepared to assume that some loss was suffered by Pete N Peppa and Tabletop and Kitchen, but I can be no more precise than that. The conduct in each case occurred over a considerable period of time and Bamix and Magimix products were popular in the marketplace. Both businesses sought to discount the products. As far as the effect on consumers is concerned, I am prepared to assume that some loss and damage was caused because consumers could not buy discounted Cambur products from Pete N Peppa and Tabletop and Kitchen. 73 As to the circumstances in which the acts took place, there is no question here of accident or mistake. Neither Mr Jeffs nor Mr Caulfield had any real knowledge of the provisions of the Act at the time of the contravening conduct. Mr Jeffs did not know that the contravening conduct was taking place, but, at the same time, it was accepted by Cambur Industries that he should have exercised greater control over Mr Caulfield's activities. 74 As to whether the respondents have previously been found by the Court to have engaged in similar conduct, I find that neither Cambur Industries nor Mr Caulfield has been found by the Court to have engaged in similar conduct. 75 As to the size of the contravening company, Cambur Industries is a small company. 76 As to the degree of power of Cambur Industries, as evidenced by its market share and ease of entry into the market, I refer to my earlier finding in [14] above. The market share of Cambur Industries in the electrical products market is relatively small. There is no evidence before me which would enable me to make a finding as to the ease of entry into the market. 77 As to the deliberateness of the contravening conduct and the period over which it extended, the conduct was clearly deliberate and it extended over a considerable period of time. Mr Jeffs did not know that the conduct was taking place. Mr Caulfield was engaged in the conduct, but I am satisfied, having regard to all the evidence, that he did not know that what he was doing was in contravention of the Act. 78 As to the issue of whether the contravening conduct arose out of the conduct of senior management or at a lower level, the contravening conduct was carried out by Mr Caulfield, who held a position in the senior management of Cambur Industries. At the same time, it is relevant to note that Cambur Industries is a small company. 79 As to whether the company had a corporate culture conducive to compliance with the Act, I find that at the time of the contravening conduct and prior to that, Cambur Industries had in place no education programmes, disciplinary or other corrective measures for the purposes of compliance with the Act. As I have said, Mr Jeffs and Mr Caulfield had very little knowledge of the provisions of the Act. 80 Since the contravening conduct, Cambur Industries has made considerable efforts to ensure that the company complies with the Act in future. I am satisfied that its efforts, which I describe below, are genuine. 81 After the proceedings were instituted, Mr Jeffs caused a memorandum to be sent to the staff and agents of Cambur Industries advising them of the allegations made against Cambur Industries and that Cambur Industries could only recommend a retail price, and that stockists could advertise the sale of Cambur products for prices below the recommended retail prices. 82 Mr William Gerard Dee is a consultant who provides advice to companies about appropriate compliance systems to ensure they comply with the provisions of the Act. He was, for a time, head of the Commission's compliance unit. His expertise and qualifications are not challenged by the Commission. In January 2006, he was engaged by Cambur Industries to develop a compliance programme. He developed such a programme and that programme has been approved by the company. Mr Jeffs has agreed to be the compliance officer for the company. A training session for staff was held in February 2006. Further training sessions will be held. 83 On 3 March 2006, Mr Jeffs caused Cambur Industries to send a letter to all stockists advising them of the allegations made by the Commission, that they were admitted, and that its conduct was unlawful. It advised stockists that Cambur Industries had implemented a corporate compliance programme and that all stockists were absolutely free to sell Cambur products at prices they determined. 84 I am satisfied that Cambur Industries has taken appropriate steps to ensure compliance with the provisions of the Act in the future. 85 As to whether the respondents have shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention, I find that, subject to a couple of qualifications, the respondents have cooperated. 86 After a complaint had been made to it, the Commission wrote to Cambur Industries on 20 December 2004 about the alleged contravening conduct. The Commission sought certain documents, which, as I understand it, were provided by the company. The Commission also sought to interview Mr Jeffs and Mr Caulfield, who both attended interviews on 28 January 2005. They were both sent a transcript of the respective interviews, which was in evidence before me and which I have read. I find that during the interview Mr Caulfield did not admit aspects of the contravening conduct and was by no means as frank as he could have been. 87 Thereafter, nothing occurred until 22 September 2005, when the Commission filed and served the Application and Statement of Claim in these proceedings. There followed correspondence between the solicitors for the Commission and the solicitors for the respondents, wherein the latter indicated in general terms that they were prepared to cooperate with the Commission. The respondents filed and served a Defence on 30 November 2005. Some admissions were made in the Defence. However, as to the reason for the alleged withholding of supply of Cambur products to Pete N Peppa, the respondents denied the allegation that Cambur Industries withheld supply of its products for the substantial reason that Pete N Peppa had sold, or was likely to sell, or had advertised, or was likely to advertise, Cambur products at less than prices specified by Cambur Industries. It is unnecessary to set out the details of the pleas in the Defence, but it is fair to say that the suggestion in the Defence is that the reason for the withholding of supply was the failure of Pete N Peppa to comply with the payment terms of Cambur Industries. It should be noted that this was in the face of a plea by the Commission in the Statement of Claim that there was a telephone conversation between Mr Milosevic and Mr Caulfield on 29 October 2004 wherein Mr Caulfield said to Mr Milosevic words to the effect that the decision by Cambur Industries to no longer supply its products to Pete N Peppa was because Pete N Peppa was going into 'discount mode'. 88 On 22 December 2005, the Commission filed and served its affidavits in accordance with orders made by this Court, and those affidavits included an affidavit of Mr Milosevic. The telephone conversation in October 2004 between Mr Milosevic and Mr Caulfield had been recorded and a copy of a transcript of the conversation was an exhibit to Mr Milosevic's affidavit. 89 The respondents filed and served an Amended Defence on 20 February 2006, wherein they admitted that the substantial reasons for withholding supply of Cambur products to Pete N Peppa was as alleged by the Commission. This position had been foreshadowed by the respondents in a letter from their solicitors to the Court dated 2 February 2006 wherein they advised the Court that they would be admitting all of the allegations in the Statement of Claim. 90 By the Amended Defence, the respondents have admitted in substance the allegations made by the Commission, thereby avoiding the need for a trial. The incurring of costs has been avoided, and the Commission and its officers and the Court are free to deal with other matters. Both Mr Jeffs and Mr Caulfield have offered to attend seminars of suppliers and retailers and speak publicly of their conduct in order to assist in the understanding of others of the operation of the provisions of the Act. I accept Mr Caulfield's evidence that he has been very worried by the investigations and court proceedings and that his health has suffered. I accept that he is remorseful for what he has done. 91 As against those matters, Mr Caulfield was not forthcoming during the interview in January 2005, and the allegation as to the reason for withholding supply of Cambur products to Pete N Peppa was not the subject of an admission at the first available opportunity. The respondents' cooperation must be viewed in light of these qualifications. 92 Another matter which has been mentioned in the authorities is the financial position of the respondents and the extent to which they have profited by their conduct. Cambur Industries is a small company and Mr Caulfield's financial position is modest. Both have asked for time to pay the pecuniary penalties which are imposed. Mr Jeffs has given evidence that Cambur Industries did not profit by its conduct, and I accept that evidence. There is no evidence to suggest that Mr Caulfield profited by his conduct. 93 In fixing the pecuniary penalties, I have had regard to the cases to which I was referred. It is important to bear in mind that other cases are no more than a guide and there is an obvious danger in attempting too close a comparison for the purposes of fixing a penalty. In particular, there is a danger in taking a broadly analogous case and the penalty imposed in that case and then adding for circumstances considered more serious, and subtracting for circumstances considered less serious. Bearing those observations in mind, two cases which I have found quite helpful are Australian Competition and Consumer Commission v Dermalogica Pty Ltd (2005) 215 ALR 482 and Australian Competition and Consumer Commission v Westminster Retail Pty Ltd (2005) ATPR 42-084. 94 In my opinion, the appropriate pecuniary penalty in the case of Cambur Industries is $280,000 and the appropriate pecuniary penalty in the case of Mr Caulfield is $32,000. In the case of Cambur Industries, I have reached the figure of $280,000 by fixing a figure of $160,000 in the case of its conduct in relation to Pete N Peppa and a figure of $120,000 in the case of its conduct in relation to Tabletop and Kitchen. In the case of Mr Caulfield, I have reached the figure of $32,000 by fixing a figure of $18,400 in the case of its conduct in relation to Pete N Peppa and a figure of $13,600 in the case of its conduct in relation to Tabletop and Kitchen. A reduction has been made for the respondent's cooperation and admissions. There is no set figure, or indeed range of figures, for the allowance to be made for these matters as each case must very much turn on its own particular facts. In this case, I have made an allowance of about one-fifth of the pecuniary penalties which I would otherwise have considered appropriate. 95 I will give the parties leave to make further submissions as to the time within which the respondents and each of them are to pay the pecuniary penalties which I have imposed. A declaration under the Act and s 21 of the Federal Court Act 1976 (Cth) must identify the contravening conduct. It must be precise in its terms, such that a person reading the declaration understands the nature of the contravention and, in broad terms, the conduct constituting the contravention. On the one hand, it is not necessary to put all the relevant findings of fact in the declaration, but, on the other, the gist of the conduct (as found) should be identified: Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53 at 91 [89] - [90] per Gummow, Hayne and Heydon JJ. 97 The declarations I am prepared to make are set out at the end of these reasons. They are similar to the declarations put forward by the Commission, with the qualification that I have identified eight acts of resale price maintenance in relation to Pete N Peppa and four acts of resale price maintenance in the case of Tabletop and Kitchen. I do not think it offends any principle to declare that some acts referred to in the declarations fall within more than one paragraph of s 96(3) of the Act and I have framed the declarations accordingly. The injunctions it seeks against Cambur Industries would restrain it from engaging in conduct in breach of s 48 of the Act by virtue of engaging in conduct which falls within the terms of s 96(3)(a), (b), (d) and (f) of the Act for a period of three years. Similar injunctions are sought in relation to Mr Caulfield, the first restraining him from being involved in contravening conduct by a corporation and the second restraining him from being involved in conduct where the recipient of the goods is a corporation (see s 96(2)). 99 Under s 80 of the Act, the court may grant an injunction in such terms as the court determines to be appropriate. The section provides that the court may grant an injunction whether or not the person intends to engage in the relevant conduct again, whether or not the person has previously engaged in the relevant conduct and whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in the relevant conduct: s 80(4) of the Act. These matters, which are often highly relevant to whether a court exercising equitable jurisdiction grants an injunction in an action between private parties, are of much less relevance when a court is considering the power to grant an injunction under s 80. However, they are not irrelevant to the exercise of that power: ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 253-257 per Lockhart J. 100 The Commission in this case only seeks injunctions to restrain conduct which would constitute a contravention of the Act and does not seek to restrain conduct which would not or may not constitute a contravention of the Act. In an appropriate case it seems the court has the power to make such orders: Foster v Australian Competition and Consumer Commission [2006] FCAFC 21 ; (2006) 149 FCR 135. In this case, the granting of injunctions would add only one remedy, ie, a remedy for contempt of court, to those provided by the Act. 101 Generally speaking, injunctions which do no more than restrain contraventions of the Act will have little impact in terms of general deterrence. The pecuniary penalties are likely to have the greatest impact in that respect. Injunctions restraining no more than contraventions of the Act may have an effect in terms of personal deterrence and may be granted because of that consideration. They may also be granted because, in a particular case, they will reduce the likelihood of further contraventions. In this case, I am satisfied that the possibility of further contraventions is slight. Although Cambur Industries should have exercised greater control over Mr Caulfield, it was Mr Caulfield who was responsible for the contraventions. I am satisfied that the investigation, court proceedings, and pecuniary penalty I propose to impose has had and will have a very significant impact on him in terms of deterrence and, coupled with the compliance programme put in place by Cambur Industries, means it is very unlikely that he will engage in contravening conduct in the future. 102 As far as Cambur Industries and Mr Jeffs are concerned, I am satisfied that Mr Jeffs' lack of knowledge of the provisions of the Act, his lack of control and supervision of Mr Caulfield, and the lack of education programmes and checks and balances to ensure compliance with the Act have now been addressed and, coupled with the pecuniary penalty I propose to impose on Cambur Industries, means it is very unlikely that the company will engage in contravening conduct in the future. 103 Injunctions might still be appropriate even if the likelihood of future contraventions is slight, if future contraventions are likely to cause significant damage to other persons: cf Australian Competition and Consumer Commission v Dermalogica Pty Ltd (supra) at [111] per Goldberg J. Without wishing to minimise the seriousness of the contravening conduct here, I do not think this case falls into that category. 104 For these reasons, I decline to grant the injunctions sought by the Commission. The respondents do not dispute the fact that they must pay the applicant's costs. The parties have attempted to agree an amount for costs, but have been unable to do so. In the circumstances, it is appropriate to make the order sought by the Commission. The Court's power to accept an undertaking is constrained by the limits of its power to make an order to similar effect as the undertaking. The Court's power to make an order that a contravener comply with a compliance programme is contained in s 80 or s 86C of the Act. As far as s 80 is concerned, a training programme may go no further than the contravening conduct, or, it seems, that Part of the Act in which the section contravened appears: Australian Competition and Consumer Commission v Z-Tek Computer Pty Ltd (1997) 78 FCR 197; Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc (1999) 161 ALR 79 at 88-90 [25], [26] and [36] per French J. The programme which may be the subject of an order under s 86C is a programme relating to 'the contravening conduct, similar conduct or related conduct'. 107 Mr Dee's programme makes reference to, among other things, a training programme as to the consumer protection provisions as they apply to promotional material. In view of the authorities to which I have referred and the terms of s 86C of the Act, I would wish to hear further from the parties before accepting the undertaking in the terms in which it is proffered. I will give the parties leave to make further submissions as to the terms of the undertaking by Cambur Industries to maintain a compliance programme. Caulfield by reason of him engaging in the conduct referred to in paragraphs 1 and 2 and with the knowledge of the constituents of those matters, was directly and knowingly concerned in, and party to each and every contravention by Cambur of section 48 of the Act as referred to in those paragraphs. Cambur Industries pay to the Commonwealth of Australia a pecuniary penalty in the sum of $280,000. 2. Mr Caulfield pay to the Commonwealth of Australia a pecuniary penalty in the sum of $32,000. 3. Cambur Industries and Mr Caulfield pay the applicant's costs of and incidental to the proceeding to be agreed or taxed. 4. | application for orders under trade practices act 1974 (cth) where respondents admitted engaging in the practice of resale principles relevant to fixing of pecuniary penalty price maintenance in contravention of the act declarations whether injunctive relief appropriate power of court to accept undertaking. trade practices |
She arrived in Australia on 20 August 2001 and lodged an application for a Protection (Class XA) visa on 3 September 2001. That application was rejected by a delegate of the Minister on 22 November 2001. An application for review was lodged with the Refugee Review Tribunal and that Tribunal affirmed the delegate's decision on 25 March 2003. An application for review by the Federal Magistrates Court was then filed and in February 2009 that Court quashed the Tribunal's decision by consent. A differently constituted Tribunal thereafter conducted a further review and on 24 March 2009 again affirmed the decision not to grant the protection visa. On 5 August 2009 the Federal Magistrates Court dismissed an application seeking review of the March 2009 decision of the Tribunal: SZKOO v Minister for Immigration and Citizenship [2009] FMCA 729. On 26 August 2009 the Appellant filed a Notice of Appeal in this Court. The Appellant appeared before the Court unrepresented, although she did have the assistance of an interpreter. The Notice of Appeal purports to identify 17 Grounds of Appeal . Only the first Ground of Appeal is directed to the decision of the Federal Magistrate which is presently under appeal. Such was not the task entrusted to that Court. The jurisdiction of that Court and the task entrusted to it is that prescribed by Pt 8 of the Migration Act 1958 (Cth) ("the Migration Act "). In summary form, its task is to determine whether the decision of the Tribunal is affected by jurisdictional error. The first Ground of Appeal is rejected. Grounds 2 to 8 of the Notice of Appeal express errors said to have been committed by the Tribunal rather than any errors said to have been committed by the Federal Magistrate. These Grounds , however, are identical to the seven grounds upon which review was sought before the Federal Magistrate. So understood, none of the Grounds has any substance. The Federal Magistrate addressed and resolved each Ground . No error is discernible in the manner in which he approached his task. Some of the Grounds were difficult to understand without elaboration. Ground 2, for example, alleges a failure to " afford procedural fairness ". Section 422B of the Migration Act provides that Div 4 of Pt 7 of the Act " is taken to be an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with ". See: SZFDE v Minister for Immigration and Citizenship [2007] HCA 35 at [48] , [2007] HCA 35 ; 232 CLR 189. One of those requirements is the obligation imposed by s 425 to invite a person seeking review " to give evidence and present arguments relating to the issues arising in relation to the decision under review ". But the manner in which it is said that the Tribunal failed to afford procedural fairness in the present proceeding was not explained and was not readily apparent. The Appellant, for example, appeared before the Tribunal to give evidence and to present her arguments during the course of a hearing held on 20 March 2009. Prior to that, the Tribunal had written to the Appellant pursuant to s 424A of the Migration Act on 23 February 2009. The Appellant's representative wrote to the Tribunal on 7 March 2009 and forwarded a further submission on 15 March 2009. A yet further submission was received on 19 March 2009. When reference is made in Ground 3 to the " relevant considerations or integers central " to the claims being advanced, the " integers " are not further identified. Nor has there been any identification of the manner in which the Tribunal " failed to consider " the claims being advanced or was otherwise " preoccupied " for the purposes of Grounds 4 and 5. There is no evidence that the Tribunal was " preoccupied " and the detailed elaboration of the claims being advanced and the manner in which they were resolved belie any conclusion other than a conclusion that the Tribunal discharged the functions entrusted to it in a careful and measured fashion. Nor was there any elaboration of the manner in which Grounds 6, 7 and 8 were sought to be advanced. Grounds 2 to 8 of the Notice of Appeal (inclusive) are rejected. The remaining nine purported Grounds of Appeal are expressed in terms of further errors said to have been committed by the Refugee Review Tribunal. These Grounds provide as follows (without alteration): The Tribunal did not centralised my claim and correctly identify my well found fears of persecution on the grounds of religion if forced to return to PRC. The Tribunal didn't consider the my claims thoroughly. If I am forced to return to PRC, I will be the a person of interest to the PRC authorities on the account of my religion. The Tribunal didn't consider all the information I claimed. The Tribunal ought to use the all information for matter of reasoning and evaluation of my case for protection visa The Tribunal did not use the most updated country information to weigh against my case where the country information quoted was out of date. The Tribunal did not check thoroughly about the applicant's husband's situation and simply drew a conclusion that her claims is not genuine. The Tribunal did not investigate that why the applicant used a false travel document instead of the applicant's own passport to travel since it's the important part of the applicant's protection claims. The applicant had to use a false travel document because the applicant can't get her own passport and she was not permitted to get her travel document. The applicant had 17 years education doesn't mean that she needs to know the every details of the Bible. The applicant has basic knowledge of the Bible and goes to Church all the time with the checkable evidence. The Tribunal should consider the applicant's claims more understanding. The interpreter didn't translate accurately which may mislead the applicant's understanding of the Tribunal's question. Although not identical, they are substantially the same issues as were resolved by the Federal Magistrate. Counsel on behalf of the First Respondent has quite properly accepted that nothing turns upon these arguments now being advanced as separate Grounds of Appeal as opposed to Particulars . So construed, Grounds 9 to 17 may in large part be better characterised as but more specific attempts to give content to Grounds 2 to 8 as opposed to attempts to raise new Grounds of Appeal . However they are to be construed, they are without apparent merit. An alleged failure to properly consider the claim being advanced, for example, seems to be the concern of Grounds 9, 10 and 11 at least. This contention most probably overlaps with Grounds 3 and 4. But it is difficult to give the contention any content. The March 2009 decision of the Tribunal which was the subject of review by the Federal Magistrate contains a detailed account of the claims and evidence being advanced for consideration. The Appellant was unable to identify any claim or any evidence she maintained had been advanced for consideration by the Tribunal but not included in the Tribunal's reasons for decision. Grounds 14 and 15 assert a failure to " check thoroughly " or to " investigate " aspects of the claim being advanced. Such Grounds probably fall within Grounds 3 and/or 6 in any event. Ground 14, for example, focuses upon the facts relevant to the Appellant's husband. The factual analysis set forth in the Tribunal's reasons for decision, however, denies this Ground any merit. The now Appellant had initially advanced claims that she faced persecution because she was a practitioner of Falun Gong. Those claims were later said not to have been her real claims. The claim as finally advanced was that she claimed persecution by reason of her Christian beliefs. It was in this context that her " husband's situation " assumed relevance. Her claims founded upon her Christian beliefs were presumably sought to be supported by her husband being a Christian. The Appellant's contention was understood to be that the Tribunal erred in that it " did not check thoroughly about the applicant's husband's situation ... ". But a reading of the Tribunal's reasons for decision exposes the fact that the " husband's situation " was addressed in considerable detail. She and her husband continued to attend family church meetings and they were baptised on Christmas 1995. ... ... The applicant's husband led Brother Chen to escape and they went to Brother Chen's home in Guangdong. The applicant learned that after returning to Fujian, he was detained by the border police and sent to a police station where he was given bail awaiting further investigation. While waiting, he absconded with the assistance of church members and was smuggled to Europe in a cargo ship in the end of July 2002. He is currently in Spain. What " investigation " or further " checks " were envisaged was not explained. None could be identified by the Appellant during the course of the hearing of her appeal. Grounds 12 and 13 appear to mirror a Ground rejected by the Federal Magistrate. Before this Court there was some initial uncertainty as to the " country information " to which these Grounds were directed. The country information referred to by the Tribunal in its reasons for decision includes a 2008 United States State Department document, a November 2007 Country Information Report from the Department of Foreign Affairs and Trade and a further report dated November 2008 by the Country Research Section of the Department of Immigration and Citizenship. There was no suggestion that there were any more " updated " reports which were available to the Tribunal but not used by it. The contention of the Appellant as explained on appeal, however, was understood to be that she had more " up to date " information by reason of what she had been told about " underground churches " by people coming out of China more recently. But, so understood, the argument is without merit. The Tribunal was unquestionably aware of the difficulties in obtaining reliable information. DFAT, in line with this advice, stated that it 'has no specific information regarding the enforcement of the prohibition of underground churches in Fujian generally, or in Fuqing in particular". If those " updated reports " are reports as to what the Appellant had been told by others, she was given the opportunity to present them to the Tribunal for its consideration. During the course of the hearing of the appeal the Appellant repeatedly contended that the Tribunal had erred in not believing the claims she was advancing. This contention was variously expressed and ranged from a contention that the Tribunal was " preoccupied " to a contention that it was biased against her. The Tribunal did indeed make adverse findings of credit against the Appellant. In respect to particular aspects of her evidence the Tribunal made repeated findings that the Appellant " had been untruthful in her evidence ". One aspect of her evidence was her explanation for failing to more expeditiously pursue her rights of review. Given that the delegate initially made his adverse decision refusing her application for a visa in 2003 and that the now Appellant did not apply for review of that decision until 2008, this issue not surprisingly emerged as an issue to be pursued. Given the importance to her of the claim that she was making, so much may be expected. Indeed, it is important to constantly recall the difficult circumstances in which applicants for refugee status are called upon to give an account of their circumstances: Taylor S, "Informational Deficiencies Affecting Refugee Status Determinations: Sources and Solutions" (1994) 13 U Tas LR 43. In such a context, those findings are findings for the Tribunal alone and not this Court: cf Kopalapillai v Minister for Immigration and Multicultural Affairs [1998] FCA 1126 ; (1998) 86 FCR 547 at 552 and 559. Such findings are findings of fact falling far short of jurisdictional error: Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1 at [67], 168 ALR 407 at 423 per McHugh J. Ground 16 is perhaps best construed as a specific instance of the manner in which the Appellant sought to advance her challenge to the Tribunal's adverse findings as to credit or perhaps her challenge that the Tribunal was biased against her. She was unable, however, during the course of the appeal to provide any instance of any question being put to her by the Tribunal as to her understanding of the " details of the Bible " which could be construed as demonstrating bias or prejudgment of the claims advanced. There was no basis upon which any conclusion could be reached that the " interpreter didn't translate accurately " for the purposes of Ground 17. During the course of the hearing of the appeal, the Appellant also submitted that before the Federal Magistrate, she had been denied an " opportunity to speak " and an opportunity to identify errors said to have been committed by the Tribunal. No such contention was raised in any of her Grounds of Appeal . Leave to amend those Grounds may, of course, be granted in an appropriate case. But leave should not here be granted. There is no evidence to support the submission. Grounds 9 to 17 of the Notice of Appeal (inclusive) have each been separately considered. They are rejected as being without merit and they disclose no appellable error. The appeal is to be dismissed with costs. There is no reason why costs should not follow the event. The First Respondent seeks an order for costs fixed in the amount of $3,265 pursuant to O 62 r 4(2)(c) of the Federal Court Rules . An Affidavit has been filed in support of the amount claimed and it is appropriate that such an order be made. The Appellant is to pay the costs of the First Respondent fixed in the sum of $3,265. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | alleged failure on part of tribunal to consider claims advanced findings as to credibility alleged denial of opportunity to be heard amendment to notice of appeal migration |
She has instituted a proceeding in the Court in which she claims declaratory and other relief against the University. Her claims arise from events which allegedly occurred during her employment by the University and in the period surrounding her resignation from that employment. 2 Dr Wearne has experienced difficulties in formulating her claims against the University. Her legal representation has changed during the life of the proceeding. 3 In recent months Dr Wearne has filed a second amended application ('the Application') and a third amended statement of claim ('the Statement of Claim'). At the request of the parties, the holding of the first directions hearing was delayed to allow the University to consider 'a number of jurisdictional matters' . The first directions hearing took place on 7 April 2005. On that day Dr Wearne accepted that her statement of claim required redrafting. An amended statement of claim was filed on 22 April 2005. At a directions hearing on 28 April 2005, deficiencies in the amended statement of claim were identified. A further hearing was scheduled for 26 May 2005 but this date was subsequently changed at the request of the parties, first to 9 June 2005, and then to 16 June 2005. 6 An amended application and a second amended statement of claim were filed on 16 June 2005 pursuant to leave granted on that day. On 11 August 2005 the University filed a notice of motion for orders that the amended application and the second amended statement of claim be struck out in whole or part. 7 On 28 February 2006 I began to hear submissions on whether the University's motion for orders striking out the amended application and the second amended statement of claim should be heard and determined ahead of the final hearing. During the course of that hearing Dr Wearne agreed to file and serve a third amended statement of claim. She was given leave to do so. On 30 May 2006 Dr Wearne was given leave to file and serve a second amended application. 8 On 6 June 2006 the University filed an amended notice of motion seeking the orders identified in [3] above. 11 The power conferred on the Court by O 11 r 16 is to be exercised to ensure that a party complies with the rules of pleading ( Australian Competition and Consumer Commission v Fox Symes & Associates Pty Ltd [2005] FCA 1071 ( 'Fox Symes' ) at [95]). Ordinarily the party should be given an opportunity to replead in accordance with the rules ( Fox Symes at [95]). However, if a party's pleading is repeatedly struck out, it may be inferred that the party is unable to plead a reasonable cause of action as required by the rules ( Fox Symes at [109]). 12 The principal rules of pleading are, for present purposes, to be found in Orders 11 and 12 of the FCRs. The lower threshold of 'no reasonable prospect of successfully prosecuting the proceeding' , for which s 31A(2)(b) of the Federal Court of Australia Act 1976 (Cth) now provides, has no application in respect of a proceeding instituted before 1 December 2005 (Item 44 of Part 2 of Schedule 1 of the Migration Litigation Reform Act 2005 (Cth)). It further submitted that the pleading of Dr Wearne's claims for breach of contract lacks clarity and, in some respects, is vague, confusing or illogical. In particular the University argued that the claim based on an implied term of trust and confidence is vague, embarrassing and untenable. The applicant was at all material times employed by the respondent pursuant to a contract of employment as an academic staff member holding the position of Senior Lecturer in the School. The applicant from about January 1997 to about April 2001 held the additional position of Head of School in the respondent's School of Humanities, Media and Cultural Studies. The respondent was at all material times a respondent to and bound to comply with the Southern Cross University Enterprise Agreement 2000 ("the Agreement"). The Agreement at all material times applied to the applicant's employment. The respondent had in place at all material times a policy known as the Complaints and Grievance Policy for University Staff ("the Grievance Policy"). Copy available for inspection from the applicant's solicitors. The Grievance Policy was at all material times applicable to the employment of all academic and general staff. An annual review involving appropriate input form [sic] staff and students. It was at all material times a term of the contract of employment between the applicant and the respondent that the respondent [would] not without reasonable cause conduct itself in a manner calculated or likely to damage or destroy the relationship of trust and confidence between the parties. The terms and conditions of the Agreement at all material times constituted terms of the contract of employment between the applicant and the respondent. It was at all material times a term of the contract of employment between the applicant and the respondent that the Grievance Policy applied to the applicant's employment. The Grievance Policy required the respondent to take a number of steps in connection with the staff complaint including the following. To keep accurate records at all stages of the steps taken pursuant to the Grievance Policy as required by clause 6. headed "Record Keeping". The repeated use of the phrase 'at all material times' is a contributing factor to the lack of clarity; it hinders understanding of the process by which Dr Wearne's contract of employment is alleged to have acquired its final form. Additionally, in certain paragraphs the phrase is used to encompass a period of time which must be understood to have commenced later than the occurrence of events which are pleaded in other paragraphs as material facts; that is, a period of time that precedes an apparently material time. 17 Further, the failure to plead the material facts concerning Dr Wearne's employment contract in chronological order contributes to the tendency of the pleading to confuse. It appears likely that Dr Wearne was originally employed by the University as an academic staff member with the classification Senior Lecturer. It is unclear whether this employment was pursuant to an oral contract or a contract partly oral and partly in writing. On the assumption that the implied term pleaded in par 10 is alleged to have formed part of Dr Wearne's original contract of employment, the contract could not have been wholly reduced to writing. 18 Paragraph 3 may be assumed to plead a variation of the original contract, operative from January 1997, pursuant to which Dr Wearne was to hold the additional position of Head of School. 19 Paragraphs 4-8, 11 and 12 may be assumed to plead further variations of the contract, which took effect from 24 May 1999, by which the Southern Cross University Enterprise Agreement 2000 and the Complaints and Grievance Policy for University Staff became part of the contract. However, neither the precise terms nor the effect of the clauses of the Enterprise Agreement upon which Dr Wearne relies are pleaded --- other than indirectly. Paragraph 113 may be understood to plead the effect of a clause or clauses of the Complaints and Grievance Policy but it is unclear whether the effect of all material provisions of that policy are pleaded (see particularly the reference in par 113 to 'a number of steps ... including...' ). 20 Paragraph 9 may be assumed to plead the penultimate material variation to the contract, being a variation that took effect on or about 26 July 1999. The final material variation to the contract would appear to be that pleaded in par 48. 21 I conclude that the way in which the contract of employment between Dr Wearne and the University is pleaded in the Statement of Claim fails to comply with the rules of pleading identified in [12] above. Consequently the pleading has a tendency to cause prejudice, embarrassment or delay in the proceeding. The paragraphs identified in [15] above will therefore be struck out. However, I am not satisfied that Dr Wearne is unable to plead a reasonable cause of action based upon alleged breaches of her contract of employment. It is therefore appropriate for Dr Wearne to be granted leave to further amend the Statement of Claim to replead the employment contract upon which she relies. I accept that the law is not certain in this respect ( Heptonstall v Gaskin (No 2) (2005) 138 IR 103 at [22]-[23]). However, the implied term as pleaded (which does not involve mutual obligations) finds some support in Australian authorities ( Burazin v Blacktown City Guardian [1995] IRCA 660 --- Madgwick J's consideration of this issue was not disapproved by the Full Court on appeal in Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144; Perkins v Grace Worldwide (Aust) Pty Ltd (1997) 72 IR 186). It would not be appropriate on the present motion to foreclose argument on the important question of whether an Australian employer has the implied obligation pleaded in par 10 of the Statement of Claim. 23 The University further complained of Dr Wearne's failure to identify the basis upon which an implication of the kind which she alleges may be made. However, as I understand Dr Wearne's case, she will contend that the implied term presently pleaded in par 10 of the Statement of Claim is to be implied as a matter of law into every employment contract. She does not accept that the necessary implication depends upon the express terms of the contract and the actual intention of the parties (cf Griggs v Noris Group of Companies (Including SA Helicopters Pty Ltd and Captured Pty Ltd) (2006) 94 SASR 126). Again it would not be appropriate to foreclose argument on this important question. 24 Although par 10 of the Statement of Claim will be struck out for the reason identified in [21] above, it is appropriate that Dr Wearne be granted leave to replead the implied term. I am not satisfied that her case in this respect is clearly untenable. Rather the Statement of Claim provides a narrative of Dr Wearne's experiences as an employee of the University and her dealings with other employees of the University. Some of the subparagraphs must, I think, be understood as references, not to material facts, but either to particulars of material facts or to the evidence upon which Dr Wearne will rely at trial. 27 If, as I think likely, Dr Wearne's case is that the University breached the implied term in certain unspecified ways (eg by placing unreasonable demands on her having regard to her seniority and health or by unreasonably failing to follow established procedures) it is necessary for her to plead each alleged breach and, as appropriate, provide particulars of that breach. The University should not be required to sift through a narrative and then a list of complaints, for the purpose of trying to identify the precise manner (or manners) in which it is alleged to have breached the implied term and then categorise the particulars provided accordingly. The University is entitled to know precisely how it is alleged to have conducted itself in a manner calculated or likely to damage or destroy the relationship of trust and confidence between it and Dr Wearne so that it may, should it be so advised, respond by alleging that the conduct relied upon (whether or not admitted) is incapable of constituting a breach of the implied term. 28 I accept that the manner in which the Statement of Claim pleads the alleged breaches of the implied term has a tendency to cause prejudice, embarrassment or delay. Paragraphs 13-89, 91-104 and 111 of the Statement of Claim will be struck out. However, it is appropriate that Dr Wearne be granted leave to replead the alleged breach of the implied term of her contract of employment. ' For the reason set out in [27] above, this pleading has a tendency to cause prejudice, embarrassment and delay. It will be struck out but Dr Wearne will be granted leave to replead the alleged repudiation by the University of her contract of employment. The respondent is and was at all material times a trading corporation within the meaning of the Trade Practices Act 1994 [sic] ("the TPA"). The respondent was at all material times engaged in trade and commerce in the provision of educational services and in the employment of persons to provide such services. The applicant was at a special disadvantage vis-a-vis the respondent because she was dependent upon the respondent for her income, her career and her professional reputation. By reason of the matters referred to above and set out in paragraphs 55 to 61 above, the respondent's conduct constituted unconscionable conduct within the meaning of s51AA of the TPA. However, it contended that the Statement of Claim does not plead that the conduct of which Dr Wearne complains was conduct 'in trade or commerce' . Dr Wearne submitted that it is clearly arguable that the conduct referred to in pars 55-58 of the Statement of Claim was 'conduct in trade and commerce' . At a meeting on 14 August 2001 the respondent presented the applicant with a purported Deed of Release ("the Deed") which purported to resolve certain issues. The Deed identified the respondent, the applicant and the five complainants as parties. The respondent represented to the applicant that she should sign the Deed. At the meeting of 14 August 2001 the applicant initially declined to sign the Deed, stating that she wished to seek legal advice. In response to the applicant's statement referred to above, PVC Klich said to the applicant words to the effect that if she took legal action her career would be over and she would never work in a University again. However, par 106 does not plead that the relevant conduct was 'in trade or commerce' ; it is drawn on the apparent assumption that it is sufficient for the relevant contract to be in respect of trade or commerce. Put differently, the section was not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. It is therefore unnecessary for me to give detailed consideration to pars 107 and 108 of the Statement of Claim. I am, however, inclined to doubt that par 107 adequately pleads circumstances of 'special disadvantage' for the purpose of the unconscionable dealings doctrine expounded by the High Court in Commercial Bank of Australia Limited v Amadio [1983] HCA 14 ; (1983) 151 CLR 447 (' Amadio' ) esp per Mason J at 462. 35 Paragraphs 105-109 of the Statement of Claim will be struck out on the ground that they do not disclose a reasonable cause of action. Nonetheless I consider it appropriate that Dr Wearne be granted leave to replead, should she be so advised, the alleged contravention of s 51AA of the Trade Practices Act. The phrase 'conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories' is not confined to conduct of the kind considered by Amadio (see Australian Competition and Consumer Commission v Berbatis [2000] FCA 2 ; (2000) 169 ALR 324 esp at [13]-[28]). Subsequent paragraphs plead that Dr Wearne signed the Deed as a result of certain statements made by a senior member of the University's management. It is also pleaded that others signed the Deed. Additionally it is pleaded that Dr Wearne subsequently advised the Vice Chancellor of the University that she considered that the Deed had been breached and that she complained of conduct of others that she regarded as breaching the Deed. Nonetheless, no claim for relief in respect of breaches of the Deed is made by either the Application or the Statement of Claim. 37 It is to be assumed, I think, that Dr Wearne places reliance on the circumstances in which the Deed came to be signed, and on her complaints regarding alleged breaches of the Deed, only for the purpose of her claim that the University breached the implied term of her contract of employment (see [22] above). I have already concluded (see [25]-[28] above) that the totality of Dr Wearne's pleadings in this respect should be struck out --- albeit with Dr Wearne being granted leave to replead her case in this respect. Section 4K of the Act provides that loss or damage includes a reference to injury. It follows that the loss or damage spoken of in ss 82 and 87 is not confined to economic loss. What kinds of detriment constitute loss or damage, when a detriment is to be identified as occurring or likely to occur, and what remedies are to be awarded, may all raise further difficult questions. Especially is that so when it is recalled that remedies may be awarded to compensate, prevent or reduce loss or damage that has been or is likely to be suffered by conduct in contravention of the Act. The application for the proceeding to be dismissed or permanently stayed therefore fails. 40 However, I conclude that the Statement of Claim does not comply with the rules of pleading. Its deficiencies are so extensive that it would be counterproductive, in my view, for individual paragraphs or groups of paragraphs to be struck out. The Statement of Claim will therefore be wholly struck out. However, in my view it is appropriate that Dr Wearne have one final opportunity to plead her case against the University. 41 Dr Wearne will therefore be granted leave to file and serve within 21 days from today's date a third amended application and a fourth amended statement of claim. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | application to strike out applicant's second amended application and third amended statement of claim whether statement of claim discloses a reasonable cause of action or is otherwise defective whether compliance with rules of pleading whether pleading has tendency to cause prejudice, embarrassment or delay practice and procedure |
The primary proceedings involve a claim by the applicants, seeking relief against the respondents in respect of conduct in breach of ss 51A, 52 , and 53A Trade Practices Act 1974 (Cth) ("the Act "). 2 The first respondent is a corporation alleged by the applicants to have engaged in the impugned conduct. The second and third respondents are individuals alleged by the applicants to have, inter alia , aided and abetted the first respondent in engaging in that conduct. There is also a secondary claim in the nature of a cross-claim by the first respondent against the first applicant in the sum of $385,383 for loss suffered by the first respondent upon the failure of the first applicant to complete the contract for purchase of the Packing Shed, in the sum of $150,000 for a loan which remains due and owing by the first applicant to the first respondent, and interest on those sums under s 51A Federal Court of Australia Act 1976 (Cth). The success of this cross-claim is dependent upon the outcome of the primary proceedings. Such other relief as the Court deems necessary. As is common in proceedings involving claims pursuant to Part V of the Act , the success or otherwise of the applicants' claim turns on the facts before the Court. For this reason, it is appropriate before moving on to a more detailed consideration of the claims of the applicants to outline the background facts. 7 The second applicant, Mr Tracy, was at all material times the sole director and shareholder of the first applicant, and the sole director of the third applicant. In his statement of 17 November 2006, Mr Tracy said that he held tertiary qualifications, namely an Associate Diploma of Arts, a Post Graduate Diploma of Management, and a Masters of Business Administration. Mr Tracy also stated that his work experience was primarily in human resource management with particular emphasis on the mining industry, and that he had no experience, either professional or practical, concerning the citrus or horticultural industries. However it became apparent during cross-examination of Mr Tracy that he was also a director and principal of a company known as The RT Group Pty Ltd, which specialised in assisting the small to medium sector with business turnaround and management techniques (exhibit R21). Under cross-examination from Mr Bell QC, Mr Tracy conceded that he was in fact a "corporate doctor" whose role was to make badly performing operations perform better (TS 309 ll 31-32). 8 The third applicant was at all material times a company duly incorporated according to law and was the trustee of the Sunstate Citrus Trust. It was incorporated by Mr Tracy on 8 February 2005 for the purpose of being the operating entity for the business which was to be conducted on the orchards and Packing Shed (Peter Michael Tracy statement sworn 17 November 2006 at [97]). The third applicant entered voluntary administration on 23 June 2005. 9 It is clear that Mr Tracy was, at all times, the directing mind and will of the first and third applicants. 10 The respondents in these proceedings are the first respondent, Sunstate Orchards Pty Ltd; the second respondent, Mr Andrew Strahley; and the third respondent, Mr David Breed. 11 The first respondent, formerly Sunstate Acquisitions Pty Ltd, is a wholly owned subsidiary of Hancock FARM Company Pty Ltd (Hancock). It had originally acquired 80% of the properties in January 2001 for the sum of $5.6 million plus the cultural costs of growing the 2001 crop prior to the purchase (Andrew Colin Strahley affidavit sworn 12 July 2006 at [11]-[14]), and later acquired the remaining 20%. The primary relief sought by the applicants in these proceedings is against the first respondent. 12 The second respondent, Mr Strahley, was a director of the first respondent from 19 January 2001, and became Managing Director of Hancock in July 2003. I understand that his role included oversight of the financial and administration operations of the farms under the management of Hancock. 13 The third respondent, Mr Breed, was employed by the first respondent at the orchards from June 2003 to manage the orchards and Packing Shed. He remained an employee of the first respondent until 18 March 2005 and was subsequently employed by the third applicant until 23 June 2005. An unsigned statement of Mr Breed was filed by the applicants on 21 June 2006. Subsequently, Mr Breed swore an affidavit in these proceedings on 14 July 2006, which was filed by the respondents and tendered in evidence (exhibit R20). Mr Breed was not represented in these proceedings nor called as a witness by any party to the proceedings. 15 The orchard located at Tiaro ("the Tiaro orchard") had approximately 26,000 trees, including lemons and a number of mandarin varieties. The orchard located at Bundaberg ("the Bundaberg orchard") was slightly larger, with approximately 33,000 trees (predominately citrus trees including limes, lemons, mandarin varieties, navels and pomellos). There was also a small crop of mangoes at the Bundaberg orchard. 16 The Packing Shed was located just outside Maryborough (Strahley affidavit sworn 12 July 2006 at [15]-[17]). Mr Strahley deposed further that in the ordinary course of business the Hancock properties were re-valued every 2 years, and in June 2004 a valuation report ("1 June 2004 Valuation Report") was sought from Mr Rex Neubecker of Herron Todd White Valuers ("HTW") (Strahley affidavit sworn 12 July 2006 at [49]-[55]). 18 Mr Peter Douglas, a real estate agent with Ray White Rural, was engaged from September 2004 to market the Bundaberg and Tiaro orchards and the Packing Shed for the first respondent (Peter Colin Douglas affidavit sworn 6 July 2006 at [13]). The property went to auction on 26 November 2004 and was passed in on a vendor's bid (Strahley affidavit sworn 12 July 2006 at [60]-[61]). Mr Tracy had had no previous involvement in either the citrus or horticultural industries, however his attention was drawn to the relevant properties by Mr Douglas in late November 2004 (Douglas affidavit sworn 6 July 2006 at [13]; Tracy statement sworn 17 November 2006 at [1]-[2]). Mr Tracy and Mr Douglas had known each other for several years at that time. Mr Tracy deposed that he expressed an interest in the relevant properties and Mr Douglas suggested that he would arrange a meeting between Mr Tracy, Mr Strahley and himself, and provide Mr Tracy with an information package (Tracy statement sworn 17 November 2006 at [2]-[5]). 20 In late November 2004 Mr Strahley was informed by Mr Douglas that Mr Tracy might have an interest in looking at the properties. Mr Strahley subsequently provided Mr Douglas with the 1 June 2004 Valuation Report, and information and historical data about the performance of the orchards in the form of Block Summary data (which had been created by Mr Breed for internal management purposes) (Strahley affidavit sworn 12 July 2006 at [62]-[67]; Douglas affidavit sworn 6 July 2006 at [17]). 21 Mr Douglas gave evidence that during a telephone conversation with Mr Tracy on 1 December 2004 the prospect of a meeting with Mr Strahley was discussed as well as a proposal he had received from Mr Strahley containing broad terms of sale. 23 The first meeting between Mr Tracy and Mr Strahley took place on 3 December 2004 (Strahley affidavit sworn 12 July 2006 at [68]; Peter Michael Tracy statement in reply sworn 26 September 2006 at [3]). Mr Douglas also attended this meeting as an observer and as the real estate agent engaged by the first respondent in respect of sale of the relevant properties. 24 Mr Tracy deposed that Mr Strahley explained that the decision of the first respondent to sell the orchards was because the company wanted to concentrate on other agricultural products (Tracy statement sworn 17 November 2006 at [7]). He also deposed that Mr Strahley told him that the lemons were selling for $70 per carton; that they needed to move quickly so as to take advantage of the high prices; that the lemons would produce $1.5 million in revenue after production costs and that the budgeted sale price for lemons was $30 per carton (Tracy statement sworn 17 November 2006 at [8]). Mr Tracy deposed that at this meeting he indicated his interest to Mr Strahley, and indicated that he would like to obtain further information (Tracy statement sworn 17 November 2006 at [9]). 26 Mr Douglas deposed that at this meeting he placed the Ray White Information Memorandum about the property (which had originally been prepared by the former estate agents for the sale of the property by tender) and the Block Summary data on the table for discussion, and that they were not there at the end of the meeting. Mr Douglas further deposed that he saw Mr Tracy put a number of documents in his briefcase during the meeting (Douglas affidavit sworn 6 July 2006 at [22]). 27 Many of the events of this meeting are the subject of dispute in these proceedings. 28 Mr Strahley also gave evidence that at this meeting he provided Mr Tracy with a folder of due diligence documents from the time that the first respondent had purchased the orchards, and that Mr Tracy took this folder with him at the end of the meeting (Strahley affidavit sworn 12 July 2006 at [70]). 29 Mr Tracy met with Mr Douglas after the meeting with Mr Strahley. Mr Tracy deposed that Mr Douglas informed him that he would need to make a conditional offer to purchase the properties to show bona fides , and that the properties represented "a good opportunity". Mr Tracy indicated that he had not finished his enquiries but that he could be interested in making a conditional offer to purchase of $4 million subject to due diligence (Tracy statement sworn 17 November 2006 at [10]-[11]). In reply Mr Douglas indicated that the figures for 2003 would be sent to Mr Tracy that day, and that 2004 figures were not yet available. Mr Douglas also noted that lemon prices had continued to climb with prices of $65 and $74 (exhibit A6; Tracy statement sworn 17 November 2006 at [12]-[13]). 31 Later in the day of 6 December 2004 Mr Tracy sent Mr Douglas an email with an offer to purchase the properties, plant and equipment, water rights, know-how and fruit stock, and all other assets for $4 million "as is where is", with crop included, subject to a 14 day due diligence period and an independent report declaring the property free of canker (exhibit A8). 32 Mr Douglas forwarded Mr Tracy's email offer to Mr Strahley on 6 December 2006. Mr Strahley replied by email to Mr Douglas, who forwarded the email to Mr Tracy, indicating that the first respondent was prepared to accept an offer of $4.5 million (inclusive of the new season crop) (exhibit A9). Mr Tracy responded by email agreeing to the sum of $4.5 million, but subject to, inter alia , a guarantee by the directors of the parent company of the first respondent as to the value of the lemon crop at $1.5 million (exhibit A10; Tracy statement sworn 17 November 2006 at [17]). 33 On 7 December 2004 Mr Tracy also requested further information and another meeting with Mr Strahley. At this meeting Mr Tracy deposed that the parties discussed the first respondent's budgeting process, historical expenses, marketing agreements, supplier-negotiated pricing on consumables, and the SGARA accounting methodology used by the first respondent (Tracy statement sworn 17 November 2006 at [19]). 35 Mr Strahley deposed that this meeting lasted for approximately 2 hours and involved discussion of the emails of 6 December 2004 relating to the first applicant's offer and a discussion about the bank guarantee which was requested by the first applicant. At that meeting Mr Strahley and Mr Tracy signed a copy (in duplicate) of the Confidentiality Agreement that Mr Strahley had sent to Mr Douglas on 6 December 2004 (Strahley affidavit sworn 12 July 2006 at [83]-[84]). (Tracy statement sworn 17 November 2006 at [26]-[27]; Strahley affidavit sworn 12 July 2006 at [86]-[87]). 37 Mr Tracy deposed that he was concerned about the figures in the Sunstate Budget Nov 04 and as a result telephoned Mr Strahley. Mr Tracy said he was informed by Mr Strahley that the outbreak of citrus canker had resulted in lost sales of up to $500,000: further that the expenses were high because in the non-revenue season expenses still needed to be incurred, and because of an arrangement for contract packing for Abbotsleigh (Tracy statement sworn 17 November 2006 at [29]). Mr Douglas gave evidence that Mr Tracy asked a number of questions during this time, and while he did not recall the substance of the conversations, he did recall that Mr Tracy's questions were answered by Mr Breed and Mr Burns without any hesitation (Douglas affidavit sworn 6 July 2006 at [48]). 39 Mr Tracy gave evidence that around this time he was provided with a folder of documents by Mr Strahley, which contained information relevant to due diligence enquiries made by the first respondent when it purchased the orchards (Tracy statement sworn 17 November 2006 at [32]). 40 On 16 December 2004 Mr Tracy sent Mr Douglas an email outlining a number of issues that needed to be progressed to maintain due diligence (exhibit R23). Mr Strahley gave evidence that at that meeting the contractual terms were discussed, as was the email from Mr Tracy to Mr Douglas of 16 December 2004, and that during this meeting Mr Tracy expressed interest in negotiating the sale of the Packing Shed before he settled the purchase of the Property (Strahley affidavit sworn 12 July 2006 at [101]-[104]). 42 During the course of this meeting, a written contract of sale of the Properties at the sale price of $4.5 million was executed on behalf of Peter Tracy Nominees Pty Ltd and the first respondent, contemplating settlement on 28 January 2005. Mr Strahley gave evidence that Mr Tracy told him that Mr Tracy wanted the income from the lemon crop included as part of the contract and as a result a clause was included in the contract that the picking of the lemon crop was to commence in the first week of January, subject to weather conditions (Strahley affidavit sworn 12 July 2006 at [101]-[104]). 43 Mr Strahley deposed that Mr Tracy said his bank would not accept a valuation of the property produced in June 2004, and that he needed to obtain another valuation by 10 January 2005 to enable settlement to proceed. Mr Strahley gave evidence that the parties discussed steps to allow Mr Tracy to obtain an expedited valuation, and that he gave Mr Tracy the contact details for HTW (Strahley affidavit sworn 12 July 2006 at [104]). 45 Mr Bailey deposed that he told Mr Tracy that he could provide a valuation within 15 working days (Bailey affidavit sworn 19 July 2006 at [3]-[4]). Mr Bailey advised that he would do his best to provide it by 12 January 2005. 47 Mr Strahley said that shortly after the 17 December 2004 meeting, he had a telephone conversation with Mr Tracy in which Mr Tracy told him that he was looking for someone to obtain a crop status report to ascertain yields and condition of the crop. Mr Strahley gave Mr Tracy the telephone numbers for Mr Dan Papacek, an entomologist who was providing consulting services to the first respondent, and Mr John Owen-Turner, a horticulturist who had provided consulting services to the first respondent, and suggested that Mr Tracy contact them directly (Strahley affidavit sworn 12July 2006 at [105]). 48 Mr Strahley also arranged for Mr Tracy to speak with Ms Carolyn Bailey, manager of Client Accounting and Reporting, Hancock Agricultural Investment Group, in Boston Massachusetts, on 20 December 2004, so that Ms Bailey could explain the SGARA accounts system used by the first respondent (Strahley affidavit sworn 12 July 2006 at [106]). 51 At some point, Mr Tracy instructed Tierney & Company Solicitors to act on his behalf in the transaction. Mr Strahley was on leave on this date. Mr Tracy deposed that, during the meeting with Mr Breed, he created spreadsheets for scenarios which he titled "brilliant", "optimistic", "most likely" and "worst case". Mr Tracy deposed that Mr Breed completed these spreadsheets for him, and that Mr Tracy did not change these spreadsheets (Tracy statement sworn 17 November 2006 at [49]-[50]). 53 Following this second inspection, on 6 January 2005 Mr Breed emailed a further document to Mr Tracy entitled "Production Pricing Schedule Jan 05.xls". Mr Tracy deposed that the discussion included the orchards, the appointment of Mr Matthew Burns as horticulturalist at the orchards, and the role of Mr Dan Papacek in relation to pest control at the orchards (Tracy statement sworn 17 November 2006 at [76]). 55 Mr Owen-Turner kept some notes of this conversation. He deposed in his affidavit sworn 6 July 2006 that he and Mr Tracy discussed the varieties of fruits grown at the orchards, and that Murcott, Nova and Ellenor mandarin varieties should not be grown at the orchards because the orchards were coastal orchards and those varieties of fruit were susceptible to Emperor Brown Spot disease ("EBS"). Mr Owen-Turner deposed that he did tell Mr Tracy that the Nova and Murcott varieties were affected by EBS. Mr Owen-Turner also deposed that they discussed thinning, pruning, irrigation and harvesting, and a possible visit by Mr Owen-Turner to prepare a report on crop yields and the state of the fruit (John Charles Owen-Turner affidavit sworn 6 July 2006 at [9]). 56 Mr Owen-Turner's version of this conversation is contested by the applicants. 57 Mr Owen-Turner also gave evidence that on or about 18 January 2005 he telephoned Mr Tracy and asked Mr Tracy to provide him with written instructions and to gain permission from the first respondent for him to visit the orchards. Mr Owen-Turner deposed that Mr Tracy said he would do so by email that day, but no written instructions were provided by email or otherwise by Mr Tracy. Mr Owen-Turner deposed that on 19 January 2005 en route to the orchards he spoke with Mr Burns, the chief horticulturalist at the orchards, who advised that Mr Tracy had not approved a visit by Mr Owen-Turner. Accordingly, Mr Owen-Turner returned home and did not thereafter provide a report to Mr Tracy (Owen-Turner affidavit sworn 6 July 2006 at [10]-[11]). On the same day Mr Tracy provided Mr Bailey with a number of documents regarding the properties. Mr Bailey deposed that after reviewing these documents he determined that they were not relevant to the valuation and did not impact on the valuation report (Bailey affidavit sworn 19 July 2006 at [9]). 59 Mr Bailey inspected the properties on 11 January 2005. During the visit Mr Bailey was provided with a number of documents by Mr Breed, which Mr Bailey said he used for the valuation of the crop at $407,000. Mr Bailey deposed that he recalled that Mr Breed telephoned Mr Strahley to seek instructions as to whether information could be provided to Mr Bailey (Bailey affidavit sworn 19 July 2006 at [10]-[11]). 60 A telephone conversation subsequently took place between Mr Tracy and Mr Bailey on or around 14 January 2005 concerning the valuation of the properties. Mr Tracy deposed that Mr Bailey said during that conversation that he had inspected the property on 11 January 2005 and valued the orchards at $4.5 million (Tracy statement sworn 17 November 2006 at [77]). It was clear that a valuation this low would pose a significant problem for Mr Tracy in relation to arranging finance (Tracy statement sworn 17 November 2006 at [79]-[81]). Mr Bailey deposed that Mr Tracy said words to the effect that "Dan Papacek would be astonished if the valuation was not close to $7 million". Mr Bailey deposed that he told Mr Tracy that his valuation report had not been completed, but that the valuation would be closer to $5 million than $7 million (Bailey affidavit sworn 19 July 2006 at [12]). 61 Mr Bailey's report was completed on 17 January 2005. The total value of the relevant properties plus the crop was assessed as $4.5 million, being land at the orchards and the Packing Shed ($3,638,923), plant and equipment ($450,000) and crop ($410,000) (Bailey affidavit sworn 19 July 2006 at [14]-[15]). 62 A further version of the valuation report was later provided to the National Australia Bank on 17 February 2005 which excluded the Packing Shed at the request of Mr Tracy, and valued the remainder at $4,050,000 (Bailey affidavit sworn 19 July 2006 at [17]-[19]). 63 Mr Tracy deposed that he received the valuation report on or about 27 January 2005 (Tracy statement sworn 17 November 2006 at [91]). Mr Papacek was an entomologist who was providing consulting services to the first respondent at the time (Tracy statement sworn 17 November 2006 at [83]; Daniel Francis Papacek affidavit sworn 6 July 2006 at [18]). 65 Mr Papacek's version of this conversation is contested by the applicants. 68 On 21 January 2005, Mr Strahley received a facsimiled letter from Mr Tracy formally requesting an extension of time for settlement of the transaction (exhibit A40). We advise that we are not in a position to provide an unconditional contract today. 69 In the letter, Mr Tracy requested an extension of time before the contract became unconditional until 11 February 2005. Mr Tracy also attached a cheque in favour of the Ray White Rural trust account for $200,000 by way of further deposit. 70 On 21 January 2005 Mr Strahley responded to Mr Tracy's letter by email confirming that an extension of time before which the contract became unconditional was granted on the basis that due diligence was completed, the $200,000 further deposit would be paid that day and the contract would become unconditional on 11 February 2005. 71 On 21 January 2005 Mr Strahley also provided Mr Tracy with the contact details of Mr Michael Sommerville, a Marketing Manager for Carter and Spencer, one of the largest fruit marketing agents within the Brisbane markets, and encouraged Mr Tracy to meet with Mr Sommerville to gain an understanding of the citrus industry marketing process and pricing (Strahley affidavit sworn 12 July 2006 at [199]). 72 On 27 January 2005 Mr Tracy caused the Sunstate Orchards Unit Trust to be established in anticipation of the purchase (Tracy statement sworn 17 November 2006 at [92]). 74 In response Mr Strahley sent Mr Tracy a document entitled "Sunstate Budget Jan05.xls" (Tracy statement sworn 17 November 2006 at [94]; Strahley affidavit sworn 12 July 2006 at [159]-[161], [168]). 75 On 8 February 2005 Mr Tracy sent Mr Breed an email (exhibit A46) with a document entitled "net cashflows 2005" as well as the document entitled "Most Likely Scenario". Mr Tracy deposes that Mr Breed telephoned him a few days later and agreed that the "net cashflows 2005" document was consistent with the "Most Likely Scenario" (Tracy statement sworn 17 November 2006 at [95]-[96]). 76 On 8 February 2005 Mr Tracy caused the third applicant to be incorporated for the purpose of being the operating entity of the business that was intended to be conducted at the orchards and Packing Shed (Tracy statement sworn 17 November 2006 at [97]). 77 On 15 February 2005, Mr Strahley sent an email to Mr Tracy attaching the Sunstate Orchards financial documents titled "financials04.pdf"which included the profit and loss statement of the years ended 30 June 2002, 2003 and 2004, which had been forwarded to him by Ms Bailey (exhibit R31; Strahley affidavit sworn 12 July 2006 at [176]). 78 On 16 February 2005 Mr Tracy, on behalf of the first applicant, executed the Agreement for Sale for the orchards and a separate agreement for the Packing Shed. The orchard sale contract was conditional upon finance approval being obtained by 18 February 2005. Finance approval for the transaction was obtained by Mr Tracy on 18 February 2005. 79 On 17 February 2005 Mr Strahley sent an email to Mr Tracy (copied to others including Mr Breed, Mr Palfreeman and Mr Douglas) as to the procedures to be followed up to settlement and to the lines of communication with staff of first respondent (Strahley affidavit sworn 12 July 2006 at [183]). 80 On 17 February 2005 Mr Tracy received an email from Mr Strahley attaching "Sunstate Orchards P/L summary report key numbers summary (lemons)" (Tracy statement sworn 17 November 2006 at [106]). 81 In the last week of February during a meeting with Mr Strahley, Mr Tracy was informed that poor weather and labour supply problems had delayed the lemon picking. Mr Tracy deposed that he estimated at the time that this could reduce the gross sales revenue by $200,000 (Tracy statement sworn 17 November 2006 at [109]). During that same week, Mr Tracy was informed that Mr Burns, employed as a horticulturalist in the orchards, had resigned, and was leaving on 25 February 2005. Mr Tracy said that on learning of Mr Burns' resignation he telephoned Mr Burns to attempt to convince him to stay on (Tracy statement sworn 17 November 2006 at [111]). Mr Tracy gave evidence that Mr Burns told him that he had informed Sunstate of his intention to resign months earlier (Tracy statement sworn 17 November 2006 at [110]-[111]). 82 On 28 February 2005, by email to Mr Strahley (exhibit A53), Mr Tracy expressed concern at the lack of performance of the lemons, and sought advice as to the performance of the lemon crop. 83 A detailed response to this email was sent by Mr James Palfreeman on 4 March 2005 (exhibit A55; Tracy statement sworn 17 November 2006 at [116]). Mr Palfreeman was Hancock's acting marketing and commodities manager, reporting to Mr Strahley. 84 In the week commencing 7 March 2005 Mr Tracy met with Mr Strahley to discuss his outstanding concerns from the 28 February 2005 email and Mr Palfreeman's response. At this stage it appears that Mr Tracy was aware that he would have difficulties settling on 18 March 2005 because the cash from sale of the lemon crop had not been as high as anticipated by him (Tracy statement sworn 17 November 2006 at [118]-[120]). 85 On 8 March 2005 Mr Tracy was provided with the TotalPak report for the end of February 2005 which disclosed sales of lemons in the amount of $208,917. This could be contrasted with Mr Tracy's expectations of sales of $500,000- $850,000 (Tracy statement sworn 17 November 2006 at [122]-[123]). 86 On 11 March 2005 Mr Tracy sent an email to Mr Strahley and Mr Douglas with further questions (exhibit A57). 87 On 12 March 2005 Mr Strahley emailed Mr Tracy a document entitled "Lemon Picking history.xls" which disclosed lemon crop volumes for 2002-2005. (Strahley affidavit sworn 12 July 2006 at [197]). Mr Tracy deposed that this information was very different from that contained in an email from Mr Strahley to him on 18 February 2005 and the 2005 Sunstate Budget (Tracy statement sworn 17 November 2006 at [125]-[127]). A further email was sent on 14 March 2005 from Mr Strahley to Mr Tracy attaching a document titled "Indicative Sales Pricing" which contained an external fruit pricing market report (Strahley affidavit sworn 12 July 2006 at [198]). 88 The first respondent agreed to accept $150,000 less on settlement on the basis that the first applicant provide a crop lien in favour the first respondent for that amount. This crop lien was executed on 21 March 2005. On 22 March 2005 the third applicant entered into a lease agreement with the first applicant to allow the third applicant to occupy and operate the orchards. Between 21 March 2005 and 22 June 2005 the third applicant conducted an orchard business on the land and incurred trading losses of over $500,000. Administrators under Part 5.3A Corporations Act 2001 (Cth) were appointed to the third applicant on 23 June 2005. Historical representations: paras 11, 12(c) and 14(a). 2. Silence representations: paras 17A and 19A. 3. Future representations: paras 12(a),(b), 13, 14(b), (c), (d), 15, 16, 17, 20. 4. Packing Shed Records: para 19. 93 Given the number of instances of allegedly misleading or deceptive conduct, I propose to adopt this formulation. I also propose to address the issues concerning reliance raised in paragraph 18 later in this judgment. 94 However before examining each claim I propose to broadly outline the legal principles relevant to claims under ss 51A , 52 and 53A of the Act , and consider two factual issues which are relevant to the entirety of the applicants' case as pleaded, and which are also relevant to my consideration of that case. Many of these principles are well-settled, and include the following. Rather, s 51A provides, in summary, that where a corporation makes a representation with respect to any future matter and it does not have reasonable grounds for making the representation, the representation shall be taken to be misleading (s 51A(1)). Section 51A in that respect is a "subset of section 52": Phoenix Court Pty Ltd (1997) ATPR 46-179 , Sykes 88 FCR 511 at 514, Quinlivan v Australian Competition & Consumer Commission [2004] FCAFC 175 at [5] ). I shall consider s 51A in further detail later in this judgment in the context of the future representations alleged by the applicants. Proceedings before this Court involving s 52 claims are not infrequent and feature widely varying factual scenarios. A number of principles should be kept in mind in considering claims in the context of s 52. Section 52 of the Act requires that the relevant corporation engage in conduct that is misleading or deceptive. 2. Where a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive, it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court the nature of the alleged conduct and the circumstances which rendered the conduct misleading: McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 (cf for example, Lahoud v Lahoud [2006] NSWCA 169 at [91] , Yang v American International Assurance Co (Australia) Ltd [2008] FCA 39 at [89] ). 3. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances: Watson 49 NSWLR 315 at 318 (cf for example Christofidellis v Zdrilic [1999] FCA 39 , Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 6) (2007) 63 ACLR 1 at 107, Yang FCA 39 at [89]). 4. The essential characteristic of misleading or deceptive conduct is that it contains or conveys a meaning which is false ( Global Sportsman Ltd v Mirror Newspapers Pty Ltd [1984] FCA 180 ; (1984) 2 FCR 82 at 88). 5. There will be no contravention unless error or misconception results from the conduct of the corporation, and not from other circumstances for which the corporation is not responsible ( Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506 ; (1990) ATPR 40-994 at 50,950; Miller's Annotated Trade Practices Act (29th ed) 1.51.5). 6. Whether or not conduct is misleading or deceptive is a question of fact to be decided by considering what is said and done against the background of all surrounding circumstances ( Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202). 7. The words likely to mislead or deceive add little to s 52; at most they make it clear that it is unnecessary to prove that the conduct in question actually deceived or misled anyone (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 198). Conduct will be likely to mislead or deceive if there is a real or not remote chance or possibility of misleading or deceiving, regardless of whether it is more than 50% ( Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at [6] , [15], Equity Access Pty Ltd ATPR 40-994 at 50,950, Global Sportsman Pty Ltd [1984] FCA 180 ; 2 FCR 82 , McHugh J in Butcher [2004] HCA 60 ; 218 CLR 592 at 626). 8. Silence, or failure to disclose information, can fall within the gamut of misleading or deceptive conduct in the sense that having regard to all the relevant circumstances, it constitutes conduct that has been misleading or deceptive or that is likely to mislead or deceive ( Demagogue Pty Ltd v Ramensky [1992] FCA 557 ; (1992) 39 FCR 31 at 32, 41; Fleetman Pty Ltd v Cairns Pty Ltd [2005] FCAFC 80 at [1] - [2] ). 9. The conduct of a corporation must be viewed as a whole. It would be wrong to select some words or act which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at 199). 10. As a general rule intention (or lack of intention) to mislead or deceive is not a necessary element of conduct proscribed by s 52 ( Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 228). The liability imposed by s 52 is unrelated to fault (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at 197). 11. The court must decide objectively whether the conduct is misleading or deceptive or likely to mislead or deceive, and that evidence that members of the public have actually been misled is not conclusive, although it can be very persuasive (Gibbs CJ in Parkdale Custom Built Furniture Pty Ltd [1982] HCA 44 ; 149 CLR 191 at 198-199, McWilliam's Wines Pty Ltd v McDonald's System of Australia [1980] FCA 159 ; (1980) 33 ALR 394 per Smithers J at 399 and Fisher J at 414, Equity Access Pty Ltd ATPR 40-994 at 50,950). 100 In essence, the case of the applicants was that the respondents had acted in breach of s 52 of the Act in relation to all representations, and in breach of ss 51A and 52 in relation to the future representations. Both parties made extensive submissions on this basis. I shall return to this issue later in the judgment. Indeed Mr Tracy was the only witness whose evidence was adduced by the applicants as to the factual events relevant to the applicants' claims. Both parties made extensive submissions as to the credit of Mr Tracy and Mr Strahley. 102 The applicants also made submissions concerning other witnesses whose evidence was adduced by the respondents. I will deal with the credit of other witnesses during the course of the judgment. I reject these submissions. 104 In written submissions the applicants submitted that Mr Strahley gave the impression of being a witness who was "looking for the trap" in every question rather than a witness who was genuinely concerned and enthusiastic to assist the Court to determine the truth of the matters before it. I reject this submission. I find that, while Mr Strahley endeavoured to be careful in his answers, he was nonetheless attempting to properly answer questions put to him and was not attempting in any way, either in his demeanour or his oral answers, to be evasive or unhelpful. Overall I found Mr Strahley's answers clear and comprehensive over the significant length of time during which he was subject to cross-examination. 105 In their written submissions the applicants further invited me to make adverse findings as to Mr Strahley's credit in relation to evidence given by Mr Strahley as to contents of Hancock's financial statements which Mr Strahley had signed as a director, and referred me in particular to an exchange between Mr Perry SC for the applicants and Mr Strahley during cross-examination (TS 992 ll 1-44). However as I indicated to Mr Perry SC during closing submissions, in my view that the evidence given by Mr Strahley in that context indicated no more than the confusion of a company director who, when confronted unexpectedly with the need to explain and justify financial reports he or she may have signed, which reports had been prepared by an expert accountant, is unable to do so properly without a briefing from that accountant. I note that the respondents tendered evidence of an accountant who had participated in preparation of the relevant financial reports, which they submitted explained the relevant financial details and Mr Strahley's confusion. While it is perhaps regrettable that Mr Strahley as a company director was not able, during rigorous cross-examination on wide-ranging issues over five days, to properly explain the company's financial reports from several years earlier, I consider that it is not surprising in the circumstances, and that it would not be unusual for many directors in similar circumstances. It does not, in my view, necessarily mean that I should make adverse findings with respect to Mr Strahley's credit. 106 The applicants also made submissions in relation to Mr Strahley's evidence during cross-examination (TS 983-992). Leaving aside the fact that the issue of whether the vendors had called for expressions of interest in the sale of the properties during the period ending 30 June 2003 (approximately 18 months before Mr Tracy expressed any interest in the properties) was of minimal (if any) relevance in these proceedings the evidence again simply shows the confusion of the witness under cross-examination. In my view Mr Strahley, quite properly, made concessions under cross-examination where appropriate. 107 In summary, contrary to the applicants' submissions, I am not persuaded that I should draw adverse inferences in relation to Mr Strahley's evidence. I also consider him to be an able businessman who sought to investigate the business opportunity represented by the relevant properties to the best of his ability in light of his lack of knowledge of the citrus industry. However, both the evidence and his demeanour in Court also show that he is a person of considerable determination who, once he forms a view, is loath to relinquish it or even modify it notwithstanding evidence (even compelling evidence) to the contrary. No reliable evidence was produced to support this very serious accusation (including no sworn evidence of Mr Devenny). I shall return to this issue later in the judgment. • Mr Tracy's insistence, until the conclusion of the proceedings, and reflected in paras 17A(c) and (d) of the Further Amended Statement of Claim, that the first respondent had caused the orchards to be either improperly sprayed (17A(c)) or sprayed contrary to good agricultural practice (17A(d)). Mr Tracy's allegations at the hearing in relation to the pesticide Rovral extended to an accusation that the first respondent had illegally sprayed the orchards (TS 305 ll 1-3, ll 21-22, 293 ll 5-24). Yet despite this very serious allegation, the claims in paras 17A(c) and (d) were abandoned by the applicants in written submissions. (In my view the decision of the applicants not to press these claims was not surprising, as there was no evidence to support the claims, and indeed I consider that the evidence of the horticulturalist, Mr Burns, at the hearing (TS 705) completely answered those claims. Examples of this can be seen at TS 341-342, 415 l 39, 416 l 13, and 493 ll 17-26. 110 Third, where there was a conflict between the evidence of Mr Strahley and Mr Tracy as to events which had occurred, on balance I preferred the evidence of Mr Strahley. As I have already noted, Mr Strahley had what was demonstrated during the proceedings to be a thorough understanding of the citrus industry and the relevant properties. When information was provided by Mr Strahley to Mr Tracy during negotiations for the sale of the relevant properties, it is clear that Mr Strahley would have both understood the information, and its relevance to the discussions with Mr Tracy at the time. Because of that understanding, Mr Strahley would in my view have been able to better retain memory of discussing issues with Mr Tracy relevant to the properties and the citrus industry than would Mr Tracy. In contrast Mr Tracy as at the first meeting with the respondents on 3 December 2004 had no experience of and very little (if any) understanding of the citrus industry. I observed throughout the hearing that his recollection of discussions concerning the relevant properties and the citrus industry was imperfect, and I consider that a fundamental reason for this imperfect recollection was that he simply did not appreciate the significance of what he was being told at the time. An example of this is Mr Tracy's recollection of when he first heard of the disease EBS in relation to the orchards. At the hearing Mr Tracy said that he had never heard of EBS before January or February 2005 (TS 301 ll 17-18). Yet Mr Burns deposed that he had discussed EBS with Mr Tracy in December 2004 in the context of the need to thin the fruit (TS 299-300). In my view Mr Tracy simply had not understood the implications of what he was being told by Mr Burns at that time, and therefore did not remember it. Indeed I consider that circumstances involving the provision to Mr Tracy of important information concerning either the citrus industry or the performance of the relevant properties, but of which, because of his lack of experience in that industry, he simply did not appreciate the significance at the time, was a recurring theme in these proceedings. 111 I make these findings because they are relevant to my evaluation of the evidence given by these witnesses throughout the proceedings and the substantiation (or otherwise) of the claims of the applicants. I shall return to these issues throughout the judgment. The affidavit was tendered by the respondent as evidence. 113 Annexed to Mr Breed's affidavit was an unsigned statement, purporting to contain comments of Mr Breed relevant to the historical packout rates and the nature of information in the SmartPak computer records system. Mr Breed swore in his affidavit that the unsigned statement had been prepared by Mr Lynch, the solicitor for the applicants, on or about 31 May 2005, following discussions between Mr Lynch, Mr Tracy and Mr Breed (Breed affidavit sworn 14 July 2006 at [74]-[80]). Under cross-examination, Mr Tracy agreed that the unsigned statement was prepared following discussions between himself, Mr Lynch and Mr Breed (TS 253 ll 26-27). 114 Mr Breed's unsigned statement was filed by the applicants on 21 June 2006. 115 Significantly, there is inconsistency between the views of Mr Breed as purportedly expressed in the unsigned statement, and the evidence in his affidavit of 14 July 2006. Mr Breed swore that he refused to sign the statement prepared by Mr Lynch, and subsequently annexed to his affidavit, because the statement was inaccurate (Breed affidavit sworn 14 July 2006 at [80]-[81]). 116 Notwithstanding the fact that Mr Breed was subpoenaed by the applicants on 21 June 2006 to appear as a witness in the proceedings (exhibit R58), he was not called as a witness by the applicants, nor by the respondents who tendered his affidavit. Nor did the applicants require Mr Breed's attendance for cross-examination. Accordingly his affidavit, which taken with the annexures thereto is substantial, was not tested in court. Further, in the absence of Mr Breed being called as a witness by the applicants, his unsigned statement was neither adopted on oath nor tested by cross-examination. 117 Evidence of Mr Breed, tested by cross-examination, would have been of great significance in this case given his position with both the first applicant and the first respondent, his apparent knowledge of the background facts and his interaction with all parties to these proceedings. However there was clearly considerable strategic thought given by both applicants and respondents to the issue of Mr Breed as a witness and the value of his affidavit (I note, for example, TS 45-50). At the end of the day Mr Bell QC for the respondents invited the Court to ignore the Breed affidavit (TS 1403 ll 6-7). 118 In my view Mr Breed's unsigned statement is of no weight in relation to any matter in dispute in these proceedings. Mr Breed is a respondent to proceedings, for whom the solicitor for the applicants had prepared a statement (which Mr Breed refused to sign) purportedly reflecting his views. 120 Where it would reasonably have been expected that a party would adduce particular evidence but does not do so, adverse inferences may be drawn from the failure of the party to adduce that evidence: Jones v Dunkel (1959) 101 CLR 298. 121 To paraphrase comments of Habersberger J in Wenczel v Commonwealth Bank of Australia [2006] VSC 324 at [90] , it is obvious to me that neither the applicants nor the respondents were prepared to run the risk of calling Mr Breed, helpful though his evidence would have been. 122 In circumstances where Mr Breed's affidavit is untested, little weight should be attributed to Mr Breed's affidavit in respect of any matter in dispute in these proceedings, including of course with respect to this particular claim. Further, given the circumstances I consider the more practical approach is for me to note that neither party was prepared to call Mr Breed as a witness in these proceedings. I draw no inferences against either party for their failure to call Mr Breed as a witness. 123 I now turn to the representations the subject of claims by the applicants in the Further Amended Statement of Claim. The 2000/2001 year was a poor year but produced approximately 98,154 x 18 kg cartons at an average price of $20.51/18kg/carton. The production figures for 2001/2002 and 2002/2003 have been provided in number of bins rather than number of cartons. These figures exclude the mangoes. All of the fruit are packed into 18 kg cartons except for Imperials which are 9 Kg cartons and also exclude juicing fruit. Yields vary from 65% to 85% of total kilograms packed in 380-400 kg bins for first and second grade fruit. The production for 2002/2003 and 2003/2004 has increased substantially as trees are reaching their full production potential. It appears that farm and marketing management are at a high level. • Properly construed, this constituted the making of a statement that the orchards actually achieved the stated crop performance during 2001 and 2002. • The representation was made to a potential purchaser in the course of the purchaser making enquiries about the subject matter of the sale. • Evidence of the reliance by the applicants by the representation in the 1 June 2004 Valuation Report may be found in para 6 of Mr Tracy's statement sworn 17 November 2006, which states "On 29 November 2004 Douglas e-mailed me a copy of a Herron Todd White ('HTW') valuation of the orchards dated June 2004 (J48)". • The respondents knew that the production figures for 2001 and 2002 referred to in the 1 June 2004 Valuation Report were not the actual crop production that the orchards had produced for those years but rather were derived by Mr Neubecker utilising packout rates provided to him by Mr Breed. • The respondents knew, by reason of their possession of the TotalPak and SmartPak records, that the actual historical crop performance of the orchards for the period 2001 and 2002 was substantially poorer than recorded in the 1 June 2004 Valuation Reportthe respondents knew, by reason of their possession of the TotalPak and SmartPak records, that the actual historical packout rates for the crop performance of the orchards in 2001 and 2002 was an average packout percentage of 36.77% for 2001 and 51.8% for 2002 compared to the range of packout rates of 65-80% provided by Mr Breed to Mr Neubecker. • The respondents knew these matters when they authorised the provision of the 1 June 2004 Valuation Report to the applicants on 29 November 2004. • The respondents' act in providing the applicants with a document which they knew contained false crop production figures is misleading or deceptive particularly in the context of inquiries by a potential purchaser. • The respondents made a misleading or false representation as to the characteristics of the orchards and the use to which the orchards were capable of being put. • Mr Strahley conceded (TS 980 ll 24-37, 1059 ll 4-8) the fundamental importance of giving Mr Tracy, as a prospective purchaser, accurate and comprehensive data pertaining to yields and packout rates for the period 2001 through the end of 2004. • The first respondent conveyed nothing beyond communicating that a valuation as at 1 June 2004 had been obtained from HTW. • The production "figures" recorded in cl 7.3 of the valuation under the heading "Production" refer to the production figures for "2000/2001" and "2002/2003". The valuer recorded that the production figure for the "2001/2002 crop year" had been advised as a reasonable guide that that information was missing. The 2001/2002 year was said to be a poor year. • The table relevantly sets out the production for "2001/2002", "2002/2003" and "2003/2004" in financial years. So much is plain on the face of the document itself. The "Note" on p 24 of the report records "The Year 2003/2004...". • If there had been a reference to the 2001 or 2002 crop year than that would be stated as 2001 crop year or 2002 crop year, which was the calendar year. • The yield calculations were undertaken by the valuer. They were not yields for either the 2001 or 2002 crop years. • The report did not represent an "average yield of 65-85% of total kilograms packed from 390-400 kilogram bins for the first and second grade fruit". The report stated that "The Year 2003/2004 are expected yields only..." and "Yields vary from 65% to 85%". This was clearly a general observation of the valuer. • No facts were established from which it could be concluded that the alleged representations were misleading. • In any event, it was clear from the evidence of Mr Tracy that the applicants were not led into any error by para 7.3 of the 1 June 2004 Valuation Report. • Mr Tracy was provided with the "Block Summaries" which recorded yields and packout rates for the crop years 2002 to 2004. • Mr Tracy was provided with a Yield Summary which recorded historical yields for the crop years 1998 to 2004 (exhibit A17). • The applicants obtained their own valuation from Mr Bailey of HTW in January 2005 before entering into the contracts to purchase the orchards and the Packing Shed on 16 February 2005. • There is no sufficient basis on the evidence for the court to conclude that the alleged representation was misleading or deceptive or that there was any reliance on the alleged representation. 131 The email was sent by Mr Douglas to Mr Tracy without message, but on its face embodies an email from Mr Strahley to Mr Douglas of the same date and with the same subject, and features earlier correspondence between Mr Strahley and a third party featuring the same documentation. 132 It is not in dispute that the 1 June 2004 Valuation Report was prepared by Mr Rex Neubecker. Our valuation has been prepared for asset purposes for Hancock Farm Company Pty Ltd and it may be relied upon by RABO Australia Limited for mortgage security purposes. The interest being valued is the unencumbered fee simple including: a) Land, buildings and cold room facility. b) All irrigation allocations, pumping plant and irrigation system. c) All citrus trees but excluding crop. d) Plant and equipment. e) Crop as at 30/6/2004 (discounted to reflect price uncertainty, profit and risk and the costs of bringing the crop to market). 134 The 1 June 2004 Valuation Report is 36 pages in length, divided into 12 sections, namely Executive Summary, Title Details, Town Planning, Locality and Services, Land Description and Development, Structures, Valuation Considerations, Plant and Equipment, Crop, Comparative Market Data, Valuation Approach, and Valuation. 135 A significant proportion of the material in the 1 June 2004 Valuation Report was descriptive, with some interpretative comments by the authors of the report. 136 This particular claim of the applicants is referable to para 7.3, headed "Particular Relevant Remarks", which falls within Ch 7 of the report "Valuation Considerations". Chapter 7 of the report contains material specifically referable to the properties being valued as well as more general information relevant to the valuation, including for example information supplied by third parties. 138 The term "packout rate" refers to the proportion of delivered fruit which is packed for consumption as fresh fruit following a process of sorting of fruit, with the best fruit --- usually grade 1 and grade 2 fruit --- going to the high margin fresh fruit sector, and the remainder going to processing for juice at a price much less favourable to the fruit grower than for sale of fresh fruit. As a general proposition, the higher the packout rate for fruit, the more profitable the sale of the fruit for the grower. Grade 1 or grade 2 fruit at the relevant orchards was, according to the evidence of Mr Strahley, packed into either cartons or hat bins for delivery to the appropriate market (Strahley affidavit sworn 12 July 2006 at [33]). (Mr Neubecker, who prepared the 1 June 2004 Valuation Report, used the terms "yield of cartons" and "packout rates" synonymously (TS 771 ll 35-39, 778 ll 8-13), as did Mr Bailey in his evidence (TS 824 ll 4-9). • The tenor of his claim in para 11 was that inaccurate information had been provided by Mr Strahley to Mr Neubecker for incorporation into the 1 June 2004 Valuation Report, which report had subsequently been forwarded to Mr Tracy (TS 255 ll 45-48, 256 ll 1,10-13). • He realised that the information given by Mr Strahley earlier, including the information in the 1 June 2004 Valuation Report, was inaccurate after he had received information from Mr Breed (TS 249 ll 3-5). This information included the Historical Packouts.xls document originally emailed by Mr Breed to Mr Strahley on 11 May 2004. • He relied on the information in the 1 June 2004 Valuation Report (TS 257 ll 14-17). • In the Further Amended Statement of Claim Mr Tracy articulated the numbers which, in his opinion, were correct (TS 353 ll 28-31). • Although this was not in any of his statements, he had pieced together the fact that the information provided by Mr Strahley to Mr Neubecker for incorporation into the 1 June 2004 Valuation Report was inaccurate (TS 352 ll 29-32). • Although he was aware that the information in para 7.3 of the 1 June 2004 Valuation Report was apparently incomplete, he had not asked Mr Strahley about information which, on its face, was apparently missing from para 7.3 of the 1 June 2004 Valuation Report (TS 356 ll 2-7). In January 2004 the SmartPak system was replaced by the TotalPak system (Strahley affidavit sworn 12 July 2006 at [40]). • He had received a document from Mr Breed titled "Historical Packouts.xls", being historical packout data for 1998, 1999, 2000, 2001, 2002 and 2003 based on information recorded in the SmartPak system. Mr Breed subsequently produced the Block Summary data which Mr Strahley later emailed to Mr Douglas. • In May 2004 Mr Strahley was particularly concerned in relation to the deficiencies in the SmartPak system when he was preparing information to be provided to the Hancock board of directors (Strahley affidavit sworn 12 July 2006 at [42]). • In the ordinary course of the business of Sunstate Orchards the relevant properties were revalued every two years by an external valuer (Strahley affidavit sworn 12 July 2006 at [49]). • As part of the valuation in June 2004 he forwarded to Mr Neubecker the price and volume of fruit expressed in bin numbers for 2001/2002, 2002/2003 and 2003/2004, as he was not satisfied with the reliability of the packout rates in the summary data sent to him by Mr David Breed (Strahley affidavit sworn 12 July 2006 at [52]). • It was not apparent to him that the bin numbers for 2001/2002, 2002/2003 and 2003 he had provided to Mr Neubecker were unreliable (Strahley affidavit sworn 12 July 2006 at [52]). This information was by calendar year, the price column denoted the price per carton, not bin, and the number of cartons to come out of a bin would depend on the variety of fruit (Strahley affidavit sworn 12 July 2006 at [53]). 142 Mr Neubecker said in his statement of 22 July 2006 that, in completing the table in para 7.3 in the 1 June 2004 Valuation Report, he had applied the percentage of the yield of cartons to each citrus variety for the periods 2001/2002, 2002/2003 and 2003/2004, as provided by Mr Breed. At the hearing, Mr Neubecker gave evidence that the yields, or packout rates, for those periods were indicative rates only (TS 780 ll 13-23), and actually those for the 2003/2004 years applied across the earlier years (TS 779 ll 1-2, 786 ll 26-27). 143 According to Mr Neubecker, both in his statement and under cross-examination (for example, TS 787 ll 20-29), this was because Mr Strahley had provided Mr Neubecker with bin numbers of fruit, which Mr Neubecker had calculated and converted to carton numbers employing 2003-2004 packout rates for the purposes of producing the valuation report (TS 781 ll 24-45, 782 ll 9-10). Mr Neubecker deposed that he wanted historical details of carton numbers of fruit rather than bin numbers, for greater accuracy in producing his report (TS 777 ll 17-21). Mr Neubecker also deposed that he understood that historical information could not be provided by the first respondent or Mr Strahley because of difficulties with computer software on which historical crop data was stored (TS 764 ll 39-46, 768 ll 1-4). Was provision of the 1 June 2004 Valuation Report "engaging in conduct"? It was provided to him as a potential purchaser of the relevant properties. In my view it is not possible to do otherwise than draw the conclusion that, in authorising the provision of the report to Mr Tracy, the first respondent was "engaging in conduct" within the meaning of s 52 , and making representations referable to the contents of the 1 June 2004 Valuation Report. 145 However, I do not consider that, in authorising the provision of the 1 June 2004 Valuation Report to Mr Tracy, the first respondent acted in breach of s 52 as claimed by the applicants in para 20A of the Further Amended Statement of Claim. 1. 2. As is clear both from the pleadings and Mr Tracy's evidence, a fundamental aspect of this claim is that the historical data in para 7.3 was misleading or deceptive, because the true historical position in respect of packout rates and orchard production could be found in data generated in 2004 by the SmartPak system into such documents as the "Historical Packouts.xls" (exhibit A32). As I have already explained, the applicants bear the onus of proving that the historical data in the table in para 7.3 was misleading or deceptive. In short, I am not satisfied that the material in the Historical Packouts.xls document was accurate, and that as a result the material in para 7.3 of the 1 June 2004 Valuation Report was misleading or deceptive. I will deal specifically with the claims in para 19 in detail later in the judgment. • I accept the evidence of Mr Strahley that he had serious concerns as to the reliability of reports generated by the SmartPak system, including data in respect of Crop years 2001, 2002 and 2003 and the Historical Packouts.xls, for the reasons he gave in his evidence and which I summarised earlier in this judgment. • I find that the most likely reason for the production of the Block Summary data was that Mr Strahley did not consider the data in, inter alia , the Historical Packouts.xls to be accurate. Notwithstanding submissions by the applicants that there was no substance to Mr Strahley's concerns in relation to the historical data (I note, for example, the submission of Mr Perry SC at TS 1053 ll 1-18) I am unable to identify any ulterior motive for what appears to have been the rejection by Mr Strahley of the accuracy of the information with respect to, among other things, historical packout rates several months before negotiations commenced with Mr Tracy. • There is nothing in the evidence of Mr Neubecker, an experienced valuer familiar with the properties since 2000, to indicate that he was in any way surprised by Mr Strahley's concerns as to the lack of accuracy of the SmartPak data. • I note that Mr Breed commented in his affidavit (Breed affidavit sworn 14 July 2006 at [13]) as to the inaccuracy of information in the SmartPak computer system. • It was clear from the evidence of Mr Strahley elicited under cross-examination that he needed accurate information as to historical data in mid-2004 as there was the possibility that the first respondent would commence an action for misrepresentation against the entity which had originally sold it the relevant properties in 2000 (but which proceedings did not appear to eventuate) (for example, TS 1038 ll 30-35, 1039 ll 9-12, 1053 ll 41-47). The most likely explanation for Mr Strahley and the first respondent disregarding the historical information generated by SmartPak, including the Historical Packouts.xls is that Mr Strahley, for the reasons expressed, did not consider that information accurate. 3. The 2000/2001 year was a poor year but produced approximately 98,454 x 18kg cartons at an average price of $20.51/18kg carton. The production figures for 2001/2002 and 2002/2003 years have been provided in numbers of bins rather than numbers of cartons. Mr Neubecker gave evidence that, in applying the figures that Mr Breed had given him for the 2003/2004 financial years across the years 2000/2001, 2002/2003 and 2003/2004 and cross-checking those figures with the information provided to him by Mr Breed (in particular, indicative yields) and his earlier valuation report, he considered that the information he had included in the 1 June 2004 Valuation Report was accurate (TS 779 ll 4-7, 780 ll 13-15). 150 The derivation of the production figures and the method of calculation were clearly explained in the valuation report and are consistent with the evidence of both Mr Neubecker and Mr Strahley. 151 It is clear from considering this data in the context of preparing the 1 June 2004 Valuation Report that Mr Neubecker did not have detailed and exact information with respect to production. Rather, he presented what he perceived to be a careful estimate of expected yields for 2003/2004 as well as historical production figures for financial years (not Crop years as claimed by the applicants) based on the incomplete information before him which had been supplied by the first respondent. Similarly, by forwarding to Mr Tracy, as an interested potential purchaser, a copy of the 1 June 2004 Valuation Report with a view to providing an overview of the properties by an independent valuer, Mr Strahley and the first respondent were, at most, making a representation that the data in para 7.3 was a careful estimate of historical production figures and no higher. This did not somehow translate --- as claimed by the applicants --- into an unequivocal representation by either Mr Strahley or the first respondent that the data represented the unequivocally accurate position, which is the claim of the applicants. Given that the 1 June 2004 Valuation Report was provided by Mr Strahley (via Mr Douglas) to Mr Tracy, this is obviously not a case in that class where information is merely being passed on about property by an intermediary without any belief in its truth or falsity (cf John G Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd (1993) ATPR 41-249) However to say that a potential vendor's provision of a report by a valuer containing highly qualified estimates of production constitutes, without more, an unequivocal adoption and confirmation of those estimates as fact is simply incorrect in the circumstances of this case. 4. 153 Although the applicants claim that the Yield Summary.xls was misleading or deceptive a similar claim is not made in relation to the Block Summary data. It is not in contention in these proceedings that an accurate representation of historical production figures, including packout rates, can be found by construction of the Block Summary data. That inquiry may reveal that the meaning of the impugned statement is qualified or clarified by accompanying remarks, that "later statements replace those made earlier or affect or modify them in some way" or that subsequent examination dispels the conduct's initially misleading effect. 157 A crucial issue in the proceedings, however, was whether the first respondent provided Mr Tracy with the Block Summary data on 3 December 2004 as the respondents claimed. Mr Tracy claimed that he did not receive it from the first respondent or Mr Strahley at any time (Tracy statement in reply sworn 26 September 2006 at [4(e), (f)]). 158 Mr Tracy's evidence in relation to the Block Summary data is at odds with the evidence of Mr Strahley, and of Mr Douglas who was acting on behalf of the first respondent in these transactions. • At a meeting on 3 December 2004 between Mr Strahley, Mr Tracy and Mr Douglas, Mr Strahley and Mr Tracy discussed the Block Summary data; all three men made reference to the Block Summary documents; Mr Douglas and Mr Tracy asked a number of questions about the Block Summary data and asked him why the historical packout rates were poor; and to the best of his recollection Mr Tracy wrote some notes on the bar graphs in the Block Summary data (Strahley affidavit sworn 12 July 2006 at [69(e)]). • Prior to the meeting on 3 December 2004 between Mr Strahley, Mr Tracy and Mr Douglas, he printed two copies of the Block Summary data (Douglas affidavit sworn 6 July 2006 at [21]). • he arrived at the meeting with the Block Summary data document and another document, the Information Memorandum, to have them available to be provided to Mr Tracy, and placed them on the table at the meeting. During the course of the meeting, Mr Strahley photocopied some documents and gave them to Mr Tracy, and at the end of the meeting Mr Tracy put documents and a folder supplied by Mr Strahley in his briefcase. Nothing was left on the table. Mr Douglas left the meeting with Mr Tracy and took no documents with him (Douglas affidavit sworn 6 July 2006 at [22]). • To the best of his recollection Mr Tracy and Mr Strahley looked at and discussed the contents of the Block Summary data as well as other documentation (Douglas affidavit sworn 6 July 2006 at [25(a)]). 161 I have considered the evidence of Mr Tracy, Mr Strahley and Mr Douglas in relation to whether Mr Tracy was provided with the Block Summary data. In my view Mr Tracy was provided with the Block Summary data at the meeting of 3 December 2004 by Mr Douglas, who had received it from Mr Strahley by email prior to the meeting for the purpose of providing it to Mr Tracy. I also accept the evidence of Mr Strahley and Mr Douglas that the document was discussed at this meeting. I prefer the evidence of Mr Strahley and Mr Douglas to Mr Tracy in respect of the provision and discussion of the Block Summary data. 162 I make this finding for the following reasons. However in my view such conduct on the part of Mr Strahley would have been totally inconsistent with the level of Mr Strahley's disclosure to Mr Tracy in relation to the properties, and the assistance provided by Mr Strahley to Mr Tracy during the negotiations to purchase the property. Mr Douglas deposed that Mr Tracy asked a number of questions during his inspection of the properties, and recalled that Mr Tracy's questions were answered without any hesitation on the part of Mr Breed and Mr Burns (Douglas affidavit sworn 6 July 2006 at [48]). • Mr Strahley gave Mr Tracy the telephone numbers for Mr Dan Papacek and Mr John Owen-Turner, both of whom provided consulting services to the first respondent, and suggested that Mr Tracy make contact with them directly to ask any questions about the orchards (Strahley affidavit sworn 12 July 2006 at [105]). • Mr Strahley arranged for Mr Tracy to speak with Ms Carolyn Bailey, manager of Client Accounting and Reporting, Hancock Agricultural Investment Group, in Boston Massachusetts, on 20 December 2004, so that Ms Bailey could explain the SGARA accounts system used by the first respondent. (Strahley affidavit sworn 12 July 2006 at [106]). • Mr Strahley provided Mr Tracy with the contact details of Mr Michael Sommerville, a Marketing Manager for Carter and Spencer to assist Mr Tracy (Strahley affidavit sworn 12 July 2006 at [199]). • Mr Tracy was provided with a folder of documents by Mr Strahley, relevant to the first respondent's due diligence enquiries (including the 2000 valuation, soil tests, environmental audits and management plans) when it originally purchased the orchards (Strahley affidavit sworn 12 July 2006 at [70]). • It is clear from the evidence that Mr Strahley made the Block Summary data available to Mr Douglas, who was the real estate agent liaising with Mr Tracy in relation to the properties. • On 15 February 2005, Mr Strahley sent an email to Mr Tracy attaching the Sunstate Orchards financial documents titled "financials04.pdf"which included the profit and loss statement of the years ended 30 June 2002, 2003 and 2004, which had been forwarded to him by Ms Bailey (exhibit R31) (see also Strahley affidavit sworn 12 July 2006 at [176]). Mr Burns deposes that if Mr Tracy had asked him any questions about the orchards or any matter within his expertise he would have answered to the best of his ability (Matthew David Burns affidavit sworn 11 July 2006 at [68]). • Mr Strahley introduced Mr Palfreeman to Mr Tracy in what appeared to be a genuine endeavour to assist both Mr Tracy and Mr Palfreeman (James Palfreeman affidavit sworn 6 July 2006 at [8]-[11]). Despite suggestions from Counsel for the applicants that Mr Palfreeman could not possibly have been of any use to Mr Tracy, I accept Mr Strahley's view of Mr Palfreeman as "...an articulate young man with an MBA who was very analytical and that was --- part of his project --- or officer role, marketing role in the office was doing a lot of assessing, benchmarking and commodity research for (the respondents)" (TS 1113 ll 13-16). • Mr Palfreeman was given the responsibility of communicating with Mr Tracy on behalf of the first respondent after exchange of contracts, which also involved communicating with the Packing Shed any request for information from Mr Tracy (Palfreeman affidavit sworn 6 July at [17]). • Mr Palfreeman deposed that he had been instructed by Mr Strahley in March 2005 prior to settlement to leave all working sheets such as spray records, water usages and stock control and all TotalPak files complete for Mr Tracy, and, in light of the fact that Mr Tracy was purchasing the relevant assets and not the business, only remove Sunstate and Hancock Farm documents (Palfreeman affidavit sworn 6 July 2006 at [22]-[23] and annexure JP-03). • Mr Strahley introduced Mr Tracy to Mr Terry McMahon of Abbotsleigh Orchard, which was an orchard similar to the Bundaberg and Tiaro orchards in size, location, and varieties of fruit. The only purpose of such introduction was to allow Mr Tracy to discuss relevant issues of mutual interest with Mr McMahon (TS 1226 ll 25-35). 165 In summary, this conduct is not consistent with an allegation that either the first respondents or Mr Strahley were seeking to withhold information from Mr Tracy. The evidence clearly demonstrates that Mr Strahley had forwarded the Block Summary data to Mr Douglas on 30 November 2004. Mr Douglas was the principal real estate agent responsible for the sale of the properties, and at that time liaising with Mr Tracy as a potential purchaser of the properties. In my view it is perfectly reasonable that, at that stage of the negotiations, Mr Strahley should have provided documentation relevant to the properties and their performance to the real estate agent who was in direct contact with a potential purchaser, rather than seek Mr Tracy's email address or other contact details to provide him directly with the material. Mr Tracy and Mr Strahley did not meet personally prior to 30 November 2004, and there was no direct email contact between Mr Tracy and Mr Strahley prior to that time (TS 381 ll 10-12, 382-383). 167 Further, the fact that Mr Strahley had provided the Block Summary data to Mr Douglas indicates candour in relation to provision of this information. Clearly, neither Mr Strahley nor the first respondent were attempting to conceal the Block Summary data from the real estate agent who was in direct contact with Mr Tracy, and for whose benefit it appeared Mr Strahley provided Mr Douglas with the Block Summary data. 168 Finally in relation to this issue I note that Mr Douglas was a credible witness who, on the evidence, had nothing to gain from concealing information from Mr Tracy with whom he had been acquainted for several years at the time of the transaction to acquire the relevant properties (TS 307 ll 43-48, 308 ll 1-5). It is unlikely that Mr Douglas would be party to a conspiracy of withholding relevant information from Mr Tracy when the evidence indicates that Mr Douglas was provided the information by Mr Strahley for Mr Tracy as a potential purchaser. In their written submissions, the applicants made reference to the allegedly "murky and sinister arrangements" between Mr Strahley and Mr Douglas (including the claim that they were old school friends). This submission is curious in light of the much more contemporary and long-standing relationship between Mr Douglas and Mr Tracy . In my view the applicants' submission as to "murky and sinister arrangements" between Mr Strahley and Mr Douglas is unconvincing. Mr Douglas' undisputed evidence was that he had attended the same school as Mr Strahley, but that Mr Strahley was two classes above him. There is no evidence at all that they were friends at school, or had any relationship other than that, at an early time in their lives, many years prior to these events, they were two students concurrently at the same school. Mr Douglas' evidence, which I accept, was that after completing school he had not seen Mr Strahley again until twelve months before the sale of the relevant properties. In my view there were no "murky and sinister arrangements" between Mr Strahley and Mr Douglas, or indeed any arrangements which impact on Mr Douglas' credit. I also accept Mr Douglas' evidence, as well as Mr Strahley's evidence, that Mr Strahley and Mr Tracy discussed the Block Summaries during the meeting of 3 December 2004, and that when the meeting concluded Mr Douglas left with no papers. I have already explained my reasons why I prefer the evidence of Mr Strahley to that of Mr Tracy where there is a conflict in their versions of events. Specifically in relation to the Block Summary data, I consider that, while Mr Tracy may honestly have deposed that he did not receive that data on 3 December 2004, it is more likely that the data was produced and discussed but Mr Tracy did not appreciate the significance of it at the time in the context of the volume of other information he was receiving at that meeting. Block summaries of oranges and apples and rubbish like that isn't the sort of thing that would have interested him. He's a corporate doctor. Things that interest him are figures, profits, cash flows. And so one can understand why he may not have brought those documents provided to him into focus. 172 On balance I consider that Mr Tracy was provided with the Block Summary data at the meeting of 3 December 2004, and that the document was discussed at the meeting as Mr Strahley described. 173 Finally, as I have already indicated, I consider that the claim of the applicants in paras 19(a) and (b) as to the "true position" are not substantiated. While, as a result, I do not need to consider issues of reliance by the applicants on the material in the 1 June 2004 Valuation Report, in view of the extensive submissions made in relation to reliance on the material I shall deal with the issue separately later in the judgment. ▪ Mr Strahley, by email of 10 December 2004, provided to Mr Tracy an Australian daily fruit report of that date. On page 5 of the report there were lemon prices recorded as being obtained for the various lemon varieties in the markets on that day between $12 to $46 per carton for 1st and 2nd grade lemons for the Eastern seaboard. In cross-examination Mr Tracy's evidence was that when he received the market report he looked at the price ranges of $30-$55 for lemons per carton. The market report did not disclose lemons at that date were selling at that time for $70 per carton. Mr Tracy did not give evidence that he was told that he would get $70 for each carton of the lemon crop. ▪ By email of 21 December 2004 Mr Strahley sent to Mr Tracy the Sunstate Orchards Crop Historical Data and 2005 Season Estimates in a document titled Valuation Yield Summary 2004.xls. The recorded average price per carton for lemons for the 2005 season was $22 per carton. Mr Tracy said in cross-examination that he had looked at that document before Christmas of 2004 and was aware of the budgeted price (TS 407 ll 46-48, 408 ll 2-5). ▪ On 6 January 2005, at Mr Tracy's request, he was provided with a lemon pricing schedule for the 2005 season recording information from marketing agents, which included estimated prices for January, February and March 2005. ▪ On 7 January 2005 Mr Tracy was provided with an updated pricing schedule obtained from the fruit wholesaler Carter and Spence and comments from Sculli's, a fruit wholesaler, relating to the pricing of lemons. The average price for lemons was recorded in the schedule at $27.70 per carton with a comment in the email from Sculli's that lemons will be good for the season with an average price of $30 for lemons. • There was no sufficient basis on the evidence for the Court to conclude that the alleged representation was misleading or deceptive or that there was any reliance by the applicants on the alleged representation. 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 of 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. 181 I do not consider this claim substantiated for the following reasons. 182 First, although the applicants in the Further Amended Statement of Claim plead the representation alleged in para 12(c), there is no specific claim elsewhere in that document that this representation constitutes conduct contrary to ss 52 or 53A as to historical pricing of lemons. The applicants plead generally in para 20A that the representations referred to in paras 11 to 17 were misleading or deceptive or likely to mislead or deceive, however in para 19 and 19A the applicants plead their grounds for the claims that representations in paras 11 to 17A were misleading or deceptive. There is no reference in either para 19 or para 19A to any grounds for the claim that the representation alleged in para 12(c) was misleading or deceptive. There is nothing before the Court in the pleadings to explain why the representation alleged in para 12(c) was misleading or deceptive. 183 Second, even if I accept that there is a claim by the applicants that the alleged representations in para 12(c) were misleading or deceptive, I am unable to identify any factual basis for this claim. As the respondents submitted and as Mr Strahley said at the hearing, Mr Strahley's evidence was that he had said that it was possible that up to $70 per carton for first grade lemons could be obtained for early season crop (TS 1205-1206) Mr Tracy's evidence was that he did not proceed into the contract believing he would obtain $70 per carton for lemons (TS 401 ll 36-37), or that he believed that lemons sold for $70 per carton would calculate up by the number of cartons to $1.5 million after production costs (TS 401 ll 39-40). Indeed Mr Tracy conceded that his understanding of lemons being sold for $70 per carton was that Mr Strahley, on 3 December 2004, mentioned that "someone he knew" received $70 per carton (TS 406 ll 25-28). In relation to the applicants' claim that First Respondent's budgeted sale price for lemons was $30.00 per carton, even if Mr Strahley had made such a representation at the meeting of 3 December 2004 the applicants have not substantiated that this representation was misleading or deceptive. In any event Mr Strahley subsequently emailed a market report containing lemon prices to Mr Tracy (TS 406 ll 38-47). 184 Third, the applicants do not make a case that they either relied on the alleged representation in para 12(c), or that they suffered loss as a result of relying on it. 185 There is no sufficient basis on the evidence for the Court to conclude that the alleged representation was misleading or deceptive, or that there was any reliance by the applicants on that representation. 186 The claim in para 12(c) Further Amended Statement of Claim is not substantiated. • The difference between 6,902 bins (which the respondents claimed constituted the historical yield) and 6,727 bins (which the applicants claimed constituted the "true" position) was insignificant. • The differences in the 2001 figures between the Yield Summary data and the SmartPak data averaged over the 2001-2002 period because the following year the SmartPak data recorded the total number of bins of fruit produced as 10,814 compared to 10,677 bins referred to in the Yield Summary for 2002. Accordingly, for 2001-2002 the Packing Shed records total was 17,541 bins, and the yield summary records 17,579 bins, which was an insignificant difference. • There was no evidence that the applicants were led into error by this difference, and there was no evidence that Mr Tracy or the applicants specifically considered the number of bins for 2001 other than Mr Tracy's evidence that he looked at the trends from 1998 to 2007. The question is whether the conduct of the respondents breached s 52. 193 I have already noted, and accepted, evidence of Mr Strahley in relation to concerns as to the reliability of data in SmartPak. In any event, in my view the claim by the applicants in para 19(h) as to the "true" production figures is not substantiated. I will deal specifically with the claims in para 19 in detail later in the judgment. 194 However even assuming that the reference to 6,727 bins of fruit in the Packing Shed records is accurate and the reference in the Yield Summary to 6,902 bins of fruit is not accurate, I consider that the difference is not material. The difference is 175 bins of fruit, being a 2.6% variation from the 6,727 bins claimed by the applicants to be the accurate yield. 195 In Hill v Tooth & Co Ltd (1998) ATPR 41-649 the court considered whether materiality in inaccuracy of trading figures supplied to a prospective purchaser of a hotel was a relevant consideration in deciding whether a representation as to the volume of trade was misleading or deceptive for the purposes of s 52. Einfeld J held that the discrepancy in that case of 2.7% was not sufficiently material so as to constitute misleading or deceptive conduct, and there were no exceptional circumstances in that case to render the discrepancy sufficiently material ( Hill v Tooth & Co Ltd (1998) ATPR 41-649 at 41,221, cf Holmes J in Scootmore Holdings Pty Ltd v Bidvest Australia Limited [2001] QSC 329 at [120]). 196 The discrepancy of 175 bins of fruit in this context would appear to fall into the same category, namely not sufficiently material to constitute misleading or deceptive conduct by the respondents. 197 In my view the claim of the applicants in para 14(a) is not substantiated. The conduct referred to in paragraph 17A was misleading or deceptive or likely to mislead or deceive because in the circumstances referred to in paragraphs 1-17 the First and Second Applicants had a reasonable expectation that the matters referred to in paragraph 17A would be disclosed by the First Respondent to them and the First Respondent knew or ought to have known that the First and Second Applicants held such reasonable expectation. In a telephone conversation on or about 13 January 2005 between Daniel Papacek, entomologist, and the Second Applicant, Mr Papacek told the Second Applicant that if he was thinking of buying a citrus property at the coast he ought to be aware that it will be significantly affected by EBS; that the varieties of Novas and Murcotts are susceptible to EBS; that the crops at the First Respondent's orchards were affected by EBS and the presence of EBS adversely affected the profitability of the orchards. 200 The claims of the applicants in paras 17A and 19A of the Further Amended Statement of Claim are of wide ambit. 201 I note that the allegations in paras 17A(c) and (d) of the Further Amended Statement of Claim were not pressed by the applicants in their written submissions. 202 Before turning to consider the particular claims of the applicants it is useful to first outline principles relevant to silence as a breach of Pt V of the Act . If the circumstances do give rise to such an obligation, the next question is whether the relevant silence constituted conduct which was misleading or deceptive or likely to mislead or deceive ( Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 489, 504, 508). The duty to disclose is not confined to cases where there are particular relationships, such as trustee and beneficiary or solicitor and client ( Henjo Investments Pty Ltd [1988] FCA 40 ; 39 FCR 546 at 557). However the applicant bears the onus of establishing how or in what manner that which was left unsaid had the potential to mislead or deceive. To have that potential, omissions in communicating information must be relevant to the topic about which it is said a respondent's conduct is likely to mislead or deceive and material in the circumstances ( Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467-468). However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her adversely would, if it existed, be communicated, then the failure to so communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger of detriment existed. Thus, where a duty to speak is imposed, silence may constitute misleading or deceptive conduct. • Mr Burns' evidence was that he had considered travelling in 2004, that he had discussed this with Mr Breed but had not made any definite plans, and that he was waiting to see who purchased the orchards before making any decision. • It was Mr Tracy's acquisition of the orchards which caused Mr Burns to finally decide to leave. • Mr Burns gave notice of resignation on or about 11 February 2005. Prior to that date Mr Burns did not inform Mr Breed or any other person at Sunstate of his resignation. • Mr Tracy had not informed Mr Strahley that the presence of Mr Burns was an important or material consideration in the decision to proceed to enter into the agreements. Mr Burns' continuing employment was not one of the conditions negotiated to be included in any agreement between the parties. If Mr Burns' continuing employment was important to Mr Tracy, Mr Tracy could easily have identified it as a condition of agreement with the first respondent. • Mr Tracy's evidence was that prior to 17 February 2005 he had spoken with Mr Burns about future opportunities at the orchard but that Mr Burns did not provide any commitment to stay on with Mr Tracy. • Another horticulturalist could easily have been employed. In any event, Mr Burns was only one member of the management team. Mr Papacek and Mr Owen-Turner were horticultural experts who were available, had been retained by Sunstate, and could have been retained after the purchase of the properties. Did Mr Burns inform the first respondent of his intention to resign? In about the first or second week of July 2004, I said to Mr Breed that it was not my present intention to stay at the Orchards after the sale of the Orchards. However, at no time prior to about 11 February 2005 did I notify Mr Breed of my resignation. 76. In about February 2005, I officially resigned by giving 2 week's notice in writing as required by my employment contract. This would have been on or about 11 February 2005. I submitted my letter by facsimile to Mr Breed. Mr Breed tried to persuade me to stay at the Orchards after he received my fax. I do not recall being told by Mr Breed or Mr Strahley not to mention my resignation or plans to travel by Mr Tracy. 77. I have read paragraph 111 of the Statement of Peter Tracy. At no time prior to giving my resignation on or about 11 February 2004 did I give anyone from Sunstate Orchards notice of my resignation. I did not say to Mr Tracy that I had given such notice. I said to Mr Tracy that I don't want to work in the citrus industry any more; I'm tired of the lifestyle and want to travel. 78. My last day at Sunstate Orchards was Friday, 25 February 2005. All you had to do was raise enough money?---Yes. Right. That was achieved by December?---Yes, thereabouts. And you frequently, didn't you, discussed with Breed your broad travel plans...?---Yes. ...throughout the period July to December?---Yes, but it was still pie in the sky hopes. A bit more than that. It was your present intention to be effected by you raising enough money, which you had achieved by December of that year?---But I'd always - I wouldn't - to be honest, I was hanging around to see who would potentially buy the orchard and see if I wanted to stay on with that person. Mr Burns---?---I can--- HER HONOUR: Can you at least let the witness finish. MR PERRY: All right. THE WITNESS: Yes, so I wanted - I mean, I do look at my career and - you know, I'm not dead-set then - sorry, I wasn't determined that I'm definitely leaving. If there was an opportunity that I thought had potential, I would stay on, of course. If they were going to offer me an extra X amount of dollars, of course I would consider it. It's not like something that it was a definite, definite "I'm going". No?---It's the first time I've written one of these. HER HONOUR: What was that, Mr--- Well, the first time I've written one of these---?---The first time I've written one of these. ---but accuracy for a scientist is not something you're a stranger to, is it?---No. No. So no qualifying what your intention in July '04 was, and as I said, you discussed with Breed throughout the balance of that year potential travel plans, didn't you?---Yes. And by the end of the year, you'd raised enough money, in fact, to give your present intention concrete certainty?---Not necessarily. I hadn't - as I said, I was waiting to see who bought the orchard. And also - you know, my parents were if-ing and ah-ing whether I - you know, influencing me to buy a house as well--- Tell me, did you say to Breed, other than what you've got here - so what we know you said to Breed was, in July, "It's not my intention to stay at the orchard after sale"; correct?---Sorry, in--- In July, "It's not my intention to stay after the sale". That's what you said to Breed?---Yes and no. Well---?---I mean, like--- HER HONOUR: Can I ask--- THE WITNESS: It's not definite--- HER HONOUR: I have a question for the witness. How old are you?---I'm 28 - 29. Twenty-nine, sorry. Thank you. MR PERRY: You're no child. Mr Burns, you don't assert in this statement sworn by you on oath that you ever qualified or conditioned your expression of intention conveyed to Breed, do you?---No, but--- No. You never said--- MR BELL: Well, I--- HER HONOUR: Please--- MR BELL: ---object to that. That is outrageous. But we'd like to hear the rest, I think, wouldn't we? If you don't want to hear it, that's fine, but I'm going to be submitting at the end you only got half the answer. It's silly. HER HONOUR: I was about to say, can you please answer the question. Thank you for the interruption there, Mr Bell. THE WITNESS: Please repeat the question. MR PERRY: You do not say in this statement that at any time in your assertion to Breed about what your intention was, did you qualify it or condition it in any way along the lines of, "Oh, I'll wait to see what someone offers me"?---No, but I didn't think that was what I needed to supply here. But we chit-chatted. We had conversations. He was thinking of buying the orchard. I chit-chatted with him about staying with him, you know, in that same manner. I chit-chatted with - it was just - we were - yes. We talked about a lot of things. He was looking at purchasing the orchard. He wanted me to stay. But he didn't purchase it?---No. And it was just that there were - yes, there were a lot of things we talked about regarding my future--- So other than your personal connection with Mr Breed, there was no condition or qualification ever expressed by you in terms of this present intention that you refer to in paragraph 75, was there?---But also, as I said before, if I had been given an opportunity of a lifetime, well, then, you know, I would have stayed on. All right. Absent a Gold Lotto win, you would not have stayed on - a Gold Lotto win in the sense of the opportunity of a lifetime, as you refer to it?---Yes. So absent that, it was made clear to everyone by you that you weren't staying once the orchards were sold?---In - I make spontaneous decisions, so I was telling them, "Yes, I'm going," but you never know with me. So that's all I can say. Let's do it in two steps. You were telling them, and repeatedly did so, throughout the balance of the year, July to December, that you were going. That's the first step?---Yes. Right. And the people that you were telling repeatedly through that period that you were going were Mr Breed?---Yes. Anyone else?---No. Oh, a few of the lower level staff. But in terms of management?---No. So Mr Breed was made aware by you on repeated occasions, July to December, that you were going, and your only qualification is "If I got," as you say, "the opportunity of a lifetime," that might convince you to stay?---Yes. Yes. Now, you say that you didn't send a notice of resignation. Now, that's strictly true, that you didn't send the letter, but you had made clear to Mr Breed in the terms that you just related to her Honour, what your clearly expressed intention was, hadn't you?---It wasn't clear until - to be honest, I don't know when I'd, you know, completely made up my mind. I can't remember the exact date. 212 In 2004 Mr Burns was in his mid-twenties, and considering overseas travel. Indeed it appears that this ambition was realised, as it was clear at the time of the proceedings that he was living in South Korea and would return there after the hearing. 213 It is not surprising that a person in his mid-twenties in 2004 would consider leaving employment to travel; nor in my view is it either unnatural or unexpected that a person of that age would, as Mr Burns indicated during cross-examination, vacillate in making decisions such as whether to buy a house, provide a commitment to his employer to remain in employment or, for example, postpone making such decisions and instead travel. It is also neither unnatural nor unexpected that a person in his mid-twenties would air his indecision to his colleagues and supervisors at work but refrain from making a decision until he was ready to act upon it. However this indecisiveness did not, in my view, constitute "an intention" to resign in 2004. 214 I consider that Mr Burns' evidence under cross-examination explains the statement in para 75 of his affidavit that "In about the first or second week of July 2004, I said to Mr Breed that it was not my present intention to stay at the Orchards after the sale of the Orchards". 215 In this context, the facts demonstrate that to the extent that the first respondent (through Mr Breed) had knowledge of Mr Burns' views in relation to leaving his employment, at most it was knowledge that Mr Burns was contemplating leaving once the orchards had sold, and that it was likely that he would if he did not receive an attractive offer to stay. I do not consider that Mr Burns had a firm intention to resign in 2004 - that intention crystallised after Mr Burns had met Mr Tracy and formed a view of Mr Tracy. Mr Burns?---Yes. Was the --- I'm trying to think of a way to put this question. Was it anything to do with Mr Tracy's acquisition of the orchards which caused you to decide to leave?---Yes. Can you tell us what that was?---Simply because the manner in which he - he spoke to me. Like, if - if that - that conversation was obviously a crux, I could have gone either way, but that conversation reinforced that I didn't--- Although you'd already resigned by then--- MR PERRY: He'd already resigned by then. ?---Yes, but I - you can--- HER HONOUR: You can change your mind?---You can still take up employment with someone afterwards. I was still working in the house. Yes, no, the - the - he was too business-like. It was as if there was never going to be any - I don't think he understood the world of farming, and I never want to work under someone who doesn't have an understanding or an empathy of farming. So the people you had worked with, Mr Breed and others, they did understanding farming?---Yes, or--- In your view?---Yes, or they have a feeling and understanding and - yes. Yes. 217 Accordingly I do not consider that the applicants' case is substantiated in relation to this claim so far as they allege that Mr Burns had an intention to resign in 2004. In the interests of completeness however, I propose to consider whether the respondents were under an obligation to disclose information to the applicants concerning the possibility that Mr Burns might resign after the sale of the properties. Did the circumstances give rise to an obligation in the respondents to disclose this information to the applicants? As pointed out in Lam v Ausintel Investments Australia Pty Ltd (1990) 97 FLR 458 at 475, simply because one party has knowledge which the other does not, does not in itself impose an obligation on the first party to bring the information to the attention of the other party. This is only the case if there is an obligation of full disclosure. 219 Notwithstanding this, the applicants submitted that, in the context of a potential purchaser known by the respondents to have no citrus experience, it was incumbent on the respondents to disclose their knowledge of Mr Burns' decision to resign to Mr Tracy. ... The presence of Burns was an important consideration in my decision to go ahead with the sale transaction. This was because I had no technical experience in horticulture and was relying on Burns for this expertise... 111. After learning of Burns' resignation I telephoned Matthew Burns at his home which was on the Bundaberg orchard. I spoke to Burns and attempted to convince him to stay on however Burns was adamant. During this conversation Burns told me that he had informed Sunstate Orchards of his intention to resign months earlier. I told Burns that this was the first time that I had been informed of his intention to resign. I was greatly concerned that Burns' intention to resign had been concealed from me throughout the sale process. 220 In my view there is no evidence to support the existence of any obligation of the respondents to inform the applicants of any knowledge concerning Mr Burns' possible future resignation, so that a failure to do so was conduct which mislead or deceived or was likely to mislead or deceive the applicants. 222 Prior to settlement, at no time did Mr Tracy ask either Mr Strahley or Mr Burns himself of Mr Burns' intentions, which would be expected if Mr Burns' continuing employment was important. I accept the submission of the respondents that Mr Tracy could easily have identified the continuation of Mr Burns' employment as a condition of the agreement but apparently chose not to. 223 Second, notwithstanding Mr Tracy's lack of experience in citrus, there is no evidence before the Court that Mr Burns' resignation would affect Mr Tracy or the other applicants adversely any more than would the resignation of any other employee of the orchards. Although Mr Tracy was prepared to hire the staff already employed by the respondents, negotiations between Mr Strahley and Mr Tracy did not proceed on the basis that all staff (or indeed any staff) would stay --- rather the contract between the parties provided that the new entity would employ employees nominated by the respondents. I note, and accept the submission of Mr Bell QC during cross-examination, that this was more for the benefit of the employees, whom the first respondent was keen to ensure retained their positions, than Mr Tracy or the applicants (TS 290 ll 11-24) This position can be contrasted with, for example, the events in Lubidineuse v Bevanere Pty Ltd [1984] FCA 252 ; (1984) 55 ALR 273 where negotiations did proceed on that basis. In that case discussions between the vendor and proposed purchaser of a beauty salon proceeded on the basis that all staff of the salon would stay, in particular the senior employee who, after the completion of the sale, resigned and opened her own competing business nearby. Wilcox J found that, on the balance of probabilities, the vendor was aware, prior to the date of contract, that the senior employee intended to resign in the near future and establish a competing business in the near vicinity and that, despite this awareness, the vendor allowed the purchasers to purchase the business in the belief that the senior employee would stay on indefinitely ( Lubidineuse [1984] FCA 252 ; 55 ALR 273 at 283). • Although it is not in dispute that, prior to Mr Burns' arrival at the orchards, there had been no full-time horticulturalist, and that he had been employed to improve the cultural practices at the orchards with a view to improving the yields (Burns affidavit sworn 11 July 2006 at [32]), there was no evidence that Mr Burns was an employee critical to the business such that he could not be replaced in his role, or that other agricultural consultants available to the business (in particular Mr Owen-Turner and Mr Papacek) could not assist. Again, the role of Mr Burns can be contrasted with that of the senior employee in Lubidineuse v Bevanere Pty Ltd [1984] FCA 252 ; (1984) 55 ALR 273 whose primary role was one of client liaison and customer support, whose knowledge was important in securing the smooth transfer of customer goodwill to the new owners, and whose establishment of a new business resulted in the defection of customers and undermining of the business the subject of the sale. 224 Third, as emerged during cross-examination, Mr Tracy gave evidence that he was told by Mr Breed, and believed, that Mr Strahley had known of Mr Burns' intention to resign, and had instructed Mr Breed not to tell Mr Tracy of this intention (TS 261 ll 42-46, 262 ll 1-2). Mr Tracy said that he believed this deliberate concealment "was consistent with the misinformation that had been given --- or perpetrated upon me through the whole process" (TS 260 ll 18-20). However other than what appears to be a statement in Mr Breed's unsigned statement, which for reasons I have already given is of little evidentiary value, there is no evidence that Mr Strahley ever gave anyone instructions to conceal such information from Mr Tracy, or indeed that he had known of Mr Burns' state of mind prior to February 2005. 225 I do not find the claim of the applicants in para 17A(a) substantiated. • Mr Strahley agreed during cross-examination that the farm manager reports for September to November 2004 informed him that Novas, Murcotts and Imperials were performing poorly. • Although the respondents pleaded that the allegations in para 17A(b) were met by evidence of Mr Owen-Turner and Mr Papacek, any disclosures made by those witnesses in relation to EBS do not cure the silence of the respondents concerning the factual matters contained in the farm manager reports. • There are good reasons to reject the evidence of Mr Owen-Turner and Mr Papacek in light of concerns as to their credit. Accordingly Mr Tracy's version of events should be preferred over Mr Papacek's recollection. • EBS was disclosed to Mr Tracy, and there was no conduct of the respondents which was misleading or deceptive. • Mr Strahley provided to Mr Tracy the names of citrus experts (Mr Papacek and Mr Owen-Turner) who had been retained by Sunstate. Mr Tracy did not however proceed with obtaining a crop status report from Mr Owen-Turner, presumably because he did not consider the status of the crop a material consideration to investigate further. • Mr Papacek, Mr Owen-Turner and Mr Burns all told Mr Tracy of the existence of EBS, that crops at the orchard were affected by EBS, that the Murcott and Nova varieties of fruit are susceptible to the disease, and that EBS affects profitability. • It is well known that the Nova, Ellenor and Murcott varieties are susceptible to EBS and that the incidence of the disease is greater in coastal areas because the rainfall and humidity is higher. This information was also communicated to Mr Tracy by Mr Papacek and Mr Owen-Turner. • Mr Owen-Turner told Mr Tracy that EBS affects packout rate. • Mr Tracy admitted Mr Papacek mentioned EBS in conversation, including that the crops at the orchards were affected by EBS and that EBS affected profitability, but could not remember Mr Owen-Turner referring to EBS and its effect on packout rates. • In relation to the Ellendale fruit crop, the crop was small comprising some 500 trees, and the Ellendales were held late on the trees in 2004 due to poor prices, picking schedule and canker quarantine and prices (which factors ordinarily occur in the agricultural industry). Neither the fruit nor the trees were affected, and this did not have any significant effect on the 2004-2005 season yields. • In the circumstances there was no conduct which was misleading or deceptive. This was conceded by Mr Strahley during cross-examination (TS 1225-1226). 229 In considering paras 17A(b) and (f), the extent to which these paragraphs should be construed together is initially unclear. 230 If para 17A(f) were to be read in isolation, in my view it is potentially meaningless as a claim allegedly giving rise to a contravention of s 52 in the absence of identification of the reason why the failure of the first respondent to disclose the farm manager reports was misleading or deceptive, or in the absence of identification of specific facts or matters in the reports the non-disclosure of which was misleading or deceptive conduct by the respondents. However in their written submissions the applicants clarified the interaction of paras 17A(b) and (f). In relation to the claim of the respondents that the applicants "do not plead the facts or matters in the farm manager reports upon which they allege were not disclosed (sic)" the applicants submitted that "the Applicants plead the matters not disclosed to them by the non-disclosure of the Farm Management Reports at paragraph 17A(b) FASOC". (Applicants' Written Submissions at p 42). The intention of the applicants was that paras 17A(b) and (f) of the Further Amended Statement of Claim should be read together. If this is the case, para 17A(f) adds nothing to the alleged breach in para 17A(b). 231 I am prepared to give effect to this intention. Accordingly, the tenor of the applicants' claim is that it was the failure of the first respondent to produce the farm manager reports so far as the reports disclosed information referred to in para 17A(b) which constituted misleading or deceptive conduct. 233 The Ray White Information Memorandum was, fundamentally, a marketing document prepared by the real estate agent acting for the first respondent in the sale of the relevant properties. The applicants do not dispute that a copy of the Ray White Information Memorandum was provided to Mr Tracy. On p 19 of that document under the heading "TotalPak" there is reference to "sales information and management reporting". It follows that, if there was a system of management reporting, then management reports would be produced within that system. 234 It may be that the first respondent would anticipate that, if it had disclosed in the Ray White Information Memorandum that management reports existed, then Mr Tracy could ask for those management reports if he so wished. However that is not material. If the failure of the first respondent to produce the farm manager reports constituted conduct which was misleading or deceptive within the meaning of s 52, it is not to the point that Mr Tracy could have asked if such reports existed, and then whether he could have copies of them. (cf Fleetman Pty Ltd FCAFC 80 at [17]). The obligation to produce the reports would have been on the first respondent. 235 However as I have identified, the real issue in relation to these claims concerns the disclosure of information described in paras 17A(b)(i)-(iii) of the Further Amended Statement of Claim. Two initial questions arise, namely whether the first respondent was under an obligation to disclose the information in paras 17A(2)(i)-(iii), and whether it did disclose that information. Did the circumstances give rise to an obligation in the respondents to disclose this information to the applicants? That these crops were so affected is clear from the evidence of Mr Owen-Turner and Mr Papacek, and not in dispute. 237 EBS is a fungal disease which affects certain varieties of fruit trees, including Nova, Ellenor and Murcott. Trees in coastal areas such as Bundaberg and Tiaro are particularly susceptible to the disease as well as other diseases such as Black Spot. EBS affects the profitability of an orchard because it marks the fruit. As a result the fruit is less valuable in the market place, the packout rate is affected (Owen-Turner affidavit sworn 6 July 2006 at [9(b)]) and in severe cases the disease causes leaf and fruit drop, and drop in yield (TS 699 ll 20-23, ll 40-42)). On such a serious issue, silence could in my view have constituted misleading or deceptive conduct. 238 However in relation to the issue of the Ellendale fruit crop on the land being held on the trees past their pick date, I am not persuaded that the first respondent owed any such obligation. No evidence was given by Mr Tracy as to his expectations in relation to the Ellendales. Nor has it been shown that the fact of late picking of fruit, in the context of operating orchards, was information which required disclosure. Further, even assuming that the first respondent was silent in relation to this issue, the applicants have not shown how such conduct lead the applicants into error within the meaning of s 52 so as to constitute conduct of a misleading or deceptive nature ( Taco Bell 42 ALR 177). 240 I am not persuaded that a contravention of s 52 has been demonstrated in relation to the Ellendales, or that there is any evidence before me that the applicants relied on the timing of picking of the Ellendales so as to result in any loss arising from absence of communication as to delays in picking. Did the first respondent disclose the fact that EBS affected the Nova, Ellenor and Murcott fruit crops? • On or about 13 January 2005 he had a telephone conversation with Mr Papacek involving a general discussion about the citrus industry; that Mr Papacek told him that coastal orchards were susceptible to EBS and mentioned Novas and Murcotts; and that he could not recall what else was said in this conversation (Tracy statement sworn 17 November 2006 at [83], Tracy statement in reply at [56(d)]). • In the last week of February 2005 Mr Breed told him that EBS had seriously affected the Nova, Ellenor and Murcott crop and quantified the extent of the loss in sales revenue at $500,000 (Tracy statement sworn17 November 2006 at [110]), and it was Mr Breed only who was the source of his information about the existence of EBS affecting the crop (TS 264 ll 35-37). • He had never heard of EBS prior to January/February 2005, and he had to ask what EBS was (TS 301 ll 12-20). 242 Mr Tracy's evidence as to conversations he had had with Mr Papacek and Mr Owen-Turner is however significantly contradicted by the evidence of those witnesses. 243 Mr Papacek gave evidence that he conducted a horticultural consultancy and insectary business and had advised the first respondent from March 2004. Mr Papacek's expertise is not in dispute. Mr Papacek's evidence was that he had a telephone conversation on or about 13 January 2005 with Mr Tracy, after Mr Tracy had been given Mr Papacek's number by Mr Strahley. Neither of these issues are in dispute. I said to Mr Tracy that because the Orchards are on the coast the incidence of all diseases is greater because the rainfall and humidity is higher; and that coastal fruit are more prone to wind blemish because of the stronger winds and higher humidity near the coast. Wind can cause the fruit to rub against other fruit and branches. Wind blemished fruit has a lower price at market; (d) I said to Mr Tracy that the crops at the Orchards were affected by EBS and that EBS affected the profitability of the Orchards; and (e) Mr Tracy's potential purchase of the Orchards. 246 Mr Owen-Turner was a consultant horticulturalist who undertook work for the first respondent from 2001 until the orchards were sold. Like Mr Papacek, Mr Owen-Turner's expertise was not in dispute. As was the case with Mr Papacek, Mr Owen-Turner was telephoned by Mr Tracy in 2004 after Mr Strahley provided Mr Tracy with Mr Owen-Turner's contact details. I told Mr Tracy that the Murcott, Nova and Ellenor varieties should not be grown because these crops are especially susceptible to Emperor Brown Spot ('EBS') or Alternaria alternata when grown in coastal areas. I also said to Mr Tracy that EBS affects the packout rate (The Orchards are located near the coast, which is ideal for the development of EBS because there is more wind, humidity, mists and fog near the coast. In some years EBS has little affect (sic) but in others it can be significant. These facts are well documented and well known to citrus growers). I also refer to paragraph 76 of the Statement of Peter Tracy and say that I did tell him that the Nova and Murcott varieties were affected by EBS. I also refer to my diary note of the conversation in which I have noted the following... (c) That fruit crops at the Orchards were affected by EBS. I told Mr Tracy that fruit crops at the Orchards were affected by EBS. I said to him that Murcotts and Novas were affected by EBS. 248 In my view the evidence of Mr Papacek and Mr Owen-Turner clearly demonstrates that Mr Tracy was informed of the prevalence of EBS in the Bundaberg-Tiaro region, the fact that the orchards were affected by the disease, that fruit crops susceptible to that disease (in particular the Nova and Murcott varieties) were affected, and the fact that the disease affected profitability. 250 In comparison, it appears that the first respondent and Mr Strahley had acted in good faith in providing Mr Tracy with an efficient and effective manner of being informed of key issues relevant to the orchards, in particular EBS. • In my view the circumstances of the communication of information concerning EBS to Mr Tracy was another instance of where Mr Tracy was told information, but simply failed to comprehend it or appreciate the importance of it at the time. In my view it is more likely that Mr Papacek and Mr Owen-Turner, experts who both understood the information they were communicating to Mr Tracy and the significance of that information, would have a better recollection of the conversation than Mr Tracy. • There was no reason for either Mr Papacek or Mr Owen-Turner to give evidence which was not truthful in relation to their conversations with Mr Tracy. There is absolutely no evidence of any conspiracy between the consultants and anyone else which would affect the evidence of the consultants in this regard. • My observation of the demeanour of both Mr Papacek and Mr Owen-Turner was that they were both truthful witnesses. • More specifically, in view of the familiarity of both consultants with the orchards and the fact that Mr Tracy had contacted them, with the apparent endorsement of Mr Strahley and the first respondent, I think it unlikely that either consultant would confine his comments to generalities about citrus in coastal areas as claimed by Mr Tracy. It is much more likely that, as claimed by both consultants, they discussed with Mr Tracy issues specifically relevant to the orchards within their own knowledge. This is particularly so given the possibility that Mr Tracy would have need for their services in future following the sale of the orchards. I infer that it would not have been in their personal interests to be anything but candid with Mr Tracy. • In relation to the issue raised by the applicants of inconsistency in Mr Owen-Turner's affidavit as to whether he discussed packout rates with Mr Tracy, while the affidavit reflects poor drafting, I accept Mr Owen-Turner's explanation, namely that para 20 referred to his conversation with Mr Tracy at a time and place after 7 January 2005. 252 Further, and in any event, I consider that Mr Burns had informed Mr Tracy of the susceptibility of the Nova, Ellenor and Murcott fruit crops orchards to EBS in conversation in December 2004. During the conversation I mentioned the disease EBS to Mr Tracy when I explained the importance of thinning. I said to Mr Tracy that the thinning wasn't done well last year. Thinning involves removing clusters of fruit and fruit from heavily fruited areas of the tree so as to : improve fruit size and reduce tree stress; remove any small, disease, distorted or obviously poor grade fruit; and prevent touching fruit which provides a significant site for the growth of EBS. (Burns affidavit sworn 11 July 2006). 253 During cross-examination Mr Tracy conceded that he had had a conversation with Mr Burns about thinning, but could only recall from that conversation that the purpose of thinning was to prevent blemishing of the fruit. Mr Tracy could not recall any reference to EBS by Mr Burns (TS 299-301). In my view however, it is more likely that EBS was discussed by Mr Burns with Mr Tracy as an important reason for thinning. I prefer Mr Burns' evidence as to the conversation to Mr Tracy's, because, as I explained earlier in this judgment, I consider that Mr Tracy's failure to recall the subject of EBS being discussed was due to his failure to understand its significance to the orchards when he was initially interested in the orchards in December 2004. 254 In summary, the first respondent and Mr Strahley were not silent in relation to the issue of EBS at the orchards or more specifically the Nova, Ellenor and Murcott fruit crops. The fact that the information concerning EBS in the orchards was communicated to Mr Tracy through Mr Burns, Mr Papacek and Mr Owen-Turner, rather than providing him with farm manager reports, was in my view irrelevant. It is unfortunate that Mr Tracy did not comprehend the information he was being told about EBS in the orchards - to the extent that notwithstanding his conversations with Mr Burns and the consultants his evidence was that by January/February he still did not understand the concept of EBS or what it actually meant - but that lack of understanding, was not attributable to the respondents. Paragraph 19 of the Further Amended Statement of Claim refers to reasons why the representations referred to in paras 11 to 17 were misleading or deceptive. I will deal with para 19 later in this judgment. However, as I have indicated earlier in this judgment, I find that the first respondent, through Mr Strahley, fulfilled this obligation. 257 In their written submissions concerning the alleged silence of the respondents in relation to para 17A(e), the applicants particularly referred to the SmartPak and TotalPak records maintained by the respondents, an email with packout rates attached from Mr Breed to Mr Strahley dated 11 May 2004 (exhibit A32) and the Block Summary data (exhibit R30) produced by the respondents in November 2004. I have already found that Mr Tracy was provided with the Block Summary data at his meeting with Mr Strahley and Mr Douglas on 3 December 2004. Further, as I have said earlier in this judgment, I find that Mr Strahley did not provide Mr Tracy with the email marked exhibit A32 or data generated by SmartPak because he did not have confidence in the accuracy of that material. As I have already noted, the Block Summary data contained detailed historical information for the orchards for the years 2002-2004 and a forecast component for 2005-2007, including reference to yield and packout rates. 258 The applicants submitted at some length that the Court should draw an adverse inference from the manner in which the respondents conducted their defence as to the disclosure of historical records, in particular the lack of explanation by the respondents for their failure prior to mid-July 2006 to plead that the Block Summary data had been provided by the respondents to Mr Tracy. • In the absence of further evidence, I draw no inferences from the lack of a confidentiality agreement relating to the Block Summary data. • I draw no inferences from the alleged lack of reference in discussions between the parties to the Block Summary data. • I consider the applicants' submissions concerning the conduct of the respondents' Senior Counsel lack merit. • I consider the applicants' submissions concerning the "murky and sinister arrangements" between Mr Strahley and Mr Douglas unconvincing for reasons I explained earlier in this judgment. 261 I consider that this conduct is not consistent with that of the respondents deliberately trying to withhold records. 262 In my view the claim of the applicants in para 17A(e) is not substantiated. 264 In their written submissions, the applicants submitted that paras (g)-(k) should be interpreted as they appear --- in other words, that by pleading that each email was not disclosed, the applicants mean that the entire contents of each email was not disclosed. The applicants do not submit that these paragraphs are to be read with other sub-paragraphs in para 17A. 265 A problem with this approach is that it is not clear from paras 17A(g)-(k) why the failure to disclose the emails to which those paragraphs referred constituted conduct allegedly in breach of s 52, other than a blanket pleading in para 19A that the first and second applicants had a reasonable expectation that the emails would be disclosed in the circumstances referred to in para 17. This is a fundamental issue. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. 266 So, as a general principle, when a party pleads breach of s 52 it necessarily follows that the factual basis upon which the section is invoked must be stated with appropriate clarity in the statement of claim (Fox J in Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348). This is not the case here. The relevance of the failure to disclose the emails listed in paras 17A(g)-(k) to the applicants is not articulated in the Further Amended Statement of Claim, so as to present a case that the respondents can meet. This creates a problem which the applicants' submissions do not overcome. 267 A second fundamental flaw in the claim of the applicants in relation to the emails in each of paras 17A(g)-(k) is that, in the absence of articulation of the factual basis upon which the applicants allege that failure to disclose the relevant email was misleading or deceptive, the applicants do not substantiate their claim that the emails --- as distinct from any information in them --- be disclosed. The emails identified in paras 17A(g)-(k) were clearly internal emails sent as part of the management of the orchards, in the normal course of business. While it is undesirable for the Court to take an unnecessarily restrictive view of pleadings where the substance of an applicant's case is clear from the statement of claim, in this case the alleged substance of the applicants' case in paras 17A(g)-(k) is not clear from the manner in which it has been pleaded. In my view it would be unjust to the respondents to require them to meet a case which the applicants develop in their written closing submissions at the end of a long trial when the proper approach was clearly for the case to be unambiguously pleaded at the outset. 268 An illustration of the difficulties arising from the failure of the applicants to clarify the basis of their claim in each of these paragraphs through proper pleading can be seen by reference to the applicants' claim in para 17A(g) and the email of 7 December 2004. • Steve, to service the Packing Shed line, only non cost repairs and servicing to be carried out. • Steve to work on Tiaro and Bundaberg on repairs when not in the shed. • You are to do any admin, casual wages and invoicing, then down to Tiaro for work there. • I need all R&M external cost to be stopped with only internal repairs carried out by Steve and staff. • I agree to $61,000 worth of thinning in total for both farms. • All chemicals stocks to be run down, with all herbicide and tree chemicals to be used for stores to maintain spray programs. Chemicals can be rotated on consultant's advice. Transfer chemicals between farms if required. • All slashing, weed and tree spraying is to be well maintained. • The contract slashing is to cease, salary and casual staff to take over this role. • You will need to get authority for any expenditure from HO. staff such as Matt, Trevor and Steve are to be informed of the process. To take random examples --- are the applicants suggesting that failure of the respondents to disclose an email with the instruction "Debbie to only work on an as required basis in the Tiaro orchard" or "Steve to work on Tiaro and Bundaberg on repairs when not in the shed" was conduct in breach of s 52? • It is clear that, in making this submission after conclusion of the trial, the applicants sought to articulate the factual basis for the claim in para 17A(g) that failure to disclose that email constituted a breach of s 52. However this submission is in the nature of particulars. If this material were to form part of the applicants' claim, it should have been included in the Further Amended Statement of Claim. • In any event, the submission was "Only internal repairs carried out... Contract slashing is to cease" in relation to this email. This does not explain why the claim under para 17A(g) is in any way relevant to an alleged breach of s 52. 271 Similar comments could be made about the email referred to in each of paras 17A(h)-(k). 5. The applicants had separately pleaded that the fruit crops on the land had been sprayed contrary to good agricultural practice (paras 17A(c) and (d)) however the applicants stated in their written submissions that they were not pressing these claims. No evidence was adduced by the applicants that any delay in the thinning process affected the viability of the orchards so as to influence Mr Tracy's decision to purchase. • In relation to the emails of 14 January 2005 (para 17A(i)) and 19 January 2005 (para 17A(j)) the applicants submitted that the issues revealed by these emails were "that the First Respondent was restricting the repair of farm machinery and that this was not disclosed to the Applicants" (Applicants' Written Submissions p 43) and "the Respondents were restricting the repair of farm machinery which will have adverse effects upon crop volume and quality and this policy if known would have been material to the Applicants' decision to purchase given that its disclosure to the Applicant would have suggested possible adverse effects on crop volume and quality" (Applicants' Written Submissions p 85 No 21. 5. E-mails). These submissions included claims as to alleged restrictions concerning repairs to farm machinery, the impact upon crop volume and quality, and the possible approach of the applicants to those hypothetical circumstances. However these issues were not pleaded by the applicants, and in any event constituted claims (such as an alleged approach of the respondents to repair of machinery contrary to ordinary business practice) which are simply not supported by evidence. • In relation to the email of 3 February 2005 (para 17A(k)) the applicants submitted that the issue revealed by this email was that "the 2005 current crop was affected as to 60% and the particular effect of that on the 2005 proposed packouts. The general disclosures purportedly made by Owen-Turner and Papacek could not have included these elements because they were in early January 2005" (Applicants' Written Submissions p 43). The applicants also submitted that "had (they) been informed that almost 60% of Nova, Murcott and Ellenor crops at both orchards was affected by disease and that this would reduce packouts to 35-40% and also reduce the fresh price received as no Class 1 fruit will be able to be packed with no juice market the effect on quality and volume of fruit would have been disastrous" (Applicants' Written Submissions p 85 No 21. 5. E-mails). The extent to which the 2005 crop was affected by EBS and the impact on the packout rates with specific reference to this email was not pleaded by the applicants, although evidence was given by Mr Tracy during cross-examination as to his views of the impact on the 2005 crop of EBS (for example, TS 292-295). I have already addressed claims by the applicants as to the allegedly misleading or deceptive conduct of the respondents concerning the presence of EBS in the orchards and the impact of the disease on packout rates. I have found that Mr Tracy was informed by both Mr Burns, Mr Papacek and Mr Owen-Turner of the existence of EBS in the orchards in previous years, the susceptibility of Novas, Murcotts and Ellenors to EBS, and that the disease impacted upon the packout rates. Further, the evidence demonstrates that the Novas and Murcotts were not due to be picked for a number of months beyond February 2005, that by the end of February 2005 the EBS had been contained, and that the appropriate strategy was to thin the Novas and Murcotts to remove obvious EBS damaged fruit (Burns affidavit sworn 11 July 2006 at [64]). This suggests that the response of the first respondent (while owner of the orchards) and the employees at the orchards was according to usual horticultural practices in the event of an EBS strike, and that the description of the situation as "disastrous" by the applicants in this context was an exaggeration unsupported by the evidence. 273 In my view the claims of the applicants in paras 17A(g)-(k) are not substantiated. Before I specifically address the applicants' claims concerning the future representations in the Further Amended Statement of Claim I propose to make a number of preliminary observations and findings. 1. For the respondents, s 51A is particularly significant because although s 51A does not provide an independent cause of action separate from ss 52 or 53A, and nor does it define a norm of conduct, if the facts demonstrate that the first respondent has made the representations alleged, the effect of s 51A is that the representation shall be taken to be misleading unless the first respondent had reasonable grounds for making the relevant representation . Conversely if the first respondent demonstrates that it had reasonable grounds for making the relevant future representations, it will not only be free from liability under s 51A but also from liability under s 52 of the Act. ( Ting v Blanche [1993] FCA 524 ; (1993) 118 ALR 543 at 552, Quinlivan FCAFC 175 at [6]. (2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation. The weight of authority however is that the person making the representation can only avoid the deeming in s 51A(2) by establishing on the usual balance of probabilities that there were reasonable grounds for making the representation: Lewarne v Momentum Productions Pty Ltd [2007] FCA 1136 at [82] , Ting [1993] FCA 524 ; 118 ALR 543 at 552, Bowler v Hilda Pty Ltd (1998) 153 ALR 95 at 108 and 117, Sykes 88 FCR 511 at 513-514, Adelaide Petroleum NL & Ors v Poseidon Limited & Ors (1988) 10 ATPR 40-901 at 49,700, Phoenix Court Pty Ltd (1997) ATPR 46-179 (and cf other cases in support of this proposition listed at Miller , 29th ed para 1.51A.37). 278 Accordingly I consider that there is an onus on the representor in an individual case to establish that it had reasonable grounds for making representations as to future conduct. 280 Clearly whether the representor had "reasonable grounds" to make the relevant representation will depend upon the facts of the case in question. I consider this issue later in the judgment. 2. This expression appears in the Further Amended Statement of Claim in para 13(a)-(c), para 16(a)-(d) and para 17(c) and (d) with respect to budgeted costs and returns; paras 13(a)-(d) and 16 (a)-(d) with respect to projected fruit crops; para 13(d) and 16(d) with respect to packout rates; and para 16(f) with respect to yield. 282 In relation to these representations the respondents submitted, inter alia , that no such representations as alleged were made by the forecasts, and that in relation to the budgetary forecasts they could not be expected to materialise precisely. What is really being said in relation to each of the heads of complaint is that the plaintiff spent more than was projected....Of course projections of this character, being estimates, cannot be expected to materialise precisely. • Putting to one side for the moment the issues raised by s 51A in relation to future representations, if the forecasts were misleading or deceptive in a non-material sense they could still be misleading or deceptive for the purposes of s 52. The fact that they did not materialise precisely would be an issue going to causation and remedies rather than the central issue of whether the conduct was, as a matter of factual determination, misleading (cf discussion in Miller at [1.52.25]). • The essence of s 51A is that it recognises that representations as to future matters may be misleading, including documents in the nature of budgetary forecasts. 284 Accordingly, I do not find this submission of the respondents helpful in considering the claims of the applicants with respect to these particular future representations. 3. The respondents sought to rely on Mr Frick's evidence, in particular his affidavit of 10 July 2006, to which his expert report was annexed in relation to the reasonableness of forecasts made by the first respondent. 286 Although the applicants did not object to Mr Frick's expertise, they did object to the admissibility of his affidavit and annexures including his expert report. Objections were first raised by the applicants in November 2006, however the issue was addressed by both applicants and respondents in written submissions. I indicated with the parties' consent that I would deal with the objections to Mr Frick's affidavit after hearing his evidence and on the basis of the written submissions. 287 The primary aspect of Mr Frick's evidence-in-chief was the annexures to his affidavit. I am informed by Paul Hardman, and verily believe, that document no. 4 on the Index to Documents (Crop Expert) is identified as document no 75 in the First and Second Respondent's List of Documents. As stated in my Report, document no. 4 is the document that I relied upon to obtain the yields and packout rates for 2002, 2003 and 2004. (7) Annexed to my Affidavit and marked 'MBF-04' is a copy of the document titled 'The Economics of Growing Citrus in the Central Burnett Region of Queensland' referred to in the Report. (8) Annexed to my Affidavit and marked 'MBF-05' is a copy of the document titled 'Packing Shed Records --- "Commodity Packed by Grower" Reports --- Key Data'. I relief upon 'MBF-05' in respect of the yield data and packout rates for 2001. 289 I now look more specifically at the applicants' objections. 291 As was clear from both the expert report itself and evidence given by Mr Frick during cross-examination (TS 1321-1322), in preparing his expert report Mr Frick relied on documents which were not included in or attached to his report. This included material in the Brief to Crop Expert (indexed in the exhibit MBF-02 to Mr Frick's affidavit), as well as material from unidentified sources. 292 It is my understanding from the nature of the cross-examination of Mr Frick that this particular aspect of the applicants' objections related specifically to the material in the Brief to Crop Expert upon which Mr Frick relied and which was not annexed to his expert report. 294 On the application of Mr Bell QC, and in order to progress the hearing with respect to the evidence of this witness, I permitted the applicants to tender the "Brief to Crop Expert" and material therein, being the material already otherwise in evidence and listed in the Index to Documents (Crop Expert). I now deal with the applicants' objection to Mr Frick's affidavit with respect to the alleged non-compliance with the relevant Practice Direction. I will deal later in this judgment with material from unidentified sources upon which Mr Frick said he relied, and which material was also not annexed to his expert report. It is clear from Mr Frick's affidavit, p 1 of his expert report (MBF-02) and the annexure MBF-03 (the Index to Documents (Crop Expert) indexing the material in the Brief to Crop Expert) that, in preparing his expert report, Mr Frick reviewed data in the Brief to Crop Expert volumes. b. I accept this information, and in any event note from reviewing the Brief to Crop Expert that the following material, of which copies were included in the Brief to Crop Expert, was already in evidence by the time that Mr Frick was called as a witness: exhibits A32, A5, R30, A16, A12, A13, A17, A19, A21, A37, A39, A43, A45, A52, A30, A58, A64 and A66. d. Although the two volumes of material composing the Brief to Crop Expert were not physically annexed to Mr Frick's expert report as provided by cl 2.7, it is well established that compliance with a practice note is not a criterion of admissibility of evidence: Centurion Roller Shutters Pty Ltd v Automatic Technology (Australia) Pty Ltd [1999] FCA 1118 at [4] , Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 2) [2006] FCA 364 at [13] . While it is preferable that the factual material upon which the expert relies be annexed to the report in compliance with the Federal Court of Australia Guidelines for Expert Witnesses in Proceedings in the Federal Court of Australia , in the circumstances of this case I do not consider Mr Frick's expert report inadmissible nor its probative value diminished because of the physical absence of the two volumes of material composing the Brief to Crop Expert from the affidavit or the expert report itself. 298 Before turning to consider these objections it is helpful to first identify the factual premises of Mr Frick's expert report. Verify that the forecast yields were attainable or reasonable for the following varieties of citrus (Murcotts, Lemons, Imperials, Novas, Ellenors). 2. Verify that the packout figures provided were achievable based on industry best practice and taking into account past history of the orchard in question. The main reference text used to verify the data provided in the briefs was "The Economics of Growing Citrus in the Central Burnett Region of Queensland". This information is in my notes and is not tendered as reference information. ... Yield Forecast The yield forecast data has been mostly derived from the industry publication 'The Economics of Growing Citrus : In the Central Burnett Region of Queensland. " This is a highly regarded industry publication that was compiled with the direct assistance of many leading citrus producers. To ensure that the figures were applicable to coastal citrus and current management practices, correlation was made using industry contacts, including grower and consultant information. After research, the industry publication was the only source of printed reference for citrus variety information. 304 It is also clear that Mr Frick contacted a number of industry consultants and growers to verify the yield information in the reference text, but that he did not contact Mr Burns, or visit the relevant properties. During cross-examination much was made of the fact that Mr Frick relied upon records provided to him without ascertaining --- by inspection, reference to Mr Burns, or otherwise --- their accuracy, or whether they were a sufficient basis upon which he might give the opinions contained in his report. I am satisfied that Mr Frick's reasons for refraining from consulting Mr Burns in relation to the material in the Brief to Crop Expert were reasonable, namely that Mr Frick did not wish to be influenced by Mr Burns, whose position had been to maximise yield, or have his thought processes influenced by anyone involved in this case (TS 1330 ll 6-7, 1332 ll 19-21). I note that in any event the material with which Mr Frick was briefed included the farm managers' reports, and that he had reference to those reports prepared by Mr Burns (TS 1330 ll 20-21) as well as his own knowledge of the orchards from his work for previous owners of the relevant properties (TS 1335 l 20). • I am not persuaded that Mr Frick's approach in basing his expert report on material provided by the respondents (which, as I have noted, is in evidence) impacted adversely on the probative value of his report or otherwise renders his opinion irrelevant. The implication is reasonable because professional men and women are accustomed to forming opinions on assumed facts in the course of their ordinary professional work. It is part of their stock in trade, developed by training and by experience in the practice of their profession. Thus it is that an expert witness has a much more limited role than that of a solicitor acting for a client. In particular, expert witnesses are not bound to use all information they might previously have obtained. On the contrary, expert witnesses are bound to confine their attention to specified factual assumptions which are made known to the court. The opinion is then only as good as the assumptions are established by evidence to be correct. If anything, his approach is an issue which goes to weight. His evidence in summary was that he relied on the information given to him (TS 1333 ll 10-11) rather than attend the properties and consult Mr Burns. 309 The failure of an expert assessing the reasonableness of predictions as to primary production to visit the properties would, as a general proposition, be an issue relevant to the value of the resultant expert report, although it would not necessarily render the opinion irrelevant and inadmissible (cf Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82). In this case I accept the submission of the respondents as to the futility of attendance at the orchards by Mr Frick in circumstances where the orchards had not been maintained for a year. Evidence was given by Mr Harrison, who inspected the property in June 2006, that in June 2006. The health of the trees was obviously very poor. The rows were overgrown, the trees were --- still have fruit on from the year before --- from the season before. The watering regime had not been maintained. There was just a slow --- well, a --- an obvious lack of management throughout the orchard. 312 Such change in circumstances at the properties as lack of maintenance over the space of a year potentially means that an inspection of the properties in June 2006, when Mr Frick prepared his report, would have been of limited assistance to him in preparing his report (cf observations of Beach J in Australian Retail Enterprises Pty Ltd v ND Cowan Nominees Pty Ltd [2000] VSC 538 at [27] - [28] ). I consider that the failure of Mr Frick to visit the properties at the time of the preparation of his report does not make his evidence inadmissible, but if anything goes only to weight. Notwithstanding Mr Frick's reliance on the DPI publication, the reliability of his expert opinion was fatally damaged by his failure to identify persons whom he consulted to validate the application of the data in the DPI publication to the South Burnett region. These regions are distinct but contiguous (this is recognised in, for example, the Australian Spatial Data Directory http://asdd.ga.gov.au). • During cross-examination, Mr Frick accepted that the South Burnett region is a coastal orchard region, whereas the Central Burnett region is not (TS 1338 ll 5-8). 316 In my view, contrary to the submissions of the applicants, Mr Frick recognised the differences in conditions between the Central Burnett and South Burnett regions. This was clearly noted in his report, and evidenced by the fact that he sought validation of the data in the DPI publication by reference to other sources. 317 However in any event the oral evidence of Mr Frick with respect to yield in my view satisfactorily addresses any issue arising from possible discrepancies between the two regions. Mr Frick's expert report clearly states that he relied on the DPI publication only in relation to yields , not packout rates. His evidence that any discrepancy between the two regions would not impact on yields was not challenged, nor otherwise was the authority of the information as to yields in the DPI publication disputed. 318 In my view Mr Frick did recognise differences between the two regions in his report. Whether he did so sufficiently thoroughly is not relevant to admissibility because his evidence was that yield is determined by variety of tree, not growth area. 319 I now turn to the key objection of the applicants with respect to Mr Frick's expert report, namely his refusal to identify third parties or properties consulted by him to validate the DPI data and its application to the relevant properties. (Frick expert report p 3). And that is private information, which most growers do not release, and I was --- with the relationship I have, they were comfortable to actually give it to me and --- knowing that it wasn't going to go any further. 326 It follows that evidence in Mr Frick's expert report is based on hearsay to the extent to which his opinion relies on facts supplied by unknown third parties. 327 Unfortunately the submissions of the parties as to the admissibility of Mr Frick's evidence in light of his reliance on information provided by unidentified third parties were of limited assistance. Traditionally if expert witnesses relied on the existence or non-existence of some fact which was basic to the question on which they were asked their opinion, that fact needed to be proved by admissible evidence (JD Heydon Cross on Evidence (subscription service vol 1) Butterworths para 33825). However this so-called "basis" rule was extended at common law to allow knowledge of the expert derived from general experience to legitimately contribute to the opinion arrived at in the expert report. This knowledge derived from general experience could at common law be contrasted with specific information sought by an expert from third parties for comparative purposes as a basis for his or her opinion --- such information would likely be hearsay unless it were disclosed and admitted, and the resultant opinion therefore inadmissible ( English Exporters (London) Ltd v Eldonwall Ltd (1973) 1 Ch 415 at 421, Arnotts Ltd 24 FCR 313 at 350-351 and ASIC v Rich [2005] NSWCA 152 ; 218 ALR 764 at 800). 329 The position at common law may be compared with the position under the Evidence Act . Strictly speaking, it is not necessary for an expert opinion to be admissible for the factual basis of the opinion to be itself proven by admissible evidence ( Neowarra v Western Australia [2003] FCA 1399 ; (2003) 134 FCR 208 at [22] and [37], Quick v Stoland Pty Ltd (1998) 87 FCR 371 at 373-374, Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 at [10] , Bodney v Bennell [2008] FCAFC 63 at [90] ). as a general rule it is admissible under s 56(1) , and the general discretion of the Court to refuse to admit evidence under s 135 is sufficient to deal with problems that might arise in respect of the opinion the basis of which is not disclosed ( Quick 87 FCR 371 per Branson J at 617, Emmett J agreeing; Bodney [2008] FCAFC 63 at [91] ). 331 Branson J in Quick v Stoland explained in detail the legislative rationale for this position, and Lindgren J in Alphapharm Pty Ltd v H Lundbeck A/S [2008] FCA 559 summarised in detail the historical background including the Australian Law Reform Commission's Interim Report on Evidence (ALRC No 26, 1985). It is unnecessary to repeat the reasoning of their Honours here. 333 First, particularly in relation to packout rates but also to a significant degree in relation to yield information, it is clear that there was reliance by Mr Frick in forming his opinion on his research with growers and industry contacts. 334 Second, under cross-examination Mr Frick provided limited information as to the identity of the third parties from whom he obtained information, but not so as to make them identifiable. I note that this is not a situation where there is no discernible basis for the opinion --- Mr Frick has explained that, because of confidentiality restrictions, he is not prepared to reveal his sources. He has informed the Court that his sources are growers and industry consultants. The question for the Court, of course, is whether the absence of identification by Mr Frick of his sources has a result which is tantamount to absence of a discernible basis for his opinion. 335 Third, where Mr Frick relied on information provided by unidentified third parties, this is not a situation where he is drawing his opinion from his own experience, in the sense that he is personally aware of the information from (for example) his own direct engagement. 336 Finally, in relation to packout rates and validation of the data in the DPI publication, this is not a situation where Mr Frick is relying on data in, for example, peer-reviewed journal articles and texts (cf discussion in Alphapharm [2008] FCA 559 at [779] ). 337 In my view expert evidence of Mr Frick as to yields and packout rates is relevant in this case in the sense defined in s 55(1). It is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding. It is prima facie admissible. 339 In my view the probative value of Mr Frick's expert opinion is substantially outweighed by the danger that it might be unfairly prejudicial to the applicants or be misleading or confusing. I consider it should be excluded in exercise of the Court's discretion under s 135 Evidence Act . 340 I take this view for the following reasons. 341 First, although Mr Frick's expertise and credibility are not in dispute, in this case the applicants take issue with the factual premises of the report. While the applicants do not submit that his opinion is based on fabricated data, or that he did not in fact consult with third parties as he claimed, the very real issue associated with Mr Frick's expert opinion in this case, and that to which the applicants object, is that the applicants were not in a position to test the unidentified source material upon which Mr Frick's opinion was based, by cross-examination or otherwise. This is a serious matter which in my view causes prejudice to the applicants. 342 Second, it is clear that, although the opinion as to packouts is substantially premised on information sourced from the relevant properties in the Brief to Crop Expert, it is also apparently substantially premised on data which Mr Frick sourced from unknown third parties, in relation to unidentified properties. This data is incapable of being tested in court. • The DPI publication was clearly used as a basis for Mr Frick's expert opinion as to yields in respect of Murcotts, lemons, and Imperials, however the DPI publication contains no information as to yields in respect of Novas. Mr Frick in his report acknowledges this limitation. In his report he states that there were no published yield data as to Ellenors (although Ellenors are apparently similar to Ellendales, in respect of which there is information in the DPI publication) or Novas, and that "the relevant information has been collected from industry sources" (Frick expert report p 6 in relation to Ellenors, cf p 7 in relation to Novas). • Even in relation to yields from Murcotts, lemons and Imperials, Mr Frick's opinion is to an unknown extent based on validating data he has collected from unidentified industry sources, which cannot be tested in Court. 344 Fourth, the extent to which Mr Frick in his expert report relied upon his own specialist knowledge as distinct from information from unidentified sources is unclear from the expert report. The considered industry potential is more likely between 65 and 75%, however both orchards have achieved packout rates higher than industry standard, which would suggest that in some seasons the 80.5% figure is achievable. 345 This "considered industry potential" to which Mr Frick refers could be based either on his own specialist knowledge, or more likely in this context, on information provided by unidentified industry sources. Even where observations in Mr Frick's expert report appear to be derived from his own knowledge (for example, in relation to packout rates his observations as to factors which can result in significant variations in crop performance at harvest (Frick expert report p 3) and his general comments concerning climatic conditions affecting packout rates as between coastal citrus and Central Burnett citrus (Frick expert report p 3)) it is not possible to be sure of the source of the opinion. In my view the manner in which Mr Frick's opinion as to packout rates was expressed in his report does not answer the question posed by Gleeson CJ in HG v The Queen [1999] HCA 2 ; (1999) 197 CLR 414 at 427, namely whether the opinion was wholly or substantially based on specialised knowledge based on training, study or experience. There will be occasions in which matters of this character are proper to be explored for the purposes of determining the weight to be given to the opinion. The mere fact that there must have been use of some extraneous material, even of the extensive character identified by his Honour, does not of itself necessarily lead to a conclusion that the evidence is of low probative value. In many cases the opinion will plainly be capable of being supported by the underlying facts proven or assumed. If so, the fact that a broader range of information may originally have been availed of would not necessarily detract to any significant degree from the probative value of the evidence given. Any such conclusion must depend on the particular circumstances of the matter under consideration. 347 However the information Mr Frick obtained from the four industry sources he did not identify does not, in my view, fall within the definition of his "entire body of experience which is not articulated and, is indeed so fundamental to his professionalism, that it is not able to be articulated". The information from these sources was not, for example, information he had acquired from his practice which contributed to his specialist knowledge. This was information he specifically sought with a view to being in a position to give an expert opinion on the yield and packout forecasts in question. Further, not only is the resultant information from sources known only to Mr Frick, but the actual specific information (for example, data referable to packout rates on specific properties) is known only to Mr Frick and is not capable of being tested. 348 In my view, although these comments represent a common law position as to admissibility of expert opinion evidence as distinct from the position under the Evidence Act , they are relevant to the consideration by the Court under the Evidence Act as to the probative value of the evidence before it (cf Arnotts Ltd 24 FCR 313 at 350). 349 Sixth, it is unfortunate that no other expert evidence in relation to the issue of yield and packout forecasts was produced to the Court to contradict or otherwise answer the opinion of Mr Frick. However this does not automatically mean that the Court is obliged to accept Mr Frick's expert opinion (cf Hardie J in The Minister v Ryan (1963) 9 LGRA 112 at 114). The fact that Mr Frick stated in his oral evidence that he would not have been able to obtain the information from his industry sources upon which he appeared to rely for his opinion, without maintaining confidentiality, does not diminish the prejudice to the applicants in these circumstances. 350 Seventh, as I observed earlier in this judgment this is not a situation where the expert has sought to rely upon reputable articles, publications and material produced by others in the area in which they have expertise, and which is hearsay, as a basis for the expert opinion (cf for example Bodney [2008] FCAFC 63 at [92] , Alphapharm [2008] FCA 63 at [762] ). 351 Finally, while I do not fault Mr Frick's motives in seeking to verify that the packout figures provided to him were achievable and to validate the yield information before him, and while I understand his reasons for not wishing to disclose his industry sources, this is not a situation where, for example, he has himself produced a report on the basis of undisclosed data which has been published in a reputable journal and subject to peer review and independent criticism (cf discussion in Alphapharm [2008] FCA 63 at [776] - [779] ). Mr Frick's expertise may have qualified him to know which (unidentified) growers and industry consultants to contact, and to ask for relevant information upon which he could base his opinion, however it is not reasonable that the applicants in the context of these proceedings should be expected to accept such a process without question, where sources were not identified. 352 Overall, I consider that there is such a blurring in Mr Frick's expert report of unidentified facts from unidentified sources, material from admitted sources, and his own specialist knowledge that its probative value is exceeded by the prejudice to the applicants and the risk that it is misleading or confusing. I am unable to extricate from the report his opinion, as distinct from unidentified hearsay evidence upon which his opinion may be based. 353 For the reasons I have given I exclude Mr Frick's expert report from evidence pursuant to s 135 Evidence Act . 354 I note that even if I had considered that the probative value of Mr Frick's expert report was not outweighed by the prejudice to the applicants within the meaning of s 135 , I would have ruled that it be given no weight. The weight to be accorded to an expert opinion depends to a significant degree upon the factual basis for such an opinion (cf for example Ramsay v Watson [1961] HCA 65 ; [1961] 108 CLR 642 at 649, Branson J in Quick 87 FCR 371 at 621, Notaras v Hugh [2003] NSWSC 167 at [20] ). I have already discussed in detail the difficulties associated with the lack of identification of sources, and what appears to be the intertwining of information from those sources with the specialised knowledge of Mr Frick in producing his report. 355 Having made this finding however, in light of the fact that Mr Frick's expertise is not challenged, my findings in relation to his expert report do not extend to his oral evidence at the hearing to the extent to which that evidence was based on his specialised knowledge and experience. 356 I now turn to the claims concerning the future representations in more detail. 359 This representation was referred to as the "lemon dream" representation during the trial by Counsel and Mr Tracy, although Mr Tracy also referred to it as the "lemon lie". 360 (I have already considered claims of the applicants in para 17A to which there is reference in para 19(c). As a preliminary issue I also note that the applicants have not pursued their claims in paras 17A(c) and (d). I infer from the abandonment of those claims that the applicants are similarly no longer claiming reliance on those paragraphs in relation to other claims in the Further Amended Statement of Claim. For completeness, I make the observation that if the applicants were continuing to rely on paras 17A(c) and (d) in relation to the facts claimed therein for the purposes of para 19(c), I consider that those facts have not been substantiated in these proceedings. Further, I do not consider that the applicants have substantiated the "true position" as referred to in para 19(c) Further Amended Statement of Claim for reasons I explain later in this judgment. The respondents also relied on the matters referred to in para 10 of the Defence, namely that at the relevant meeting Mr Strahley told Mr Tracy. (2) February is the bigger volume month for lemons. (3) The earlier the lemon crop is picked the higher the obtainable prices and a price of $70 per carton of 1st grade lemons may be achievable for the earlier picked lemons. (4) If the lemons are selectively picked as they ripen to be available to market before other growers place their fruit on the market there is a higher cost by reason of the selective picking of the lemons. (5) The First Respondent only produces a small percentage of 1st grade lemons and that the average price per carton of the lemons produced from the trees during the years 2001 to 2004 varied from $23.02 to $30 to $18. The most likely explanation is that Mr Strahley made such a representation to Mr Tracy. • Although the respondents assert that the figure of $1.5 million was determined by Mr Tracy, the notes written by Mr Tracy after the meeting of 3 December 2004 were more consistent with the figure being mentioned by Mr Strahley. It is very unlikely that Mr Tracy, a man with no experience in citrus, would make such a bold assertion shortly after his first meeting with Mr Strahley. • The absence of complaint by Mr Tracy on being told that the net proceeds were $1.5 million was consistent with Mr Tracy being perfectly happy with the prediction. • Although Mr Tracy was conservative in his expectations and expected to receive 50% of the $1.5 million, this does not mean that he did not rely on the $1.5 million lemon dream representation. • Although the respondents submitted that the 2005 Valuation meant that Mr Tracy did not rely on the lemon crop representation, the 2005 valuation was infected with the false crop production figures provided to Mr Neubecker by Mr Breed and could be the subject of reliance by the respondents in equity to negate reliance by Mr Tracy. However the more fundamental point is that the 2005 valuation figure of $407,610 was after deduction of a profit and risk factor of 25%. • In relation to the alleged representation that the net proceeds of the lemon crop for 2005 would be $1.5 million, no such representation was made by Mr Strahley to Mr Tracy at the meeting of 3 December 2004; and in any event information provided to Mr Tracy after 3 December 2004 qualified such alleged representations. This is clear from the conduct of this case: the respondents' contend (and the applicants dispute) that Mr Strahley had told Mr Tracy that lemon picking could be commenced in January but that a bigger volume month was February, and that picking continued through to April. 365 Mr Tracy's evidence as to the timing of the picking of the lemon crop was based on his recollection. He did not keep notes of the meeting of 3 December 2004 where he alleges Mr Strahley made the relevant statement (Tracy statement sworn 17 November 2006 at [9]). 367 In my view no representation was made by the either the first respondent or Mr Strahley that the lemon crop was due to be picked in its entirety in or by early January 2005. I accept Mr Strahley's version of the discussion between Mr Strahley and Mr Tracy on 3 December 2004 for the following reasons. 368 First, documentation of the first respondent including the Ray White Information Memorandum and budgetary documentation record that picking of lemons can occur over a number of months commencing in January through to April of each year. It is not in dispute that Mr Tracy was provided with the Ray White Information Memorandum. Further, Mr Tracy's evidence was that he noted the citrus calendar in that document (Tracy statement sworn 17 November 2006 para 30). The documentation before Mr Tracy therefore indicated that the lemons would be picked between January and April, not only in January. In view of these facts I consider it unlikely that Mr Strahley would have told Mr Tracy that the lemon crop was "due to be picked in early January". 369 Second, Mr Tracy conceded on a number of occasions both during cross-examination and re-examination that he was told by Mr Strahley that the picking of the lemon crop "started" in January and continued through February, March and April (for example, TS 413 ll 23-26, 491 ll 45-46, 492 ll 6-8). Indeed Mr Tracy conceded during re-examination that budgets presented to him by Mr Strahley on 10 December 2004 showed lemons being picked particularly through the month of February (TS 492 ll 6-8). I remember there was talk about $30. There was something about picking in January. Mr Tracy recollected that Mr Strahley had said "something about picking in January". The likely explanation of this recollection is that it is consistent with Mr Strahley's version of events, namely that picking of lemons could begin in January 2005, and that lemons picked early could, if grade 1 lemons, achieve prices of $70 per carton. 372 Finally I note that Mr Tracy had no experience, and very little understanding, of the citrus industry in December 2004 at the time of this conversation with Mr Strahley. The evidence demonstrates in this context that he seized on one fact among many which were given to him, namely that lemons were "picked in January". That he was told that lemons were also picked in February, March and April did not appear to have made an impression on him in relation to formulation of this claim (although curiously this recollection was not consistent with a number of his answers during the hearing, which I noted earlier). However the fact that Mr Tracy's memory was selective in this respect does not entitle him to claim misrepresentation by the first and second respondents in relation to this claim. The applicants do not substantiate this claim. " (Tracy statement sworn 17 November 2006 at [8]). Mr Tracy did not keep notes of the meeting at which Mr Strahley allegedly made this statement. 375 Mr Strahley denied that he had made this representation to Mr Tracy (Strahley affidavit sworn 12 July 2006 at [69(m)]). His evidence during the hearing was that $1.5 million was not a fair representation of his forecast of the lemon crop for 2005 (TS 1211 ll 3-5). 376 In my view, the submission of the applicants that Mr Tracy must have received information as to the value of the lemon crop from Mr Strahley is superficially persuasive in light of Mr Tracy's lack of understanding of the citrus industry. However following consideration of this claim, and notwithstanding this submission of the applicants, I do not consider that the first respondent, through Mr Strahley, at the meeting of 3 December 2004 made a representation that $1.5 million net realisable value was achievable for the lemons. I form this view for the following reasons. 377 First, on the basis of the evidence before the court I consider it possible that Mr Strahley mentioned the figure of $1.5 million during the meeting in relation to the lemon crop. This potentially ties in with the gross income from the lemons and limes to which Mr Bailey referred in his valuation report of 11 January 2005. However even if Mr Strahley had mentioned the amount of $1.5 million referable to the lemon crop, on the facts I do not consider it at all likely that Mr Strahley made the representation alleged by the applicants, namely that this represented the net realisable value of the lemon crop. No documentation existed which was produced by the respondents, either for Mr Tracy's benefit or otherwise, which could support a claim that the net realisable value of the lemon crop following deduction of costs including picking, packing and transport would be $1.5 million. The only evidence before the Court that Mr Strahley made the representation to Mr Tracy claimed by the applicants is the oral evidence of Mr Tracy that he recalled Mr Strahley making a statement referring to $1.5 million for the lemon crop at the meeting of 3 December 2004. Mr Tracy took no notes of the meeting or the statement and I have already found that Mr Tracy's recollection in relation to another claim arising from that meeting was inaccurate. I note again the warning of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318 concerning recollection of oral statements claimed to be misleading or deceptive. 378 Second, and in any event, there is evidence from which it can be inferred that Mr Tracy himself derived the amount of $1.5 million for the lemon crop from other information he had received in relation to the orchards and citrus prices in general, including information he received from third parties. An email from Mr Tracy to Mr Douglas acting for the first respondent (which Mr Douglas then forwarded to Mr Strahley on 6 December 2004: exhibit A106) shows that Mr Tracy had offered $4 million, but was prepared to increase his offer to $4.5 million if the directors of the parent company of the first respondent gave a directors' guarantee that the net realisable value of the lemon crop was $1.5 million. (TS 415 ll 46-48, 416 ll 1-2, 419-420). This appeared to be the first time that reference to valuation of the lemon crop appears in writing. • Mr Tracy had made undated handwritten notes (Ex R40) which were tendered as evidence as to his deliberations in relation to purchasing the relevant properties. These handwritten notes included calculations. On the notes he had written "1.75 M", and below that following further calculations "1.5 LEM". (Significantly in my view, Mr Tracy said at the hearing in explanation of this figure " leaving me with a number of 1.5 lemons " (TS 419-420)). 379 Although no concession was made by Mr Tracy as to when these notes were made, I accept the submission of Mr Bell QC that it is likely that, given the nature of the notes and the information they reference, the notes date from early December 2004, and probably after the meeting with Mr Strahley when Mr Tracy was considering making an offer for the relevant properties, and that they reflect Mr Tracy's deliberations in relation to making an offer. If that is so, then it is clear that Mr Tracy had formed a view as to the approximate number of cartons of lemons which could be produced by the orchards, namely 38,000 cartons (despite his evidence that he did not have such information: TS 412 ll 41-44). It is not clear where Mr Tracy derived this information - a likely source was the first respondent although there is no evidence as to whether this figure was provided to Mr Tracy and if so what it represented. 380 Further, it is clear that Mr Tracy had received information concerning lemon prices from not only the first respondent but also third parties, including Mr Noel Sims, a lemon grower from Renmark in South Australia. Mr Tracy was informed that it was possible to obtain up to $70 per carton net for early crop first grade lemons (including by Mr Sims: TS 420 ll 7-8), and that the first respondent's budgeted price of lemons at the time was $22 per carton, but based on current market information there was the possibility that a higher price could be received. Indeed Mr Tracy's evidence was that at that time "I'm told all sorts of numbers about what's happening in the market place" (TS 491 ll 46-47). In my view it is likely that Mr Tracy sifted through the information he had been given, and, on the basis of information as to prices which could be achieved in the market in January, formed a view that he could receive $50 per carton net for 38,000 cartons of lemons, the total of which sum should in the interests of caution be discounted to $1.5 million. 381 I am not persuaded that the reason for Mr Tracy's calculations was that he "liked to check his figures" (TS 421 ll 30-31) in the sense of confirming information he had already received as to prediction of $1.5 million net for the crop. Rather Mr Tracy was calculating the amount he believed he could make from the sale of the lemons in those notes, based on a mixture of information he considered relevant. It was this calculation which formed the basis of his request for a directors' guarantee from the parent company for that amount. 382 In any event, even if I am wrong in holding that no representation was made by the first respondent through Mr Strahley on 3 December 2004 that the net realisable value of the lemon crop would be $1.5 million, I consider that information provided to Mr Tracy after that meeting qualified any such representation to the extent that the initially misleading effect of the representation did not persist (cf Lezam Pty Ltd [1992] FCA 206 ; 35 FCR 535 at 541). Mr Tracy's evidence was that the first respondent was not prepared to guarantee the net income for the lemon crop (TS 415 ll 36-37). This refusal suggests that the first respondent could not undertake that the net realisable value of the lemon crop was $1.5 million. • The purchase agreements were negotiated on the basis that the risk was with the purchaser and that the picking of the lemon crop was subject to weather. Contractual clauses were included to that effect. • Mr Tracy confirmed at the hearing that he had told Mr Breed before settlement of the purchase of the properties that he did not expect to obtain $1.5 million for the lemon crop, but had told Mr Breed that he was expecting to receive between $750,000 and $850,000 for the lemon crop (TS 264-265). • Not one of the budgets prepared by the first respondent and provided to Mr Tracy forecast such a return on the lemon crop. • Following the meeting of 3 December 2004 the first respondent provided Mr Tracy with information including budgetary forecasts for revenue, prices, yield and packout by carton for lemons. All of this documentation indicated that, in general, an expected price for lemons was $30 per carton. • The valuation report of Mr Anthony Bailey, prepared at Mr Tracy's request and dated 11 January 2005, estimated the net realisable value of the lemon and lime crop at the orchards as only $407,610. Further, the applicants' refer to the fact that the 2005 valuation figure of $407,610 was after deduction of a profit and risk factor of 25%. I have already addressed issues relating to the 1 June 2004 Valuation Report. • Mr Bailey's evidence at the hearing was that he asked Mr Breed for the number of cartons ex-farm gate and had not discussed packout rates with Mr Breed (TS 825 ll 21-22). 384 In these circumstances the applicants could not claim to be misled by any representation by Mr Strahley on 3 December 2004 that the net realisable value of the lemon crop would be $1.5 million. 385 Finally, and in any event, I do not consider that the applicants have substantiated the claim in para 19(c) as to the "true" position disclosed by the packing shed records. I shall deal with para 19 later in this judgment. 386 I do not find the applicants' claim in para 12(b) substantiated. As I have observed elsewhere in this judgment, paras 19 and 19A of the Further Amended Statement of Claim present the applicants' case as to why the representations referred to in paras 11 to 17A were misleading or deceptive or likely to mislead or deceive. Paragraph 19A is referable only to para 17A. There is no reference in para 19 to the specifics of the claim as made in para 13(a)-(c). 389 (Although unfortunately it is not clearly pleaded, I assume that para 19(g) cross-references to para 13(d)). 390 For the purposes of this judgment, the immediate result is that, objectively, no case which the respondents can meet is actually pleaded by the applicants as to why any of ss 51A, 52 or 53A were breached in relation to the conduct alleged in paras 13(a), (b), and (c), other than broad claims in the stem of para 19 and in paras 20 and 20A that the representations referred to in, inter alia , para 13 were misleading or deceptive or likely to mislead or deceive. 392 I consider it unlikely that the applicants intended to plead two sets of allegations in para 19 referable to the claims in para 16. It is more likely that the absence of reference in para 19 to the claims in para 13 was the result of inadvertent duplication in the Further Amended Statement of Claim and (presumably) typographical errors in paras 19(d), (e) and (f). I can find no reference in any pleadings or submissions of the applicants, or in the transcript of the hearing, to the failure of the applicants to specifically plead the basis upon which they claim that the representations in para 13 of the Further Amended Statement of Claim were misleading or deceptive or likely to mislead or deceive for the purposes of ss 51A, 52 or 53A. 393 On the basis that the respondents were clearly prepared and able to meet the claims of the applicants in to paras 13(a)-(d) by reference to paras 19(d)-(g), and given that paras 19(d)-(f) may have contained typographical errors with respect to monetary amounts, I shall proceed to consider paras 19(d)-(f) as if they contain typographical errors and are referable to the claims in paras 13(a)-(d). (2) The yield is multiplied by the number of trees. (3) The gross yield is then divided by the capacity of fruit bins. (4) The indicative price was an estimate obtained from agents. (5) The picking cost is an estimate of the amount required to be paid to the employee/contractor. (6) The packout cost is an estimate of the amount required to pack each crop which takes into account historical data. (7) The packout percentage was derived by estimates of future rates, taking into account historical data for each crop, current cultural practices, and consideration of factors which may have historically impacted on packout rates for each crop, such as disease or weather conditions. 398 In response, the respondents made detailed written submissions as the "broader factual matrix" behind the sale negotiations in respect of the relevant properties. This background was, the respondent submitted, relevant to consideration of all claims made by the applicants in respect of future representations allegedly made by the first respondent. These submissions are also significant because, although the respondents make specific submissions with respect to each of paras 12, 13, 14, 15, 16 and 17 in relation to future representations, the broader submissions encapsulate to a large degree the respondent's case in discharge of its onus of proof under s 51A. 401 Given the length of these broader submissions (some twenty-five pages) I do not propose to summarise them, but will refer to them as appropriate in my consideration of the substantive issues. In fact, p 1 of the budget records total forecasted revenue at $5,724,168 on the bases set out in the budget. o The applicants in para 13(b) claimed that the Sunstate Budget.xls represented that the cost of production of the fruit crops grown on the land was $4,968,408. In fact, p 14 of the budget records total forecasted operating costs at $4,968,408 on the bases set out in the budget. o The applicants in para 13(c) claimed that the Sunstate Budget.xls represented that the net profit before tax of the fruit crops that would be grown on the land was $755,760. In fact, p 15 of the budget records forecasted total profit of $755,760 on the bases set out in the budget. o The applicants in para 13(d) claimed that the Sunstate Budget.xls represented that a packout rate of 70-80% would be achieved in the production of the fruit crops. In fact, the budget did not forecast an average packout as alleged, rather pp 13-22 of the annexure to the budget records budgeted packout rates of Oranges 80%, Limes 75%, Imperials 75%, Pages 70%, Nova 75%, Ellenor 75%, Murcott 70%, Ellendale 75%, Mango 80%. 404 The email to which the 2005 Sunstate Budget.xls was attached contains no message from Mr Strahley to Mr Tracy. The subject is "2005 Sunstate budget". 405 Despite the absence of any statement in the email which could be a representation, I agree with the applicants that, in emailing the 2005 Sunstate Budget.xls document to Mr Tracy, the first respondent through Mr Strahley was making a representation to a potential purchaser in the course of the purchaser making enquiries about the subject matter of the sale. An important point of initial contention however is the nature of the representation made by the first respondent in providing this document to Mr Tracy. The respondents raise in dispute the issue whether the representation was to Mr Tracy alone, or to the first applicant through Mr Tracy. I will return to this issue later in this judgment. 406 A review of the 2005 Sunstate budget.xls document reveals that the respondents' description of the amounts referred to in paras 13(a)-(c) is technically accurate, in comparison with the applicants' description of those amounts. 407 Further, the respondents' claim that the budget did not state or convey the alleged representation, namely that a packout rate of 70-80% in the production of the fruit crops that would be grown on the land for the period 1 January 2005-31 January 2005 would be achieved, is accurate. The budget records budgeted packout rates for specific varieties of fruit as set out earlier in this judgment, not a "packout rate of 70-80%" as the applicants plead. 408 However despite this lack of precision in the applicants' pleadings, it is clear that the applicants' pleadings in para 13 are sufficiently identifiable so as to allow the respondents to answer them. So, for example, the packout rates in the 2005 Sunstate Budget.xls did actually range from 70% (Pages, Murcott) through to 80% (Oranges, Lemons, Mango). Similarly, the "total budgeted revenue from the Bundaberg and Tiaro properties" is recognisable as the "proceeds of the sale of the fruit crops that would be grown on the land" (Further Amended Statement of Claim at [13(a)]), and similar comparisons could be drawn in relation to the terms used in paras 13(b) and (c) and the accurate description of the amounts in those paragraphs. Accepting that para 13 Further Amended Statement of Claim does, with sufficient substantive accuracy if not technical accuracy, reflect the relevant representations in the 2005 Sunstate Budget.xls, the immediate question is whether, in making the representations as to future matters with respect to the 2005 total budgeted revenue, the total budgeted operating costs, the budgeted total profit and the packout rates, the first respondent can establish that it had reasonable grounds within the meaning of s 51A. 409 It is not in dispute that the properties ceased to be operated as orchards after 23 June 2005 when the third applicant entered voluntary administration pursuant to Pt 5.3A Corporations Act 2001 (Cth) (Tracy statement sworn 17 November 2006 at [152]). Evidence is scant as to what actually occurred at the orchards between 21 March 2005, when the contract of sale was completed, and 23 June 2005. • Between 21 March 2005 and 22 June 2005 the third applicant conducted an orchard business on the orchard land and incurred trading losses of over $500,000.00 in that period (Tracy statement sworn 17 November 2006 at [142]). • After receiving a report from the TotalPak system on 13 April 2005 he realised that the lemon crop was below budget (Tracy statement sworn 17 November 2006 at [146]). • Mr Breed explained to Mr Tracy that "the poor packouts were due to black spot on the fruit and bruising from picking in humid conditions" (Tracy statement sworn 17 November 2006 at [147]). • On 4 May 2005 he received a document showing that the orchards were approximately 3000 bins under budget, which he calculated meant a reduction of about $1 million in gross revenue from that projected in the 2005 Budget. (Tracy statement sworn 17 November 2006 at [148]-[149]). 410 There is however before the Court unchallenged evidence of both Mr Strahley (Strahley affidavit sworn 12 July 2006 at [267]) and an expert forensic accountant, Mr Lytras, who was called as a witness by the respondents, that the packout rate for the lemon crop picked at the orchards in 2005 was 81.2% (Lytras expert report p 10 at [2.6(c)]). This rate exceeded the packout rate of 80% for lemons forecast in the 2005 Sunstate Budget.xls. • The evidence demonstrates that, objectively, the events predicted by the respondents' future representations in the 2005 Sunstate Budget.xls (the subject of para 13) did not occur. In the words of Goldberg J in Phoenix Court Pty Ltd (1997) ATPR 46-179 , the events did not come to pass. Sections 51A and 52 are thus enlivened. 413 Considering later events which did occur is of some relevance --- although clearly not conclusive --- as to whether the respondents had reasonable grounds to make the future representations. Nonetheless while examining evidence of later events may throw light upon the overall probabilities it remains vital to guard against hindsight illusion (cf Mason P in City of Botany Council v Jazabas Pty Limited [2001] NSWCA 94 at [83] ). There is no necessary connection between the reasonable grounds and the subsequent circumstances which resulted in the predicted state of affairs not occurring ( Sykes 88 FCR 511 at 513 per Heerey J). In summary, the substance of the applicants' case is that the respondents had no reasonable grounds for their representations as to the future financial performance of the orchards, based on the historical performance of the orchards. 415 There is no doubt that historical performance can be a factor relevant to the reasonableness of a forecast of future performance (see, for example, ACCC v Top Snack Foods Pty Ltd [1999] FCA 752 , ACCC v Telstra Corporation Ltd [2007] 244 ALR 470). However in determining whether a person had reasonable grounds for expressing an opinion or making a prediction as to a future matter, is necessary to judge the matter as at the date of the representation (see Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599 at 625, Sykes 88 FCR 511 at 513, City of Botany Council [2001] NSWCA 94 at [83] ). Historical performance is one factor, although it is an important factor. In paras 19(e) and (f) the applicants claim that the respondents had in their possession Packing Shed data computer records which disclosed the matters referred to in paras 19(a), (b) and (c). I have already considered the claims in paras 19(a), (b) and (c) and found that the respondents had reason to distrust the information in the Packing Shed records to which the applicants refer. Further, I do not consider that the applicants have substantiated the "true position" with respect to, inter alia , the Packing Shed records as claimed by the applicants in paras 19(d)-(g). I shall return to this issue later in my judgment. 416 However even putting to one side for a moment the monetary figures in para 19 Further Amended Statement of Claim based on the Packing Shed computer records, the respondents admit that the financial and horticultural performances of the orchards in previous years were not as positive as forecast in 2005. • During cross-examination Mr Strahley gave evidence that the relevant properties suffered a loss of $700,000-$900,000 in 2001, a loss of $2 million in 2002, a loss of $700,000-$900,000 in 2003, and a loss of approximately $1 million in 2004 (TS 906). • Mr Strahley gave evidence under cross-examination that there was a steady decline in the revenue base for the actual price of the citrus from 2001 until 2004 (TS 910 ll 10-11, 27-28). • Mr Strahley gave evidence that price and packout percentages among the fruit varieties were inconsistent (TS 911 ll 6-16), and historically poor (Strahley affidavit sworn 12 July 2006 at [69(e)]) with the result that price and packout percentages were the two areas where there was underperformance against expectation (TS 912 ll 47-48). Have the respondents discharged their onus under section 51A? 419 In considering the facts and circumstances on which the first respondent relied in making the representations as to future economic performance of the orchards, it is in my view critical to consider the process in which the first respondent engaged in compiling the 2005 Sunstate Budget. 420 First, Mr Strahley gave evidence that the budget model upon which the 2005 Sunstate Budget was based was developed in 2001 in conjunction with Dr Matt Shaffer, a specialist with skills in financial modelling who was employed by the US parent company of the first respondent. The budget also provided for revenue and cost on a per tree basis. The first respondent had utilised the template since 2001 in preparation of the yearly budgets (Strahley affidavit sworn 12 July 2006 at [10], [225]). Mr Paul Green, an expert forensic accountant requested by the applicants to prepare an expert report detailing his opinion of the loss and damage (if any) suffered by the applicants in these proceedings, reviewed documents including the 2005 Sunstate Budget. 423 Mr Tracy also agreed that the 2005 Sunstate Budget was a thorough document, prepared by the first respondent in the ordinary course of business (TS 439 ll 17-21). • Fourth, in relation to the claim in para 13(c), by reference to my findings in relation to paras 13(a) and 13(b). • Fifth, in relation to the claim in para 13(d), by reference to my findings concerning packout rates in the context of my consideration of para 13(a). • Sixth, by reference to information provided to Mr Tracy in relation to the budgetary process and factors relevant to that process. • The budgets were prepared with input by Mr Strahley, Mr Breed, field staff and Ms Carolyn Bailey who was the financial controller of the US parent company of the first respondent. Mr Strahley said that he was personally involved in the budgetary process and reviewed information provided by Mr Breed and the field staff (Strahley affidavit sworn 12 July 2006 at [10], [221]). • The head office of the first respondent also prepared monthly budget summaries in the ordinary course of business, containing year to date actuals and the variance from budget to actuals (Strahley affidavit sworn 12 July 2006 at [23]). As part of the budgetary process the budget was also reviewed on a quarterly basis (Strahley affidavit sworn 12 July 2006 at [221]). • Block Summary data were prepared as part of the yearly budgetary process as a basis of identifying the historical data for yields and packout rates (Strahley affidavit sworn 12 July 2006 at [67]). Earlier in this judgment I dealt with the decision of Mr Strahley not to accept the packout data provided by Mr Breed in an email in May 2004 and the decision to produce of Block Summary data instead. 428 In relation to this evidence I make the following observations. 429 First, I consider that the factors taken into account by Mr Strahley and the first respondent in the budgetary process were appropriate. They reflect a practical recognition of issues of relevance to the orchards and their economic performance. I will refer later in this judgment in more detail to the relevance of the data in the DPI publication, but consider it of particular relevance to yields of specific varieties of fruit grown on the orchards and therefore performance of the relevant properties in relation to those varieties. 430 Second, as I have already observed the applicants do not dispute the soundness of the budgetary model used by the respondents. As a template, it is a reasonable basis for forecasting economic performance. On the basis that the 2003 yields demonstrated what had been achieved by the orchards, and what could be achieved, it appears that the forecast total yield for 2005 was reasonable. The evidence was that cultural costs increased by over 50% from 2001 to 2005 (Strahley affidavit sworn 12 July 2006 at [227(c), (d]), Lytras expert report p 9 of [2.3]). • Under the direction of Mr Burns from early 2004 and in conjunction with the consultants Mr Papacek and Mr Owen-Turner, improved cultural practices at the properties with a view to improving the yields. Mr Burns implemented and managed a new cultural practices program which included irrigation, pruning, thinning, spray and fertilizer. 435 Mr Burns said that it was clear to him that, prior to his engagement, a substantial area of the orchards had not been properly pruned, and that the orchards had been "let go" in previous years (TS 673 ll 37-39). He also gave evidence that the watering programme in place prior to 2004 meant that there was some over-watering which would have affected the rates of fruit growth (Burns affidavit sworn 11 July 2006 at [30]). 436 Mr Burns gave evidence that while there was a chance that the comprehensive pruning programme implemented in 2004 might reduce the yield for 2005, it would result in improved yields for the 2006 season. However he also gave evidence that the overall effect on yield, compared to the 2003 season, needed to be considered with the other cultural practices which were expected to produce improvements to yield (Burns affidavit sworn 11 July 2006 at [32], [33]). Indeed Mr Burns' evidence was that he did not expect the pruning programme to negatively impact on yield in the 2005 Crop year (TS 664 ll 20-21). 438 Mr Burns stated under cross-examination that he did not provide a scientific yield estimate to management of the first respondent, that this was the only way that management could really keep an accurate record of his views on matters of yield, and that it was the most accurate way of properly assessing prospective yield (TS 648 ll 15-19, 650 ll 26-33, 742 l 38, 743 ll 14). The applicants rely on the fact that no scientific yield estimate was ever undertaken by any of Mr Burns, Mr Breed, Mr Strahley, Mr Owen-Turner or Mr Papacek and therefore claim that the first respondent had no reasonable grounds for its representations the subject of para 13. 439 In my view the absence of a scientific yield estimate undertaken by Mr Burns or anyone else does not diminish the reasonableness of the grounds upon which the first respondent based its representations as found in the 2005 Sunstate Budget.xls document. He provided monthly reports to Mr Breed describing the general horticultural matters for each orchard, the crop status for each orchard and water usage and weather for the Bundaberg orchard. Mr Burns also contributed to sections of the Farm Manager reports which were provided to Mr Strahley. • Mr Burns also gave evidence that in 2004 he provided two oral estimates of expected crop yields for 2005 to Mr Breed, and that the estimates were undertaken using his experience, knowledge of the various blocks, the trees on those blocks, the varieties of fruit, what he saw on the trees, his previous citrus experience and his knowledge of the historical picking records from the trees in the blocks. (Burns affidavit sworn 11 July 2006 at [85]). • It is clear from the evidence that Mr Burns had a detailed knowledge of the orchards. His evidence was that he lived in the orchards (TS 684 l 39). • Mr Burns' unequivocal evidence was that complete absence of formal reporting on expected yields was consistent with him being employed to improve cultural practices at the orchards with a view to improving yields (TS 667 ll 37-39). He stated that as a horticulturalist, he did not need to construct detailed records of the orchards, but was able to rely on visual perceptions in order to be able to, for example, know whether a block required pruning (TS 684 ll 32-46), or know whether an orchard had been thinned (TS 684 ll 6-7, and generally 673). • It is also clear that in his reports he made comments as to prospective yields (for example, Burns affidavit sworn 11 July 2006 at [88(b)(i)]). 440 No evidence was produced that horticultural advice as to yields without a scientific yield estimate was ineffective. In my view the first respondent did not need to carry out a scientific yield estimate in order to be in a position to make representations as to yield based on reasonable grounds. 442 Although pursuant to s 135 Evidence Act I have excluded from evidence Mr Frick's expert report for the reasons I gave earlier in this judgment, opinions given by him at the hearing which are clearly within his specialised knowledge are both admissible and, in my view, do not give rise to such issues as would enliven the Court's discretion under s 135. 445 Appendix K to the DPI publication lists actual yield data collected from yield records of growers. In comparing the DPI data relevant to Murcotts, Imperials, lemons with the forecast yields for those citrus varieties in the 2005 Sunstate Budget.xls, it is apparent that the 2005 forecast yields in that document were within industry parameters. To the extent that the first respondent was basing its forecasts for 2005 on industry standards as appearing in the DPI publication, those forecasts were based on reasonable grounds. • The citrus fruit market is very volatile and reflects constant changes in the supply and demand for the variety of fruit, classes of fruit and size. • He or Mr Breed obtained indicative pricing from fruit wholesalers with whom they dealt, as well as other fruit wholesalers. • As a component of keeping abreast of the commodity prices and the market Mr Strahley talked to Mr Noel Sims each Friday, and they would discuss the lemon market. • In the Valuation Yield Summary he had available the average prices received by the first respondent during the financial years 2002, 2003 and 2004. Those average prices were provided to Mr Tracy on 21 December 2004. 448 In my view the steps taken by the first respondent in the budgetary process in forecasting fruit prices they could expect to receive were thorough and reasonable. To that extent representations by the first respondent in para 13, to the extent that those representations depended on fruit prices, were made on reasonable grounds. 450 First, in 2002 the Bundaberg orchard was subject to hail strike, with the result that the crops across all varieties at the orchard were severely affected (TS 920 l 25). So, for example, the Block Summary data records the packout rate for Novas at Bundaberg that year as 1.61%. 451 Second, although the respondents' properties were not directly affected, both citrus prices and picking of fruit were affected in 2004 by an outbreak of citrus canker disease in Queensland. However Mr Strahley gave evidence that, because properties in the large citrus-producing region of Emerald had been quarantined because of the citrus canker outbreak, he was expecting prices would improve for the benefit of citrus properties in Queensland which were not quarantined (Strahley affidavit sworn 12 July 2006 at [56]-[59], [66]). 452 In my view it was reasonable to take these factors into account in forecasting prices for citrus in 2005. Earlier in the judgment I set out in tabular form the packout rates achieved in respect of lemons, Imperials, Novas, Ellenors and Murcotts at both orchards between 2001 and 2004, based on the Block Summary data. 456 Significantly, the Block Summary data, the accuracy of which is not in contention, demonstrates that in 2001 the packout rates for those specific fruit crops in the orchards were high but that they had deteriorated since that year. 457 The evidence clearly shows that the orchards were capable of achieving packout rates similar to those forecast in the 2005 Sunstate Budget.xls. On this basis, representations at least as to packout rates of lemons, Imperials, Novas, Ellenors and Murcotts were based on reasonable grounds. • The pruning programme would improve fruit quality, reduce the incidence of EBS, and reduce the time to pick or harvest fruit from a tree (Burns affidavit sworn 11 July 2006 at [33]). • Because thinning improves fruit quality and decreases stress to the fruit tree, it was expected that improvements in the yield would occur in the 2005 Crop year. (TS 658 ll 5-15). • The engagement of Mr Papacek's services would result in a significant advance for the first respondent in its production, because Mr Papacek's firm "Bugs for Bugs" had expertise in citrus culture. • The benefits of the pruning and cultural practices implemented by him in 2004 would have a "huge" benefit for that year and the following year. (TS 673 ll 37-39). 459 Mr Burns' evidence was consistent with the evidence of Mr Owen-Turner as to the correlation between pruning and thinning as a management system on the one hand, and on the other hand yield and packout rates (TS 889 ll 22-23, 890 l 22). Mr Burns' evidence also acknowledged the relationship between nutrition of the trees and the quality of the fruit (TS 890 l 22). 460 The management and reporting relationship between Mr Burns, Mr Breed and Mr Strahley is not in dispute. The engagement of Mr Burns and the experts, the expenditure on improvement and refurbishment of the properties, the reformed cultural practices and the ensuing benefits to orchard productions were within the control and knowledge of the first respondent, and Mr Strahley, who formed a view that a significant improvement in packout rates would follow. Mr Strahley's evidence was that, by December 2004, he was of the opinion that the orchards were "starting to perform" (TS 1201 ll 20-22). I note this fact as contributing to the overall probability that the first respondent made its representation as to the performance of the orchards in 2005 on reasonable grounds (cf Sykes 88 FCR 511 , City of Botany Bay Council [2001] NSWCA 94). This can be compared with the question of whether a formal scientific yield should have been undertaken which was the subject of cross-examination of Mr Burns during the hearing. 463 In my view the reasonableness of the respondents' grounds in making their representations, so far as they related to packout rates, was not related to whether a packout study had been undertaken. 465 In my view the applicants have not demonstrated the absence of a packout study as relevant to para 13 Further Amended Statement of Claim. During cross-examination Mr Strahley gave evidence that he had discussed operating costs (both total costs and cultural costs) with Mr Tracy (for example, TS 1014-1015) but neither the applicants' submissions nor the evidence support a claim that the applicants were mislead or deceived by representations as to future costs in terms of para 13(b). 469 Further I have already outlined in detail the evidence of the first respondent as to its budgetary process, including factors taken into consideration in that process. 470 Notwithstanding the claim in para 13(b) (and para 19(e)) as to the costs of production, the soundness of the first respondent's process in forecasting costs is not otherwise impugned by the applicants. I have already found that the first respondent had reasonable grounds for making representations as to its total revenue --- which derived from the proceeds of sale of the fruit crops --- in 2005 (para 13(a)) and as to its costs of production (para 13(b)). 473 On this basis, the first respondent had reasonable grounds for making the representation as to net profit before tax of the fruit crops that would be grown at the orchards during 2005. These factors are equally relevant to the reasonableness of the grounds of the first respondent in making representations as to the range of packout performance forecast in 2005. In my view the first respondent had reasonable grounds for making the representations as to packout performance by the orchards in the 2005 Crop Year. I am not persuaded that the representations were misleading or deceptive for the reasons referred to in paras 19(d)-(g). In my view it is irrelevant whether the representations were made to Mr Tracy personally, or to the first applicant through Mr Tracy. I consider that the respondents appropriately and effectively did so. This is not an issue which was raised by the applicants, and indeed as Allsop J observed in Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 171 at [627] it does not follow that any statement in any commercial context which can be characterised as a promise must be accompanied by any existing legal or factual qualification. I address the issue in the interests of completeness in light of comments in such cases as Wheeler Grace & Pierucci Pty Ltd v Wright (1989) 16 IPR 189 at 201-2, Bowler 153 ALR 95 at 108, Famel Pty Ltd v Burswood Management Ltd (1989) ATPR 40-962 and Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 171 at [627] . 477 First, I accept the submission of the respondents that on numerous occasions Mr Tracy was informed that, because the orchards were an agricultural business, the performance of the orchards was subject to factors beyond the control of the respondents including weather, commodity prices and market issues such as citrus canker. • The overall outcome of the budget forecasts were subject to factors beyond the control of the first respondent including weather and commodity price fluctuations and market access such as issues like citrus canker (Strahley affidavit sworn 12 July 2006 at [69(m)]). On site employee management plays a significant role during the picking and packing process in determining packout rates. 480 Finally, Mr Bailey referred to factors relevant to budgetary forecasts including weather and timing of picking in his valuation report to Mr Tracy. The prices contained for fruit fluctuates depending on the time of harvest and supply and demand pressures existing at the time of marketing. 481 Mr Tracy in his witness statement in reply to the affidavit of Mr Strahley acknowledged that Mr Strahley had informed him of the citrus canker outbreak and its adverse impact on the orchards (Tracy statement in reply to the affidavit of Strahley at [4(c)]) and said that he recalled some discussion with Mr Strahley about market fluctuations and market access (para 4(n)). In relation to Mr Strahley's claim in para 69(t) of his affidavit, Mr Tracy denied having a discussion as deposed to by Mr Strahley, but recalled Mr Strahley telling him that attention to detail was important in relation to the management of the farms (para 4(u)). At the hearing, Mr Tracy acknowledged that there had been discussions with respect to budgetary matters on 3 December 2004, and that Mr Strahley organised a meeting for Mr Tracy with Ms Carolyn Bailey on 20 December 2004 in order for Ms Bailey to explain to Mr Tracy the standard way in which accounts were kept in relation to primary industry (TS 391 ll 21-34, cf Strahley affidavit sworn 12 July 2006 at [106]). 482 In my view Mr Strahley did inform Mr Tracy of factors affecting the overall outcome of the budget forecasts. I consider that Mr Tracy's failure to recall the discussion to which Mr Strahley deposed in para 69(t) of his affidavit of 12 July 2006 other than a general impression that "attention to detail was important in relation to the management of the farms" was due to Mr Tracy's lack of knowledge of the citrus industry and his inability to appreciate the importance of what was being told to him at the meeting of 3 December 2004. It was clear that, for example, Mr Tracy recalled Mr Strahley informing him that the timing of picking was weather-dependent (for example, TS 344 ll 13-16), and indeed there was a clause in the contract of sale in relation to risk of weather. Further, and in any event, it is clear that Mr Tracy was informed by Mr Bailey of the impact of seasonal conditions on economic performance of the orchards. 483 Second, in addition to informing Mr Tracy of factors affecting the budgetary forecasts including weather, the first respondent qualified the representations in the 2005 Sunstate Budget.xls by providing Mr Tracy with subsequent budgetary information, namely the Yield Summary.xls (provided on 20 December 2004), the Carton Yield Summary.xls (provided on 21 December 2004), the Valuation Yield Summary.xls (provided on 21 December 2004) and the Production Pricing Schedule Jan 05.xls (provided on 6 January 2005). This subsequent information is the subject of separate claims by the applicants. I now turn to those separate claims. I will utilize this information within the reforecast. • The respondents claimed that they had a reasonable basis for making the predictions in the Yield Summary.xls because they took into account historical data, physical inspection of the trees, current cultural practices, previous yields, and consideration of factors such as disease and weather conditions. However having regard to the evidence of Mr Breed and Mr Strahley and the considerations referred to in relation to the 2005 Sunstate Budget.xls, there could not possibly have been a reasonable basis for the making of those predictions. On the first page the data is described as "Yield Forecast 3 Years Historical 7 Years" with separate tables for Bundaberg and Tiaro; on the second page the data is described as "Combined Orchards". Both pages describe actual yields between 1998 and 2004, and estimated yields for 2005, 2006 and 2007. The three figures found in para 14 Further Amended Statement of Claim are on the second page of the Yield Summary.xls under "Combined Orchards". I had the orchards guys revisit their yields estimates on the weekend. 491 A "representation" includes a statement made by a representor to a representee and relating by way of affirmation, denial, description or otherwise to a matter of fact ( Halsbury's Law of England , 4th ed vol 31 para 703, cf Given v Pryor (1979) 24 ALR 442 at 446). In this case the representation made by the first respondent through Mr Strahley is that the yield data (a) were produced by the field staff and (b) Mr Strahley would use the data in reforecasting the yield figures which he would later provide to Mr Tracy. It is not, in my view, an unqualified representation as to the yield figures, upon which the applicants could rely as against the first respondent. At its highest, the data is field information, which appears to have been provided for the information of Mr Tracy, but which was subject to review by Mr Strahley. 492 However if I am wrong in relation to this finding, and the provision of the Yield Summary.xls does constitute a representation to the applicants as claimed in paras 14(b), (c) and (d), I nonetheless consider that the first respondent has discharged its onus of proving that it made the representations as to yields in 2005, 2006 and 2007 on reasonable grounds. • Although the estimates for 2006 and 2007 were in excess of yield achieved in previous years, I accept that the basis of the forecast was that the first respondent took into account historical data, physical inspection of the trees, current cultural practices, previous yields, and factors such as disease and weather conditions. I consider my earlier analysis of yield issues in relation to the 2005 Sunstate Budget.xls applicable to the applicants' claim in para 14(b), (c) and (d). • The claim of the applicants in paras 19(i), (j) and (k) as to the "true position" are not substantiated. I will deal specifically with the claims in para 19 in more detail later in the judgment. 493 This is not a case where there is no adequate foundation for optimistic predictions of future production. In my view the claims of the applicants in paras 14(b), (c) and (d) are not substantiated. • The cartons predicted in the Sunstate Budget were 271,728 whereas the actual cartons produced by the orchards historically were 2001-110,079; 2002-91,447; 2003-214,882; 2004-132,526. • The respondents' claim that the prediction was reasonable because in making it they took into account historical data, physical inspection of the trees, current cultural practices, previous yields, and consideration of factors such as disease and weather conditions could not stand for the reasons the applicants advanced for the earlier future predictions. • The Carton Yield Summary did contain a representation that the land would yield 271,728 packed cartons of fruit. • The email qualified the forecast by informing Mr Tracy that yields were budgeted figures and that Mr Tracy should bear in mind that as per all agricultural practices the forecasts were subject to the weather and timing of picking. • The yield of 14,075 bins was qualified by the same qualifications applying to the Yield Summary. • The Valuation Yield Summary was an estimate for the 2005 Crop Year of the number of cartons of fruit of 262,278 with historical numbers of cartons and budgeted average prices per carton for each fruit variety. • The bin yield in the Valuation Yield Summary had been revised from the 2005 Sunstate Budget and the forecast number of cartons to be packed was reduced from the 2005 Sunstate Budget. • For reasons already given in relation to earlier predictions and in the context of the submissions as to the Yield Summary allegations these forecasts were made on reasonable grounds. Bear in mind as per all agriculture industries these are subject to the weather and timing of picking & packing. 500 The Valuation Yield Summary.xls (exhibit A21) is a one page document with records of prices and cartons of fruit in the 2001/2002, 2002/2003 and 2003/2004 years, and estimated prices and cartons for fruit in 2004/2005. The estimated cartonnage for 2004/2005 was 262,278 cartons. HTW should ask for them before including them as a crop component in the valuation. 501 While the respondents are correct in submitting that the Valuation Yield Summary 2004.xls did not refer to yields for bins but only cartons, it is clear that the Carton Yield Summary 2004.xls referred to both bins and cartons. Further, the fact that Mr Strahley suggested in his email that the data be provided to the HTW for valuation purposes indicates that the first respondent, through Mr Strahley, was representing the accuracy of the data in the Valuation Yield Summary.xls. 503 However, the first respondent clearly qualified the forecasts as to both yields and cartons in the Carton Yield Summary.xls by reference to weather and timing of picking and packing. These documents also clearly represented a revision of earlier production forecasts. 504 I consider the first respondent had reasonable grounds for making the representations in the Valuation Yield Summary.xls and the Carton Yield Summary.xls for the same reasons I have already discussed earlier in this judgment with respect to the 2005 Sunstate Budget.xls and the Yield Summary.xls. 505 Further, I do not consider the claims of the applicants in paras 19(l) and (m) as to the "true position" are substantiated. The representation referred to in sub-paragraph ( g f ) was oral and was made by the First Respondent, by the Third Respondent, to the First and Second Applicants in a conversation between the Third Respondent and the Second Applicant that took place on 5 January 2005 at the First Respondent's shed. The representations referred to in sub-paragraphs (a)-( f e ) were in writing and are contained in a document entitled 'Most Likely Scenario' which was authored by the First Respondent, by the Third Respondent, and provided to the First and Second Applicants on 5 January 2005 at the First Respondent's shed. They are, regrettably, scattered through the 128 pages of the applicants' written submissions with little explanation as to the reason for such fragmentation. Further there is considerable cross-referencing of material within the written submissions without indexing or other identification of the material to which cross-referencing is made. Paragraph 1 of that material state, without further precision, "For the reasons stated earlier there is no reliable evidence before the Court which could support a finding that Mr Tracy was the author of the Most Likely Scenario". • Page 61 under the heading "THE APPLICANTS' DUE DILIGENCE" the applicants submitted "For the reasons stated earlier in relation to Mr Breed there is no reliable evidence before the Court to support a finding that Mr Tracy was the author of the Most Likely Scenario". • Page 55, where in para 16 under the heading "FAILURE TO CALL MR BREED" there is oblique reference to the Most Likely Scenario document in the context of the conversation between Mr Tracy and Mr Breed. • Page 82 under the heading "No 19 WAS THE REPRESENTATION MADE BY Ex39 MISLEADING OR DECEPTIVE OR LIKELY TO MISLEAD OR DECEIVE OR FALSE OR MISLEADING IN RELATION TO THE ORCHARDS? ", the applicants submitted that "the evidence concerning the Tracy-Breed meeting and the effect of the failure to produce Mr Breed for cross-examination have been dealt with earlier". Accordingly, if the Court finds that the representations were made they are deemed to have been misleading or deceptive under s 51A. • The respondents failed to call Mr Breed as a witness, presumably because such cross-examination would not have assisted the respondents' case. It follows that Mr Tracy's version of the conversation with Mr Breed in relation to the production of the Most Likely Scenario document should be accepted. • The data summary document to which the respondents refer in their submissions, and which was part of the Most Likely Scenario, was a worksheet within the 2005 Budget.xls provided to Mr Tracy on 10 December 2004 and provided in turn by Mr Tracy to Mr Bailey on 4 January 2005. However although the worksheet from the 2005 Budget was in Mr Tracy's computer on 4 January 2005, this does not establish that the Most Likely Scenario was in Mr Tracy's computer on 4 January 2005. • Reference to pp 68-69 of the Most Likely Scenario shows the changes in bin numbers made by Mr Breed on 5 January 2005, which proves conclusively that the analysis of Mr Lytras was wrong. • In relation to this issue the respondents demonstrate "once again ... a superficial and glossed approach to the submissions...". • The evidence demonstrated that on 4 January 2005 Mr Tracy had emailed to Mr Bailey three documents, namely the Carton Yield Summary, the Yield Summary and a Data Summary. • Mr Lytras' second affidavit established that the Most Likely Scenario was in Mr Tracy's computer on 4 January 2005 as he produced the same document to Mr Bailey, being the "data summary" on that date for the purposes of undertaking his valuation. • This was consistent with the sworn affidavit of Mr Breed that he did not create the Most Likely Scenario. o Mr Breed was operating the computer as he had a working knowledge of the budget model. o Mr Breed was operating the computer to input the various scenarios of Mr Tracy. o The events of 5 January 2005, on Mr Tracy's case, involved Mr Tracy asking Mr Breed for assistance for his own purposes in assessing a variety of scenarios. Whatever occurred on that day relating to Mr Tracy's laptop computer and the analysis of different scenarios had nothing to do with a farm manager's authority to perform the functions which he had as a farm manager. There was no interest for the first respondent in the development of these scenarios, or any evidence that Mr Strahley approved of them. o Mr Breed had made it plain that he had no authority to provide any external person with farm information, in particular financial information in relation to the first respondent's conduct of the orchard. This was acknowledged by the applicants at para 4 on pp 17-18 of the Applicants' Written Submissions. • On the laptop was the 2005 Sunstate Budget provided earlier to him by Mr Strahley. • He asked Mr Breed to consider a number of scenarios as to the trading results for the period January 2005-December 2005 based on the 2005 Sunstate Budget supplied by Mr Strahley. • The scenarios were titled "brilliant", "optimistic", "most likely" and "worst case". • The spreadsheets were extremely complex linking to multiple source data worksheets and he did not have the familiarity or technical competence to efficiently operate these spreadsheets. • He began making some alterations to the spreadsheets based on what Mr Breed was telling him however he soon realised that he was not capable of efficiently dealing with the data, so he turned his laptop around so that Mr Breed could make the changes to the spreadsheets Mr Breed said were necessary for the various scenarios. • Mr Breed checked Mr Tracy's limited input before completing spreadsheets for each scenario, and Mr Tracy made no alterations to the spreadsheets once completed. • Mr Breed was the author of the various scenarios although the spreadsheets were saved on Mr Tracy's laptop computer. • Mr Breed used Mr Tracy's laptop to create each of the trading scenarios. • The process began by Mr Breed looking at the separate elements of the spreadsheet increasing or reducing certain inputs and then calculating the trading result for that scenario. • Mr Tracy's reason for asking Mr Breed to undertake the exercise was that he wanted the view of "the man on the ground" concerning the accuracy of the 2005 Budget that had been provided to him by Mr Strahley. • When Mr Breed calculated the Most Likely Scenario he reduced the number of bins that were stated in the 2005 budget from 14,241 to 13,208, changed the picking times slightly, increased the expenses slightly and slightly reduced the costs of the bin harvest. Mr Breed did not reduce any of the packout rates but instead increased two of them slightly. • As Mr Breed undertook the other calculations he changed other variables but mainly prices obtained for the fruit to arrive at the different scenarios. 514 The only other evidence of the events of 5 January 2005 was that of Mr Breed in his affidavit sworn 14 July 2006. I have already found that, in the circumstances, little weight can be attributed to Mr Breed's affidavit. I note however that, in many respects, Mr Breed's evidence of the events of 5 January 2005 was similar to that of Mr Tracy with the critical distinctions being that Mr Breed claimed that Mr Tracy had authored the Most Likely Scenario, that Mr Tracy had performed all the calculations and entered most of the data, and that Mr Breed was in a subordinate role to Mr Tracy in relation to creation of these documents. Did Mr Breed have authority to make representations to Mr Tracy? 516 It is clear that Mr Strahley, as managing director of the parent company of the first respondent, and also as an executive director of the first respondent itself, had actual authority on behalf of the first respondent to make representations binding the first respondent in the transaction with Mr Tracy. Mr Strahley was also clearly the primary contact of Mr Tracy in the purchase transaction, particularly with respect to budgetary and financial information. Further, the evidence is that, after contracts had been exchanged, Mr Strahley had given Mr Palfreeman the responsibility of communicating with Mr Tracy until settlement, which included communicating with the Packing Shed any request for information from Mr Tracy, and to that extent Mr Palfreeman would have had actual authority to provide Mr Tracy with information (TS 1114 ll 17-19, 1231 ll 30-31). These issues are not in dispute. 517 In relation to Mr Breed, the respondents admitted in para 3(2) of the Defence that Mr Breed acted as agent of the first respondent within the scope of his employment. Mr Breed was the farm manager of the first respondent. That does not necessarily mean that Mr Breed had authority to make representations binding the first respondent in relation to budgetary and financial issues. The key question is whether Mr Breed's authority extended to making such binding representations, or whether the conduct of the first respondent had clothed Mr Breed with such authority by way of apparent or ostensible authority. 518 To the extent that there was a hierarchy in the first respondent's management structure, the evidence is that Mr Breed was a senior member of the management team to whom other staff at the orchards, including Mr Burns, reported. In describing the communication protocol at the orchards Mr Strahley explained that the employees communicated with the farm manager, who in turn communicated with him (Strahley affidavit sworn 12 July 2006 at [20]). (Breed affidavit sworn 14 July 2006 at [5]). However the respondents' position is that Mr Breed had no authority as farm manager to provide any external person with farm information and, in particular, financial information as to the first respondent's conduct of the orchard. Indeed the respondents point to evidence of Mr Neubecker that on one occasion Mr Breed had been unwilling to provide unqualified information without first confirming the information with Mr Strahley (TS 853 ll 42-47). 521 While Mr Breed's primary functions appear to have been to manage the relevant properties and to report to Mr Strahley in relation to the operational matters involving the properties, such evidence as is before the Court demonstrates that, even if he did not have actual authority to do so, in practice Mr Breed was armed with the appearance of authority to speak to third parties in relation to financial matters on behalf of the first respondent without Mr Strahley's express prior consent. Mr Bailey said that he understood that Mr Breed was the person on behalf of Sunstate whom he should contact in order to obtain, from the first respondent's perspective, relevant production information, and that he further understood that Mr Breed was authorised to provide such information. • During cross-examination Mr Strahley agreed that "Mr Breed was, in terms of his position, the source of information from the farm to [Mr Strahley], or indeed, from the farm to Tracy, whether directly or through [Mr Strahley]" (TS 1015 ll 21-23). • During negotiations the first respondent gave Mr Tracy access to the Packing Shed where he had discussions with, inter alia , Mr Breed (TS 1226 ll 7-9, Strahley affidavit sworn 12 July 2006 at [219(c)]). It is clear that Mr Breed had numerous communications with Mr Tracy during which Mr Breed provided Mr Tracy directly with data (for example, email from Breed to Tracy on 6 January 2005 exhibit A37; email from Breed to Tracy on 14 January 2005 exhibit A39). There is no evidence that the first respondent limited Mr Breed's discussions with Mr Tracy during the negotiation period --- indeed the first respondent appeared generous in allowing Mr Tracy access to Mr Breed in the course of his duties. • Mr Strahley communicated with Mr Tracy through Mr Breed on at least one occasion (Strahley affidavit sworn 12 July 2006 at [165]). • Mr Breed was in communication with and provided confidential price information to third party fruit wholesalers for their comment, which comment was then forwarded to Mr Tracy (Strahley affidavit sworn 12 July 2006 at [253]). 522 In relation to the meeting of 5 January 2005 between Mr Tracy and Mr Breed, Mr Tracy did not give evidence as to how the meeting was arranged, however I infer that it was arranged by Mr Tracy contacting Mr Breed and arranging to meet him at the orchards. This is consistent with Mr Breed's affidavit (para 30). The evidence was that Mr Strahley was absent on leave at that time. 523 The next question however is whether the first respondent, through Mr Breed, made the representations claimed by the applicants in para 16 Further Amended Statement of Claim. Was Mr Breed the author of the Most Likely Scenario? In his affidavit Mr Bailey deposed that on 4 January 2005 Mr Tracy had emailed him three documents for the purposes of Mr Bailey undertaking a valuation of the relevant properties. Those documents were the Carton Yield Summary.xls, Yield Summary.xls, and "data summary.xls". It does not appear to be in dispute that the document "data summary.xls" was an extract of approximately 22 pages from the 2005 Sunstate Budget.xls. 525 Mr Lytras, the forensic accounting expert called by the respondents, gave evidence that the numbers in the data summary.xls were exactly the same as those in the "Data" worksheet of the Most Likely Scenario document (Lytras second affidavit sworn 11 May 2007). This evidence was not challenged by the applicants. On that basis it is clear that the material in the data.summary.xls forms a foundation of the calculations in the Most Likely Scenario document. 526 The key issue in relation to this claim is whether this evidence means that the Most Likely Scenario was already in Mr Tracy's laptop computer prior to his meeting with Mr Breed. The respondents say that Mr Lytras' evidence establishes that this was the case. 527 The fact that the basis of the Most Likely Scenario was the data summary which Mr Tracy already had prior to the meeting with Mr Breed does not automatically establish that he had already created the Most Likely Scenario prior to 5 January 2005. However in my view, the evidence supports the respondents' submissions that Mr Tracy both initiated the creation of the Most Likely Scenario, and was the "author" of that document. He clearly considered this data of such importance that he had forwarded it to Mr Bailey on 4 January 2005 as reference material for Mr Bailey's valuation. Accordingly, by 4 January 2005 (prior to his meeting with Mr Breed) Mr Tracy was clearly focusing on that data, and in a position to manipulate the material in the data summary.xls to create the various scenarios including the Most Likely Scenario. • However in any event Mr Tracy's own evidence demonstrates that he created the Most Likely Scenario rather than Mr Breed. Mr Tracy had brought his laptop to the meeting, and he deposed that he asked Mr Breed to consider a number of scenarios which Mr Tracy had already created , including one titled the Most Likely Scenario. Mr Tracy asked Mr Breed to assist him because the spreadsheets were complex and Mr Tracy was not familiar with them. The concept of the Most Likely Scenario was conceived by Mr Tracy, its data set was provided by Mr Tracy, and his own evidence demonstrates that he drew Mr Breed in to assist him in the technical task of completing the various scenarios to his (Mr Tracy's) satisfaction. The author of the Most Likely Scenario was Mr Tracy, not Mr Breed (cf observations of Morling J in Crocker v Papunya Tula Artists Pty Ltd (1985) 61 ALR 529 at 531, and discussion in S Ricketson The Law of Intellectual Property: Copyright, Designs & Confidential Information (2nd ed, looseleaf) Lawbook Co 2002, para 7.45). • Although little weight can be attributed to Mr Breed's evidence, his evidence is that Mr Tracy created the Most Likely Scenario and Mr Breed assisted Mr Tracy. Did Mr Breed represent the Most Likely Scenario to be the "most accurate prediction" of the yield in 2005? I have already noted in this judgment the caution with which courts approach serious difficulties of proof of oral or partly oral conduct in the absence of some reliable contemporaneous record or other satisfactory corroboration ( Watson (1995) NSWLR 315 at 319). The only evidence of Mr Breed's oral representation was the evidence of Mr Tracy, who had visited Mr Breed with apparently pre-conceived ideas as to, inter alia , the "most likely" scenario for 2005, and who had recruited Mr Breed's assistance in entering the data to produce these scenarios. While I do not doubt Mr Tracy's honesty, in my view it is likely that Mr Tracy satisfied himself of the various scenarios and considered those scenarios vindicated by the assistance Mr Breed provided him in producing them. • Although the respondents pleaded that the pricing predictions were reasonable because they were obtained from third parties, this evidence cannot stand against the evidence of Mr Strahley and Mr Burns as to the pricing outlook and as to the continuous decline in citrus prices that had been experienced since 2002. • Exhibit A93, a position report from April/May 2004, disclosed that the first respondent held the view that the price decreases would continue. Please let me know if I can help with anything else. Thanks for the day yesterday and hope you had a safe trip. 537 The Production Pricing Schedule.xls was a document of five pages, with pages headed "Lemon Pricing Schedule Season 2005", "Imperial Pricing Schedule Season 2005", "Nova Pricing Schedule Season 2005", "Ellenor Pricing Schedule Season 2005", and "Murcott Pricing Schedule Season 2005". Each page featured a small chart, by reference to months in 2005, and forecast information including bins picked, cartons packed, class 1 and class 2 fruit, sales, and average carton prices. 538 In my view the first respondent did not make the representations alleged by the applicants. Further, even if representations as to forecast prices were made by the first respondent the first respondent had reasonable grounds for doing so. The Production Pricing Schedule.xls was limited to specific fruit varieties specified in the report, and was not a representation as to all the fruit crops grown on the orchards including limes, mangoes or oranges. Accordingly, it could not constitute a representation as to the total yield of the orchards or the gross proceeds of the fruit crops that would be grown on the orchards. • The data in the Production Pricing Schedule.xls was clearly qualified. It was described by Mr Breed as "pricing assumption data on the main varieties. " It was clearly not an unqualified prediction of performance of price, or anything else including packout rates or yield. • The Production Pricing Schedule.xls contained no record of packout rates as claimed in para 17(e). • I agree with the submission of the respondents that the revenue and prices were qualified on 7 January 2005 when Mr Tracy was provided with an updated pricing schedule in relation to the pricing of lemons obtained from the fruit wholesaler Carter and Spence, and with a comment in the email from Sculli's that prices for lemons would be good for the season. • In any event I consider representations by the first respondent as to price were made on reasonable grounds for the same reasons I outlined earlier in this judgment with respect to para 13 Further Amended Statement of Claim. 539 Further, the claim of the applicants in paras 19(t)-(x) as to the "true position" are not substantiated. Throughout this judgment I have referred to para 19 in the context of the individual claims in paras 11-17. It is important that the claims of para 19 be specifically addressed, and I do so now. The claims in paras 17A(c) and (d) were not pressed by the applicants in their submissions. I found that the claims in paras 17A(a) and (e) were not substantiated. 545 There is also considerable cross-referencing between each of the sub-paragraphs in para 19 as well as back to paras 11-17. 546 I have already dealt with the historical representations of the respondents, in relation to which the Packing Shed records were clearly of particular relevance. 547 Further, as I have already explained, historical information in the Packing Shed records was of more limited assistance in relation to future representations than historical representations because historical performance is only one factor in assessing whether a representation as to a future matter is reasonable. Did the first respondent and Mr Strahley attempt to destroy the Packing Shed records? I deal with this matter only because Mr Bell QC for the respondents submitted that these particular accusations have "hung over the head" of the respondents, in particular that of Mr Strahley, and because the first respondent is a public company with reporting obligations. 550 As I mentioned earlier in this judgment, no reliable evidence was produced in support of the allegation that the first respondent and Mr Strahley had ordered the destruction, or otherwise attempted to damage or destroy, the Packing Shed records to prevent the applicants accessing them. Mr Tracy claimed that he was told by Mr Breed and Mr Devenny that Mr Palfreeman and another person attempted to delete all of the data files from the computers. A statement purporting to be that of Mr Devenny was filed by the applicants on 30 June 2006, however as it is unsigned no weight can be attributed to it. Mr Palfreeman deposed further that he complied with these instructions. 552 It is not surprising that this accusation was not pursued in the pleadings. I noted that this concern lead Mr Strahley to withhold from Mr Tracy the Historical Packouts 2004.xls document prepared by Mr Breed, and to produce instead the Block Summary data as an accurate summary of historical data. 554 The claims of the applicants in the Further Amended Statement of Claim that the conduct of the respondents was misleading or deceptive relied heavily on the respondents' alleged knowledge of the "true" historical position the applicants specifically identified throughout para 19. 555 There are however significant difficulties associated with the applicants' position in respect of these figures. 556 First, a key difficulty is that, unlike the respondents who in defending this action have relied on material which they have clearly identified as evidence, and which is available to be scrutinised by the Court, the applicants have not clearly identified the source of the material which they claim to represent the "true facts" as I have set out above, other than to allege that this material is from "the Packing Shed records". Mr Tracy during cross-examination said that, in the Further Amended Statement of Claim, he had articulated the numbers which, in his opinion , were correct (TS 353 ll 27-31). However in identifying the source material for this claim, the applicants in their submissions barely take their case beyond the claim as set out in para 19 Further Amended Statement of Claim. This is of particular concern in light of the fact that the onus lies with the applicants to make their case under ss 52 and 53A . 557 Second, to the extent that the applicants have based their claims in para 19, and in paras 11-17 on facts stated in para 19, on the findings of Mr Green in his expert report, I consider such claims flawed. The only finding in Mr Green's expert report I can identify as relevant to historical production of the orchards was in relation to the "Actual Weighted Average Pack-out Rate" of fruit over the period 2001-2004. In my view however Mr Green's finding with respect to this issue was flawed because of the nature of his instructions. "sstrnd-nosgara.xls" supplied on 21 December 2004 (paragraph 40 of the Tracy Statement). Indeed, Mr Green did not list the Packing Shed computer records in his source documentation. I agree with the criticisms to this approach by the respondents' expert forensic accountant, Mr Lytras (Lytras expert report at [11.82]). • In calculating average packout figures, Mr Green appeared to rely upon a "Historical Production Schedule" apparently created by Mr Breed and provided by him to Mr Tracy in June 2005 by email. This in itself causes concern as any qualifications arising from the use of that document are neither identified nor explained by Mr Green. • It became clear during cross-examination of Mr Tracy that the "Historical Production Schedule" to which Mr Green had reference in preparing his expert report was identical to a document in Mr Breed's affidavit, which Mr Tracy agreed had been prepared by Mr Breed after Mr Tracy had directed Mr Breed to remove from the calculations all fruit which had been placed in "hat bins" (TS 281 ll 33-44). The respondents submitted that this produced a distortion in the packout rates, and consequently a distortion in Mr Green's analysis of the historical packout rates achieved by the respondents. I agree with that submission. 558 Third, the unchallenged evidence of Mr Lytras was that the information derived from the Packing Shed records, which were annexed to Mr Lytras' expert report, was at material variance with the claims made by the applicants in paras 19(a),(b), (d), (g), (h) and (m) Further Amended Statement of Claim (Lytras expert report at [2.1]). Mr Lytras clearly based his report on underlying source documents provided to him, and annexed to his report. I agree with Mr Lytras' comments in his expert report criticising the basis of Mr Green's analysis in that it was not based on underlying source documents. Indeed I note that Mr Green in his letter of 16 October 2006 (annexed to his statement sworn 17 October 2006) acknowledged the issue that his calculations as to historical performance was based on the model prepared by Mr Breed, but stated further that this issue was a matter for trial. 559 On the basis that Mr Lytras based his opinions on information derived from the Packing Shed records, I prefer Mr Lytras' evidence to that of Mr Green in relation to historical performance of the relevant properties. 560 (With respect to Mr Lytras' evidence, although early in the proceedings the applicants signalled that they would have objections to Mr Lytras' affidavit and expert report (TS 4), no objections were made in the written submissions of the applicants to that evidence following my direction that outstanding objections be addressed in written submissions. No further objections to Mr Lytras' affidavit and report were not raised at any time later in the trial by the applicants. How do you explain the difference? " That didn't happen. I was --- where did all that go? Where did all this --- the lie, the big lie about all would be revealed in the Packing Shed records. Where did it go to? 563 In my view the claims of the applicants in para 19 are not substantiated. It follows that, to the extent that the claims of the applicants in paras 11-17 Further Amended Statement of Claim rely on the claims of the applicants in para 19, the claims in paras 11-17 similarly cannot be substantiated. The conduct of the respondents, so far as the applicants have established it, was not misleading or deceptive or likely to mislead or deceive within the meaning of s 52 Trade Practices Act . No representations as to future matters made by the respondents, to the extent to which the applicants have substantiated representations made by the respondents, were misleading or deceptive within the meaning of s 51A Trade Practices Act . In the absence of submissions with respect to s 53A , and in light of my findings with respect to s 52 , I also consider that the facts do not support any cause of action based on s 53A Trade Practices Act . 565 The appropriate order is therefore to dismiss the applicant's Amended Application. 567 I make such comments in the event that I have erred in my findings that the respondents had not acted in breach of the Trade Practices Act in relation to claims pleaded by the applicants in the Further Amended Statement of Claim. The common theme of these actions was the acquisition of the relevant properties from the first respondent. All actions listed in para 18 related to that purchase transaction and the decision of Mr Tracy (who, as I have already noted, was the directing mind and will of the first and third applicants) to enter that transaction. 569 As Mason CJ observed in Wardley Australia Ltd v Western Australia [1992] HCA 55 ; (1992) 175 CLR 514 at 525, the statutory cause of action for which s 82(1) Trade Practices Act provides arises when the applicant suffers loss of damage "by" contravening conduct of another person. Section 82(1) clearly comprehends the common law concept of causation. 570 It is clear that the contravening conduct need not be the sole inducement in sustaining the loss ( Gould v Vaggelas [1985] HCA 85 ; (1985) 157 CLR 215 ; National Australia Bank Ltd v Cunningham [1990] FCA 310 at [6] , Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd [1993] FCA 99 ; (1993) 41 FCR 229 at 233, Elitegold Pty Limited v CM Holdings Pty Ltd , Australia Fair Shopping Centres Pty Limited and CM Developments (Qld) Pty Ltd [1995] FCA 1336 at [49] ) although it is necessary that the contravening conduct had a substantial rather than a negligible effect ( Como Investments Pty Ltd (in liq) v Yenald Nominees Pty Ltd (1997) 19 ATPR 41---550 at 43,619; McHugh J in Henville v Walker [2001] HCA 52 ; (2001) 206 CLR 459 at 494). 571 Further, it is not fatal to a claim of reliance that the applicant does not give express and direct evidence of reliance : see analysis of Lindgren J in MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313 at 358 and observations of the Full Court in Amadio Pty Ltd v Henderson (1998) 81 FCR 149 at 245-246. 572 However, where it appears that the applicant had knowledge of the true facts by the time it allegedly acted on the impugned conduct, it is clearly much more difficult for the applicant to demonstrate reliance on such conduct: cf Rumpe v Camrol Pty Ltd [1985] FCA 5 , McMahon v Pomeray Pty Ltd [1991] FCA 289. Similarly, where the applicant makes its own inquiries or retained its own advisers to ascertain the true position there is some authority that reliance on the impugned conduct is negated: cf The Australian William E Simon Graduate School of Business Administration Incorporated v Minister Administering the National Parks and Wildlife Act 1974 (NSW) (1994) 51 FCR 243. 573 In my view the evidence demonstrates that Mr Tracy, and through him the first and third applicants, were determined to purchase the properties from an early date, and did not rely on the representations in paras 11-17A Further Amended Statement of Claim to enter the transaction to acquire the relevant properties or any transaction associated with that purchase. The email of 6 December 2004. 2. Mr Tracy's knowledge of the history of the orchards. 3. Mr Tracy's conduct of the due diligence. 4. Mr Tracy's lack of experience in relation to citrus. 1. Time is of the essence in this matter and we would appreciate your timely response. 577 The claims of the applicants in paras 17A(a), (b), (e) and (f) were to varying degrees referable to the period up prior 6 December 2004. 578 However as at 6 December 2004 Mr Tracy had not been provided with documents referable to the applicants' claims in paras 13, 14, 15, 16, 17, 17A(f)-(k), and (to varying degrees) 17A(b) and (f). 579 Leaving aside for the moment the question whether Mr Tracy and the first and third applicants relied at all on the conduct of the respondents in relation to the acquisition of the relevant properties and related transactions, the inference may be drawn that, in light of the conduct of Mr Tracy in offering to acquire the relevant properties on the terms he proposed on 6 December 2004, neither he, nor the first and third applicants through him, relied on the conduct of the respondents as claimed in paras 13, 14, 15, 16, 17, 17A(f)-(k), and (to varying degrees) 17A(b) and (f) in deciding to purchase the relevant properties. 580 The applicants submitted that the email from Mr Tracy to Mr Douglas constituted only an invitation to treat rather than a legally enforceable final offer to purchase the orchards and the shed, and that this was clear because the email specified that any purchase was expressed to be subject to due diligence. 581 Whether or not the offer by Mr Tracy was a legally enforceable offer to purchase the relevant properties is an issue I need not decide. Further, the fact that an offer was made by Mr Tracy on 6 December 2004 was not conclusive --- misleading or deceptive conduct engaged in after entry in contractual relations may nonetheless contravene s 52 (cf Johnson v Eastern Micro Electronics Pty Ltd (1986) 70 ALR 339 at 352). However, that Mr Tracy made such an offer suggests that by 6 December 2004 he had decided to purchase the properties, and that he wished to expedite settlement of the transaction subject to his own due diligence. 2. 583 Further, I consider it significant that Mr Bailey, the valuer engaged by Mr Tracy, valued the properties at the sum paid by Mr Tracy, and no higher . I consider it likely that Mr Tracy simply did not believe Mr Bailey's valuation, and preferred to rely on his own judgment as to the future value of the relevant properties. The evidence is that Mr Tracy did conduct this due diligence himself, without seeking the assistance of experts in the citrus industry, and formed his own conclusions on the basis of that exercise. 585 The applicants submitted that Mr Strahley did not provide Mr Tracy with "the all important financial model" from Mr Strahley's own due diligence folder referable to when the relevant properties were acquired by Hancock, however in my view this is of no relevance. Leaving aside the fact that the failure to provide this document was not the subject of any claim by the applicants, Mr Strahley explained during cross-examination that he did not give Mr Tracy the forecast document which formed part of Hancock's decision to buy the properties because it was "aggressive in its expectations"(TS 973-974). This explanation was reasonable, particularly in light of the significant reforms to the manner in which the orchards had been conducted since the properties were originally acquired by Hancock several years earlier. 4. My capacity to focus on this business rather than, as I think Mr Strahley might have told me at one time, he had so many businesses and he wasn't able to spend enough time on them. In doing so, our greatest pride comes from knowing our clients have assured their future business success. 589 A manifestation of Mr Tracy's determination to acquire the properties in the context of his role as a corporate doctor was reflected in his discussions with Mr Douglas to re-sell the Packing Shed immediately following the signing of the purchase agreement on 17 December 2004 (TS 345, exhibit R26). I consider that Mr Tracy saw the orchards and the Packing Shed as an opportunity for a quick profit (as was clear from his email to a colleague on 16 December 2004 exhibit R22). 5. This was made particularly clear during cross-examination of the respondents' witnesses at the hearing (for example, TS 1091-1092, 1169, 1222). 593 In my view the evidence does not support this premise. The evidence demonstrates that the first respondent, through Mr Strahley, went to significant lengths to provide Mr Tracy with accurate information. I consider that Mr Tracy was a competent and astute businessman who considered his lack of experience in the citrus industry of little importance in relation to this transaction, and who was confident in his own abilities to undertake a due diligence and to profit from the acquisition of the relevant properties. 595 In this case there is meagre evidence of reliance by the applicants on the historical production material in the 1 June 2004 Valuation Report as pleaded in para 11. "Look, what happened, Peter Tracy," - when you're sitting in this room with Mr Lynch --- "is when we were getting a valuation, Strahley was misleading the valuer. He wasn't giving in the information. " That's how you first got onto it obviously, isn't it?---No. It wasn't. I see?---No, it wasn't. Because I knew the bin numbers and the carton numbers of - put forward by the valuer, in the 1 June 2004 valuation, as I recall was the date. That was an important piece of information, in terms of what I relied on, because valuers are proper people and they make proper judgments. 598 I think it unlikely that the representations as to historical performance in 1 June 2004 Valuation Report would have been a factor causing Mr Tracy to enter into the transactions to purchase the relevant properties. The applicants submitted that the material was conveyed to Mr Tracy as a potential purchaser making enquiries about the subject matter of the sale. However I have already found that on or by 3 December 2004 Mr Tracy was provided with the Block Summary data which contained accurate data as to historical production, and that this material was discussed by Mr Tracy and Mr Strahley at the meeting of 3 December 2004. It is difficult to see how, after 3 December 2004, the applicants could show any continuing reliance on the estimates of historical production in the 1 June 2004 Valuation Report. The Block Summary data and other material such as the Yield Summary.xls, produced by the respondents for Mr Tracy, clearly superseded the heavily qualified material in the 1 June 2004 Valuation Report. 599 A further relevant factor with respect to reliance by the applicants on historical production figures in 1 June 2004 Valuation Report is that on 16 December 2004 Mr Tracy procured his own valuation report by Mr Bailey in relation to the relevant properties as part of an arrangement to seek finance for their acquisition. • When the evidence of Mr Bailey is examined it is clear that he simply copied most of the 1 June 2004 Valuation Report into the report he prepared. • The respondents cannot in equity be entitled to rely on either valuation report because the first respondent (through Mr Breed) rendered the reports unreliable by providing grossly inflated packout rates to Mr Neubecker which the respondents knew vastly exceeded actual historical crop performance data. • Even apart from the falsity of packout rates Mr Bailey's report is so unreliable and flawed that the Court should find that its receipt could not possibly be held to affect the question of reliance because, inter alia , information as to 2004 production figures were inaccurate. • Evidence of Mr Bailey reflects badly on his credit. 600 The fact that Mr Bailey's report should contain heavily qualified estimates referable to historical production is surprising given that by January 2005 more accurate material in the form of the Yield Summary and the Block Summary data was clearly available. A comparison of the two valuation reports shows that the material under "Production" in para 7.3 1 June 2004 Valuation Report is identical to that under "Production" in para 7.5 11 January 2005 Valuation Report with the exception of a sentence in para 7.5 which reads "Recent crops were significantly lower due to the effects of citrus canker; and a large percentage of the crop was juiced. " Under cross-examination, Mr Bailey conceded that he used information, including the carton yield data, from the 1 June 2004 Valuation Report in the 11 January 2005 Valuation Report, because that information was available from the work undertaken by Mr Neubecker (TS 824 ll 9-12, ll 29-39, 825 ll 24-31). It is also clear however that Mr Bailey was under pressure from Mr Tracy at the relevant time to expedite production of his valuation report. 601 As the evidence demonstrates, both valuation reports were procured with a view to obtaining finance. It is difficult to identify how, in circumstances where a new valuation report which also addressed historical production data was prepared by another valuer at Mr Tracy's instigation, it could be said that the applicants were relying on the historical data in the 1 June 2004 Valuation Report at the time of the acquisition of the relevant properties. 602 In any event, while Mr Perry SC in cross-examination of Mr Bailey made much of the fact that Mr Bailey's report replicated the historical production figures found in the 1 June 2004 Valuation Report, this replication was in no way directed by the respondents. The fact of duplication of the material was, if anything, an issue between Mr Tracy and Mr Bailey. Mr Tracy organised his own valuation report for his own purposes, by a valuer whose valuation of the relevant properties was, in the end result, very different from that of Mr Neubecker and indeed reflected the price which Mr Tracy had offered to pay. Notwithstanding the fact that the historical production data in the two reports was substantially identical, in my view this does not mean that, in the chain of causation, any original influence on the applicants exerted by the 1 June 2004 Valuation Report in relation to this data remained (contrast, for example, Henjo Investments Pty Ltd (No 1) [1988] FCA 40 ; 39 FCR 546). Indeed as the evidence also demonstrates, Mr Tracy clearly took into account Mr Bailey's report in his decision to purchase the relevant properties (Tracy statement sworn 17 November 2006 at [77], [78]). 604 There is no case against either Mr Strahley or Mr Breed in relation to s 53A. 605 In the Defence, the respondents denied this claim so far as it concerned Mr Strahley. Mr Breed was not represented in these proceedings. 606 Although the applicants do not specifically plead the relevant legislation, in prescribed circumstances s 75B of the Act imposes accessorial liability in relation to certain provision of the Act . If reasonable grounds exist, there will have been no contravention and thus no question of accessorial liability will arise. However, as against the accessorial respondent, the onus will be on the applicant to show the respondent had actual knowledge that • the representation was made and • it was misleading or • the corporation had no reasonable grounds for making it. 609 By way of example the respondents pointed to the allegation regarding the Most Likely Scenario, which the applicants in para 16 pleaded was created by Mr Breed, and submitted that the applicants did not plead that Mr Strahley had actual knowledge of such representations, or that they were misleading, or that there were no reasonable grounds for making the forecasts or predictions. Strahley sent the Applicants the 2005 Budget, Yield Summary.xls, Carton Yield Summary.xls, and Valuation Yield Summary.xls to the Applicants. Breed made the representations about the Most Likely Scenario and the oral representations made on 5 January 2005. 2. Paragraph 20B does not allege actual knowledge by either Mr Strahley or Mr Breed of each alleged representation, that either respondent new each representation was misleading, or that either respondent knew that the first respondent had no reasonable grounds for making the alleged representation as to future matters. The written submissions of the applicants with respect to s 75B constitute an attempt to replead their claims after the hearing has concluded, but in any event continue to fail to address the elements of s 75B as articulated in Yorke v Lucas and Quinlivan . I consider that even if I have erred in my findings that the representations of the first respondent as pleaded in the Further Amended Statement of Claim did not breach ss 51A or 52, the claims of the applicants against Mr Strahley and Mr Breed in respect of accessorial liability failed at the threshold. 613 In these circumstances, it is clear that the first respondent has been successful in the cross-claim against the first applicant and I propose to make the orders sought by the first respondent. 614 In this context however the first respondent has not sought interest to be paid at a specific rate of interest on either damages or the sum of $150,000 claimed, other than interest pursuant to s 51A Federal Court of Australia Act 1976 (Cth). The current rate of interest prescribed under s 47 Supreme Court Act 1995 (Qld) is 10% per annum. No submissions were made by the parties as to an appropriate rate of interest. I consider that the rate of interest of 10% per annum under the Supreme Court Act should be applied. Accordingly I make no orders as to costs pending submissions by the parties. The Amended Application filed 16 February 2006 be dismissed. 2. | misleading or deceptive conduct pursuant to sections 52 and 53a trade practice act 1974 (cth) (the act) sale of citrus orchards multiple alleged representations written and oral representations whether falsity of representations established on evidence whether materiality in inaccuracy of trading figures a relevant consideration silence as misleading or deceptive conduct possibility of employee resigning non-disclosure of management records non-disclosure of internal working documents whether obligation to disclose representations with respect to future matters pursuant to section 51a of the act reversal of onus of proof whether representations made whether reasonable grounds for making representations nature of budgetary forecasts relevance of past performance to reasonableness of future representations accessorial liability pursuant to section 75b of the act test established in yorke v lucas knowledge of the essential elements of contravention adequacy of pleadings whether applicants suffered loss or damage by conduct of respondents pursuant to section 82 of the act authority to bind body corporate pursuant to section 84 of the act whether third respondent's conduct within scope of actual or apparent authority expert agronomist admissibility of expert opinion evidence whether practice direction breached reliance on unidentified third party data existence of basis rule pursuant to section 79 evidence act 1995 (cth) whether expert opinion hearsay relevance of opinion evidence pursuant to sections 55 and 56 evidence act failure of expert to visit property discretion to exclude evidence pursuant to section 135 evidence act weight attributed to expert opinion based on unidentified sources assessment of witness credibility weight of evidence given to witness findings of fact influenced by credit competing evidence by key witnesses failure to call witnesses whether negative inference drawn unsigned statement weight attributed to unsigned statement witness not called clarity of pleadings whether pleadings have sufficient clarity for respondents to meet case interest on damages correct rate of interest owing pursuant to section 51a federal court of australia act 1976 (cth) trade practices trade practices trade practices trade practices trade practices evidence evidence evidence practice and procedure practice and procedure |
The first is that he be given leave to raise two new grounds of appeal relating to matters that were not argued at first instance. The second, that he be given leave to adduce fresh evidence on the appeal. That fresh evidence consists of affidavits by the applicant himself, his then migration agent and a legal practitioner. The orders sought in both cases need to be understood against the background of the nature of an appeal itself. Both parties have taken me to authorities bearing upon this matter. 2 The often quoted observations of the High Court in Coulton v Holcombe [1986] HCA 33 ; (1986) 162 CLR 1 at 7 to 8, loomed large in the respondent Minister's submissions. If it were not so, the main arena for the settlement of disputes would move from the Court of first instance to the appellate Court, tending to reduce the proceedings in the former Court to little more than a preliminary skirmish. The appeal is not a reworking of the trial taking account of such impediments as are thrown up by the judge's finding which alter the landscape. That decision was at the time not one for which an appeal lay to the Migration Review Tribunal. It was, in consequence, made the direct subject of an application under s 39B of the Judiciary Act for relief by way of constitutional writs. The application was dismissed by the Federal Magistrate. The appellant now appeals to this Court impugning the decision of the Federal Magistrate. 5 The two new grounds of appeal sought to be raised were not raised at the hearing before his Honour. The principles governing the grant of leave to argue new grounds are reasonably well settled. Leave should only be granted if it is expedient in the interests of justice to do so. In considering whether it is so in the interests of justice, it is necessary to give some consideration to the merits of the ground proposed, to determine whether they have reasonable prospects of success. Authorities in support of these well known propositions have been collected in a decision of my own, MZWCL v MIMIA [2006] FCA 635 at [35] and [36]. There is one matter which I would give particular attention to in considering the question of leave, and that is in some cases it is not only appropriate but necessary to have regard to the relation of what is now being sought to be done in the appeal to what was done at the trial. 6 The applicant has placed particular reliance, in relation to the grant of leave, upon the majority decision of the Full Court of the Federal Court in NAJT v MIMIA [2005] FCAFC 134 , and particularly upon the factors referred to at [166]. Apart from referring to what are well accepted propositions relating to the prospects of success and whether there was an acceptable explanation of why the grounds were not raised below, those factors deal by and large with issues relating to the efficient conduct of an appeal, whether the issues themselves raised have an importance beyond the case at hand and to prejudice. 7 The one factor upon which particular reliance is placed by the applicant is: what is at stake in a case for the appellant? In the context of this particular visa application, it is said, that if the appellant is not permitted to raise the grounds he wishes to raise, and be given the opportunity to successfully prosecute them, he will not be able to come to Australia at all. Why this particular outcome is said to be inevitable is not the subject of evidence before me. The learned Federal Magistrate erred by holding that under the combined effect of s 66(2)(c) & s 66(3) of the Migration Act 1958 ( 'the Act' ) the Delegate was under no obligation to give written reasons for the decision. These subsections of the Act , s 66(3) in its entirety and a part of s66(2)(c) as relevant should be construed as invalid because they are inconsistent with the Federal Court's and Federal Magistrate Court's power under the Constitution both in its original jurisdiction and its appellate jurisdiction and the principle of the Rule of Law . These subsections protect decisions that are potentially affected by jurisdictional error by allowing reasons not to be disclosed and thus they impede or prevent an applicant from establishing jurisdictional error on the part of the Delegate. I wish to emphasis this. It is an express statutory exemption to an obligation otherwise to give reasons. 10 It is a little difficult to discern from the ground of appeal itself, as enlarged upon in argument what the precise argument is that the applicant appellant will wish to agitate. 11 One possible basis is that the duty to give reasons is so fundamental to the proper conduct of judicial review as to be, in effect, an implication into Ch 3 of the Constitution , and in particular to s 75(v) of the Constitution . The difficulty with that proposition is that it stands in sharp contrast with what has been accepted common law in this country in decisions of the High Court for some time. In Public Service Board of New South Wales v Osmond [1986] HCA 7 ; (1986) 159 CLR 656, the High Court, in the context of State legislation, indicated that at common law a governmental decision-maker had no duty to give reasons for decision. The same proposition was articulated by Stephen J in Salemi v MacKellar (No 2) [1977] HCA 26 ; (1977) 137 CLR 396 at 443 to 4. This time, however, it was stated in the setting of a court exercising federal jurisdiction in relation to a decision under the Migration Act . 12 In light of what I consider to be orthodox law in this country, I do not consider that, if the argument is as I have described it, it has any reasonable prospects of success. An alternative formulation of the argument would seem to be that unless reasons are given, you cannot have procedural fairness. How this is said to ensue is by no means clear, and in any event, it again is inconsistent with decided authority: see Salemi's case above, see also Moradian v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1590 ; (2004) 142 FCR 170 at [26] . 13 In a third alternative explanation of the ground, Mr Silva drew analogy with an approach sometimes evident in judicial decision and well accepted in jurisprudence in England. That is, if a decision-maker does not give reasons, a court can presume that the decision-maker had no good reason, see Padfield v Minister of Agriculture, Fisheries and Food [1968] UKHL 1 ; [1968] AC 997, at 1053 to 1054, 1061 to 1062. That bare proposition clearly is inapplicable even if it could be said to represent Australian law. Here there is an express statutory exemption from a general obligation to give written reasons. To apply the presumption to which I had referred would make a nonsense of that exemption. 14 Mr Silva sought to avoid that inconvenient result by saying that if the decision was infected on its face by jurisdictional error and if no reasons were given, it is assumed there were no good reasons. The absence of reasons in this setting seems to serve no operative purpose given that a jurisdictional error has first to be discerned. 15 In short, however one seeks to package this particular ground of appeal and the constitutional question it raises, I am satisfied that it has no reasonable prospects of success. For that reason, I would not give leave for it to be raised on the appeal. 16 I indicated at the hearing of the notice of motion that the second new ground of appeal sought to be argued will be dealt with at the hearing of the appeal in just over a week's time, at which stage the question of leave and also the merits of the ground itself will be dealt with. 17 Turning now to the second matter, the application to adduce fresh evidence on the appeal, this matter relates to the legitimate expectation the appellant said he entertained of the delegate, such that her not taking a particular course at the hearing amounted to a denial of procedural fairness. 18 The learned Magistrate concluded at paragraph 33 of his reasons that the delegate did not fail to observe a procedure suggested by the relevant public service documentation in question. He equally did not consider that the publication of that document to migration agents and others extended its status or legal effect such that it would constitute a governmental representation which could give rise to legitimate expectations or rights of procedural fairness to all persons affected. Mr Silva, in effect, acknowledged that such was the case. I referred earlier to the nature of an appeal and to the influence it may have upon what one permits to transpire at the appeal when it has not transpired at first instance. This is doubly so where, in a matter such as the present, the very issue was raised. The only evidence sought to be put on was rejected by the Magistrate for reasons I need not enter upon here. The evidence that is now sought to be put on was available at the time but a forensic choice was made by the appellant's then legal representatives not to call evidence. 21 To permit that evidence now to be called, in my view, is to do the very thing that Allsop J in Branir indicated ought not be done. It is to have a reworking of the trial taking account of such impediments as are thrown up by the judge's findings which alter the landscape. I am not, in the circumstances of this matter, prepared to grant the leave that is sought. It seems to me that what is sought is no more than an attempt to retrieve a point that had been raised and was lost. 22 Accordingly, I will refuse leave to adduce the affidavit evidence that is sought. The orders of the Court will be that leave not be granted in relation to ground 1 of the amended notice of appeal. Grounds 4 and 5 of that amended notice of appeal I am informed now, are not being prosecuted. I adjourn consideration of ground 6 to the hearing of the appeal. Secondly, leave will not be granted to adduce fresh evidence on the appeal. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | leave to raise new grounds on appeal not raised at first instance no reasonable prospect of success leave to adduce fresh evidence on appeal issue raised at first instance forensic choice of legal representatives not to adduce available evidence leave refused practice and procedure practice and procedure |
He first arrived in Australia in March 1998 as the holder of a student visa. In August 2000 he unsuccessfully applied for a protection visa. He departed from this country in May 2005. He returned to Australia several months later as the holder of a prospective marriage visa (subclass 300). However, the marriage did not take place. 2 On 7 August 2006 the appellant made a second application for a protection visa. A delegate of the respondent Minister refused that application. In January 2007 the Refugee Review Tribunal ("the Tribunal") affirmed the delegate's decision. On 4 September 2007 Federal Magistrate Riley ordered that an application to review the Tribunal's decision be dismissed. 3 Before the Federal Magistrate the appellant raised three grounds of review, and a fourth issue which her Honour treated as a foreshadowed fourth ground. 5 Before the Tribunal, the appellant claimed that prior to his death in December 1997 his brother had been a lieutenant in the Sri Lankan army. In that capacity he had gained a great deal of information about the Liberation Tigers of Tamil Eelam ("LTTE"), as well as the corruption of certain high-ranking officers who supported the People's Alliance ("PA"), a coalition of political parties opposed to the UNP. The appellant claimed that his brother had been engaged in leaking information about the corruption of PA supporters within the army to the UNP when he was killed by the LTTE. 6 The appellant claimed to have discovered his brother's diaries after his death. He claimed that they contained information about LTTE operations and the corruption of high-ranking officers. He told the Tribunal that he gave some of the diaries to the Sri Lankan authorities and that the information contained in them had been used to arrest LTTE members. 7 According to the appellant he then began to receive threatening telephone calls. He claimed that there had been an attempt by various unknown Tamils to break into his house. He claimed that he had reported the matter to the police, but they had declined to investigate. He said that it was these events which had triggered his initial decision to come to Australia in 1998, and to seek protection thereafter. 8 The appellant told the Tribunal that after his return to Sri Lanka in May 2005 he was once again threatened by the LTTE. He claimed that the LTTE wanted to take revenge upon him for having disclosed their future plans, and having disclosed certain other matters that were recorded in his brother's diaries. 9 The Tribunal rejected the appellant's claims, primarily upon the basis that he lacked credibility. It found his evidence to be vague, evasive and non-responsive. It identified a number of significant inconsistencies between his earlier application for a protection visa and the current application, and between his evidence and the written submissions which he had filed a few days before the hearing. It concluded that these inconsistencies were fundamental, and did not accept that they were the product of faulty recollection. 10 The Tribunal considered the nature of the events leading to the appellant's brother's death, the contents of the diaries that were produced, the various claims of threats, assaults and harassment, the appellant's political affiliation with the UNP, his familial relationship, and his Sinhalese ethnicity. It had regard to country information, and was not satisfied that the appellant had a well-founded fear of persecution. It found that there was no real chance that he would be persecuted in the reasonably foreseeable future for any Convention reason. 11 The Federal Magistrate observed that the Tribunal had rejected the appellant as a credible witness largely because of the significant inconsistencies in the various accounts he had given. Her Honour noted that the Tribunal had found that his brother had been killed by the LTTE because he was a commando engaged in fighting against them, and not for the reasons which he put forward. She noted that the Tribunal had examined those of the brother's diaries that were provided to it and found that they contained no sensitive information about the LTTE, or about corruption amongst officers in the Sri Lankan army. She also noted that the Tribunal had rejected the appellant's claim to have passed on the diaries to the relevant authorities. 12 Her Honour observed that the Tribunal had rejected the appellant's claims to have been threatened by members of the LTTE, and that it had rejected his claim that there had been an attempt to break into his house. 13 Her Honour gave careful consideration to each of the appellant's grounds of review. 14 In relation to ground 1, she found that the Tribunal had considered the matters therein particularised, including the appellant's and his family's political involvement, his membership of a particular social group and his Sinhalese ethnicity. She concluded that, for reasons that were open to the Tribunal, the appellant did not face any risk of persecution for a Convention reason. 15 In relation to ground 2, her Honour rejected the contention that the appellant had been denied natural justice. She found instead that the Tribunal's manner of questioning had been fair and reasonable. In particular, she found that it had fairly alerted the appellant to its doubts and given him numerous opportunities to assuage them. She concluded that the Tribunal had acted lawfully, and within power, when it decided what weight to give to inconsistencies going to credibility. 16 In relation to ground 3, her Honour noted that the particulars set out therein were identical to those set out in grounds 1 and 2. As neither preceding ground was made out, ground 3 also failed. 17 Finally, in relation to proposed ground 4, her Honour rejected the contention that the Tribunal had failed to consider subjective fear in relation to a "well-founded fear of persecution". She concluded that the Tribunal had asked itself the correct question. For that reason she refused what she described as an "implied" application to include this ground as a separate ground of review. 18 The Notice of Appeal to this Court raises essentially the same issues as were raised before the Federal Magistrate, though they are couched in slightly different terms. The learned Federal Magistrate failed to take into consideration that the decision of the Refugee Review Tribunal was rendered invalid by a jurisdictional error made by the Tribunal by and/or identified a wrong issue, asked a wrong question, relied on irrelevant material or ignored relevant material. His political opinion neither his race has been considered by the Tribunal. In particular the previous testimony. The perceived inconsistencies are minor and quite attributable to problems with a person who have suffered persecution. The Tribunal Member has taken into account irrelevant considerations that have denied the Appellant natural justice. The Tribunal failed to review and consider the Application for the purposes of Section 47 , 65 and 414 of the Migration Act 1958 . He was unable to point to any error in her Honour's reasons for judgment, or any jurisdictional error in the Tribunal's reasons for decision. Basically, both before her Honour and before me, he simply sought merits review. 20 In relation to ground 1 of the Notice of Appeal, I am satisfied that the Tribunal considered each of the appellant's express claims, and did so with appropriate care, and without jurisdictional error. I am not persuaded that the Tribunal ignored or failed to consider relevant material submitted by the appellant, namely that he was a Sinhalese, and that both he and his late brother were members of the UNP. I am also not persuaded that the Tribunal failed to consider his "subjective fear". I note the Minister's submission that even if the Tribunal had failed to consider the appellant's "subjective fear", it was entitled to find that any such fear was not "well-founded". 21 In relation to ground 2, I am satisfied that the Tribunal afforded the appellant a reasonable opportunity to respond to adverse material in keeping with its obligations to accord natural justice. It is for the Tribunal, within recognised limits, to make findings as to credit: Re Minister for Immigration & Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1 ; (2000) 168 ALR 407 at [67] . The weight to be given to particular evidence is a matter for the Tribunal. It was open to the Tribunal to reach the conclusions that it did given its observations regarding the demeanour of the appellant, and the inconsistency between the various accounts that he had provided. 22 Ground 3 is devoid of any meaningful content. Nothing further need be said about it. 23 The appeal should be dismissed with costs. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | delegate of respondent minister refused protection visa decision affirmed by refugee review tribunal appeal from orders of federal magistrate dismissing application for review whether tribunal's decision affected by jurisdictional error whether tribunal dealt with all claims made by appellant whether tribunal failed to accord natural justice appellant seeking merits review migration law |
The notice included a statement that the first respondent considered that the grant attracted the expedited procedure under the Act. The proposed exploration licence is some 120.43 km 2 in area and is located 87 km north-west of Newman in the Shire of East Pilbara. The Martu Idja Banyjima People (the native title party) have a registered native title claim which is overlapped by the area of the proposed licence. The Yandi mine, operated by BHP Billiton Limited (BHP) is close to the area of the proposed exploration licence. 2 On 9 November 2005, the appellants, on behalf of the native title party, made an expedited procedure objection application to the National Native Title Tribunal (the Tribunal). They contended that the future act did not comply with any of the three limbs referred to in s 237 of the Act. (Original emphasis. On 20 June 2006, the native title party appealed. The site in question was a site known as the Barimunya site. 6 The relevant evidence relied upon by the native title party before the Tribunal comprised an affidavit sworn by Mr Slim Parker on 17 May 2006 and an affidavit of Mr Tim Parker sworn on the same day. Each of the affidavits annexed a witness statement by the deponent. The appellants also relied on a letter from Ms Fiona Sutherland, an anthropologist, dealing with the cultural heritage significance of the Barimunya site. The Tribunal made a direction under s 155 of the Act that these documents, as well as the statement of contentions of the native title parties, were not to be disclosed. In these reasons I have only referred to those documents to the extent necessary to explain my decision and have not included material which should according to customary law and traditions remain confidential. The Tribunal did not disclose the content of this evidence in its reasons. In his witness statement, Mr Slim Parker also said that the potential interference with the Barimunya site was a major concern when BHP developed the Yandi mine. Mr Parker said he participated with members of the claim group on heritage surveys with BHP to map a boundary for the Barimunya site, and it was agreed with BHP that none of their employees or contractors would go onto the site and that it would be a "no go" area. 8 The native title party also provided to the Tribunal a copy of BHP's "Aboriginal Heritage Induction Handbook" which referred to the Barimunya site. 9 The Tribunal found that the Barimunya site was a site of particular significance to the native title party in accordance with their traditions. The evidence provided by Mr Slim Parker, Mr Timothy Parker and Ms Fiona Sutherland, Anthropologist with Australian Cultural Heritage Management in a letter to Paul Sheiner of 3 April 2006 were the subject of confidentiality orders because of the sensitive nature of the site. In order to comply with the Western Australian Aboriginal Heritage Act, 1972 and the wishes of the heritage custodians BHP Billiton Iron Ore is committed to the management and protection of this site. To ensure this, an area of land surrounding the hills has been made a Designated Area. Part of this area has been fenced and marked with signs marking the Designated Area status. This involved taking into account the grantee party's intention in relation to the protection of Aboriginal heritage sites. In its reasons, the Tribunal drew a distinction between a "buffer zone" surrounding the site and the Barimunya site itself. 11 The Tribunal referred to the statutory protective regime under the Aboriginal Heritage Act 1972 (WA) (the AHA). Section 17 of that Act provides that certain specified conduct in respect of an Aboriginal site, such as damaging or in any way altering the site, is an offence. Section 18 provides for a means of obtaining an exemption from the provisions of s 17 in the prescribed circumstances. The grantee party said that it would comply with its legal obligations under the AHA and would attempt to avoid Aboriginal sites but in the event there was a need to disturb a site, it would pursuant to s 18 make an application through the Aboriginal Cultural Material Committee, for consent to disturb the site. 12 The Tribunal said that the existence of the statutory protective regime and the expressed intention on the part of the grantee party to operate within the statutory regime was not decisive of the question of whether it was not likely there would be a proscribed interference with the Barimunya site under s 237(b) of the Act. What is clear is that the Tribunal is entitled to have regard and give considerable weight to the Government party's site protection regime. This possibility has always been a part of the Government party's regulatory regime which has been considered by the Tribunal and Federal Court in Little . Its importance in deciding whether there is a real risk of interference with sites of particular significance will depend under the predictive assessment approach on all the circumstances. If the evidence were to be that exploration could not be carried out without avoiding sites or that a s 18 application was virtually inevitable then these circumstances would need to be given greater weight. It would still, however, need to be considered in the context of the number of sites, the consultative mechanism in place with the native title party through a heritage survey or otherwise and the attitude of the grantee party to site protection. • The most important part of the DIA delineated site area, the Three Sisters hills, are also within the Innawonga and Bunjima Peoples registered claimant area and any exploration will be the subject of a site survey conducted by them pursuant to the RSHA. • While the grantee party has made application for a mining lease (M47/1360) which appears to be at least partially over the DIA delineated site, suggesting the possibility of future mining in the area, the future act with which the Tribunal is concerned here is an exploration licence only. A proposal to mine will be a separate future act and subject to the right to negotiate provisions of the Act not involving the expedited procedure. • Before making a recommendation to the Minister the ACMC will be aware of the views of the Traditional Owners which will include members of the MIB and Innawonga and Bunjima claim groups. • The agreement of the Traditional Owners with BHP which preceded the development of the Yandi mine recognised the significance of this area and restricted access to it by employees of BHP (Slim Parker affidavit). • The native title party has not been opposed to exploration per se but has not been satisfied with the RSHA adopted by Yamatji. Negotiations have been about the type and cost of a site survey, not about whether a survey should be conducted. I am aware of the contents of the RSHA a copy of which was tendered in this matter (see also findings in Champion at [21]). I can see no reason why the RSHA will not provide for an adequate Aboriginal heritage survey, something with which Yamatji, the native title representative body for the area with a special responsibility for looking after the interests of native title holders and claimants, by its endorsement of the RSHA agrees with. • The grantee party is currently carrying out surveys with MIB and other native title claimants. Other groups have indicated that work programs will not interfere with sites such as the proposed drilling in the Phil's Creek area on E47/1237 which is within the DIA delineated area (see below). (b) The Deputy President failed to consider whether Low Impact Exploration as defined in the Regional Standard Heritage Agreement ( RSHA ) would constitute interference with the Barimunya site or area. (c) The Deputy President failed to consider the particular significance of the Barimunya site or area to the Native Title Party and what might comprise interference with that site in accordance with traditional laws and customs in assessing whether or not there was a real risk of interference with that site or area. In my view, there was no such conflation by the Tribunal. The Tribunal distinguished between the protection that might be afforded to an Aboriginal site by the statutory protective regime under the AHA and the application of the predictive assessment required under s 237(b) of the Act. It found that neither the existence of the statutory protective regime nor the expressed intention of a grantee party to give effect to that regime, was conclusive of the question under s 237(b) of the Act whether the grant of the exploration licence was not likely to interfere with the Barimunya site. The distinction between the protection afforded by the statutory regime, and the application of the predictive assessment required in respect of s 237(b) of the Act, is evidenced by the passages of the Tribunal's reasons referred to at [13] and [14] above. This ground of appeal should be dismissed. 19 I deal with the second and third grounds of appeal together because they are, in my view, related. The appellants contended that the Tribunal did not consider what activities might constitute interference with the Barimunya site by reference to the traditions of the native title party, in determining that it was not likely that the grantee party would interfere with the site. The appellants referred specifically to the evidence that, under the customs of the native title party, it would be "wrong" to walk over or disturb any part of the area without senior members of the claim group. This evidence was given by Mr Slim Parker and was covered by the confidentiality order. The appellants said that the Tribunal made no express finding as to the nature of the activities that would constitute interference with the site under s 237(b) of the Act. It followed, contended the appellants, that, in undertaking the predictive assessment, the Tribunal did not have regard to the sensitivity of the site and, in particular, that even walking on the site in the absence of senior members, would constitute an interference. 20 I am of the view, that although the Tribunal made no express finding as to which activities would constitute "interference" with the site, the Tribunal was aware of, and accepted the evidence of Mr Slim Parker that even walking upon the site in the absence of senior members, would breach the laws and customs of the native title party. In my view, the reason why there is no such express finding is because the Tribunal was reluctant to refer expressly to this part of Mr Slim Parker's evidence because of the sensitivity of this information. This reluctance is evident from the Tribunal's reasons referred to at [6] above and, in particular, the distinction drawn by the Tribunal in its reasons referred to at [9] above, between the fact that the evidence of Mr Slim Parker and others was, because of the sensitivity of the site, confidential, whereas the information in the BHP handbook was "publicly available". Suffice to say that the Barimunya site is a very special traditional place for the native title party. 22 Firstly, the Tribunal referred expressly to the BHP "Aboriginal Heritage Induction Handbook" on the basis that it was "publicly available" information about the site, and chose to quote verbatim from that part of the handbook which referred to the site being "fenced off and marked with signs marking the Designated Area status". The reference to the site being "fenced off" recognises the degree of exclusion necessary to prevent an "interference". 23 Secondly, it is significant that in [48] of its reasons (referred to at [15] above) the Tribunal refers specifically to the fact that the traditional owners had reached an agreement with BHP which recognised the significance of the site and restricted access to it by employees of BHP. Again, the Tribunal there manifests further recognition of the requisite degree of exclusion necessary to prevent "interference". 24 As to the second ground of appeal specifically, it follows a fortiori from the abovementioned finding that the Tribunal took into account that low impact drilling, as defined in the RSHA, would constitute interference with the site. 25 Accordingly, in my view, the second and third grounds of appeal should be dismissed. 26 I also record that at the hearing of the appeal the second and third respondents sought to tender and rely upon affidavit evidence as to events which had transpired after the Tribunal hearing. The appellants objected to the tender of the evidence. I said that I would rule on that question in my reasons. In the absence of any motion having been brought by these respondents to stay the appeal on the grounds that it was moot, I am of the view that the evidence is irrelevant, and, therefore, inadmissible. 27 The appeal is dismissed with costs. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. | future act objection whether the tribunal considered the nature of the activity that would constitute interference with the aboriginal site under s 237(b) of the native title act 1993 (cth) native title |
A fourth charge (originally described as charge 2) was not pressed. The appellant appeals in relation to each remaining charge. That Pursuant to Federal Magistrates Court Rule 19.02(1) the Respondent be found guilty of contempt of this Court for interfering in the due administration of justice in that it intentionally destroyed the Applicant's e-mail mailbox after it had been notified of the proposed proceedings and after it had accessed that e-mail account on or about 3 October 2002 for the purpose of its proposed defence. That pursuant to the Federal Magistrates Court Rule 19.02(1) the Respondent be found guilty of contempt of this Court for failing to comply with the subpoena issued by this Court on 12 February 2004 in that it did not produce the full chain of email correspondence dated 4 December 2001 between the Applicant and Ms Leesa Baker and then Ms Baker and Ms Hall and Ms Lindsay. That pursuant to Federal Magistrates Court Rule 19.02(1) the Respondent be found guilty of contempt of this Court for failing to comply with the order for discovery made by this Court on 1 July 2004 in that it did not discover the full chain of email correspondence dated 4 December 2001 variously between the Applicant and Ms Leesa Baker and then Ms Baker and Ms Hall and Ms Lindsay. It is best to do so in order to deal with the issues on appeal. The following statement of facts is substantially drawn from the submissions for the appellant. I am satisfied the facts are properly based in the evidence. It needs to be borne in mind that it was only the appellant's evidence which was relevant. The appellant was entitled to have that evidence considered at its highest ( May v O'Sullivan [1955] HCA 38 ; (1955) 92 CLR 654; Amalgamated Television Services Pty Ltd v Marsden [2001] NSWCA 32 ; (2001) 122 A Crim R 166 per Ipp AJA at 172---176). I shall discuss some of the evidence in more detail when considering the individual charges. 4 The appellant commenced full-time employment with the respondent as an accountant on 15 December 1997. In December 1998 the appellant was promoted to financial controller and received substantial pay increases during 1999 and 2000. In May 2000 the appellant married. In November 2000 the appellant became pregnant and in August 2001 gave birth to her son. In November 2001, during her maternity leave, the appellant met with Mr Stephen Byron, the respondent's Managing Director, and indicated that she would like to return to work in February 2002 on a part-time basis. Whilst Mr Byron said he would consider her request, the appellant was uneasy about the way in which he treated her; she generally considered that he had been evasive and was unlikely to accede to her request. 5 The appellant met again with Mr Byron in December 2001 during which he refused her request to return to work part-time. However, Mr Byron said that circumstances had changed since the collapse of Ansett Airlines. He now needed a person, who could work full-time, who could deal directly with the banks. When the appellant asked if she was the person who could do this work, he said 'no'. The appellant then said she would return to work on a full-time basis. Mr Byron then recommended that the appellant take a part-time position she had been offered with another company instead. The appellant felt devastated after this meeting and was in tears. The appellant did not make a decision at that time but telephoned some days later to see if she could return to other available roles in the respondent's accounts department. Mr Byron told her she would be bored by the other positions and he confirmed that she should resign. The appellant did not resign and considered herself dismissed in December 2001. 6 On 3 September 2002 the appellant's solicitor wrote to the respondent setting out this history, asserting that the respondent had wrongfully dismissed the appellant and had unlawfully discriminated against her under ss 5 , 7 and 14 of the Sex Discrimination Act 1984 (Cth). In preparation of the respondent's defence, Mallesons instructed the respondent to review the appellant's personal emails to locate any emails which recorded communications by her with friends and family about the circumstances of her departure from the respondent. In response to that request, at least Ms Leesa Baker on 3 October 2002 separately forwarded three emails from the appellant's email mailbox to Mr Danny Kynaston at Mallesons. 8 On 10 December 2002 the appellant's solicitor lodged a complaint about the respondent's conduct with the Human Rights and Equal Opportunity Commission (HREOC). HREOC was not able to resolve the dispute between the parties. 9 On 26 September 2003, after termination of that complaint by HREOC pursuant to s 46PH(1) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (the HREOC Act), the proceedings were commenced in the Federal Magistrates Court pursuant to s 46PO of the HREOC Act. 10 On 4 and 5 February 2004 the respondent served its evidence which included an affidavit by Ms Baker sworn on 3 February 2004. I have something on everyday this week and I think it will just be too much for Lachlan. I am feeling MUCH better already. It will not be hard to get what I am after obviously!! I have an email from Jacqui from TMP wanting my resume ASAP so she can forward to Lindsay as she wants to speak with me NOW. How fantastic. I will let you know when I know something. All Email communications to and from Korin [sic] Norden/Korina Choundary maintained by the Respondent's server for the period of 1 November 2000 to 29 February 2002. All email communications to and from Stephen Byron concerning Korina Norden/Korina Choundary maintained by the Respondent's server for the period of 1 November 2000 to 29 February 2002. All email communications to and from Leesa Baker concerning Korina Norden/Korina Choundary maintained by the Respondent's server for the period of 1 November 2000 to 29 February 2002. We confirm that the Applicant considers that your client has produced incomplete documents in response to subpoenas issued on behalf of the Applicant. The basis upon which the Applicant makes this allegation is her personal knowledge and recollection. In response to the subpoena seeking "all email communications to and from Stephen Byron concerning Korina Norden/Korina Choundary maintained by the Respondent's server for the period 1 November 2000 to 29 February 2002", the Respondent has failed to produce an email from Leesa Baker sent to Sarah Lindsay who forwarded it to Stephen Byron concerning why Ms Baker does not want Ms Choundary to return to work at the airport. The appellant's computer expert, Mr Mario Ferraro, examined those tapes on or before 30 June 2004 but did not recover the appellant's email mailbox. 14 The matter then came for hearing before Driver FM on 1 July 2004 and the issue of the adequacy of the respondent's compliance with the subpoena was agitated and the appellant's desire to have Mr Ferraro image the respondent's server to recover her email mailbox. His Honour vacated the hearing and ordered that the respondent provide verified discovery and answer interrogatories. On 9 August 2004 the respondent provided answers to interrogatories. 16 On 18 August 2004 the appellant's solicitor served a Notice to Produce for back-up tapes for the period 1 February 2002 to October 2002. At the directions hearing on 20 August 2004 Driver FM ordered, inter alia, that the Notice to Produce of 18 August 2004 be returnable on 30 September 2004 because the Federal Magistrates Court Rules 2001 do not provide for the return of notices to produce except at a hearing of the proceedings. The Court granted Mr Ferraro access to the back-up tape. 18 Mr Ferraro inspected the back-up tape and the only relevant material he recovered was an email chain of 4 December 2001. The two emails attached to the affidavit of Ms Baker were part of that chain of emails. The chain records the communications in the reverse order to which they occurred. The chronological order in which the email chain was created is set out below. I have something on everyday this week and I think it will just be too much for Lachlan. I am feeling MUCH better already. It will not be hard to get what I am after obviously!! !! That is exactly right - it is a pity you couldnt reschedule your appointment before seeing SB because I just think that whatever the outcome is with him, you will already be relaxed knowing that you already have something else. Is the position doing the same thing? I have an email from Jacqui from TMP wanting my resume ASAP so she can forward to Lindsay as she wants to speak with me NOW. How fantastic. I will let you know when I know something. His examination of the back-up tape of 9 January 2003 did not find the appellant's email mailbox. (2) There was no direct evidence of the respondent's intention. (3) There was no direct evidence that the email mailbox had been destroyed or deleted. (4) He 'could not be satisfied beyond reasonable doubt that the respondent intended to interfere with the administration of justice'. Any finding of intention would be so speculative that it would not be beyond reasonable doubt. 21 It is submitted in this appeal that the Federal Magistrate erred in his approach to the question by coming to his own decision as to whether the charge was proved beyond reasonable doubt, rather than considering whether that conclusion could be reached. Whilst there are some indications of that approach, the Federal Magistrate referred to the proper test and used the word 'could', which is consistent with the correct test. I would not uphold that submission in relation to this charge. 22 There was debate both on this appeal and at the original hearing concerning the place of intent in relation to this charge. Reference was made to R v Rogerson [1992] HCA 25 ; (1991) 174 CLR 268; Meissner v The Queen [1995] HCA 41 ; (1994) 184 CLR 132; Lane v The Registrar of the Supreme Court of New South Wales (Equity Division) [1981] HCA 35 ; (1981) 148 CLR 245; Hatty v Pilkinton (No 2) (1992) 35 FCR 433; and R v McLachlan [1998] 2 VR 55. In my opinion, it is not necessary to get deeply involved in fine distinctions to resolve this case. Counsel for the appellant accepted that it was necessary to prove that the respondent had intentionally destroyed the appellant's email box knowing that to do so would have the tendency to interfere in the administration of justice. The elements themselves of course can be established by making inferences from primary facts. The Federal Magistrate was required to take into account all inferences most favourable to the appellant, which could reasonably be drawn from the primary facts (see the decision of the Privy Council in Haw Tua Tau v Public Prosecutor [1982] AC 136 at 150). In my opinion, it would not be possible, on the primary facts, to exclude the hypothesis that any destruction of the emails that took place was the result of actions by persons with no knowledge of the proceedings or potential proceedings or was a result of a procedure which did not take account of those proceedings. It is quite possible that a system could have existed which provided for the destruction of emails at fixed times during the year, at a particular length of time after an employee has left or as directed by some person in the administration or technology areas to suit the convenience of administration. In other words, any destruction may have been the result of a routine procedure. There is no inference available from the primary facts that would exclude that hypothesis unless there is speculation as to the circumstances of the alleged destruction. 24 Counsel for the appellant referred to the evidence of Mr Ferraro that it was not usual commercial practice to delete a former employee's email mailbox if that employee had played an important role in the organisation. Even if that evidence were admissible, it would not say anything about the commercial practices of this respondent and would not assist in denying the hypotheses to which I have referred. 25 This analysis is a symptom of what appears to me to be an underlying problem, namely, that the party charged with interfering with the course of justice is a corporation with a number of employees carrying out a number of functions. The principles according to which a corporation can be guilty of contempt of court by interfering with the course of justice were not a topic raised below and only surfaced during the course of argument on this appeal. Even if a corporation can be guilty of such a charge, it is not legitimate to aggregate the knowledge of individuals and attribute the aggregated knowledge to the corporation ( R v AC Hatrick Chemicals Pty Ltd (1995) 152 A Crim R 384 at 394; cf, in a different context, Krakowski v Eurolynx Properties Ltd [1994] HCA 22 ; (1995) 183 CLR 563 at 582---583). In the present case, it is not possible to know who deleted the emails (that is if they were deleted) or on whose instructions the emails were deleted. That being the case, it is not possible to attribute to those persons the knowledge held by others within the organisation as to the actual or potential litigation. The relevant knowledge as to the litigation would have to be held by the representative of the corporation who was also responsible for the deletion. Further, that person would need to be the directing mind of the corporation for guilt of such a charge--in effect, a common law offence requiring mens rea--being attributed to the company ( Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1 ; [1972] AC 153). The evidence in this case simply does not permit any such finding to be made. 26 The other two charges are different in nature as they involve alleged breaches of orders ( cf Australasian Meat Industry Employees' Union and Others v Mudginberri Station Proprietary Limited [1986] HCA 46 ; (1986) 161 CLR 98). The full email chain containing six separate emails dated 4 December 2001 was not produced, although two of those six emails were produced. 28 The Federal Magistrate found that there was no prima facie case for the respondent to answer as the subpoena called for material from the server, not from the back-up tapes. He said that there was no evidence that the email chain in question was on the respondent's server at the relevant time. He was not prepared to infer that the full email chain was still on the server in February 2004. 29 Counsel for the appellant submits that, as two emails from the chain were produced in response to the subpoena taking into account Mr Ferraro's evidence that the two emails only ever existed as part of the chain and never in isolation in electronic form, there was an inference available that all of the emails were on the server at the relevant time. 30 The respondent supports the reasoning of the Federal Magistrate. It submits that there was no direct or indirect evidence that the relevant emails were on the respondent's server at the time of service of the subpoena. The fact that the full chain may have been on a back-up tape did not establish its presence on the server. 31 For the purposes of this charge I view the facts somewhat differently from the Federal Magistrate. It can be taken that all of the emails were on the server originally. There is no evidence which compels the conclusion that they were deleted prior to the service of the subpoena. The existence of a back-up tape does not establish that the emails had been deleted from the server. Thus, on a view of the evidence most favourable to the appellant on this charge, there was a prima facie case of failure to produce the email chain in accordance with the requirements of the subpoena. 32 I have a further fundamental difficulty with the respondent's position. The subpoena called for communications which were maintained by the respondent's server at the earlier nominated period of time, not communications maintained at the time of the service of the subpoena. If, for example, hard copies were kept of emails which were maintained on the server at the earlier time, they should have been produced. Similarly, back-up tapes containing those emails should also have been produced. If the evidence of Mr Ferraro at its highest is taken into account, the fact that two emails out of a chain were produced shows that there was access to the chain of emails at the relevant time. 33 In my opinion, on either basis there was a prima facie case and the appeal must be upheld to that extent. That makes it unnecessary to consider whether the Federal Magistrate impermissibly found facts in disposing of this charge. For the purposes of rule 14.03 of the Federal Magistrates Court Rules 2001 (Cth) the respondent's affidavit of discovery shall distinguish between documents previously produced on subpoena and documents not previously produced. The first was that he could not be satisfied beyond reasonable doubt that the respondent held the chain of emails elsewhere in its possession apart from the back-up tape of 9 January 2003. Furthermore, it is not consistent with the view I have expressed with regard to the second charge relating to the non-compliance with the subpoena. It will be recalled that the affidavit was to be provided in July 2004. The appellant's solicitor gave evidence that she had received a telephone call from the respondent's solicitor on 20 September 2004 saying that his client had found the 9 January 2003 back-up tape and said that she had no reason to disbelieve him. The tribunal of fact would not be obliged to accept the hearsay statement of the respondent's solicitor, even if it was admissible, and the question as to whether or not the appellant's solicitor had any reason to disbelieve it is irrelevant to the issue. In effect, the Federal Magistrate found a version of the facts favourable to the respondent without any proper basis for doing so. 38 In my opinion, there is a prima facie case that the email chain was available either on the back-up tape or the server or both at the time the affidavit of discovery was sworn and filed. The appeal must be allowed on that account also. No particular failing was identified. I see no difficulty with the framing of the third and fourth charges, and I can see no procedural defect that would have justified dismissal of the charges on that account alone. 40 I gather from what was said by the respondent's counsel that the ruling in question was not the result of an application by the respondent, but followed from the learned Federal Magistrate's reading of r 19.02(7) of the Federal Magistrates Court Rules which provides that, after hearing evidence in support of the allegation, the Court may, if it decides there is no prima facie case, dismiss the application. The effect of the rule in question was not argued before me. I am concerned if it requires the Court to rule as to whether there is a prima facie case of its own motion and regardless of the position of the respondent. A respondent with a simple explanation may prefer to fight the merits and so avoid interlocutory appeals. For all I know that may be the case here. The order of the Federal Magistrates Court dismissing the proceeding is set aside. In lieu thereof it will be ordered that the proceeding be remitted to the Federal Magistrates Court for hearing in relation to charges 3 and 4. The respondent should pay two-thirds of the costs of this appeal to reflect the failure of the appellant on one of the charges. The costs of the proceedings below should await the result of that proceeding. Any application that can be made pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) can be made to me in Chambers. | whether prima facie case of interference with the course of justice whether prima facie case of breach of discovery order and breach of subpoena contempt |
It is not an application to extend the time for convening that meeting. The meeting has been convened but it was adjourned until 9 May 2008, which was the longest period permitted by the Act. 2 The circumstances in which the application is made are set out in the affidavit of Mr John Vouris sworn 30 April 2008. The affidavit indicates that Marrickville Bowling & Recreation Club Ltd (under administration) is a registered club pursuant of the provisions of the Registered Clubs Act 1996 (NSW). 3 On 31 January 2008, the Board of the company appointed Mr Vouris and Mr Whitton as joint and several administrators. The circumstances in which the appointment was made are set out in [4] of Mr Vouris's affidavit and I need not repeat them. 4 The investigations made by the administrators indicate that the company has a very substantial surplus of assets over liabilities. There are no secured creditors and Mr Vouris is of the opinion that there is a good chance that the debts of unsecured creditors would be paid in full if the company were to be placed in liquidation. This is amply borne out by the evidence before me. However, as Mr Vouris observes, the liquidation of the company would take a minimum of three months and the administrators are presently looking at the possibility of either an amalgamation of the company with another club or alternatively a development of the club's premises. Either of those courses would produce an outcome under which the creditors would obtain a distribution of 100 cents in the dollar. 5 Nevertheless, the basis upon which the application is made is that the administrators feel that time is needed to advance the outcome of the discussions and the administrators consider that this has the potential to be favourable to both creditors and members of the company. 6 There are four benefits which creditors and members would be likely to secure from an amalgamation. These are, first, that creditors would be likely to be paid in full more quickly. Second, this course would avoid the costs associated with a liquidation. Third, the club facilities would be likely to be preserved for the benefit of current and future members. Fourth, if there were a winding up, the articles of association of the company provide that members would not share in any surplus. As I have said, the financial position of the company is such that there would be likely to be a surplus and if there were a liquidation, members would not share in it but would be able only to direct how any such surplus should be used. 7 The adjournment of the second meeting of creditors was for the purpose of allowing the administrators to consider any expressions of interest regarding the possible amalgamation of the company with another registered club or the proposed development and sale of the company's premises. Advertisements were placed by the administrators calling for expressions of interest from registered clubs interested in amalgamation and from potential developers of the company's premises. 8 There were no formal expressions of interest but there were approaches made to the administrators by two clubs with a view to the possibility of amalgamation. Those two clubs are the Sydney Portugal Club Ltd and the Jets Sports Club Ltd. If an amalgamation with the Jets is able to be secured then the proposal which the Jets have put forward is to continue operating a club trading from the company's premises. That is not the approach which is proposed by the Portugal Club. The administrators therefore anticipate that members of the company are unlikely to vote in favour of the Portugal Club's proposal. 9 The administrators believe that an amalgamation of the company with the Jets is in the best interests of the members of the company, however such an amalgamation is not a foregone conclusion. The administrators have convened information meetings for members to discuss the merits of the two amalgamation proposals. 10 In anticipation of the possible amalgamation with the Jets, the administrators and the Jets have negotiated draft documentation including a Memorandum of Understanding and a Deed of Amalgamation. A further information meeting will be held on 11 May 2008. If the orders sought in the present application are made, the administrators of the company propose that members vote on the amalgamation on or before 13 June 2008. 11 Mr Vouris is of the view that the amalgamation meeting could be held on 13 June 2008 or possibly at an earlier date. However, it would appear that 13 June is the most likely date which would permit all of the necessary steps prior to the convening of that meeting. That is a reason which underlies the application for the power to further adjourn the meeting to 24 June 2008. 12 Thus the effect of the application is that the administrators seek an order to permit a further adjournment of the second meeting of creditors to 24 June 2008. This is to enable members of the company and, assuming the amalgamation proposal goes ahead, the members of the other company, to vote on the amalgamation prior to the conclusion of the second meeting of creditors. 13 Whilst it would be possible for the administrators to prepare a conditional Deed of Company Arrangement to be dealt with at the meeting on 9 May 2008, the administrators believe that this expense ought not to be incurred prior to the outcome of a meeting of the members to consider whether amalgamation is to go ahead. 14 The administrators believe that an extension of the period of adjournment to 24 June 2008 would be in the best interests of creditors and members. A number of reasons are set out in [35] of Mr Vouris's affidavit. I will not repeat them, but in summary this course should enable the administrators to exhaust all possibilities prior to the completion of the second meeting of creditors and to completely appraise the creditors of all possibilities at the second meeting. 15 The order which is sought in the present case is in similar terms to an order made by Barrett J in Re Porter and Another as joint administrators of Priceright Construction Pty Limited (2006) 57 ACSR 206 at [7]. His Honour observed at [8] that it is now well recognized that the Court has the power to extend the convening period in a way that s 439A of the Act does not itself allow. See also the decision of Lindgren J in Re Double V Marketing Pty Ltd (in admin) [1995] FCA 1151 ; (1995) 16 ACSR 498. 16 The period of extension which would be permitted under the proposed order is a period of 32 business days. The Act fixes a maximum period of adjournment at 45 business days. 17 The period of the permitted adjournment is within the approach which Brownie J took in Re Taylor (1995) 16 ACSR 774. The effect of what his Honour said was that a further extension which would more than double the period permitted by the Act ought not to be made. The present order would not do so. 18 In all the circumstances it seems to me that the orders that are sought ought to be made for the reasons set out in Mr Vouris's affidavit. The orders are in accordance with the terms which Barrett J described in Re Porter at [10] and [12] as appropriate orders to be made in an application of this type. 19 Accordingly I will make orders 1, 2 and 3 as set out in the originating process. I will order that the orders be entered forthwith. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. | application by company administrators to permit creditors to adjourn second meeting to allow company members to vote on amalgamation company solvent adjournment said to be in best interests of creditors and members application granted corporations |
Both of those insurers are the Applicants in these proceedings. 2 The Scheme to give effect to that transfer and amalgamation has been prepared in accordance with Part III , Division 3A of the 1973 Act. 3 Auto & General Insurance Company Limited is incorporated in Australia and has carried on general insurance business in Australia since July 2005. 4 Budget Insurance Company Limited is incorporated in the United Kingdom and is registered as a foreign company in Australia. It has carried on business in Australia since June 2001. It has, however, not issued any new contracts of insurance in Australia since 31 August 2005. It wishes to be relieved of its liabilities and obligations under and in respect of insurance policies that it has issued and underwritten and to have its authorisation to carry on general insurance business under the 1973 Act revoked. 5 All renewals and new business after 31 August 2005 has been written through Auto & General Insurance Company Limited. 6 Both of the Applicant insurers are presently authorised to conduct general insurance business and both are subsidiaries of Budget Holdings Limited, a Guernsey corporation. 8 Part III of the Act concerns the need to apply to the Australian Prudential Regulation Authority for an authorisation to carry on insurance business in Australia and further provides for those circumstances in which an authorisation may be revoked. 9 Part III, Division 3A provides for the transfer and amalgamation of an insurance business. For the purposes of s 17C, it is considered that an application for confirmation of a scheme is " made " at that point in time when a hearing is held which seeks confirmation and not at that point in time when proceedings are filed with this Court: Re Insurance Australia Ltd [2004] FCA 524 at [30] ---[37] per Lindgren J, [2004] FCA 524 ; 139 FCR 450 at 458---9. See also: Calliden Group Limited in the matter of Calliden Group Limited [2007] FCA 2019 at [81] . 11 Section 17D provides that the Australian Prudential Regulation Authority may arrange for an independent actuary to make a written report on a scheme. When a scheme is confirmed, it becomes binding on all persons: s 17G. 13 The discretion conferred by s 17F is conferred in general terms and does not specify any criteria to be satisfied. It must, however, be a discretion exercised in a manner which promotes the objects of the Act, including the protection of the interests of policy holders in ways consistent with " the continued development of a viable, competitive and innovative insurance industry ". A " critical consideration " is " whether affected policyholders will be detrimentally affected by the implementation of the scheme ": PMI Indemnity Limited (No 2) [2005] FCA 1842 at [24] per Lindgren J. 14 Section 32 of the 1973 Act, it should further be noted, provides that the Authority may also determine " prudential standards " that must be complied with. (d) The rights, benefits, obligations and liabilities of holders of policies issued by BIC in Australia will be the same as if those policies had been issued or underwritten by A&G instead of BIC. Claims under such policies are to be made to A&G, instead of BIC. (e) BIC will bear the costs and expenses relating to the transfer and the scheme. (f) The transfer will take effect on the first business day after the date on which the scheme is confirmed by the Court. The latter condition was satisfied by a decision of a delegate of the Minister on 19 December 2007. It is now concluded that the Scheme should be confirmed without modification. 17 It has been concluded that the confirmation of the Scheme will not detrimentally affect either those policy holders whose policies are being transferred pursuant to the Scheme or those policy holders into whose funds the policies are being transferred. Nor is there any other discretionary reason to refuse confirmation. 18 Pursuant to the terms of the Scheme , all of the liabilities and obligations of Budget Insurance Company Limited in respect to its policies are assumed by Auto & General Insurance Company Limited. The Scheme provides ( inter alia ) that " any person having a claim on or obligation to BIC in respect of a BIC Policy will have the same claim on or obligation to A&G in substitution for the claim on or obligation to BIC irrespective of when the claim or obligation arose ". The Scheme further provides for the transfer from Budget Insurance Company Limited to Auto & General Insurance Company Limited of an amount being the quantum of all liabilities and obligations of the former company. That amount is calculated at present to be an amount of $46,000. 19 And the financial security of both existing policy holders of Budget Insurance Company Limited and the policy holders of Auto & General Insurance Company Limited will not be prejudicially affected if the Scheme is confirmed. 20 Joint actuarial reports have been provided by Mr Timothy Andrews, a Fellow of the Institute of Actuaries in Australia and employed by Finity Consulting Pty Limited, and a Mr Adam Payne, also a Fellow of the Institute. Mr Andrews is the Approved Actuary for Auto & General Insurance Company Limited. An actuarial report was provided as recently as 2 May 2008 and is based upon the unaudited quarterly returns provided to the Australian Prudential Regulation Authority as at 31 March 2008. An earlier (but now updated) report relied upon the audited annual report as at 30 June 2007. Our opinion is based on the actuarial assessment of the insurance liabilities of each company and the statement of assets set out in the APRA returns for each company. The key issue is whether the likelihood of valid claims being paid is materially affected. We assess that A&G provides a similar level of protection to policyholders as BIC to the extent that the likelihood of claims not being paid is remote. Those conclusions, it should be noted, have been based upon an assumption that none of the existing reinsurance of Budget Insurance Company Limited will be transferred to Auto & General Insurance Company Limited. As a matter of fact, all reinsurers have been notified of the Scheme and a limited number indicated that they do not have objection to an assignment of the reinsurance contracts. 21 The conclusion of the actuaries is well supported by their prior analysis of the financial statements of both Applicant insurers prior to and subsequent to transfer. One important matter to which consideration is given in the actuarial report is the " Capital Adequacy Multiple ". That is a margin calculated pursuant to Prudential Standard GPS 110. It is a risk-based assessment ... The Capital Adequacy Multiple ("CAM") is the ratio of the Capital Base to the MCR. At 30 June 2007, the CAM for each entity is slightly higher than 1.30. At 30 September 2007, the CAM for each entity was largely unchanged for A & G but had reduced slightly to 1.26 for BIC. The Prudential Practice Guide issued by the Authority provides that it " envisages that an insurer's minimum target capital specified in its Business Plan would be at least ... 1.2 times MCR where its MCR exceeds $5 million ". This multiple, Mr Andrews explained, was but one of the matters taken into account in reaching the ultimate conclusion. However, we understand that A&G intends to manage its capital in line with its Capital Management Plan which states that that [sic] A&G will continue to retain earnings to ensure adequate capital coverage above a minimum target CAM of 1.30. We have been provided with projections undertaken by the company which show that the CAM is expected to remain above the target minimum of 1.30 provided A&G meets its budgeted profit levels. These projections appear reasonable, however there is no guarantee that the assumptions on which the projections are based will be realised --- i.e. it is possible for the CAM to vary materially from the expected position. To address this concern, there were apparently discussions which resulted in the parent company, Budget Holdings Limited, writing what has been described as a " Letter of Support ". That letter from Budget Holdings Limited states that -- if required -- it will provide additional capital so that Auto & General Insurance Company Limited will continue to maintain its minimum capital requirements and ensure that its Capital Adequacy Multiple does not fall below 1.30. 24 The importance of Auto & General Insurance Company Limited continuing to meet the prudential requirements set forth in Prudential Standard GPS 410 is such that consideration has been given to whether the Scheme should be confirmed -- but only subject to a modification to embrace as a term of the Scheme the commitment Budget Holdings Limited proffered in its " Letter of Support ". 25 Such a modification was opposed by both the Applicant insurers and the Australian Prudential Regulation Authority. That opposition, it is considered, is well-founded and no modification of the Scheme is considered warranted prior to confirmation. 27 A copy of the Scheme has been provided to the Authority in accordance with s 17C(2)(a). 28 The Authority has no objection to this Court making an order for confirmation of the Scheme . I also note that the terms of the policies held by BIC policyholders will not change (other than the identity of the insurer changing from BIC to A&G) and that claims handling procedures will continue as before. I therefore advise that APRA has no objection to the applicants seeking an order for confirmation of the Scheme. 29 The manner in which this Court exercises the discretion conferred by s 17F(1) is informed and assisted by the views expressed by the Australian Prudential Regulation Authority. This Court has long recognised the role played by the Authority and the reliance placed by the Court upon its review of the proposed scheme and its assessment as to whether or not it should oppose an order seeking confirmation. Nor did APRA arrange for an actuarial report on the scheme, as it is entitled to do under s 192 of the Act. It can be inferred that APRA regarded the reports furnished by the applicants as adequate. ... Like comments have also been made in other cases: Re Royal & Sun Alliance Life Assurance Ltd [2000] FCA 1259 at [23] , [2000] FCA 1259 ; 104 FCR 37 at 40 per Katz J. See also: Application of Zurich Insurance Company and Converium Limited [2003] FCA 1519 at [4] per Hely J; Application of Advance Life Insurance Limited (Unreported, FCA, Sheppard J, 18 February 1997). 30 The conclusion that the Scheme should be confirmed in the present proceedings has been likewise assisted by the views expressed by the Authority. (2) The general insurer must make the arrangements that are necessary to enable the actuary to do those things. (3) The reports that the prudential standards require the actuary to prepare must deal with all of the matters required by the prudential standards to be dealt with in the reports. An insurer may also seek the advice of its Approved Actuary in relation to other matters where the insurer considers this to be appropriate. 34 The independence of actuaries (including consultant actuaries) and the responsibilities imposed in particular upon the Approved Actuary by the Act and the Standards are matters upon which this Court can rightly place considerable reliance when exercising the discretion conferred by s 17F. 35 The manner in which the discretion is to be exercised in the present proceedings has obviously been largely informed by both the facts set forth in the joint report prepared by Messrs Andrews and Payne and also the professional assessments they have made based upon those facts. They are designed to ensure that affected policy holders are both informed of the scheme which is being proposed and given adequate information such that they can make a decision as to whether or not they wish to support or oppose that scheme. The steps to be undertaken have helpfully been summarised by Jacobson J in SGIC General Insurance Limited [2004] FCA 1639 at [18] . 37 In addition to requiring that a copy of the scheme and any actuarial reports are to be provided to the Australian Prudential Regulation Authority, Prudential Standard GPS 410 also imposes obligations as to the need for a Notice of Intention to be published and for an approved summary of the scheme to be given to every affected policy holder. The Standard also requires that a copy of the scheme be available for inspection. 38 In accordance with that Standard , the Authority has approved the Notice of Intention , the list of newspapers in which the Notice has been published, and the locations in each of the States and Territories where copies of the Scheme have been made available for inspection. The Authority has also approved the " Scheme Summary " . 40 Specific reference should be made to s 17C(2)(c) of the 1973 Act. That provision requires that an approved summary of the scheme must be given to every affected policy holder. On 4 March 2008, Branson J made orders pursuant to s 17C(5) dispensing with the need for compliance with s 17C(2)(c). The orders as made by Her Honour, namely requiring that copies of the approved summary of the Scheme be provided to those persons identified in the order, have been complied with. 41 All procedural requirements which are to be satisfied prior to confirmation of the Scheme , it is considered, have been satisfied. Pursuant to s 17F(1) of the Insurance Act 1973 (Cth), the Scheme for the transfer and amalgamation of the Australian insurance business of Budget Insurance Company Limited to Auto & General Insurance Company Limited , in the form of the document annexed hereto and marked 'A', be confirmed. 2. The Applicants to pay the costs of the proceedings of the Australian Prudential Regulation Authority as agreed or taxed. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. 1.2 BIC is incorporated in the United Kingdom and registered as a foreign company in Australia and has carried on general insurance business as a branch operation in Australia since June 2001. A&G is incorporated in Australia and has carried on general insurance business in Australia since July 2005. Both companies are subsidiaries of Budget Holdings Limited (a Guernsey corporation). 1.3 BIC has not issued any new contracts of insurance in Australia since 31 August 2005 and wishes to be relieved of its liabilities and obligations under and in respect of all contracts of insurance that it has issued and underwritten in the course of carrying on its Australian general insurance business thereby enabling it to apply to have its authorisation to carry on general insurance business under the Insurance Act revoked. 2. APRA means the Australian Prudential Regulation Authority. Assumed Liabilities has the meaning given in paragraph 4(a). BIC Policy means each and every contract of insurance issued or underwritten by BIC in the conduct of BIC's Australian insurance business. Business Day means a day that is not a Saturday, Sunday, public holiday or bank holiday in Queensland. Court means the Federal Court of Australia. Court Confirmation means an order of the Court confirming this Scheme (with such modifications, if any, as it thinks appropriate) under Part III, Division 3A, of the Insurance Act . Effective Date means the first Business Day after the Scheme Date. Insurance Act means the Insurance Act 1973 (Cth). insurance business has the meaning given in the Insurance Act . Personal Information means personal information, as defined in the Privacy Act 1988 (Cth), that has been received by BIC or A&G or an officer, employee, agent or contractor of BIC or A&G in connection with a BIC Policy. policyholder means, in relation to a BIC Policy, the holder of a BIC Policy. Records means all records in respect of BIC Policies in BIC's possession and control as at the Effective Date, including without limitation insurance proposals and applications, policy documents, insurance premium receipts, payment records, claims records, correspondence and file notes, whether recorded on paper, electronically or otherwise. Scheme Date means the date on which this Scheme is confirmed by the Court under the Insurance Act . 3. 5. 5.3 On and from the Effective Date, BIC will be released from all obligations and liabilities under the reinsurance contracts and treaties referred to in paragraph 5.1. 6. 7. 8. 9. | transfer of insurance business capital adequacy margin need to ensure compliance role of actuaries and the australian prudential regulation authority insurance |
It has brought proceedings against Stephen Dunn who is a practising accountant, but not a member of the applicant body. It seeks to restrain Mr Dunn from representing, in connection with the provision, promotion or supply of his professional services, that he is a "Certified Practising Accountant", a "Certified Public Accountant" or a "CPA". The applicant is one. The others are the Institute of Chartered Accountants in Australia, and the National Institute of Accountants. The applicant is by far the largest of these three bodies. It has over 112,000 members, and its officers and staff are based in 18 offices located across Australia, Asia and Europe. 3 The applicant can trace its origins back to the late 19 th Century. After a series of name changes, it finally acquired its present designation in 2000. One class of the applicant's membership is that of "Certified Practising Accountant". That expression, and its commonly used abbreviation "CPA", have been widely adopted since at least 1983 to describe those of the applicant's members who have been recognised as such according to the applicant's bylaws. In order to qualify for this designation, members are required to have tertiary qualifications in accountancy and to complete a program created for this purpose which includes examinations and continuing professional development. The evidence overwhelmingly points to the fact that the public use by the applicant and its members of the term "Certified Practising Accountant" and its abbreviation "CPA" is extensive and widespread. 4 The applicant has been accorded statutory recognition throughout Australia. For example, it is expressly mentioned, along with the Institute of Chartered Accountants in Australia and the National Institute of Accountants, in various provisions of the Legal Profession Act 2004 (Vic), the Strata Schemes Management Act 1996 (NSW) and the Property Agents and Land Transactions Act 2005 (Tas). Some statutes refer to the applicant and the Institute of Chartered Accountants in Australia only. See for example the Corporations Act 2001 (Cth) s 1282 and the Australian Securities and Investments Commission Act 2001 (Cth) s 203(1). 5 In addition, the applicant is specifically recognised in reference works such as the Penguin Macquarie Dictionary of Economics & Finance . This new, higher class of accountants was introduced in 1983. It also spends considerable amounts each year on the further education of its members, and on the recruitment of new members. 7 Mr Dunn is a qualified accountant. As previously indicated, he is not a member of the applicant. Nor is he a member of either of the other umbrella organisations of accountants. He describes himself as "proudly independent". He has no interest in joining any such organisation, and he exhibits barely disguised contempt for them. He has long been engaged in challenging their right to hold themselves out as having some special expertise which he lacks. See, for example, Dunn v Australian Society of Certified Practising Accountants (1996) ATPR |P41-461; Dunn v Australian Society of Certified Practising Accountants [1996] FCA 1193 ; Dunn v Australian Society of Certified Practising Accountants [1998] FCA 1199 ; and Dunn v Australian Society of Certified Practising Accountants [1999] FCA 651. 8 Mr Dunn has gone out of his way to induce the applicant to bring these proceedings by writing to it and its solicitors, threatening to use various designations, including the terms "Certified Practising Accountant" and "Certified Public Accountant", in his professional letterhead. For example, on 14 July 2006, he sent a letter to the applicant on letterhead describing himself as a Certified Practising Accountant and stating that he would use that designation "on my letterheads and promotional materials in the future". Mr Dunn refused to give any such undertaking. Rather, he invited the applicant to institute proceedings to restrain him. This the applicant has done. It further contends that any such use will contravene ss 42 and 44 (f) of the Fair Trading Act 1987 (NSW) and would also constitute the tort of passing off. The applicant seeks injunctive relief in order to restrain Mr Dunn from engaging in the proposed conduct. 12 The applicant's claims against Mr Dunn pursuant to the Fair Trading Act 1987 (NSW) are put in the alternative to its primary claims pursuant to s 52 of the Trade Practices Act . So are its claims in relation to the tort of passing off. If the s 52 claims are made good, it will be unnecessary to say anything further about these alternative causes of action. 13 It should be noted that the s 52 claims are dependent upon s 6(3) of the Trade Practices Act . The applicant's case is that, unless restrained, Mr Dunn proposes to engage in contravening conduct which involves the use of postal services, through one or other of the forms of letterhead that he has threatened to adopt. 14 Finally, it should be noted that the applicant relies upon s 80 of the Trade Practices Act in support of its claim for statutory injunctive relief. Section 80 can be invoked without any evidence of past contraventions. Moreover, it does not require proof of likely significant harm. 15 In response Mr Dunn submits that the application is vexatious and oppressive. He states that pursuant to its constitution the applicant is obliged to advance the interests of the accounting profession. He submits that the applicant lacks standing because it is neither his competitor nor his consumer. He states that no competitors or consumers have made complaints against him, and he is not misleading anyone. 16 He further submits that because his degree and tax agent registration constitute "certificates" he is relevantly certified, and therefore should be able to use that term in his letterhead and advertising material. He submits that the applicant is seeking to create an "unfair monopoly" by allowing only its members to use the term "Certified Practising Accountant". The law has long protected the names of, and the names adopted by, societies of accountants. See, for example, The Society of Accountants in Edinburgh v The Corporation of Accountants Ltd (1893) 20 R 750 and Society of Accountants and Auditors v Goodway and London Association of Accountants Ltd [1907] 1 Ch 489. 18 The position in Australia is much the same. The most common form of protection of the names of, and the names adopted by, trade associations is through s 52 of the Trade Practices Act , and its various State equivalents. In fact, the applicant has previously relied on s 52 to obtain protection from the unauthorised use of the designation "Certified Practising Accountant" and its abbreviation "CPA". We are currently running examinations to increase your status to C.P.A. Any accountant who wishes to do so with our federation is encouraged to inquire. Any accountant that becomes a C.P.A. with our federation will be allowed to use our logos for advertising purposes. 20 CPA Australia, which at that time was the Australian Society of Accountants, sought injunctive relief. I am satisfied that, even in that comparatively short space of time, it has built up a substantial reputation in the accountancy profession and in the general community for that qualification. The expression "Certified Practising Accountant" was apparently unknown in Australia before the applicant began its campaign, and there is no evidence to suggest that it is used in any other English-speaking country. It seems that the expression "Certified Public Accountant" has currency in the United States, but there is no evidence before me to indicate how widespread its usage is or just what status it conveys. Its antecedent bodies date back to 1887. It charges its members an annual subscription of $214, spends some $17 million each year on its professional objects, and employs 160 people. It is, in short, a very large and reputable professional body, which recruits some 2500 new members each year -- over 70 percent of those who graduate in accountancy from tertiary institutions. Along with the Institute of Chartered Accountants, it has provided the only regulation of the profession in most states of Australia over a number of years. Users of accountancy services may also be misled into thinking that the federation is in some way connected with the applicant, or that any organisation can award such a qualification, thus devaluing it in the eyes of such potential clients. In the same way, the letters CPA have acquired a special meaning in relation to accountants in Australia. It is plain that the opening paragraph of the advertisement is likely to mislead students and others wishing to obtain accountancy qualifications into believing that they can obtain the Society's CPA qualification from the Federation. See Society of Accountants and Auditors v Goodway and London Association of Accountants, Limited . [1907] 1 Ch. 489 at 497. When determining whether particular conduct was, or is, likely to mislead or deceive it is unnecessary to prove that anyone was actually misled or deceived: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 198. However, evidence that particular individuals have been misled or deceived is admissible, and may be persuasive: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87. The test is objective, and the Court must determine the question for itself: Taco Company Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202. Finally, conduct is likely to mislead or deceive if there is a real and not remote possibility that it will do so. It is not necessary to establish that the degree of likelihood exceeds 50%: Global Sportsman at 87. 27 It is clear that regard must be had to the relevant conduct as a whole, and in context. See generally Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45. The question whether a representation made by a person to the public, or a section of it, would be likely to mislead or deceive must be answered without regard to whether that person intends to mislead or deceive. It is not a question of whether, if the person makes these representations, he or she would be acting honestly and reasonably. It is simply a question of whether potential members of the class to whom the representations are to be addressed (which include the astute and the gullible, the intelligent and the not so intelligent, and the well educated and the poorly educated) are at serious risk of being misled or deceived: see .au Domain Administration Ltd v Domain Names Australia Pty Ltd (2004) 207 ALR 521 at [12]---[15] and National Exchange Pty Ltd v ASIC (2004) 49 ACSR 369. 28 Statements that are capable of more than one meaning may be misleading or deceptive provided that the meaning for which the applicant contends is one that would be reasonably open, and might be drawn by a significant number of those to whom the representation is made. In the same way, a statement may contain a representation that is implied, rather than express. That is why a statement that is literally true can be misleading or deceptive: National Exchange at [48]---[52]. 29 In the context of this case it is particularly important to note that a descriptive name can acquire a secondary meaning that identifies a specific person and that person's goods or services: see S & I Publishing Pty Ltd v Australian Surf Life Saver Pty Ltd (1998) 88 FCR 354 at 363. I am satisfied, on the evidence, that those of the applicant's members who have been accorded the qualification of "Certified Practising Accountant" have acquired a reputation through that designation. I accept the applicant's submission that the combination of those three words have a secondary meaning, namely that a person who has that designation has obtained "membership of [the applicant] which, by its tests and examinations and by its rules and requirements as to qualification, confer[s] on its members a status different from that of other members of the profession" who do not have the same qualification: Society of Accountants and Auditors v Goodway and London Association of Accountants Ltd at 500. 31 In Australian Society of Accountants v Federation of Australian Accountants Inc Woodward J reached precisely the same conclusion regarding the words "Certified Practising Accountant". His Honour's decision was upheld by a Full Court. Of course, that decision turned on a question of fact in a case involving only one of the two parties before me. However, it is fair to say that his Honour reached that view on the basis of only three years of promotion of the designation "Certified Practising Accountant". The evidence before me is much stronger. The term has now been used for more than twenty-three years, and as previously indicated has found its way into both State and Commonwealth legislation. 32 For these reasons, Mr Dunn's argument that the word "certified" means nothing more than "qualified", and that as he has a degree in accounting, and practises as an accountant, he is entitled with impunity to describe himself as a "Certified Practising Accountant", must fail. The term has a distinct secondary meaning, and as a consequence Mr Dunn's use of it would be likely to mislead or deceive. 33 Mr Dunn's argument fails at other points as well. Though he has a degree, one would not normally describe the University that granted it to him as having "certified" him as a practising accountant. The reason is plain. Many graduates in accounting do not go on to practise in that field. 34 In my view, Mr Dunn's use of the designation "Certified Practising Accountant" would be likely to induce at least some members of the public, including his own clients, to believe that some professional body or organisation has conferred that status upon him. The reality is that no such body or organisation has done so. His certification is self awarded. He has never been given that certification by the applicant, or by any other body capable of conferring it upon him. I doubt that many people would know the exact name of the corporate entity which is the applicant in this proceeding. Anyone taking the trouble to read either of these qualifications to Mr Dunn's representation would not know whether he was suggesting that he had satisfied the requirements for, and been granted the right to use, the designation "Certified Practising Accountant" by the same body that has granted that right to the thousands of existing Certified Practising Accountants in Australia. In any event, Mr Dunn's representation would still suggest that some other body capable of conferring that status upon him had done so. That would still be likely to mislead or deceive. 36 Much the same can be said about Mr Dunn's use of the phrase "Certified Public Accountant". That term closely resembles the designation "Certified Practising Accountant". The visual and aural similarities are real. It is clearly established that the use of different but similar words and phrases can constitute misleading or deceptive conduct. For example, in Mobileworld Communications Pty Ltd v Q & Q Global Enterprise (2003) 61 IPR 98 the Court was concerned with the use by one business of the name "Crazy Ron's". Allsop J held that that name was misleading or deceptive because of its similarity to the pre-established trade name "Crazy John's". His Honour further concluded that disclaimers would not be sufficient, and that injunctive relief was appropriate. 37 Finally, the use of the term "Certified Public Accountant" would be likely to mislead because it suggests that there is some organisation that awards that qualification, and that Mr Dunn has satisfied the requirements of that organisation in order to acquire that status. In fact, the evidence reveals that there is no such organisation. Mr Dunn has not undertaken any continuing education of the kind that the applicant requires in order to grant certification, and he has not undertaken any examinations which are a prerequisite to the designation in question. He may be a public accountant holding tertiary qualifications. However, he is not a "Certified Public Accountant" because no professional body or organisation has conferred that title upon him. Mr Dunn acknowledged in his final submissions that, unless restrained, he will use one or other of the expressions "Certified Practising Accountant" or "Certified Public Accountant" in his letterhead. That would amount to a contravention of s 52 of the Trade Practices Act , and the applicant is entitled to prevent that from occurring. 39 However, the applicant wishes to go further and have Mr Dunn restrained from using not merely these two expressions, but also the designation "CPA". The fact is that Mr Dunn has never threatened to use that designation in his letterhead, and has stated that he has no intention of doing so. I do not think that it is appropriate to frame an injunction which goes beyond the actual threats made to date. For that reason, the injunction will not extend to the designation "CPA". However, Mr Dunn should be under no illusions. If he were to use that designation in the future, it is almost certain that he would be restrained from doing so, essentially for the reasons set out above. His longstanding dispute with the applicant regarding its rights to describe its members in the way that it does reflects a genuinely felt sense of grievance on his part. In some respects, he might be regarded as a "stirrer". To paraphrase the remarks of Murphy J in Neal v The Queen [1982] HCA 55 ; (1982) 149 CLR 305 at 316---317, Mr Dunn is entitled to be a stirrer. He is not, however, entitled to exemption from the ordinary rules that govern proceedings in this Court. In accordance with normal practice, costs should follow the event. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | application for injunctive relief pursuant to trade practices act 1974 (cth) s 80 applicant sought to restrain respondent from engaging in misleading or deceptive conduct in contravention of trade practices act s 52 whether respondent's use of terms "certified practising accountant" and "certified public accountant" misleading or deceptive principles relevant to determining whether representation misleading or deceptive whether terms in question have acquired a "secondary meaning" injunction granted unnecessary to deal with alternative claims based on fair trading act 1987 (nsw) and tort of passing off "certified practising accountant", "certified public accountant" trade practices law words and phrases |
876332 (with the initial term commencing on 18 May 2001) which 'consists of a shape kind of sign' for goods in Class 6 of the Register described as 'fence droppers'. The Certificate of Registration records that the trade mark 'consists of a rod bent to an S shape' as depicted in the Schedule in the Certificate. That depiction is set out as Schedule 1 to these reasons. 2 A fence dropper is an article made, in the case of the applicant, from heavily galvanised spring wire designed to be inserted into a fence (almost in all cases a fence restraining livestock of one kind or another) to engage or catch the horizontal wires of the fence (which, depending upon the breed of livestock to be restrained, generally comprises three to nine or possibly more horizontal strands) so as to maintain a constant distance between the horizontal fence wires; contribute to the elastic strength of the fence; prevent distortion in the fence as a result of impact by an animal; and act as a substitute for fence posts. 3 The applicant's fence dropper is formed in such a way that it contains a loop in a particular shape which has the appearance of two U-bends formed in the dropper in opposite directions one above the other in the shape of an S-bend thus giving rise to the description of the loop as an S loop or S shape. The fence dropper is formed by machinery so as to contain the number of S loops required to engage the relevant number of horizontal strands comprising the fence. The fence dropper must necessarily engage not only the intermediate wires between the top and bottom strands of the fence, but also engage the top and bottom strands. The applicant's fence dropper contains an angle section (described as 'tails') at each end of the dropper which when wound on to the top and bottom strands of the fence prevent, in conjunction with the S loops, movement of the dropper along the fence. 4 Schedule 2 of these reasons contains a photograph of the applicant's article which would be applicable to a four strand fence, thus requiring two S shaped loops to engage with two intermediate wires and an angle section at each end of the fence dropper to be wound on to the top and bottom strands of the fence. 5 The typical method of engaging the fence dropper with the fence is this. The user holds the fence dropper against the fence with the S loops parallel to the fence wires and moves the dropper downward so that the intermediate wires are captured within the top section (or upper U section) of the S shape. The horizontal fence wire will, upon the user moving the dropper downward, pass into the upper section of the S loop and sit upon the base of the upper section of the loop. The user then rotates the dropper by twisting the tails anti-clockwise 'to lock wires in the loops' until the tail sections are in contact with the top and bottom strands of the fence. Each angle section or tail is then wound by the user (typically with a screwdriver or rod) on to the top and bottom strands so as to grip the fence and prevent movement. 6 Schedule 3 contains a depiction of the engagement method which illustrates the upper section of the S loop engaging the horizontal wire of the fence; in one case, barbed wire, and in the other, plain wire. 7 The applicant contends that the election by the respondent through its prime mover Mr Hastie, to import fence droppers from a related New Zealand company associated with Mr Hastie and supply fence droppers to distributors in Australia for sale, containing an S loop substantially identical with the shape of the S loop depicted in the applicant's trade mark, and advertise the attractive force of the respondent's fence dropper by reference to the 'unique loop' together with an image of the shape of the S loop, is an infringement of the trade mark for the purposes of s 120(1) of the Act. The applicant says the question of use of the trade mark by the respondent must be examined in the context of all the circumstances of use and when those contextual circumstances are examined, it is plain that the respondent has used the applicant's 'sign' as a trade mark to distinguish its goods from those of other traders in the course of trade. 8 The respondent says the contention as to 'use', marks out the primary point of departure in the controversy between the parties as the shape of the S loop and thus the applicant's shape mark serves at least, in part (and the respondent says in substantial part), a functional purpose. The shape of the S loop is said to take its shape in order to efficiently catch and hold one or more intermediate fence wires; facilitate quick and efficient application of the fence dropper into a fence; avoid the use of 'fiddly clips'; aid elasticity and 'like the ropes of the boxing ring' enable the fence wires (and thus the fence) to retain dynamic tension without distortion should a beast or other animal impact the fence. Since, it is said, the shape of the loop serves these functional purposes, use by the respondent of the mark by incorporation of the shape within the respondent's dropper and depiction of the shape in advertising material is not use of the shape as a trade mark . It is simply the use of a functional feature of a fence dropper and where depicted in brochures and other material, simply represents an illustration of that feature, its operation, utility and functionality. 9 The respondent says the 1995 Act by introducing the notion of a 'shape' within the definition of 'sign' in s 6 of the Act and thus within the definition of a 'trade mark' in s 17 of the Act as a ' sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person ' did not bring about the radical change of providing that a registered trade mark would have the effect of restricting access to functional features or innovations. The respondent says the trade mark law of this country recognises a continuing fundamental distinction between a shape, whether expressed in part or the entirety of the goods the subject of the registration, that has an element of 'functional significance' and a shape which bears no functional significance. The respondent says, consistent with observations in Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273 ; (2002) 122 FCR 494, were the 1995 Act to enable a registered trade mark to give the owner a monopoly over functional features (and thus suit for infringement of such a registered trade mark) it would indeed have made a radical change to trade mark law and nothing in the Act or in the discussions that preceded it suggest that such a result was intended. Therefore, it follows, it is said, that in the context of contended infringement, once the evidence demonstrates that the shape serves some functional significance, use of the shape (the trade mark) cannot be use as a trade mark. In such a case, it is said the shape adopted in the respondent's goods and consequential use of the shape in brochures and advertising material does not differentiate or distinguish the goods as a badge of origin of the user as a purveyor of those goods but serves to identify (distinguish) the content or features of the goods themselves. In other words, the respondent uses the shape to say in trade 'these are the goods that I sell' not 'know me as the seller or purveyor of these goods by this shape' (although, for trade mark use purposes, the seller need not be specifically identified). 10 The applicant says the respondent has misunderstood the true context in which issues of functionality were discussed Kenman Kandy and related authorities. In this case, the trade mark has been accepted by the Registrar and has been registered. The applicant is the registered owner of a valid shape mark which is not the subject of a challenge or cross-claim for cancellation or rectification of the Register on grounds of lack of distinctiveness . The applicant says that discussions in the authorities of whether a trade mark application is to be rejected if it consists of a shape expressed in the relevant goods so as to achieve a particular technical result or by reason of the nature of the goods or some other functional feature, do not inform in any determinative sense, whether a registered trade mark (assessed in accordance with s 41 of the Act throughout the application stage) is infringed by use of the trade mark or a substantially identical trade mark. In assessing whether the registered trade mark has been infringed for the purposes of s 120(1) of the Act, the applicant says that all the circumstances of use are examined to answer this orthodox question: has the respondent made use of the mark as a 'badge of origin' in the sense that the use indicates a connection in the course of trade between the goods and the user of the sign? Further, the applicant says the S loop, although it in part serves a purpose of catching a wire, the bottom section of the S shape (that is, the lower U-shape of the S loop), serves no functional purpose at all. Secondly, other shapes also catch the wires of a fence and the respondent's fence dropper need not incorporate the S loop, that is, need not use the applicant's trade mark, in order to function as a dropper incorporating a shaped catch. The applicant, in submissions, put it this way, ' ... it must have something that engages on the intermediate wire, but it doesn't have to have that shape. That is our case. The applicant says that a three dimensional shape mark that performs an aspect of function may, as in the case of this mark, distinguish the goods (fence droppers) in the applicant and although a mark may have a functional element, there is no point of principle derived from the authorities that a shape mark cannot serve as a bade of origin by a respondent to distinguish its goods from those of others. The question is whether, contextually, it has been so used by the respondent. An analogue in relation to word marks is a mark that contains a descriptive element which, nevertheless, in the context of contended infringing use, might be seen to serve as a badge of origin. A question will inevitably arise as to whether the use of words containing a descriptive element might make it difficult to demonstrate that the words have been used to distinguish the goods of the respondent, and that difficulty is likely to be all the more pronounced where the mark is a three dimensional shape forming part of the goods. 12 That question will require consideration in these reasons. 13 The applicant says that although the introduction by the 1995 Act of a shape within the notion of a sign as a trade mark within s 17, did not effect a radical change to trade mark law, it nevertheless enabled a shape for goods or a part of goods, that is, the three dimensional configuration of those goods (or parts of them) to be registered as a trade mark. Once registered and absent any cross-claim for cancellation or rectification based on lack of distinctiveness in the trade mark, meaning must be given to the scope of s 120(1) of the Act in the sense that the shape the subject of the mark might well be expressed in the respondent's goods and depicted in the respondent's brochures, to distinguish the respondent's goods from those of other traders. The applicant says a registered shape mark must mean something. It cannot be rendered nugatory as a distinguishing three dimensional shape trade mark for goods on the footing that use of the shape in the respondent's goods is no more than the commercial use of the configured goods themselves or the identification of the content of the goods and thus never use of the shape as a trade mark . 14 The respondent says that whatever might be the position in other cases, in this case the article is a highly utilitarian article; sold by farm produce outlets or stock and station agents to users engaged in the art of finding functional practical solutions to immediate and recurring problems; the fence dropper serves that purpose by adding to the utility and functionality of the fence; and the shape of the loop is central to the operation of the dropper. In that sense, the respondent says the three dimensional shape mark is a functional shape par excellence and as a matter of law, use of such a shape is simply a statement of the content and features of the goods and cannot be use of the shape as a trade mark. The respondent says that although shapes other than the S loop might be identified that also catch a wire, the only relevant question is whether the S loop shape serves, in part or substantial part, a functional purpose. If so, use by the respondent cannot be a trade mark use. 15 The respondent also pleaded and contended throughout the proceedings, until the point was abandoned in addresses, that the elements of s 24(1) of the Act were made out on the footing that the registered trade mark consists of a sign that, after the date of registration of the trade mark, has become 'generally accepted' within the relevant trade as the sign that describes or is the name of an article. As a result, s 24(1) has the effect of enlivening a limitation under s 24(2) of the Act on the exclusive rights of the registered owner to use or authorise others to use the sign in relation to the article and by operation of s 24(2)(b), the registered owner ' is taken to have ceased to have those exclusive rights from the day determined by the court under subsection (4). ' Subsection (4) provides that ' a prescribed court may determine the day on which a sign first became generally accepted within the relevant trade as the sign that describes or is the name of the article ... '. Although the respondent contends that the trade mark consists of a sign that has become generally accepted in the relevant trade as the sign that describes a fence dropper containing an S loop, the respondent says it cannot satisfy the temporal element and show that the sign became so 'generally accepted' after the date of registration of the trade mark. Accordingly, a defence in reliance upon s 24 of the Act has been abandoned. 16 The respondent relies upon a defence under s 25 of the Act on the footing that the trade mark contains a sign (the S loop shape) that describes a fence dropper that was formerly exploited by the applicant (or its predecessors in title) under a patent lodged on 9 October 1968 under the Patents Act 1952 (Cth) for a term of 16 years which expired on 9 October 1984. Thus, s 25(1)(a) and (b) are satisfied. The respondent says, consistent with s 25(1)(c) of the Act, the evidence demonstrates that ' the sign is the only commonly known way to describe or identify the article ... '. The respondent says that since the trade mark consists of the sign, the registered owner by reason of s 25(2)(a) and (b) does not have any exclusive rights to use or authorise others to use the sign in relation to the article and is taken to have ceased to have those rights from the end of the period of 2 years after the patent expired or ceased. Further, if the sign describes anything at all, it describes the S loop in the fence dropper which is only a part of an article not the article for the purposes of s 25(1) of the Act. If, however, s 25 does apply, the sign is not the 'only commonly known way' to describe the article. The applicant says the evidence shows other commonly known ways of 'describing' or 'identifying' the article. 19 The respondent also relies upon s 122 of the Act which provides for classes of conduct that 'in spite of s 120' do not constitute infringing conduct. The respondent says, consistent with s 122(1)(b)(i) that it has depicted the 'unique loop' in good faith to indicate the kind, quality, or intended purpose of the respondent's fence dropper or the characteristic of the respondent's dropper of effecting 'constituent, efficient securing loop(s)'. The respondent also relies upon s 122(1)(c) of the Act on the footing that the respondent has used the trade mark in good faith to indicate the intended purpose of goods. The applicant says the respondent has used the trade mark as a badge of origin not as an indication of those identified characteristics, and, in any event, the respondent did not do so in 'good faith. 21 The first of the cross-claims for relief is a declaration in reliance upon s 24(3) of the Act. That matter is now abandoned. The second is a declaration that the registered mark ' consists of, or contains, a sign that describes or is the name of an article or substance that was formerly exploited under a patent, namely the Expired Patent. ' The third, either further or alternatively, is a declaration that the registered owner of the trade mark has ' no exclusive rights to use, or authorise others to use the sign in relation to the article or substance or other goods of the same description from the end of the period of 2 years after the Expired Patent expired or ceased. ' The fourth is a declaration that any previous, existing or continued use of the registered mark by the cross-claimant is permitted pursuant to any of ss 120(2), 122(1)(b)(i), 122(1)(c), and 122(1)(e), ss 24 and/or 25 of the Act. Relief based on s 24 has been abandoned. Section 122(1)(e) provides that a person does not infringe a registered trade mark when: ' (e) the person exercises a right to use a trade mark given to the person under this Act ... ' Section 120(2) provides for infringement of a registered trade mark if the person uses as a trade mark a sign that is substantially identical with a trade mark in relation to goods of the same description as the goods in respect of which the trade mark is registered. Accordingly, the applicant relies only upon s 120(1) and says that no conduct in issue in these proceedings can be the subject of a contended permission under s 120(2). 23 By par 5 of the cross-claim for relief, the cross-claimant seeks an order pursuant to s 87(1) of the Act that the Register be rectified by cancelling the registration of the trade mark. The cross-applicant relies upon the contended application of s 25 as the trade mark is said to consist of a sign that describes a formerly patent exploited article and the sign is the only commonly known way of describing or identifying the article. The cross-applicant does not seek cancellation or rectification on the footing of ' any ground on which the registration of the trade mark could have been opposed under the Act ' (s 88(1) and s 88(2)(a)). The challenge to registration is based on the legacy consequences of exploitation under the patent and satisfaction of the statutory integers relating to that matter. Section 87(2) provides that the Court may decide not to make an order under s 87(1) if s 24 or s 25 applies ' because the trade mark contains a sign that has become generally accepted within the relevant trade as the sign that describes or is the name of the relevant article '. Section 24 contemplates a sign becoming ' generally accepted ' within the relevant trade as the sign that describes or is the name of an article in which event s 87(2)(a) addresses the circumstances of s 24. Section 87(2(b) alternatively provides that s 25 might apply ' because the trade mark contains a sign that describes or is the name of an article that was formerly exploited under a patent yet s 25 can only apply if all of the integers of s 25(1) are satisfied. Further s 87(2) contemplates a trade mark that ' contains a sign ' whereas s 25 contemplates a trade mark that ' consists of or contains a sign '. If s 25 applies according to its terms, s 87(2) may have a limited operation although s 87(2)(b)(i) may simply be selecting only that integer of s 25 for its operation. The discretion conferred by s 87(1) is to be exercised subject to s 89 (i.e., taking account of whether the registered owner of the trade mark has satisfied the Court that the ground relied upon by the applicant has not arisen through any act or fault of the registered owner) and having regard to the effect of s 25 upon the right of the registered owner of the trade mark to use the trade mark or any sign that is part of the trade mark in relation to particular goods. 26 A further question arises in relation to the onus of proof under s 25 of the Act. The respondent contends that the applicant bears the onus of establishing, on the balance of probabilities, that the conduct of the respondent constitutes infringing conduct and the exclusive rights conferred by registration continue to subsist. Thus, the applicant must exclude the operation of s 25. The applicant says that s 25 is raised by way of defence by the respondent and the respondent bears the onus of making out the elements of the section. The respondent cross-applicant, relies upon the discretion under s 87(1) to support cancellation of the registration of the trade mark based upon the application of s 25 of the Act. On 27 March 2007, the Court ordered by consent that the trade mark infringement claim, defences to the claim, and the cross-claim by the respondent be tried separately before the trial of any other question in the proceedings. Mr Sachs swore an affidavit filed on 5 February 2007 (exhibit 2 in the proceeding) in which he describes the following history of the applicant's fence dropper. Mr Sachs' father, Roger Sachs, was the managing director of a company called National Nail Pty Ltd (National Nail). On 9 October 1968, National Nail lodged an application for a patent under the Patents Act 1952 (Cth) (Australian Patent No 402,869) for an invention described as 'an improved wire fence dropper'. The inventor was Roger Sachs. The patent granted to National Nail was for a term of 16 years from 6 June 1969. The applicant admits in the Amended Reply that the patent expired on 8 October 1984. 30 The patent specification describes the invention, the disadvantages of the prior art, the improvements reflected in the invention to overcome those disadvantages, the preferred embodiments of the invention, and the claims defining the monopoly. Another disadvantage is that such a dropper is so designed that it must be made of fairly heavy gauge wire, for if an engaged fence wire is forced downwardly, it acts to bring about torsional stresses in the dropper, which must be made of wire of sufficient diameter to resist these. The droppers are therefore heavier, and also less resiliently flexible, than is desirable. As a result they are more difficult to transport, and when installed may not recover satisfactorily from being sharply bent by an impact load. Furthermore such droppers are not well suited to simple and economical manufacture by machine. Other features of the invention will become apparent from the following description. A fence dropper of the type formed of wire and having at top and bottom means for engagement with wires of a fence, and a series of intermediate catches for engagement with intermediate wires of the fence, characterised in that each such intermediate catch is comprised of two U-bends formed in the wire in opposite directions one above the other and inter-connected by a transverse section, such that a fence wire may be passed up between the lower U-bend and the portion of wire extending downwardly from the upper inverted U-bend, and seated on the transverse section and adjacent to the portion of wire extending up from the lower U-bend and to the said portion of wire extending down from the upper inverted U-bend. A fence dropper according to Claim 1 and further characterised in that the said transverse section is shaped to form an S-bend, with an upward curve and a downward curve adapted to form a seating for the said fence wire. In 1971, National Nail became the registered owner of the Lightning trade mark. From as early as 1969, National Nail sold and advertised the patented fence dropper. The brochure from 1969 gives emphasis to the basic requirements of an ideal fence dropper including minimum weight for both fence efficiency and height; maximum strength and resilience to withstand impact without damage; quick and easy to apply; and low initial cost and no maintenance. The brochure says ' National therefore developed its unique Patent Loop which makes possible the manufacture of 'Lightning Droppers' from 8 gauge galvanised spring wire. ' In March 1980, National Nail ceased trading and its assets were transferred to a partnership called 'Mayne Industries' consisting of Roger Sachs and his wife. The partnership commenced trading on 1 April 1980 and carried on the business previously operated by National Nail. Roger Sachs died in August 1991 and a new partnership came into existence between his wife and his estate. This partnership continued to operate the same business until March 1993 when the estate of Roger Sachs was finalised. In March 1993, the partnership assets were transferred to a new company, the applicant. Since 1993, the applicant has operated the business previously conducted by National Nail and the partnerships previously mentioned. The applicant is the owner of the Lightning trade mark. A further company, Gesellschaft Pty Ltd (formerly known as Mayne Industries Investments Pty Ltd) owns the plant and equipment used to make the applicant's fence droppers. 33 Mr Nicholas Sachs accepted in cross-examination that the fence dropper made by the applicant embodying the S loop which is now the subject of the registered trade mark and complaint as to use by the respondent, is the same fence dropper made and offered for sale from at least 1968 (although Mr Sachs' evidence-in-chief suggests that the year was 1969) by National Nail, the various ad hoc partnerships formed as a result of the death of Roger Sachs and by the applicant. 34 The 1969 brochure illustrates the method of inserting the dropper into a fence; illustrates an exploded view of the S loop catch in situ with a seated intermediate wire; and bears the endorsement 'the unique loop with intermediate wire positively trapped'. The exploded view of the S loop is beneath the words 'National Lightning Dropper' above which in bold letters is the word 'Lightning'. Exhibit G to the affidavit of Mr Sachs contains examples of the applicant's brochures 20,000 copies of which have been distributed since 1998 to resellers and graziers. Some of those brochures (the first six pages of exhibit G) depict a conjunction on each page of 'LIGHTNING ®' under which is the words 'FENCE DROPPERS' where greater type face emphasis is given to the word 'Lightning' and next to it is placed a depiction of the S loop (as ultimately depicted in the Trade Mark Certificate). The remaining brochures comprising exhibit G to Mr Sachs' affidavit describe the applicant's fence dropper as 'National Lightning ® Fence Droppers'. Installed in under 10 seconds per dropper saving valuable hours of your time or contractors' labour. Other droppers can take up to two minutes each. The Lightning Dropper's ingenious design makes it the cheapest dropper to freight (light physical weight) without compromising its phenomenal strength. The applicant's brochures contain a matrix for each standard size dropper that identifies the ordering code, overall length, the spacing between each of the S loop catches in the dropper (depending upon the number of wires to be caught), number of lines to be caught, colour code, and weight per bundle of 25 droppers. For each dropper code (i.e. each dimensionally different dropper in length) the applicant adopts a particular colour code (15 different colours in the matrix in the early brochures and 12 colours in the applicant's product price schedule of 1 May 2005) for ease of identification of each separate product size. The applicant says the respondent has imported for sale, distributed, sold and advertised for sale in Australia fence droppers that comprise as part thereof a rod bent into an S shaped loop which is substantially identical with the applicant's registered S shape sign. Secondly, the applicant says such use is use as a trade mark. The first step is to determine whether the respondent's article comprises in part a rod bent to an S shape which is substantially identical with the shape depicted in the Certificate of Registration. I have examined the shape of the applicant's sign contained in the trade mark Certificate and have compared that sign with the shape of the loop forming part of the respondent's fence dropper tendered in evidence. The trade mark, of course, is not a shape sign for the three dimensional shape of the entire dropper. It is a sign for the shape of the catch or loop for a fence dropper. Any particular complete dropper would vary according to length and the number of S loops in the dropper. I am satisfied that the S loop comprising part of the respondent's fence dropper is substantially identical with the applicant's trade mark. 37 The respondent is an Australian company incorporated in Queensland in 2003. Mr David Allan Hastie is the managing director of the respondent and has been the sole director of Advanced Engineering Ltd, a New Zealand company (AEG New Zealand) since its registration in August 1995. In April 1997, AEG New Zealand commenced the manufacture and sale of a wire fence dropper described as the 'ezy-lock' fence dropper. In July 2003, Mr Hastie caused the respondent to commence the importation and sale in Australia of those fence droppers manufactured in New Zealand by AEG New Zealand which embody the S loop substantially identical with the applicant's trade mark. During the period 2002 to July 2003, AEG New Zealand supplied its fence droppers to Hurricane Pty Ltd for sale in Australia. Annexure NS8 to the affidavit of Nicholas Sachs (exhibit 2) is a copy of the respondent's product catalogue for September 2003. The catalogue is marked with the logo AEG, an image of an interlocking mesh device and bears the heading on page 4 'ezy-lock fence droppers'. Although the catalogue deals with a range of the respondent's products, page 5 explains features of the respondent's fence dropper by use of a 7 strand fence with the dropper installed and an exploded view of the S shape of the loop contained in the dropper with an arrow linking the exploded view of the S shape to the words 'The Unique Loop With Line Wires Securely Trapped'. The graphic illustration also contains an illustration of the tails of the dropper wound to the top and bottom wires and an illustration of the method of winding the tails to the top and bottom wires. I am also satisfied that the shape depicted in the respondent's 2003 product catalogue is substantially identical with the applicant's trade mark. Graham John Serisier is the applicant's rural sales manager for Australia and has held that position since June 2003. He swore an affidavit of 1 February 2007 filed on 2 February 2007 (exhibit 12). Annexure GS1 is a copy of the applicant's 1 May 2005 product and price schedule and a copy of a price list received by Mr Serisier from one of the respondent's distributors, Whites Wires Australia Pty Ltd (Whites) on 17 August 2005. The Whites' brochure displays the graphic illustration contained on the respondent's product brochure including the exploded view of the S loop, reference to the unique loop and a large emphatic 'NEW'. The Whites' brochure adopts a colour code for each category of dropper by product number. Each colour selected by the respondent is the same as the applicant's colour for the corresponding dropper set out in the applicant's 1 May 2005 product and price schedule. Annexure GS3 is a copy of the respondent's current double-sided brochure. The brochure displays on the left side of the front page what appears to be a photograph of the respondent's fence dropper. It shows the complete dropper installed in a fence, top and bottom tails and the S loop catch with two intermediate wires caught in the upper section of each loop. The top of the page on the right side is endorsed with a mark 'ezy-lock &tm;' in reasonably large lower case font above the words 'Fence Droppers' all within an oval device border. The same device in smaller print is placed near the left border of the brochure slightly above the bottom tail in the photograph of the dropper. There are three other device marks on the front page including a stylised 'AEG' and other marks relevant to other AEG products unrelated to the respondent's fence droppers. 39 The reverse page also depicts a photograph of the fence dropper in precisely the same way as the front page. The reverse page is given over entirely to the fence dropper depicting on the left side between the top strand and the first intermediate wire, a compact depiction of a four strand fence showing the installed dropper, two S loops catching two intermediate wires and the centimetre distances between each wire of the fence. The top right hand side of the reverse page depicts the 'ezy-lock' device as shown on the front page also to the same size. The centre of the page sets out text and a graphic depiction of three steps in installing the dropper and a prominent image of a top tail wound on to the top wire. The bottom of the page shows a collection of 20 or 30 droppers spread out on the ground most of which prominently reveal the S loop shape of each catch in the dropper. The bottom of the page is also endorsed with a distributor's name, ' Hurricane as your ezy-lock &tm; Fence Dropper Supplier '. 40 The applicant contends that if the brochure is turned sideways, the elongated D of the word 'Fence Droppers' in the 'ezy-lock' device, together with an extended line above the word 'Droppers' suggests or 'echoes' the contents of the S shape. 41 The applicant's dropper is sold in bundles of 25. The average order size is a pallet of 40 bundles. The applicant transports its product with at least five 'swing tags' attached to each pallet. The swing tags often come off in transit and Mr Sachs says, ' The only way of distinguishing the applicant's product from other fence droppers is its appearance including the shape of the loops. ' The swing tags, down the left side of each tag (exhibit F to the affidavit of Mr Sachs), depict an installed fence dropper for a five strand and four strand fence. The applicant says that the placing of the image of the fence and a fence dropper on the respondent's current brochure resonates with the layout of the fence and dropper in the applicant's material. 42 Mr Sachs says at para 22 of this affidavit that it is possible to shape the catching loop in a wire fence dropper into shapes other than the S loop shape used in the applicant's product. Mr Sachs exhibits (exhibit E to his affidavit, exhibit 2) three examples of wire shaped into loops (called loop styles 3, 4 and 5) which could form part of a wire fence dropper. Mr Sachs says none of these different shapes are used on any fence dropper in the Australian market (including the respondent's dropper). Geoffrey Charles Bailey is the factory engineer employed by the applicant and has held that position since 1994. Mr Bailey holds a Bachelor of Mechanical Engineering Degree from the University of Queensland. Mr Bailey in his affidavit sworn 31 January 2007 and filed 2 February 2007 (exhibit 7 in the proceeding) refers to two patents for loop styles or shapes, one dated 16 February 1909 and another dated 21 December 1967. Mr Bailey caused a wire to be shaped in accordance with each patent (loop styles 1 and 2). Each loop takes an entirely different shape to the applicant's S loop. Each dropper containing styles 1 or 2 is able to be installed in a fence in a similar way to the installation of the applicant's dropper. Mr Bailey describes other droppers. A wire dropper exhibiting a loop catch was once sold by Queensland Pastoral Supplies Pty Ltd but is no longer being manufactured. Mr Bailey identifies a patent of 8 September 1896 containing what seems to be a round loop; a patent dated 4 May 1897 containing apparently a semi-circular loop; and a patent dated 17 November 1896 containing essentially a figure 8 loop. Mr Bailey says there are other droppers currently available on the market. The 'Marsh' spiral twist wire dropper is a wire dropper twisted to form a continuous spiral. Sheet metal droppers are the most popular fence dropper in Australia. The entire length of the dropper is a metal V shape and is attached to fence wires by clips. There is also a wooden dropper and a U shaped polythene dropper with a square base. Two things are said to emerge from Mr Bailey's evidence. First, there are ways of configuring or shaping a wire loop to engage and capture intermediate wires without using the applicant's S shape loop. Secondly, Mr Bailey says the applicant's dropper features a particular orientation of the wires to form a ' unique S shape ' but the ' S shape does not serve a functionally unique purpose '. Mr Bailey says the top section of the S loop does ' function as a capture zone for the wire strand '; the function of the top portion can easily be achieved by any number of alternative shapes; and the bottom portion of the S loop serves no functional purpose at all. The conclusion the applicant invites the Court to reach is this. The applicant has been selling its fence dropper since at least 1969 giving particular emphasis to the 'unique loop' as a shape feature of the goods that distinguishes and differentiates its dropper from all other droppers and by reason of the shape of the loop, the dropper is associated with the applicant in trade. 44 The applicant says these considerations are made more pronounced by the respondent's reliance on the distinctiveness of the S loop and the use of Mr Bailey's evidence in another forum, tendered by the respondent as part of exhibit 17 in these proceedings that the ' S shape applied to the wire capturing feature has become synonymous with the products of Mayne Industries in the marketplace '. The applicant says such a powerful statement of acquired distinctiveness supports an inference that the respondent's use in the manner identified is use of a distinctive shape mark, as a trade mark. The applicant contends the shape mark has been ' thrown on ' to the respondent's advertisements to distinguish its droppers from others in the sense contemplated in the well-known passage from the judgment of Kitto J in The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited [1961] HCA 75 ; (1963) 109 CLR 407 at 424-425 and used ' to make the goods more arresting of appearance and more attractive and thus to distinguish them from the goods of other traders ' which is the ' primary function ' of the mark ( Coca-Cola Company v All-Fect Distributors Ltd [1999] FCA 1721 ; (1999) 96 FCR 107 at 118 per Black CJ, Sundberg and Finkelstein JJ). Coca-Cola v All-Fect recognised that a two-dimensional mark used in relation to goods can function as a trade mark even though it has become part of the goods. The 1995 Act makes it plain that a three-dimensional shape registered as a shape trade mark for embodiment in an article or part of an article, can operate as a trade mark and it follows, it is said, that use of the shape in the respondent's articles in circumstances of pronounced distinctiveness and the factors identified at [38]-[44] operates as trade mark use. 45 The respondent relies upon the statements of Mr Sachs and Mr Bailey (and like statements on the part of the applicant's patent and trade mark attorneys) made to the Registrar of Trade Marks in support of the application for registration of the shape sign as a trade mark to demonstrate that the S shape distinguishes the goods: a fence dropper containing an S loop designed to catch the intermediate wires of a fence; it identifies the thing sold. Any seller selling that good must necessarily exemplify the good by the shape. Secondly, the shape is synonymous with the product and has become the commonly known way of describing that article, and moreover by reason of the shape synonym, the only commonly known way of so doing. Thirdly, in conjunction with the evidence of Mr Sachs of the functionality of the S loop, the proper conclusion is that the S loop in the respondent's dropper and references to the image of the S loop in product catalogues and brochures is not use of the sign as a trade mark to make the goods ' more arresting of appearance ' or ' more attractive ' and thus to distinguish origin in the user of the sign. The goods identified by reference to the S shape are said to be no more than what they are , a fence dropper with an S shape loop that catches the intermediate wires of a fence. 46 As to the functionality of the S loop, the applicant concedes that the upper section of the loop performs a functional role of engaging and capturing a wire. The lower section of the S loop performs no function. The lower section of the S shape is however the symmetrical other part of the S shape, the top half of which engages the intermediate wire. It is difficult to see how the top section of the S shape could function without the corresponding lower section of the shape even if the lower section is not engaging the wire. Mr Sachs was taken in cross-examination to the features of the dropper emphasised by the applicant in its brochures and the working operation of the catch and the dropper. And the whole thing about this product, the functionality of this product I suggest to you is two-fold. It is first, the speed with which the product can be securely fastened in its intended purpose and secondly, the security of attachment on all the wires which result from that. Both of those are correct ... [customers] look for other features of the Lightning Dropper as well ... I would contend that the flexibility and resilience of the product is an intrinsic feature of it. What do you mean by durability and flexibility? The Lightning fence dropper was first born in the era of elastic fencing, as it's known, and that is fencing which is made with the benefit of high tensile fencing wire. High tensile fencing wires are strained to a high tension to enable them to stretch and to recoil to their original size depending --- so that if they are impacted by a beast, there is a greater chance that they will absorb the impact, much like the ropes on a boxing ring and resume to its normal shape, its normal vertical shape, when the impact is passed, and this is considered an advantage in the field where static, very strong fencing tends to be destroyed or bent. We consider that to be a functional advantage, in addition to those that have just been mentioned, in comparison with the vast range of competing droppers. Thank you Mr Sachs ... but with the addition of the elasticity that you've described, do you agree with what I put to you as well? Yes, I do. I accept that. That function of elasticity of the finished dropper is served by using higher grade spring wire as one consideration? Certainly. The claims [that the dropper is] easily attached, suits barb or plain wires are particular claims you make by reference to the S bend, don't you? Easily attached, yes. And suits barb or plain wire. That also, isn't it? That's correct. And likewise proven performance meaning that the attachment, the security that I mentioned or the elasticity too, for that matter, is superior because of the use of that S style of catcher. That's so isn't it? Yes. The characteristic S is the thing which makes it lightning fast and easy to install? That is correct. It is that catcher which is the distinguishing feature when it comes to speed and ease of application, isn't it? Yes. It is that catcher which provides the speed and ease of application, isn't it? The lightning fast advantage to the tune of a few seconds over two minutes or more? That's undoubtedly right. It's the intermediate catching and holding of the wire that is the real problem and the real burden for someone installing a fence dropper, isn't it? It's half the burden. I agree with that. It's a great deal of the burden, isn't it --- you can turn off a bit of bull wire and stick it on the top of the fence. You've got the first part done. You can measure it out and you can stick it around the bottom of the fence, notionally you've got the second part done. You can do that in a trice, can't you? That's correct. So it's the intermediate catching and holding securely and spacing to the requisite standard of the intermediate wires which is the real part of the exercise, isn't it? I agree with what you say, except if I could qualify it. The advantage increases as you have more line wire. So if you have a very complex fence, say up to seven wires, which you do where you've got smaller livestock instead of cattle, then the five intermediate loops being engaged, hopefully at the one moment, is a greater advantage than if you have a three wire fence such as is fairly representative out of Western Queensland. [As to the reference to no need for fiddly clips, ties or specialty tools] that is all about the S feature, isn't it? The S feature dispenses with fiddly clips or ties? That is correct. It's the S feature which dispenses with the need for specialty tools, isn't it? That is correct. And it's the S feature which is the ingenuous design, isn't it? In part, yes. In substantial part, so far as it makes a difference to the user, I suggest to you? I agree with you, except that where it's leading to saying it's the cheapest dropper to freight ... that's very important because fencing products are perhaps very cheap and freight is a very important cost component. Well, I understand what you've said [but] fiddly clips, ties or specialty tools at least limited to that, the S feature is the essence of what you're referring to? That's correct. Not detaching or sliding even on plain wire is again a function of the S feature, isn't it? Not detaching is a function of the S feature. The sliding is a function of the tail. Well, it's also a function of how well the intermediate wires are caught, isn't it? Actually, I accept that. It can be coloured different things. It can be coloured for size. It can be coloured for type of manufacture. It can be made longer. It can be made shorter. It can be called 'lightning', but if you're actually describing the thing under this patent, it's the S dropper, isn't it? Yes, or the dropper with the S shape loops; a variant of that. On 31 May 2002, the attorneys wrote to the Registrar (exhibit 17, tab 23) urging acceptance of the view that although ' the primary characteristic of the fence dropper is that it comprises some means of holding, clipping, gripping or capturing the horizontal wires constituting the fence to control the spacing of the wires and thus prevent stock from forcing the wires apart ', the shape of the S loop does not result from that function; and the shape had not been selected to ' solely fulfil a functional purpose '. The attorneys emphasised that although ' the wire holding feature is an essential feature of the fence dropper ', the S shape is not. To emphasise that point, reference was made to the alternative droppers Mr Bailey also gave evidence of in this proceeding including the Marsh spiral wire dropper and the polythene DM plastics dropper. The letter contends that although ' the applicant has selected their distinctive S shape for the additional purpose of making their products easy to identify in the marketplace ' the S shape operates to distinguish the applicant's products from those of other traders. The patents demonstrate that the S shape does have a functional capacity, but in the 30 years since the patents were granted, the S-shape applied to the wire capturing feature of the fence droppers has become synonymous with the products of Mayne Industries in the market place. 49 On 4 March 2003, the applicant's attorneys wrote to the Registrar on Mr Sachs' instructions and enclosed a statutory declaration made by Mr Sachs on 26 February 2003. In that letter (exhibit 17, tab 28) the attorneys say, ' It is typical to use a letter of the alphabet to refer to the type of fence dropper where the particular letter lends itself to a shape of, or a shape incorporated in, a fence dropper. In the fence dropper business, it is common to refer to fence droppers by a letter if that letter lends itself to the shape of the fence dropper. Enclosed as Exhibit NS-5 are some examples of these. V droppers are manufactured by Cyclone and Waratah; and J droppers are manufactured by Thomas marsh & Co Pty Ltd. Similarly, our fence droppers are commonly referred to in the grade as S-droppers or S-shaped droppers. We have received numerous testimonials from distributors, farmers, graziers and other users of our fence droppers located around Australia and these are enclosed as Exhibit NS-6. Our fence droppers are sold in bundles with one small sticker or label per 1000 fence droppers. It is impractical to affix any brand name to the fence droppers themselves. Often this label becomes detached e.g. in transit or handling, which just leaves the bare fence droppers. The S-shapes of the fence droppers obviously remain and are distinctive elements of the fence droppers, which serve to identify them as our fence droppers and distinguish them from other types and brands of fence droppers. And that was the means of being able to identify that wire stocked product from other competitor fence droppers? I don't accept that. That's what you were saying, weren't you? I don't understand what the issue is here. It says that it's ---'S shapes are distinctive elements'. I accept that. But it doesn't say it's exclusive. In the same paragraph it refers to swing tags or whatever they are called there, small stickers and labels. Yes, and the point you made just so, Mr Sachs, is that if you had just the thing itself, no colour, no swing tags, no packaging material, no advertising material, just the article --- the point you are making was, devoid of all other external means of reference, it would be distinguishable and identifiable as an S dropper. That's so? I accept that. And on that basis yours, and only yours, would be the S dropper? I accept that. And that's why you wanted a mark for it? I accept what you say, yes. 52 The applicant's dropper is a utilitarian article used predominantly in rural settings to perform the function of making a wire fence endure and enhance its capacity to function as a fence and retain dynamic tension should it be impacted by a beast. An essential element of that functionality is the catch loop that engages the intermediate wires. The evidence of Mr Sachs makes it clear that the catch contributes to ease of installation, saving time, eliminating fiddly clips and ties; retention of elasticity and shape; and helps to prevent sliding or movement of the dropper. The patent as the foundation for the dropper demonstrates that the S loop adopted in the dropper provided a solution to functional problems evident in droppers comprehended by the prior art at that time. The adoption of the S loop as the shape of the catch was the central element of the functionality of the improved dropper which continues to be the same dropper incorporating the S loop as developed and patented in 1969. The shape of the S loop is not just a functional part of a functional article, its functionality is fundamental to the working easy application of the dropper into a fence and the work of the dropper once installed. 53 Shapes other than the S shape are capable of configuration for wire fence droppers that can in principle and might, over time, be demonstrated to be effective in catching an intermediate wire of a fence. Mr Bailey has identified a number of possible shapes for wire droppers. Plainly, there is also the spiral wire droppers. Other droppers of an entirely different configuration exist that do not rely upon a loop catch such as the metal V dropper. Droppers of different shapes are made from wood and polythene. However, alternative possible shapes for the shape of a catch incorporated within a wire dropper do not answer the important question of whether the S shape of the applicant's wire dropper takes its shape by reason of the nature of the goods or the function to be performed. The applicant says the point of real distinction is that the catch need not have an S shape to perform as a catching loop or device and it follows that other shapes (non-trade mark shapes and presumably non-patented shapes) could have been used by the respondent. It follows, it is said, that the features of shape are not dictated by function. 54 However, they predominantly are so dictated. 55 The patent makes it plain that the solution to the identified disadvantages in prior art fence droppers was the invention of a dropper that retained the typical top and bottom means of engagement but which incorporated a series of intermediate catches to engage intermediate wires 'characterised' by a shape , that is, 'two U bends formed in the wire in opposite directions, one above the other and interconnected by a transverse section preferably in the form of an S- bend ' . That shape is selected 'such that' an intermediate fence wire is caught in the upper portion of the S shape and 'seated' in the preferred position. The S shape and its adaptation to capture and seat the wire 'on the transverse section preferably in the downwardly extending curve of the transverse S bend and adjacent to the portion of the wire extending up from the lower U bend and the portion of the wire extending down from the upper inverted U bend' serves the function of overcoming prior art disadvantages resulting in an improved fence dropper. There is no element of the S shape that is invented or concocted to make the article more appealing. The shape helps to render comparatively dysfunctional wire droppers functional in an improved novel way. There may be cases where, for example, the iconic shape of a bottle performs the function of acting as a container of fluid, but the features of shape bear no relation to function. That is not this case. Here the inverted U shapes forming an S bend are the functional solution to problems in the prior art. So much so that a statutory monopoly in the form of a patent was granted to the applicant's predecessor for inventing the novel solution. There can there be no doubt that the S shape takes its features from the function to be performed by the loop and thus the nature of the work the article does. Other shaped loops might also catch a wire just as other shaped containers might hold fluid, but the S shape of this loop owes its shape quite precisely to the functional solution its shape serves. It seems to me that on all the evidence the S loop performs the functions described by Mr Sachs by reason of the shape; and the function it performs is essential to the working operation of the applicant's dropper. It is clear that Mr Sachs accepts as a practical and honest man who has been involved with his company's fence droppers both directly and through the genetic footprint of his father, Mr Roger Sachs, that the S shape of the loop is the very thing that makes his company's dropper better than others, because it makes the dropper function more efficiently for all the reasons Mr Sachs accepted in evidence. That is why Mr Roger Sachs obtained a patent for an improved fence dropper. 56 As to the resonance of the applicant's dropper in trade, Mr Serisier gave evidence that the dropper is known by a number of different descriptive terms including the 'wire dropper' and Mr Sachs gave evidence that ' S dropper is a sensible way of describing the dropper but not the only way . ' Mr Sachs said it is also called a ' wire dropper ' and the ' lightning dropper '. However, the evidence of Mr Sachs both in cross-examination and in submissions by his patent and trade mark attorneys to the Registrar and in his declaration of 26 February 2003, is that the applicant's dropper is commonly known as the 'S dropper'; droppers are 'typically' known by a letter of the alphabet that describes a facet of shape and although some other descriptions are known and might be used, the commonly known way of describing the applicant's dropper is the S dropper. It is often referred to as the S shaped dropper in much of the correspondence from the applicant's attorneys to the Registrar. Ultimately, Mr Sachs went further and accepted that the 'S dropper' as the commonly known way of describing the applicant's product, only described the applicant's product. 57 It is not surprising that the fence dropper containing the S loop has become commonly known in the market by the S shape. Notwithstanding the evidence of Mr Sachs that other shaped loops are possible and the evidence of Mr Bailey to like effect (and Mr Bailey's evidence that droppers embodying some of those loops can be installed in the same manner as the applicant's dropper), the evidence is that droppers bearing those shapes have not emerged sustainably in the market and during the period that other manufacturers were foreclosed by the patent from manufacturing droppers embodying the S shape, none of the contended easily identifiable, alternative, equally efficacious, shapes emerged or became common when commercial incentives might have provoked the emergence of such shapes. Nor is it surprising that after 16 years of patent monopoly and continuous post-patent manufacture, sale and marketing of the fence dropper containing the S loop, that the only, 'commonly known ' way of describing the dropper has become, the S shape of the loop. The evidence of Mr Sachs and Mr Bailey establishes that across a period of well over 30 years, the S shape ' applied to wire capturing features of fence droppers ' has become ' synonymous ' with fence droppers of the applicant and the descriptive term for that synonym is 'S dropper' or the 'dropper with the S shaped loops'. I accept that the S shape of the loop has become synonymous with the shape of fence droppers made by the applicant by reference to the S shape. 58 A question then arises of how might a person who manufactures and sells a fence dropper, describe or exhibit or extol the features of a dropper, and in particular an S shaped catch incorporated within such a fence dropper that engages the intermediate wires of a fence, without necessarily making reference to the shape of the catching mechanism especially when the catch, in that shape, performs a function essential to the operation of the dropper and the dropper is commonly known and described by the alphabetic description S dropper. When such a user incorporates the S shape within its article (there being no patent or registered design prohibition upon that use) and exhibits the S shaped feature of the catching loop in catalogues or brochures, is the user saying something about the essence of the goods; what they are; how they work; or, is the user using the shape as a trade mark to say 'know these goods in trade because I have made them more 'arresting of appearance' and 'more attractive' by this shape' so as to distinguish them from the goods of other traders. 60 Section 120 of the Act expressly incorporates the notion previously implied ( The Shell Company of Australia Limited v Esso Standard Oil (Australia) Limited (supra)) in both s 58(1) and s 62(1) of the Trade Marks Act 1955 (Cth) ('the 1955 Act') that infringing use of a mark is limited to use ' as a trade mark '. Use as a trade mark is use of the mark as a badge of origin in the sense that use indicates a connection in the course of trade between goods and the person who applies the mark to the goods. ( Coca-Cola v All-Fect (supra); Johnson & Johnson Australia Pty Limited v Sterling Pharmaceuticals Pty Limited (1991) 30 FCR 326 at 341 per Lockhart J and 351 per Gummow J). The registered owner of the trade mark has, subject to Part 3 of the Act, the exclusive rights to use the trade mark (and authorise others to use the trade mark) in relation to goods in respect of which the trade mark is registered (s 20(1))). Section 120(1) provides relevantly, that a person infringes a registered trade mark if the person uses, as a trade mark, a sign that is substantially identical with the trade mark in relation to goods in respect of which the trade mark is registered. A trade mark is a sign used or intended to be used, to distinguish goods dealt with or provided in the course of trade by a person from goods so dealt with or provided by any other person (s 17) and a sign includes a shape (s 6). Section 7(4) provides that use of a trade mark in relation to goods means use of the trade mark upon or in physical or other relation to the goods. Accordingly, has the respondent used, as a trade mark, the three dimensional sign in relation to goods by importation, sale and promotion of articles, embodying the shape, to distinguish those goods in the course of trade from the goods of others? 61 The answer to that question requires examination of the purpose and nature of the impugned use, the relevant context, the way the trade mark has been adopted or applied in relation to goods and the use of brochures, catalogues and advertisements ( Johnson & Johnson v Sterling at 347). A part of that contextual analysis involves an assessment of whether use of the trade mark might be illustrative or descriptive of the goods rather than use as a trade mark. In that context, the extent to which a three dimensional shape for the goods or a part of the goods serves function is an important element in the determination of whether use is distinctive of commercial origin or illustrative or descriptive of the embodied shape of the goods. Use of the trade mark must be demonstrated to be use that serves the primary function of a trade mark ( Johnson & Johnson v Sterling at 348 and 349; Christodolou v Disney Enterprises Inc [2005] FCA 1401 ; (2005) 66 IPR 595). A word trade mark that contains a descriptive element may nevertheless still serve as a badge of origin as language does not necessarily convey only one idea ( Johnson & Johnson v Sterling ) although the descriptive element may make it difficult to demonstrate that the words serve the primary function of distinguishing the goods. ( Wellness Pty Ltd v Pro-Bio Living Waters Pty Ltd (2004) 61 IPR 242 per Bennett J [29]). 62 Similarly, a trade mark that comprises a three-dimensional shape for embodiment in goods or a part of goods where the shape serves in part a functional purpose might be thought to still serve as a badge of origin. Since the goods, or a part of the goods, take the form of the shape serving that functional purpose, it would be difficult to demonstrate that use of the shape of the goods serves the primary function of a badge of origin. Such use is very likely to convey something of the functional attributes of the goods, much akin, by analogy, to the use of the oil drop man to identify the qualities of the Shell Petrol in Shell v Esso (supra). Where the goods embody the shape, a seller of goods bearing the shape, might find it difficult to describe or illustrate the goods without reference to the shape in much the same way that Tansing ( Musidor BV v Tansing (1994) 52 FCR 363) found it necessary in the course of trade in unauthorised recordings of the Rolling Stones to use the trade mark ' Rolling Stones ' to describe the content of the goods being sold. Similarly, how might Disney Enterprises Inc describe an animated cinematic version of ' The Hunchback of Notre Dame ' without using the words ' The Hunchback of Notre Dame ' notwithstanding the registration of that title as a trade mark for entertainment services ( Christodoulou (supra)). Where the trade mark comprises a shape which is demonstrated to involve a substantial functional element in the goods, references to the shape are almost certainly references to the nature of the goods themselves rather than use of the shape as a trade mark. 63 In Koninklijke Philips Electrics NV and Another v Remington Products Pty Ltd [2000] FCA 876 ; (2000) 100 FCR 90, the Full Court considered in the context of contended infringement of a two dimensional device mark for the configuration of three rotary shaving heads arranged in an equilateral triangle and a second two dimensional device mark (described as a three dimensional mark because the depiction was said to represent a three dimensional appearance) whether dealing (manufacture, importation and sale) in goods having that shape, being a functional shape depicted in each of the two dimensional device marks, constituted use of the mark ' upon, or in physical or other relation to the goods ', the subject of the registration. In addressing that question, the Court was considering marks depicting a configuration for rotary shaving heads forming part of an electric shaver that had been popular for over 30 years and a configuration of rotary heads that ' although not the only way in which to make an efficient rotary electric shaver, it is one of the best ways to do so and this model has proved extremely successful '. In respect of the second two dimensional mark, the applicants had incorporated within the registration a so-called ' disclaimer ' to the effect that 'registration of the mark would neither confer nor recognise any right to use its features as a design applied to an article of manufacture. [12]. [12]. As a result, the shape of goods (or of a part of goods) embodied by reason of the nature of the goods or a technical or functional result to be achieved by the goods could not distinguish the goods of one trade source from similar goods of another. [15]. The shape might distinguish or differentiate the goods as goods but not the trade source. Dealing in goods of that shape is thus use of the goods not use of the shape of those goods as a trade mark. For they are cases where the shape that is a mark is 'extra', added to the inherent form of the particular goods as something distinct which can denote origin. The goods can still be seen as having, in Windeyer J's words, 'an existence independently of the mark' which is imposed upon them. Were the 1995 Act to enable the registration of a trade mark that would give the owner a monopoly over functional features, it would indeed have made a radical change to trade mark law. None of these uses constitute use of the shape as a trade mark, nor does importing and offering for sale a dropper that contains an S loop constitute use as a trade mark. Although the earlier brochures of the respondent depicting the exploded view, in situ, of the shape of the S loop (thereby giving particular emphasis to the feature) and descriptive references to the ' unique loop ' impressionistically suggest use of the shape as a distinguishing feature of the goods in the course of trade going to origin, the references are ultimately properly seen as a reference to the configuration of the goods as goods that owe the shape of the S loop to an essential function of the article, that is, the nature of the goods themselves and the capacity of the loop to catch, fix and secure intermediate wires of a fence. There is a circularity involved when the shape in the goods is such an important functional part of the dropper that a user necessarily illustrates the S shape of the catch in the course of trade to convey the features of the dropper. Such use has all the appearance of selecting the shape as a distinguishing feature of the respondent's dropper as a badge of origin. However, such use is not use of the shape as a badge of origin, but rather a statement of the essential functional feature of the S loop inherent in the goods in the sense contemplated in Philips v Remington (supra) per Burchett J; Hill and Branson JJ agreeing and in Kenman Kandy (supra) per French J [45] and Stone JJ [137] and [140]. 67 The applicant says the observations of the Full Court in Philips v Remington are confined to the application of two dimensional marks to goods. It is not an authority directed to a case of infringement of a three dimensional shape mark incorporated in goods. Whilst that is true in terms, the expressions of principle in relation to shapes that take form by reason of the function to be performed or due to the nature of the goods, are broader statements of principle. Where the three dimensional shape inheres in goods or a part of goods and the goods or that part perform a functional role (particularly where the shape derives from a novel and patented improvement to functionality), the use of the shape by importing and selling an article embodying the shape and promoting that article (and its shape) by graphic illustrations or by photographs, is not use of the sign as a trade mark but the expression of the essential features of the goods. 68 I have considered all of the contextual circumstances identified by the applicant including the additional matter of the evidence of Mr Bailey that there are alternative cheaper designs the respondent might have selected or alternative shapes or designs which would be of a similar cost. The applicant says this evidence also suggests a conscious decision to use the applicant's trade mark, as a trade mark. However, notwithstanding the contextual factors, it seems to me that the functional features of the S loop make it clear that the respondent's use of the shape is not use as a trade mark. 69 A further consideration bearing on whether the respondent has used the shape of the S loop catch as a trade mark is this. The social compact underpinning the patent legislation is the encouragement of novel innovation by the grant, subject to qualifying criteria, of a term of exclusivity on the footing that upon the expiry of the monopoly, others are free to exercise the former monopoly. The 1995 Act by enabling shapes to be registered as a badge of origin did not establish a regime under which inventors might be able to secure enduring exclusive rights of use and foreclosure of others through infringement proceedings for the shape of a functional manner of new manufacture formerly the subject of a patent, as in this case. A shape essential to the very subject of the patent will almost always be largely functional as the invention must be novel and useful. If the shape is entirely incidental to the subject matter of the patent, it is unlikely to be a shape bearing any functional element. That is not this case. 70 Accordingly, the respondent has not infringed the applicant's trade mark. Section 25 applies to bring about that result if the trade mark consists of or contains a sign that describes or is the name of an article formerly exploited under a patent; it is two years since the patent expired or ceased; and the sign is the only commonly known way to describe or identify the article. The registered owner is taken to have 'ceased to have those exclusive rights at the end of the period of two years after the patent ceased or expired' (s 25(2)(b); s 25(3)(b)). Expiry of the patent occurred on 8 October 1984. The opportunity to apply for and obtain a trade mark for the shape of the loop arose under the 1995 Act. Section 25 in one sense operates upon a construct as the exclusive rights contemplated by ss 25(2) and 25(3) can only be those rights conferred by the Act. Those rights had not arisen on 9 October 1986 (being two years after expiry of the patent) when the registered owner is taken to have ceased to have 'those exclusive rights' in respect of a subject matter that was not then capable of being a trade mark and would not be the subject of an application for a trade mark until 18 May 2001. The section at one level seems to contemplate a registered trade mark and articles exploited under a patent during the currency of the mark. However, s 25(1) applies in circumstances where three integers are satisfied: a registered trade mark consisting of or containing a sign describing (or a sign that is the name of) an article formerly exploited under a patent; an elapsed period of two years from expiry of the patent; and a sign that is the only commonly known way to describe or identify the article. In those circumstances, the registered owner does not have any exclusive rights. The temporal provision should be understood as declaring that as from a relevant date determined by the section, no exclusive rights under the Act could arise in the registered owner. The rights that would have arisen on registration (s 20(3)) did not, as those rights are subject to Part 3 which includes s 25 of the Act. 72 Sections 24 and 25 of the 1995 Act are based on s 56 of the 1955 Act which owes its formulation in substantial part to s 15 of the United Kingdom Trade Marks Act 1938. Section 56(1) of the 1955 Act provided that the registration of a trade mark did not become invalid by reason only of the use, after the date of registration, of a word or words which the trade mark contained or of which it consisted, as the name or description of an article. As to invalidity, the Court in Campamor Sociedad, Limitada & Anor v Nike International Limited & Anor [2000] HCA 12 ; (2000) 202 CLR 45 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ, approved the view of Taylor J in F H Faulding & Co Ltd v Imperial Chemical Industries of Australia and New Zealand Ltd [1964] HCA 38 ; (1965) 112 CLR 537 at 560-561 that s 56 operated as a provision intended to define exhaustively what manner of use after registration of a registered word trade mark would operate to invalidate the mark. Section 56(2)(b) of the 1955 Act provided that where an article was formerly manufactured under a patent, a period of two years had elapsed since the patent ceased or expired and the word which the trade mark contained or of which it consisted, was the only practicable name or description of the article, particular consequences arose. They were these. If the trade mark consisted solely of that word, the registration of the trade mark 'so far as regards registration in respect of the article ... or of any goods of the same description, ... shall be deemed for the purposes of s 22 to be an entry wrongly remaining in the Register' (s 56(3)). Section 22(1) of the 1955 Act provided that a prescribed Court 'may, on the application of a person aggrieved or the Registrar, order the rectification of the Register by [among other things] the expunging or amendment of an entry wrongly made in or remaining in the Register'. If, however, the trade mark contained that word and other matter, s 56(4) provided that a prescribed Court, in deciding whether the trade mark ought to remain in the Register in relation to the article or any goods of the same description, 'may, in the case of a decision in favour of the trade mark remaining in the Register, require as a condition that the proprietor shall disclaim any right to the exclusive use of that word in relation to that article or to any goods of the same description ... but no such disclaimer affects any rights of the proprietor of the trade mark except such as arise out of the registration of the trade mark in respect of which the disclaimer is made'. Section 56(5) contained a provision which had the effect of deeming rights of the registered owner to have ceased. 74 Section 24 of the 1995 Act addressees the circumstances of a registered trade mark which consists of or contains a sign that after the date of registration of the trade mark had become generally accepted within the relevant trade as the sign that described or had become the name of an article. Section 25 of the 1995 Act addresses a trade mark that bears a relationship to articles formerly exploited under a patent. Section 25 preserves the distinction between a registered trade mark that consists of or contains a sign although the term 'consists solely' used in s 56(3) is not used in s 25(2). A trade mark consists of a sign for the purposes of the 1995 Act if the trade mark is the sign. If the trade mark consists of a sign, as in this case, s 25(2) provides that the registered owner does not have any exclusive rights to use (or authorise others to use) the trade mark, in relation to the article or goods of the same description. Section 56(3) of the 1955 Act deemed the relevant entry to be an entry wrongly remaining on the Register for the purposes of the Court's discretion conferred by s 22(1) of the 1955 Act, conferred generally 'subject to the Act'. The power to rectify the Register to remove an entry wrongly remaining on the Register is conferred on the Court under the 1995 Act by s 88(1)(b) on the grounds set out in s 88(2). Section 87 [23] contemplates that either ss 24 or 25 might apply in relation to a registered trade mark. If, relevantly here, s 25 does apply, the Court may on the application of an aggrieved person or the Registrar 'but subject to section 87(2) and section 89, order that the Register be rectified by (a) cancelling the registration of the trade mark; or (b) removing or amending any entry in the Register relating to the trade mark having regard to the effect of section 25 on the right of the registered owner of the trade mark to use the trade mark, or any sign that is part of the trade mark, in relation to particular goods or services'. 75 Section 87(1) confers a discretion on the Court to order cancellation of the registration of the trade mark. That discretion is to be exercised according to its terms and, where appropriate, settled principle. The discretion is to be exercised subject to s 87(2) which identifies circumstances in which the Court might decide not to make an order. Similarly, the Court might by s 89 of the Act decide 'not to grant an application under s 87' and therefore refuse to make an order which, is itself, an exercise of the discretion, if the registered owner satisfies the Court that the ground relied on by the applicant 'has not arisen through any act or fault of the registered owner'. In terms, the discretion must not only be exercised taking account of s 87(2) and s 89 but having regard to the effect of s 25 on the right of the registered owner of the trade mark. It seems to me that all these matters must be weighed carefully in the balance to determine whether the Court ought to cancel the registration of a trade mark and, in consequence, extinguish rights conferred by the Act on the registered owner. The discretion is a true discretion in the sense that all the matters going to s 25 (the circumstances of this case) must be considered, the particular circumstances of the applicant, any relevant s 87(2) factors, the conduct of the registered owner and the effect upon the rights of the registered owner brought about by the operation of s 25. Some of these factors will weigh heavily as s 25, for example, has the applied effect of declaring that the registered owner has no exclusive rights. In that sense, the discretion may seem facultative only ( EOS (Aust) Pty Ltd v Expo Tomei Pty Ltd (1998) 42 IPR 277, per Branson J). However, the Court is required to determine whether an order ought to be made or refused taking account of the identified considerations. Although those considerations are more limited than the reference in s 22(1)(b) of the 1955 Act which conditioned the discretion as 'subject to the Act', s 87(1) requires the Court to consider particular matters or circumstances by drawing within s 87(1) the specific matters, facts and circumstances contained in s 87(2) and s 89. Moreover, an order for cancellation of the registration of a trade mark is one of and perhaps the most significant intervention a Court might make in granting remedial orders inter-parties or on the application of the Registrar. That suggests that the Court is required to consider and weigh (within the bounds identified by the section) whether an order ought to be made in all the relevant circumstances. Accordingly, the term 'may' in s 87(1) ought not to be read as 'must upon the application of s 25 but subject to subsection (2) and section 89, order' etc. The power conferred on the Court in respect of cancellation under s 87(1) involves the exercise of a discretion as much as s 22 of the 1955 Act involved the exercise of a discretion in relation to expungement ( Campomar v Nike (supra) [87], p 80, the Court). 76 Section 87(2) like s 87(1) contemplates the application of either s 24 or s 25 in relation to a trade mark and uses the language 'because the trade mark contains a sign' and then sets out alternatives that fulfil the content of the application of either s 24 or s 25. The first alternative relates to the circumstances engaging s 24, namely, 'because the trade mark contains a sign that (a) has become generally accepted within the relevant trade as the sign that describes or is the name of an article ...'. The second relates to the circumstances engaging s 25, namely 'because the trade mark contains a sign that describes or is the name of an article that was formerly exploited under a patent'. In either case, the Court may decide not to make an order under s 87(1) and allow the trade mark to remain on the Register in respect of the article or goods of the same description subject to any condition or limitation the Court may impose. Section 25 of the 1995 Act maintains the distinction evident in s 56 of the 1955 Act between a trade mark that contains subject matter (a word or words in s 56) and one that consists of that subject matter. Differential consequences arise for each. Section 87(1) is predicated upon the application of s 25 which applies in the circumstances set out in s 25(1). Section 87(2) so far as s 25 is concerned, addresses a circumstance where s 25 applies because the trade mark contains a sign rather than consists of the sign and secondly, because the trade mark describes or is the name of an article. Section 87(2) does not also require for its operation that the sign is the only commonly known way to describe or identify the article. Once s 25 applies according to its terms, the discretion in s 87(1) is enlivened. Subject to its terms, the exercise of the discretion must take into account whether an order ought not to be made in the case of a trade mark containing a sign that describes or is the name of an article formerly exploited under a patent. Since the trade mark in this case consists of the sign rather than 'contains' a sign (among other elements) s 87(2) has no operation for the purposes of s 87(1). 77 Are the elements of s 25(1)(a), (b) and (c) satisfied? 78 The trade mark's legislation of the Commonwealth has been evolving over time and now comprehends any shape, colour, sound or scent as a possible trade mark. Section 25 must be given a purposive construction consistent with the evolution of the Act to contemporary circumstances. The elements of s 25(1) on the facts of this case, are these. 79 The trade mark consists of the sign as it is the entirety of the trade mark. 80 The sign is a shape. 81 A shape when formed is capable of describing something, as the shape is capable of conveying information. A continuous line drawn around a centre point where each point on the line is equidistant from that point, describes a shape in a particular plane. The name given to that shape is a circle and the shape when formed is commonly understood as describing a circle. A shape might take form in two dimensions or when the shape is to be applied to or embodied in an article, the shape will take form in three dimensions. A three dimensional shape to be embodied in goods is capable of describing those goods by that shape. That shape might also find expression in an analogue for the shape such as an alphabetic analogue like 'S shape' or 'S dropper' that sufficiently approximates the features of the shape that it becomes the name, by that analogue, of the article. In Philips Electronics N V v Remington Consumer Products (1998) 40 IPR 279 at 292 , Jacob J observed that: 'A picture of an article is equivalent to a description of it --- both convey information. If the picture is simply of an artefact which traders might legitimately wish to manufacture then to my mind it is just like the common word for it' . In that case, Jacob J was considering a question of capacity to distinguish. However those observations as they relate to the capacity of an image to convey information and thus describe an artefact or article are relevant to this issue. A picture is simply a two-dimensional image of the three dimensional article reflecting features of shape. His Honour's observation was adopted in Koninklijke Philips v Remington (supra) at p 101 [12], per Burchett J; Hill and Branson JJ agreeing. 82 In s 25(1)(a), the shape sign must describe or be the name of an article formerly exploited under a patent. The applicant says a shape sign is not capable of describing an article, only words can do that. Section 25 of the 1995 Act expressly contemplates that a sign, defined to include a shape, might describe or be the name of an article. Section 25(1)(i)(a) is consistent with a common understanding that a shape by conveying information as to the features of an article, might describe that article by those features. Trade marks, in a modern society, 'play a significant role in ordinary public and commercial discourse, supplying vivid metaphors and compelling imagery disconnected from the traditional function of trade marks to indicate source or origin of goods' ( Campomar v Nike (supra) at 67 [46] per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ). The categories of subject matter susceptible of registration as trade marks have evolved from the 1905 Commonwealth Act repealed by the 1955 Act to the Trade Marks Amendment Act (1976) (Cth ) providing for the introduction of service marks, to the 1995 Act providing for the adoption of a definition of sign to include shape, consistent with the recommendations in July 1992 of the Working Party appointed by the Commonwealth Minister for Science, Customs and Small Business, in its report ' Recommended Changes to the Australian Trade Marks Legislation' . Through the various approaches to framing the content, in many important respects, of the statutory instruments, 'it is significant that the balancing of all these interests has been struck differently between one Statute and the next as markets and trade methods and practices have changed' ( Campomar ) [49] per the Court (supra ). 84 Does the sign describe an article? 85 In s 25(1)(a), the sign must describe or be the name of an article formerly exploited under a patent. That article is the fence dropper. The features of the three-dimensional shape describe the S loop forming part of the article: an inverted U having the appearance of an S bend that has the identified functional advantages resulting in 'an improved fence dropper'. The article is not just a fence dropper but an improved fence dropper, improved by reason of the embodiment of the invented shape in the article. The improved fence dropper is made up of a galvanised wire, where, at points along the wire, an S shaped loop is formed. The sign shows the line of the 'upwards' part of the wire (which is simply a section of wire) entering the S shape which, as shaped, has the effect of forming the upper inverted U or top section of the S shape, and a downwards wire entering and forming the bottom U or lower section of the S. The fence dropper may comprise two or many more S shaped loops depending upon the number of intermediate wires to be caught. The article is made up of a collection of S loops. The shape of the repeated loop is, in substance, the article. But for, an S loop or two or more S loops, the dropper has no utility subject to one thing. The tails, top and bottom, connect the dropper to the top and bottom wires of the fence. The tails are an important feature of the dropper and each tail must be wound on to the top and bottom wires respectively of the fence. The dropper could not function properly without the tails. The shape sign does not include the tails of the article. The patent specification [30] sets out the features of the article to be exploited under the monopoly and identifies the essential feature resulting in an improved fence dropper as the configuration or shape of the formed bend in the wire to catch the intermediate wires. The critical thing about the dropper 'formerly exploited under [the] patent' is the shape of the formed catch or loop. Apart from the disadvantage that earlier droppers were necessarily designed of heavy gauge wire, another disadvantage was that the intermediate catches as then designed were so turned by the top and bottom attachment means as to tend to kink the fence wires. Difficulty would arise if the intermediate wire should be broken. The invention resided 'broadly', as the specification says, in a fence dropper having a top and bottom engagement means consistent with the prior art and a series of intermediate catchment loops comprised of the S shape to overcome the perceived disadvantage of prior art catches. In that sense, the S loop is the functional novel feature of the article. Since the article is constituted by the collection or series of intermediate S loops depending on the number of wires to be caught, the shape of each S loop is the dominant element of the improved article. 86 Accordingly, the sign, in substance, describes the article. 87 More fundamentally, s 25 contains a limitation within Part 3 itself upon s 20(1) which confers exclusive rights of use 'in relation to goods' in respect of a trade mark that might, for the purposes of s 17 of the Act, comprise either the shape of the goods or a shape of part of the goods. Since a shape sign for a part of a good might be a trade mark for that good, a sign might, as a matter of consistency, describe a good by so describing a part of the good. If the good is an article formerly exploited under a patent, the sign will describe the article. In addition, the article is commonly known as the 'S dropper'. 88 The shape of the loop comprising the sign has lent its shape to the name of the article through the device of an alphabetic analogue, 'S' as the applicant's patent and trade mark agents contended to the Registrar and as Mr Sachs accepts. The shape can only operate however as the name of the article through the intermediary of a recognised descriptor of the shape. Since a sign now comprehends a shape, purposive meaning must be given to the language of the section. A well known shape could become the name of an article if the name of the shape (such as a letter emblematic of the elements of the shape) has become the name of the article. In this case, since the S shape has become not only a commonly known way of describing the dropper, but the only commonly known way, of doing so, the language of the section is not strained by recognising that an alphabetic analogue for the shape has become the name of the article formerly exploited under the patent. Notwithstanding the currency of that alphabetic analogue, s 25(1)(a) is satisfied, on the footing that the sign describes the article formerly made under the patent. 89 As to s 25(1)(b), the patent expired on 8 October 1984. 90 As to s 25(1)(c), for the reasons indicated previously, I am satisfied that the sign is the only, 'commonly known' way to either describe or identify the article. In the result, s 25(2) operates to deprive the registered owner of any exclusive rights to use or authorise others to use the trade mark and those rights are taken to have ceased on 9 October 1986, notwithstanding that they arose under the Act much later in time. The cross-applicant has made out each of the elements of s 25(1) that cause that section to apply. As a result, because the trade mark consists of the sign, s 25(2)(a) declares that the registered owner does not have any exclusive rights to use or authorise others to use the trade mark in relation to the fence dropper formerly exploited under the patent or other goods of the same description. Since the registered owner has no such exclusive rights, prima facie the Register ought not to continue to reflect registration of a trade mark that suggests, to those who deal with the Register, the apparent enjoyment of those exclusive rights in the registered owner. The effect of s 25 of the Act is to declare that the registered owner does not have 'any exclusive rights' of the kind described in that section. If those rights are a sub-set of broader exclusive rights, there may be good reason not to cancel the registration of the trade mark so as to enable the registered owner to enjoy other rights conferred by registration of the trade mark. Section 20(1) provides that if a trade mark is registered, the registered owner has, subject to Part 3, the exclusive rights (a) to use the trade mark; and (b) to authorise other persons to use the trade mark; in relation to goods and/or services in respect of which the trade mark is registered. Section 20(2) provides that the registered owner 'also has the right to obtain relief under this Act if the trade mark has been infringed'. Infringement of a registered trade mark occurs having regard to Part 12 of the Act. The right to obtain relief in respect of infringement is necessarily a consequential right dependent upon the registered owner having the exclusive rights conferred by s 20 which accrue to the registered owner 'as from the date of registration of the trade mark' (s 20(3)). Section 22 provides that the registered owner may, subject only to any rights appearing in the Register to be vested in another person, 'deal with the trade mark as its absolute owner and give in good faith discharges for any consideration for that dealing'. The section does not protect anyone who deals with the registered owner other than as a purchaser in good faith for value and without notice of fraud. Equities may be enforced against the registered owner except to the prejudice of a purchaser in good faith for value. 92 Sections 24 and 25 declare that the registered owner does not have any exclusive rights of use as identified in those sections, in the circumstances of those sections. Section 26 sets out the powers of an authorised user of a registered trade mark, subject to any agreement between the registered owner and an authorised user. 93 Section 25 falls within Part 3. The exclusive rights conferred by s 20(1) are conferred subject to Part 3. It can be seen that the exclusive rights dealt with by s 25(2) of the Act are not merely a sub-set of broader rights. Section 25 meets the conferral of exclusive rights by s 20(1) head on. 94 Section 87(2) seems to me to have no application as the trade mark does not contain a sign but consists of a sign. However, even if the phrase 'contains a sign' comprehends a trade mark that comprises a trade mark containing or consisting of a sign, the consideration that the sign describes a fence dropper formerly exploited under the patent does not provide a foundation for concluding that the trade mark should remain on the Register in respect of the article or goods of the same description subject to a condition or limitation that the Court might impose. The position might be different if the trade mark consisted of a sign and 'other matter' where the relationship between the sign, the remaining features of the mark and the goods or services in respect of which it is registered suggest that the trade mark should remain on the Register subject to a particular condition or limitation. 95 Section 89 of the Act [24] conditions the exercise of the discretion under s 87(1) in the sense that the registered owner may be able to satisfy the Court that the ground relied upon by the applicant under s 87 has 'not arisen through any act or fault of the registered owner'. The ground relied upon by the cross-applicant is the application by force of s 25(1) of s 25 resulting by reason of s 25(2)(a) in the registered owner not having any exclusive rights to use the trade mark or authorise others to use the trade mark in relation to the article formerly exploited under the patent or other goods of the same description. It seems to me that the phrase 'act or fault of the registered owner' contemplates any conduct on the part of the registered owner having a material connection with an element of s 25(1) of the Act. It is the demonstrated satisfaction of those elements which causes the ground relied upon by the cross-applicant to arise. 96 In this case, the registered owner has contributed significantly to elements of s 25(1) which has given rise to the ground relied upon by the cross-applicant. The registered owner on 18 May 2001 applied for and ultimately obtained registration of a trade mark that consists of a sign which is the shape of the S loop the subject of the expired patent. At the moment in time when the registered owner applied for the trade mark, that shape was emblematic of a fence dropper made and sold by the applicant containing an S loop which was commonly known as the S dropper. By reason of the shape, not only was the fence dropper commonly known as the S dropper but, as Mr Sachs conceded, the articles sold by the applicant are the same articles formerly exploited under the expired patent and the reference to the term 'S dropper' was distinguishable and identifiable as the S dropper of the applicant and only the applicant [50]. Since the applicant has sought to apply for and obtain registration of a trade mark consisting of a sign that describes an article formerly exploited under the patent knowing that the patent had expired in 1984 and that the sign is the only commonly known way to describe or identify the article formerly exploited under the patent, the applicant has obtained a trade mark registration in circumstances where the registered owner does not have any exclusive rights to use or authorise others to use the trade mark in relation to the article or goods of the same description. 97 In simple terms, the applicant has, through registration of the trade mark, sought to take advantage of the 1995 Act and its introduction of any 'shape' as an element of a sign and thus potentially a trade mark for the purposes of s 17 of the Act, to strategically put itself in the same position, through registration of a three-dimensional shape for a functional 'S' shaped loop for embodiment in fence droppers, as it would have been in, had the expired patent remained on foot, with the added advantage that exclusive rights of use and the right to obtain relief for infringement thus obtained, would be renewable every 10 years as required by s 77 of the Act (recognising that the Registrar '... must renew the registration ...' ) pursuant to a request made in accordance with s 75 of the Act. 98 Accordingly, I am not satisfied that the ground relied upon by the cross-applicant 'has not arisen through any act or fault of the registered owner'. 99 As a result, the discretion conferred by s 87(1) ought to be exercised to cancel the registration of the trade mark. In spite of s 120(1), for present purposes, use as a trade mark of a sign substantially identical with the trade mark in relation to fence droppers is not an infringement of the registered trade mark if the respondent has used the sign to indicate a characteristic of the goods, namely, the feature of the S loop that engages the intermediate wires, or, the purpose of that feature in the function and operation of the goods. Having regard to the consideration of whether the respondent's conduct is use of the trade mark, as a trade mark, and the findings on that question, infringement is not made out. It is not necessary to decide whether these additional defences are also made out. However, some observations should be made. First, consistent with the earlier discussion, the respondent's use of the sign is use so as to indicate the characteristic of the S loop to catch, fix and secure the intermediate wires of a fence and the intended purpose of the goods containing the shape. Secondly, s 122(1)(b)(i) and s 122(1)(c) are predicated upon 'use of the sign in good faith. Mr David Allan Hastie is the managing director of the respondent and has been a director since incorporation of the company in May 2003. Mr Hastie swore an affidavit in the proceeding, exhibit 18. Mr Hastie has been a director of AEG New Zealand since its formation in August 1995 and that company is in the same business as the respondent. Mr Hastie has enjoyed over 27 years involvement in the manufacture of rural and industrial products. 103 Mr Hastie's first introduction to fence droppers was as a result of his employment by a New Zealand company, Cyclone Industries Ltd (Cyclone) in 1978. Mr Hastie worked continuously for Cyclone from 1978 to 1981 and from 1982 to 1995. Mr Hastie says he was responsible in 1978 for running wire products machinery including the manufacture of S shaped fence droppers which were then being made by Cyclone under a patent licence from National Nail and called 'Lightning Fence Droppers'. Mr Hastie agreed that the S shape then adopted by Cyclone was the S shape that appears in the registered trade mark in these proceedings. Mr Hastie agreed that he was well acquainted with the S shape during his work with Cyclone. In 1995, Cyclone closed its South Island operations and relocated its equipment to alternative premises in the North Island. In 1995, Mr Hastie purchased Cyclone's woven wire screen business and in August 1996, Mr Hastie was approached by a commercial group made up of merchants and fencing contractors, and asked to manufacture wire fence droppers. Mr Hastie agreed that at the time he elected through AEG New Zealand to enter the market for fence droppers, he was well aware of the Lightning Dropper and the S shape at the centre of it. Mr Hastie says that he made inquiries on behalf of AEG New Zealand of Baldwin Son and Carey, Patent and Trade Mark Attorneys of Christchurch New Zealand to determine whether any New Zealand patent or patents prevented the manufacture of wire droppers using wire dropper manufacturing equipment. Mr Hastie asked the patent attorneys to look at patents for any wire dropper similar to the dropper proposed to be made and to identify any possible infringement that might arise. Mr Hastie agreed that the dropper he intended to make was the Cyclone Lightning Dropper. Mr Hastie says he asked the patent attorneys to look at the 'whole market of droppers' that might affect his company's manufacture of the Cyclone Lightning Dropper. Mr Hastie accepted that the shape of the dropper was the matter of particular interest to him as it was ' the shape the public was interested in getting further access to and was struggling to get hold of ' and he proposed to serve that need ' by supplying to them what they had previously known as the Lightning Cyclone Dropper'. In April 1997, AEG New Zealand commenced manufacture of its 'ezy-lock' wire fence dropper. In July 2003, the respondent commenced sale of AEG New Zealand ezy-lock droppers. During the period 2002 to July 2003, AEG New Zealand sold its droppers to Hurricane Wire Products Ltd, a New Zealand company, that distributed droppers to a related Australian company, Hurricane Pty Ltd, for sale in the Australian market. Did you engage in any further inquiries of Baldwin Son and Carey or anybody else in relation to the intellectual property position before you changed the activities and moved to Australia? When I came to Australia I was unaware --- well, when I did the search in 1996, I believed that the patents in Australia and New Zealand had well expired, and that we basically had free access. And we also were well-known, that Hurricane had been selling our droppers here for 18 months without any issues. Now, when you say in your answer then, the patent position in Australia and New Zealand, you do not suggest, do you, that Baldwin Son and Carey advised you in 1996 on the patent position in Australia? No. It was the New Zealand one, but I did actually ask them about the Australian one as well. 105 Section 122(1) of the Act like s 64(1) of the 1955 Act, assumes infringing conduct on the part of the respondent that is excused when the person uses a sign in good faith to indicate one or more of the identified characteristics. Section 64(1)(b) contemplated use in good faith by a person 'of a description of the character or quality of his goods' whereas s 122(1)(b)(i) concerns use in good faith to indicate a broader range of characteristics. The essential concern going to good faith in s 122(1) is that the use be honest. Something less than fraudulent intention in the common law sense will suffice to prevent use being in good faith ( Johnson & Johnson v Sterling (supra), per Gummow J at p 356). There must be however, identified conduct on the part of the respondent that demonstrates use of the sign in circumstances where Mr Hastie has engaged in conscious and deliberate acts to undermine the registered owner or the integrity of the trade mark. Has the respondent sought to undermine the trade mark by the 'assiduous efforts of an infringer? ( Johnson & Johnson v Sterling per Gummow J at p 355 adopting the phrase used by Windeyer J in Re Bali Brassiere Co Inc Registered Trade Mark: An Application by v Berlei Limited [1968] HCA 72 ; (1968) 118 CLR 128 at 133). A conscious decision to try and render generic, a trade mark which on advice from reputable patent and trade mark attorneys would be infringed by use is an example ( Sterling Pharmaceuticals Pty Ltd v Johnson & Johnson Australia Pty Ltd (1990) 96 ALR 277 at 311 per Hill J). In that case, the decision by Johnson & Johnson to use the trade mark was made with 'full knowledge' of the registration with advice that use would constitute infringement of the mark; and in circumstances where use was part of an international strategy to undermine the mark by rendering it generic. Since those ulterior motives subsisted, the use was found not to be honest. In this case, Mr Hastie had worked with and had been responsible for manufacturing S shaped wire droppers since 1978. He knew of the licence agreement between National Nail and Cyclone and knew that the improved dropper was the subject of a patent in New Zealand. He knew that royalties had been paid under the licence until the expiry of the prolongation period of the patent in New Zealand in 1986. Before entering the New Zealand market in 1996, Mr Hastie sought advice as to the patent position in that country. He understood that any patent had expired for the S shaped dropper. He assumed that there was no patent protection for it in Australia. He sought advice in 1996 from patent attorneys and he says he at least asked about the position in Australia. There is no independent written advice to Mr Hastie going to the position in Australia. I accept that Mr Hastie assumed in 2003 that there was no patent on foot in Australia but that he did not seek advice in 2003 as to the intellectual property position in Australia concerning the S dropper. 106 The applicant's trade mark was lodged on 18 May 2001; accepted for registration on 13 October 2003, acceptance was advertised on 30 October 2003; the certificate was sealed on 9 February 2004 and registration was advertised on 26 February 2004. Mr Hastie had the experience of supplying the fence droppers to the New Zealand Hurricane entity, some of which were re-supplied to the Australian Hurricane entity for sale in Australia. Mr Hastie had not received any complaint that sale of the articles in Australia might infringe any intellectual property right of any party. Notwithstanding that the trade mark was not accepted for registration until 13 October 2003, viewed from Mr Hastie's perspective, there was no adverse intellectual property interest extant in any party in Australia. Mr Hastie was well familiar with the S shaped dropper and that rights of manufacture in Cyclone had derived from National Nail under the patent. The dropper Mr Hastie proposed to manufacture through AEG New Zealand was precisely that dropper as he intended to fulfil a market demand for that dropper specifically, which he understood to be the Lightning Dropper made from the outset by Cyclone. It seems to me that the highest at which lack of good faith can be put on the part of Mr Hastie is that he sought to take advantage of the market demand for the precise dropper which contained the S loop and which as to the shape of the loop is now, in Australia, the subject of the trade mark registration. However, at the time that Mr Hastie sought to enter the market in New Zealand in 1996, and when he elected to supply fence droppers to the respondent in Australia, Mr Hastie had no basis for believing that there was any prohibition upon the sale and distribution of an article containing the S loop. Mr Hastie believed that he was free to make and sell the S dropper in New Zealand and free to sell it in Australia. 107 In these circumstances, on the assumption that the conduct of the respondent is otherwise infringing, there is no lack of good faith on the part of Mr Hastie. The defences under s 122(1) are made out. The objections to paragraphs 11---13 are not pressed. Paragraphs 19-21 are challenged on the ground of relevance. Those paragraphs go to the steps taken to build machinery to make fence droppers so as to enable AEG New Zealand to enter the market in 1996 and the primary advantages of the machine in the forming process. I admit those paragraphs as part of the context or nature of Mr Hastie's entry into the manufacture and sale of fence droppers incorporating the S shape. 109 The applicant challenges paragraphs 33-39 of Mr Hastie's Affidavit. Those paragraphs concern a meeting that took place in March 2004, a week or so after the respondent received a letter from the applicant's patent and trade mark attorneys, asserting infringement by the respondent of the trade mark. The meeting took place between the applicant (Mr Sachs), the applicant's advisor Mr Hosburgh, and Mr Hastie in Mr Hastie's office in Darra in Brisbane. The meeting discussed the possibility of the applicant acquiring the business and assets of the respondent. The respondent presses the paragraphs on the footing that it is only when the commercial proposal fails that that the applicant presses the notion that the respondent is using the applicant's trade mark as a mark . The respondent invites the Court to infer that the applicant's claimed concern that the respondent was and is infringing the mark is a matter of tactics or recent invention and not a genuinely held concern of infringement. The circumstances of the meeting and evidence in relation to it does not assist the Court in determining whether the respondent's use is use as a trade mark. The paragraphs are not irrelevant and the objection is upheld. 110 Objections are taken to paragraphs of the Affidavit of Mr Eades sworn 12 March 2007 and filed on 18 March 2007 (Exhibit 19 in the proceeding). The objection to the last sentence of para 9 is accepted by the respondent. The applicant says the process of manufacture of the respondent's fence dropper described at paragraphs [12]-[15] of the Affidavit is not relevant and nor are the comments concerning loop styles 1 and 2 and a new loop style at paragraphs [16]-[21], and para 22 respectively. However, paragraphs [16]-[21] are responsive to Mr Bailey's evidence concerning loop styles 1 and 2. Paragraphs [12]-]15] address the process of forming the shape. I will admit the paragraphs as relevant to the evolution of the respondent's dropper and the method of adoption of the S shape derived from the cyclone dropper in the respondent's fence dropper. I will also admit para 2 as contextually relevant to paragraphs [16]-[21]. The respondent contends that having raised evidential matters going to s 25, the applicant bears a persuasive onus of demonstrating its cause of action is made out by establishing that s 25 does not apply. Section 20(1) confers exclusive rights of use upon the registered owner of a trade mark. Section 20(2) confers upon the registered owner a right to obtain relief under the Act if the trade mark has been infringed. The cause of action for infringement relied upon by the applicant is that framed by s 120(1). The elements of the cause of action involve establishing that the applicant is the registered owner of a trade mark and thus enjoys the rights conferred by s 20(2) of the Act; and secondly, the respondent has engaged in the conduct of using, as a trade mark, a sign that is substantially identical with or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. The applicant does not rely upon any other provision of Part 12. The right to obtain relief in respect of conduct falling within s 120(1) is described by s 20(2) as a right the registered owner 'also' has. 112 The right to obtain relief for infringement seems to me to be necessarily bound up with the grant of exclusive rights conferred by s 20(1). Since the grant of those exclusive rights is expressly subject to s 25 of the Act which, if satisfied, meets head on the exclusive rights conferred by s 20(1), it seems to me that proof of the subsistence of the exclusive rights is an essential element of the cause of action. In other words, the allegation made by the respondent is a denial of an essential ingredient in a cause of action and once raised and an evidential onus discharged, the persuasive onus falls upon the applicant. In Purkess v Crittenden it was said that the proposition there quoted from Phipson on evidence, 10 th Ed, par. 92, has been frequently acknowledged. The proposition was that the expression 'the burden of proof' as applied to judicial proceedings, 'has two distinct and frequently confused meanings: (1) the burden of proof as a matter of law and pleading --- the burden, as it has been called, of establishing a case, whether by preponderance of evidence, or beyond reasonable doubt; and (2) the burden of proof in the sense of introducing evidence'. The author went on to say, and this was also approved in the case last cited, that the burden of proof in the first sense is always stable, but the burden of proof in the second sense may shift constantly. Whilst it is, of course, true that the respondent seeks to avoid the plaintiff's claim in that way, the matters raised by the respondent having regard to s 20 and s 25 are properly characterised as a denial of an essential ingredient in the cause of action. Although s 120(1) does not speak in terms of the exclusive rights of the registered owner of the trade mark, the right to obtain relief is predicated upon and is conferred in support of the exclusive rights of the registered owner. If the registered owner, by operation of s 25, does not have any exclusive rights, it would be an odd notion that the registered owner could seek and obtain relief in respect of the use by a respondent of a substantially identical trade mark. Accordingly, it seems to me that once the respondent puts the elements of s 25 in issue and adduces evidence of those matters, the persuasive onus falls upon the applicant. 114 In any event, in this matter the parties agree that the disposition of the controversy does not in any sense turn upon the discharge of the burden of proof wherever it lies. There is an abundance of evidence going to the question in controversy and the findings I have made are supported by a clear body of evidence. Accordingly, that part of the application reliant upon infringement of the trade mark ought to be dismissed. 116 So far as the cross-claim is concerned, I propose to make a declaration that by reason of the application of s 25 of the Trade Marks Act 1995 (Cth) in relation to registered trade mark No. 876332, which consists of a shape kind of sign consisting of a rod bent to an S shape as depicted in the schedule in the certificate, the registered owner, Mayne Industries Pty Ltd, does not have any exclusive rights to use or authorise other persons to use the trade mark in relation to a fence dropper formerly exploited under Australian Patent No. 402,869 granted under the Patents Act 1952 (Cth) which expired on 8 October 1984, or goods of the same description and such rights are taken to have ceased on 9 October 1986. 117 I propose to make a further order pursuant to s 87(1) of the Trade Marks Act 1995 (Cth) that the Register of Trade Marks kept under s 207 of the Trade Marks Act 1995 (Cth) be rectified by cancelling the registration of registered trade mark No. 876332. 118 I propose to order that the applicant pay the costs of the respondent of and incidental to the separate question determined at trial [28]. 119 I propose to re-list the matter for further directions in relation to the remaining causes of action at a date to be nominated. I certify that the preceding one hundred and nineteen (119) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | trade marks consideration of whether the respondent has infringed a trade mark comprising a sign being a three-dimensional shape for an s loop embodied in an article described as a fence dropper consideration of whether the features of shape bear any relation to the function to be performed by the loop or the nature of the goods consideration of whether the importation of articles embodying the shape for sale and distribution and promotion through the use of advertising brochures is a use of the trade mark, as a trade mark trade marks consideration of the elements of s 120(1) of the trade marks act 1995 (cth) consideration of whether s 25 of the act applies consideration of whether the trade mark consists of a sign that describes or is the name of an article formerly exploited under a patent consideration of the effect of s 25(2) in declaring that the registered owner, in the circumstances of s 25 does not have any exclusive rights of use consideration of whether a shape is capable of 'describing' an article formerly exploited under a patent and whether a shape is capable of being the name of an article formerly exploited under a patent trade marks consideration of the discretion conferred by s 87(1) consideration of the character of that discretion consideration of s 89 and the question of whether the registered owner has satisfied the court that the ground of cancellation relied upon by the cross-applicant respondent has not arisen through any act or fault of the registered owner trade marks consideration of s 122 of the act and whether the respondent has used a sign 'in good faith' consideration of the orders to be made intellectual property intellectual property intellectual property intellectual property |
2 Section 16(1) provides that where the Attorney-General has received an extradition request from an extradition country, he may, in his discretion, give notice to any magistrate that the extradition request has been received. The s 16 notice is a prerequisite to the conduct of proceedings before the Magistrate to determine whether the person who is the subject of the s 16 notice is eligible for extradition, pursuant to s 19 of the Act. 5 The Minister for Justice and Customs, who is the first respondent in this proceeding has portfolio responsibility for extradition and, pursuant to s 19A of the Acts Interpretation Act 1901 (Cth), has the power to issue s 16 notices, notwithstanding that the section refers only to the Attorney-General. The advice, on the letterhead of the Attorney-General's Department, is signed by an Acting Assistant Secretary of the International Crime Cooperation Branch. Broadly speaking, it provides some background information concerning the applicant, the circumstances surrounding the United States' request for his extradition and the statutory framework relevant to the issuing of the notice. It recommends that the Minister issue the notice pursuant to s 16 of the Act. It is not in contention that this advice was the only material that the Minister relied upon in making his decision and therefore its specific terms are of critical importance to this appeal. 7 According to the advice, the applicant, who is a citizen of the United States of America, was arrested in Australia on 20 May 2006, at the request of the United States government. On 13 July 2006, the Australian government received a request from the United States for the extradition of the applicant. The Department submits that the criteria in paragraphs 16(2)(a)-(b) have been met and we are not aware of any circumstances that would justify the exercise of your general discretion to decline to issue a notice. You may therefore be satisfied that the United States is an extradition country. The conduct may also constitute an offence of general dishonesty contrary to subsection 135.1(1) of the Criminal Code , which attracts a maximum penalty of five years imprisonment. The Full Court described four stages in the extradition process: commencement, remand, determination by a magistrate of eligibility for surrender and executive determination that the person is to be surrendered; see also Vasiljkovic v Commonwealth [2006] HCA 40 ; (2006) 228 ALR 447 at [55] . The issue of a notice under s 16(1) of the Act formally commences the process and, as noted above, is a condition precedent to a magistrate considering the person's eligibility for surrender. The Minister's decision to issue a s 16 notice may be subjected to judicial review; von Arnim v Ellison [2006] FCAFC 49 ; (2006) 150 FCR 282 at 298, Harris at 400-401. Alternatively, the formation of the Minister's opinion is flawed and the decision is invalid if the Minister has not properly construed and applied the statutory criteria to the facts before him: Harris v Attorney General (1993) 45 FCR 11 at 27 (Ryan J). Nothing said by the Full Court in Harris v Attorney General (Cth) (1994) 52 FCR 386 controverts either of those propositions. The comments of Ryan J to which the applicant refers were directed to preconditions to the Minister issuing a notice under s 16(1) that are not the subject of challenge here. His Honour's comments were directed to whether a valid extradition request had in fact been received and whether there was an extradition objection in relation to the offence. No challenge has been made to the extradition request in this case and there is no extradition objection. The complaints made by the applicant in this case have all been directed to the reasonability of the opinion expressed by the Minister, given the alleged deficiencies in the material on which that opinion was based. Such a decision would be perverse in the Wednesbury sense; Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1 ; [1948] 1 KB 223 at 230. The decision to issue a notice under s 16 is not reviewable by a magistrate under s 19, and, subject to the limited avenues available for control by the courts, is final ... The decision operates as a necessary precondition to allow the next stage of the extradition process to occur. Although the extradition process involves a number of steps or stages before a final decision to surrender the person for extradition is made, each step is self-contained. The decision at each stage takes effect to either terminate the process or constitute the condition precedent required for the next stage to occur. Further, the issues at each stage are not the same, although there may be some overlap, eg, the existence or possible existence of extradition objections. The applicant's principal claim is that, on the basis of the information contained in the advice, the first respondent could not reasonably have formed the opinion required by s 16(2)(a)(ii) of the Act and therefore the s 16 notice was not authorised by the Act. The applicant claims that the advice did not identify the conduct allegedly constituting the extradition offence with sufficient precision. 17 In oral submissions the applicant's counsel emphasised that s 16 refers to the alleged conduct of the extradition subject rather than to the charges levelled at that person. It was submitted that the omission of the matters referred to above amounted to a failure to describe the relevant conduct. The advice merely names the charges made against the applicant and thus made it impossible for the Minister to form a reasonable opinion that, if the conduct had occurred in Australia, it would have constituted an extradition offence. In the alternative the applicant claims that insofar as the applicant's conduct is described in the advice to the Minister it could not reasonably have been considered to constitute an extradition offence in relation to Australia. 18 The applicant accepted that the Minister was entitled to rely upon the advice of departmental staff in reaching the requisite opinion per s 16(2)(a)(ii) but submitted that when it comes to signing the s 16 notice the Minister has to do more than rubber stamp the recommendations of the Department. Clearly this submission must be accepted. Speaking of earlier legislation which was in similar form, Burchett J in Schlieske v Federal Republic of Germany (No 2) (1987) 26 ACrimR 341 at 346-347, described the Attorney-General's notice as the essential document which translates any Australian obligation, under international law, to extradite a fugitive into a right, under municipal law, to have a particular application for extradition proceeded with before a magistrate. This aptly describes the function of the s 16(1) notice under the Act. In this sense, Moore J said that s 16 involves the Attorney-General acting as a contradictor to the claim of the requesting country. None of this is controversial. The fact that, if the notice is issued, the matter goes to a magistrate for consideration according to the same criteria as are considered by the Minister (s 19(2)(c) of the Act), does not in any way relieve the Minister from his obligation to give those criteria independent consideration; Director of Public Prosecutions of the Commonwealth v Kainhofer [1995] HCA 35 ; (1995) 185 CLR 528 at 538. 20 The submissions made by the applicant are similar to those rejected by this Court in Foster . From the extract of this minute in Cooper J's judgment, it appears to have been very similar in form to the advice provided to the Minister in this case. The applicant in Foster submitted that, in reaching the opinion required by s 16(2)(a)(ii), the Minister was required personally to consider the conduct of the person who was the subject of the extradition request. It was submitted that, since the conduct of the applicant in Foster was not described in any of the documents provided to him, the Minister could not have given personal consideration to this conduct. The notice issued by the respondent under s 16 of the Act and signed by him expressly states that he held the requisite opinion. In order to avoid the consequence of the respondent in fact holding the opinion, the applicant must demonstrate that no person in the position of the respondent on 27 May 1997, having the material which was available to the respondent, could reasonably have held the opinion. That is, the applicant must show that the opinion was perverse: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1 ; [1948] 1 KB 223 at 228. 23 I respectfully agree with his Honour that the applicant in this case must establish that the first respondent's determination was unreasonable or perverse in the Wednesbury sense. If the decision was based on factual material which was so materially deficient that it could not reasonably form the basis for the requisite opinion, then it would be unreasonable in the Wednesbury sense. 24 The respondents submit that the facts in Foster are indistinguishable from the present facts; that the decision in Foster is correct and should be followed by this Court; and that there is nothing in von Arnim to contradict Cooper J's analysis in Foster . 25 At its highest, the respondents' submission was that it was sufficient for the Minister to adopt the DPP's conclusion without having any indication from the DPP as to why it came to that conclusion. It seems to me that this is higher than it is necessary for the respondents to go and, indeed goes beyond the position taken by Cooper J in Foster . It is not correct to say that in this case the departmental advice gave no indication of the basis of the DPP's advice. Although scant, an indication is provided by the description of the offences with which the United States seeks to charge the applicant. The Minister had before him a list of the US offences that the applicant was charged with, a list of (at least in the DPP's opinion) equivalent offences under the Australian law and the DPP's advice that the US offences would be considered offences under the Australian law. 26 Further, the respondents referred to two passages from Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40 ; (1985) 162 CLR 24 in support of its contention that the first respondent was entitled to rely on the advice prepared for him by departmental staff. Although in a different context, these extracts bear repeating. It would not be unreasonable for him to rely on a summary of the relevant facts furnished by the officers of his Department. Part of a department's function is to undertake an analysis, evaluation and précis of material to which the Minister is bound to have regard or to which the Minister may wish to have regard in making decisions. The press of ministerial business necessitates efficient performance of that departmental function... Reliance on the departmental appreciation is not tantamount to an impermissible delegation of the ministerial function. A Minister may retain his power to make a decision while relying on his Department to draw his attention to the salient facts. As noted above at [7], the charges made against the applicant are 'wilful attempt to evade Federal income tax' in each of 1999, 2000 and 2001. Counsel for the applicant submitted that there is no such offence in Australia. Further, counsel submitted that such an offence could encompass conduct that was not criminal in Australia, including the failure to lodge an income tax return. It is inevitable that in many cases where extradition is sought there will be no precise equivalent between the offence as specified in the request for extradition and offences in Australia however the Act does not require this. It is sufficient if there is dual criminality in substance; Harris at 411; Holt v Hogan (No 2) (1993) 46 FCR 145 at 149-151. The dual criminality requirement is that the 'conduct or the equivalent conduct' to that in respect of which extradition is sought should be an 'extradition offence' in relation to Australia. 30 It is not to be expected that the Minister would be aware of which offences, if any, in Australia would equate to a wilful attempt to evade federal income tax. The Minister is entitled to rely on expert advice from his department or another Commonwealth instrumentality on this point. The applicant says that the statement of the alleged offence under United States law does not describe the conduct of which the applicant stands accused. In my view, however, it does describe conduct and it describes it sufficiently. If the United States were to seek the extradition of a person on the basis that he or she had attempted murder it would not be necessary for the Minister to know what form the attempt took to appreciate that there is an allegation of certain conduct. Similarly, to allege that the applicant wilfully attempted to evade income tax is immediately understandable as a description of conduct without the need to describe how that attempt is said to have been made. In many, if not most, cases the description of the relevant conduct will be found in the naming of the charge. 31 I respectfully accept the view expressed by Young J in von Arnim (see [18] above) that the Minister must carefully scrutinise the case for extradition before issuing a s 16 notice. I do not accept that the advice in this case did not allow such scrutiny. 32 In this case the DPP has given its opinion that that the conduct alleged by the United States, if committed in New South Wales, would be an offence under the Commonwealth Criminal Code . The question is not whether the DPP is right or wrong but whether it was perverse of the Minister to accept that advice. Put that way, the answer can hardly be in doubt. The DPP has the expertise that the Minister presumably lacks. There is no reason for the Minister to think other than that their advice was given in good faith. It was, in my opinion, entirely reasonable for the Minister to accept the advice given. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. | judicial review of minister's notice under s 16 of the extradition act statutory preconditions to issue of notice whether material before the minister identified the conduct that the minister was required to consider under s 16(2)(a)(ii) whether the material before the minister was so inadequate that his opinion as to dual criminality was perverse in the wednesbury sense extradition |
The application before the Federal Magistrate sought judicial review of a decision of the Refugee Review Tribunal (the Tribunal) made on 30 March 2007 and handed down on 24 April 2007. 2 The applicant filed an application in this Court for an extension of time on 30 August 2007. Accompanying the application was an affidavit annexing a draft notice of appeal. In the affidavit the applicant claims that the application is out of time because she did not know she could file an application for leave to appeal. In the draft notice of appeal the applicant reasserts her factual claims and asserts that the Tribunal was not reasonable in its decision. 3 The Registrar gave directions in relation to this matter on 11 October 2007. The applicant file and serve a draft notice of application setting out particularised grounds of application within ten (10) clear working days of the date of these directions (if not already filed). 4. No later than five (5) clear working days before the hearing date the applicant file and serve full written submissions upon which the applicant seeks to rely in support of the application, and in support of any application were the Court to grant an extension of time and/or leave to application, so that the Court is able to assess in the application whether there is any utility in granting the extension of time and/or leave to application. The matter was listed today for hearing at 11.00am. The applicant did not appear at that time or at 11.36am when this matter was called. The applicant was advised by the Registry of this Court on 11 October 2007 that her application was listed for hearing at 2.15pm on 16 November 2007. On 16 October 2007 the applicant was advised that the time of the hearing had altered to 11.00am. The letter which was sent to the applicant on 11 October 2007 was subsequently returned to the Court and received on 18 October 2007. On its return, that letter was re-sent on 19 October 2007, but wrongly referred the applicant to the hearing time of 2.15pm. This was the last correspondence sent to the applicant by the Court. 5 However, the first respondent provided the Court today with a copy of a letter sent to the applicant on 30 October 2007, which noted that the time was listed for hearing at 11.00am. It follows, therefore, that the last notification received by the respondent was to the effect that she was advised that the correct time of the commencement of the hearing was 11.00am. There was, as I say, no appearance by the applicant at 11.00am or at 11.36am when the matter was specifically called. At that time, the respondent asked that the application be dismissed for the applicant's non-attendance. I thought, however, that having regard to the confusion it would be fair to the applicant that the matter be adjourned until 2.15pm in case she was under the misunderstanding that the hearing was to take place at that time. 6 Consequently, I adjourned the matter from this morning to this afternoon at 2.15pm. When the matter was called at 2.15pm, there was still no appearance by the applicant. The respondent made a further oral application to have the matter dismissed for the applicant's non-attendance. Section 25 of the Federal Court of Australia Act 1976 (Cth) provides for the exercise of the Court's appellate jurisdiction. Section 25(2) provides that a single judge or the Full Court can hear applications for leave or special leave to appeal to the Court or for an extension of time within which to institute an appeal to the Court. 7 Section 25(2)(b) empowers a single judge or the Full Court to, relevantly in paragraph (bb)(ii), make an order that an appeal to the Court be dismissed for the failure of the appellant to attend a hearing relating to the appeal. As can be seen, that section, of course, only relates to an appeal and not to an application for leave to appeal or to an application for an extension of time for leave to appeal. Order 52 rule 38A(1) of the Federal Court Rules 1979 (Cth) (the Rules) provides that if a person is absent when an appeal is called on for hearing the Court may order that the hearing not proceed, adjourn the hearing, or proceed with the hearing either generally or in relation to any claim for relief in the appeal. 8 Order 52 rule 38A(2) provides that a party who has not appeared and has suffered an order under O 52 r 38A(1) may apply to the Court to set aside or vary any order made under O 52 r 38A(1). Again, however, O 52 r 38A does not empower the Court to make any order in relation to an application for leave to appeal or an application for an extension of time for leave to appeal. Applications for leave to appeal from the Federal Magistrates Court are governed by O 52 r 5, which provides that the application should be filed within 21 days. The Rules are silent as to the Court's power in relation to an application which has been brought in the Court but which is not prosecuted by the applicant by attending at the hearing of the application. 9 I would have thought that there is an implied jurisdiction in the Court to dismiss an application for leave to appeal or an application for an extension of time within which to apply for leave to appeal, where the applicant does not appear at the proceeding and I would have been prepared to make an order accordingly. However, Mr White, who appeared for the respondent, directed my attention to O 35A of the Rules which provides for orders or judgments on default. Order 35A rule 2 provides that an applicant is in default if the applicant fails to comply with an order of the Court or fails to prosecute the proceeding with due diligence. 10 He submitted that the applicant had failed to comply with an order of the Court, being a Registrar direction given on 11 October 2007 (O 35A r 2(1)(a)) and that he submitted that, in the alternative, the applicant's failure to appear at the hearing establishes a failure to prosecute the proceeding with due diligence (O 35A r 2(1)(f)). I think, with respect, that he is correct in his submission in both respects. In those circumstances the Court, I think, has power under O 35A r 3(1)(a). That empowers the Court to stay or dismiss the proceeding as to the whole or any part of the relief claimed. 11 The only relief claimed, of course, on an application for an extension of time is the following order that the applicant be granted an extension of time within which to apply for leave to appeal. In my opinion, as the applicant has failed to comply with the direction made by the Registrar and failed to attend on the hearing today, it would be appropriate to make an order dismissing the whole of the proceeding. The applicant's application for extension of time within which to file an application for leave to appeal be dismissed. 2. The applicant pay the respondent's costs fixed in the sum of $1,500. | application for extension of time within which to file an application for leave to appeal where non-attendance by applicant at the hearing of the application whether the federal court rules or the federal court act provide the court with power to dismiss such applications for non-attendance where o 52 r 38a only relates to appeals where s 25(2)(b) only relates to appeals whether court has an implied jurisdiction to dismiss such applications for non-attendance application dismissed pursuant to o 35a r 3. practice and procedure |
For the reasons that follow, I would refuse such leave. 2 In reasons for judgment delivered on the 15 April last year, I held that the respondents had contravened the conditions of the bonds given by them to the second applicant ("the Commonwealth") under s 155 of the Bankruptcy Act 1966 (Cth) ("the Act ") and the Commonwealth was entitled to recover only that which was proven to be its compensable loss. At the same time, I rejected the respondents' contention that the applicants' case should be dismissed because the applicants had failed to adduce evidence quantifying that loss. In so doing, I noted that (1) the applicants had presented evidence that the Commonwealth had incurred significant, though unquantified, costs in the investigation and prosecution of the first respondent ("Bradshaw"); (2) the respondents conceded that compensable loss included the costs to the Commonwealth of investigating the conduct of Bradshaw; and (3) such costs might equal or exceed the bond amount. Bearing in mind the evidence presented as to costs and the purpose to be served by the bond, I stated that, for these reasons, I would not dismiss the application before giving the applicants an opportunity to adduce further evidence as to the precise quantum of the Commonwealth's loss. Accordingly, I adjourned the further hearing of the proceeding in order that the Commonwealth might have this opportunity, and I made directions to prepare the matter for further hearing if this were necessary. 3 The respondents subsequently filed motions seeking leave to appeal. The exhibits to the supporting affidavits revealed that, in the correspondence before the hearing on 20 September 2004 ("the first hearing"), the applicants had specifically declined the respondents' request to quantify their loss upon the basis that the costs incurred by the Commonwealth were irrelevant to the applicants' entitlement and, in any case, these costs could not be quantified. After the directions of 15 April 2005, the respondents wrote to the applicants, saying that it was not open to them to resile from the position they had taken and to re-open their case by filing further affidavit evidence quantifying their costs. The applicants replied that they saw no such impediment and sought to take advantage of my orders, which had been made in ignorance of the pre-hearing correspondence. No draft notice of appeal accompanied the motions, but the respondents confirmed, at a subsequent directions hearing on 8 June 2005, that they sought to appeal my directions on the grounds that either the applicants had made an election not to quantify their loss or, as a matter of discretion, they should not, in the circumstances revealed, be permitted to re-open their case. 4 At this directions hearing of 8 June 2005, I observed that the Court had not considered whether the applicants had made an election or the like because the respondents had made no submission to this effect. 5 The fact was that, in oral submissions at the first hearing, counsel for the first respondent ("Bradshaw") conceded that the Commonwealth was entitled to recover its investigatory costs but argued that the application for payment should be dismissed because the Commonwealth had not quantified these costs or any other loss. At the first hearing, the applicants maintained that quantification was irrelevant, although they had tendered the affidavit of Mr TD Clarke, which referred to the costs incurred by the Commonwealth in investigating the bankrupt estates under Bradshaw's control. The respondents had not contested the contents of Mr Clarke's affidavit. Further, the applicants had not told the Court that the Commonwealth's costs could not be quantified, although they had said as much to the respondents earlier (see further below). The respondents had submitted that the Commonwealth should and could quantify its costs and had not referred to the applicants' statement to them that it could not do so. It was in these circumstances that I gave my directions on 15 April 2005: see Inspector-General in Bankruptcy v Bradshaw [2005] FCA 424 (" Bradshaw (No 1) ") at [80]. 6 Bearing this in mind, at the directions hearing of 8 June 2005, I stated that the parties should be permitted to make further submissions as to the appropriate disposition of the case. In particular, I held that it was open to the respondents to submit that the Commonwealth was precluded from recovering its loss for the reasons outlined in their letters to the applicants and to contest the recoverability and quantification of any loss specified by the applicants. The applicants had concomitant rights to pursue their claim and answer the respondents. The respondents stated that they would not pursue their motions for leave to appeal and the matter continued before me on 13 December 2005. 7 At the hearing on 13 December 2005 ("the second hearing") the applicants sought to rely on a further affidavit of Mr TD Clarke sworn on 24 May 2005, the affidavits of Darren Kane and Shane Kirne sworn on the same day, and the affidavit of Terrence Burke sworn on 23 May 2005. There was no cross-examination, but, as foreshadowed, the respondents contended that it was not, or ought not to be, open to the applicants to adduce this further evidence. 8 The respondents relied on an affidavit of Nicholas Brand and exhibits, originally filed in support of Bradshaw's motion for leave to appeal, and on an affidavit of Alexandra Golding and exhibits, which had been filed in support of the second respondent's motion for leave to appeal. Bradshaw's primary submission was that the applicants had closed their case on all issues. In his submission, the applicants should not be permitted to re-open their case because they had made "a clear and conscious decision" not to adduce evidence on the quantification of loss. Theirs was not a case of oversight or misunderstanding. 10 Bradshaw conceded that, if permitted to quantify their loss, the "[d]isbursements incurred in investigating his failure well and sufficiently to perform and execute all the duties required of him may well form a component of the quantum damnificatus ". He accepted that these disbursements totalled $4,729, as described in Mr Clarke's affidavit of 24 May 2005. He contended, however, that the applicants were not entitled to recover the disbursements incurred in his prosecution or the alleged cost of having employees of the first applicant ("ITSA") investigate his misconduct. Counsel for Bradshaw emphasized that the bond was to cover the cost to the Commonwealth, not the cost of the percentage of time that was going to be expended by the Commonwealth in any event. Further, as Bradshaw's counsel put it, the prosecution costs were too remote to be covered by the bond. Counsel for Bradshaw also submitted that, if the Court came to the view that the additional evidence would not make any significant difference to the outcome of the case, even if admitted, then the application to adduce it should be dismissed as futile. 11 The second respondent ("Ace") argued that the applicants were not entitled to re-open their case because they had unequivocally elected to proceed on the basis that they were not obliged to prove the quantum of their actual loss. This election was constituted by the manner the applicants had conducted their case at the first hearing, the parties' written submissions and the correspondence. Ace submitted that the applicants had elected to conduct their case "on the footing that they sought a ruling on the fact that the bond was, in effect, a good behaviour bond, forfeitable without proof of loss". In so doing, the applicants had, so Ace said, adopted a course that was "inconsistent with, and antithetical to, a course involving the adduction of any evidence of loss". 12 Ace further submitted that the authorities distinguished between a case where there has been a mistake or misunderstanding on the part of counsel and a case conducted on a particular basis from which a party later seeks to resile. Leave to re-open would not be granted where a party had made "a conscious tactical decision not to lead evidence" or "deliberately elected not to introduce the evidence earlier". It was, so Ace submitted, "inconsistent with the manifest requirement for finality of litigation to allow cases within [this] category to be reopened when the tactic has not resulted in success". 13 Ace contended that Cachia v Hanes [1994] HCA 14 ; (1994) 179 CLR 403 prevented recovery for the cost of lawyers' investigations preparatory to Bradshaw's prosecution. Further, the costs of the time involved in the investigatory work of Mr Clarke, his ITSA colleagues and Mr Kane were irrecoverable because they were costs incurred within the scope of the work they were employed to perform in any event. Ace also argued that the applicants' reference to the difficulty in assessing loss was misplaced and refuted the applicants' submission that exemplary damages might be awarded. 14 The applicants denied that they had made any election. According to them, they had simply called on payment under the bonds, which had been breached. The applicants wish to do no more than what the respondents themselves have been urging the applicants to do. Alternatively, they submitted that this was a "clear case" in which leave to re-open should be given, since there would be "no reagitation of any issue". They also argued that what they termed the "decision" of 15 April 2005 was "in the nature of a determination of a preliminary question". The applicants submitted that there were numerous factors militating in their favour in any exercise of discretion, including the reasonableness of their reliance on the decision in Re Smith; ex parte Inspector-General in Bankruptcy and Brown [1996] FCA 1076 (" Re Smith "), the absence of prejudice to the respondents, the absence of formal pleadings, and public policy. 16 The applicants estimated their loss as $115,348 and sought to recover $100,000 under the bond. They submitted that the Court is not discharged from an obligation to assess loss simply because quantification was "not a simple exercise" and was imprecise. In ascertaining the loss that flowed from the breach of the bond, there were, so the applicants said, three relevant questions: (1) what action was required to be taken by them once they became aware of a possible breach of the bond? : (2) What resources were used to take such action? : and (3) How can those resources be valued for the purpose of quantifying a loss? 17 The applicants contended that no issue of managerial time arose, although if it did, they were entitled to recover in respect of such time. They submitted that the employee status of relevant officers did not disentitle the applicants from recovering the costs claimed for them. They contended that "the value of the time they have spent is the cost of the resources used by the applicants in carrying out their duties following a breach of the bond". They maintained that they were entitled to recover the costs referable to Bradshaw's prosecution and submitted that the Court could award exemplary damages. 19 In Bradshaw (No 1) at [5], I referred to a letter from the applicants' solicitors dated 7 July 2000, stating that they would provide details of the costs incurred by the Commonwealth in relation to its investigation and prosecution of Bradshaw. Bradshaw deposed, and it was not disputed, that no such details were provided prior to the hearing. The full significance of this becomes clear when regard is had to certain subsequent correspondence. 20 A letter of 25 August 2004 from Ace's solicitors to the applicants' solicitors was an exhibit to Ms Golding's affidavit (upon which the second respondent relied at this later stage of the proceeding). This letter asked the applicants to "quantify and provide particulars of ... costs" and also stated "the amount of costs to the Commonwealth is relevant to the extent to which the bond can be called upon". The costs referred to at paragraphs 131 and 132 were not costs chargeable nor charged to the Commonwealth by the officers who undertook the investigations and within the Office of the Director of Public Prosecutions and therefore cannot be quantified. He submitted that the reference to "not costs chargeable" was a reference to the fact that no bills were sent by the people who did the work. This may be accepted. The reference to inability to quantify was, so he said, a reference to the fact that there could be no quantification "with any mathematical accuracy". It may be that this was what the author intended but I doubt that a reader in the respondents' position would have understood the relevant statement in this way. The gloss that counsel for the applicants would place upon the clear statement in the letter (namely, that the costs "cannot be quantified") is without foundation. 22 In conformity with the applicants' statement in the letter of 27 August 2004, their application of 12 August 2004 sought declarations that the respondents pay $100,000, being the full amount of the bonds and, at the first hearing, the applicants contended that liability under the bonds was absolute: see Bradshaw (No 1) at [10]. The gravamen of the case for Bradshaw at the first hearing was that, in order to recover on his bond, the Commonwealth was required to quantify its loss because the Commonwealth could recover only that portion of the bond amount that would compensate it for its loss: Bradshaw (No 1 ) at [12]---[14]. The applicants replied that Bradshaw's liability was not affected by the Commonwealth's failure to quantify its loss: Bradshaw (No 1) at [10]. Although the first affidavit of Mr Clarke, which was tendered at the first hearing, touched briefly on the loss to the Commonwealth, it was then common ground between the parties that his evidence was insufficient on the question of quantification. The correspondence to which I have referred makes it clear that the parties understood that the applicants' case was that they were entitled to the payment of the full amount of the bonds upon proof of breach of the conditions of the bonds and that they were not going to make any quantification. 23 In these circumstances, I would not accept the applicants' characterisation of their attempt to quantify the relevant loss as no more than the resolution of a remaining issue. The circumstances with which I am now acquainted show that the applicants should be taken to have opened and closed their case at the first hearing on the basis that they would not quantify their loss. Accordingly, I accept that it was necessary for them to seek leave to re-open their case, as in fact their counsel has now done. 24 The authorities indicate that, broadly speaking, there are four recognised classes of case in which a court may grant leave to re-open, although these classes overlap and are not exhaustive. These four classes are (1) fresh evidence ( Hughes v Hill [1937] SASR 285 at 287 ; Smith v New South Wales Bar Association [No 2] (1992) 108 ALR 55 at 61-2); (2) inadvertent error ( Brown v Petranker (1991) 22 NSWLR 717 at 728 (application to recall a witness); Murray v Figge (1974) 4 ALR 612 at 614 (application to tender answers to interrogatories); Henning v Lynch [1974] 2 NSWLR 254 at 259 (application to re-open); (3) mistaken apprehension of the facts ( Urban Transport Authority of NSW v NWEISER (1992) 28 NSWLR 471 (" UTA ") at 478; and (4) mistaken apprehension of the law ( UTA at 478). In every case the overriding principle to be applied is whether the interests of justice are better served by allowing or rejecting the application for leave to re-open: see UTA at 478; also The Silver Fox Company Pty Ltd as Trustee for the Baker Family Trust v Lenard's Pty Ltd (No 2) [2004] FCA 1310 (" Silver Fox ") at [22] and [25]. 25 The present is not a case of new evidence, inadvertent error or mistaken apprehension of the facts. Further, I accept that, as counsel for the respondents submitted, this was not a case of mistaken apprehension of the law, because the applicants knew the substance of the respondents' case, which depended on an understanding of the law that differed from their own. That is, with full knowledge that there was another view of the law to theirs, the applicants decided not to attempt to present the evidence that was relevant and necessary if the Court accepted the respondents' case and not theirs. This was not a case in which a particular issue was pleaded or argued but, by reason of circumstances outside the relevant litigant's control, was not adequately addressed at trial (as in David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48 ; (1992) 175 CLR 353 at 386 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ). There could have been no misapprehension on the applicants' part about the respondents' position as to the law. All that has happened is that the Court has accepted the respondents' submissions on the bond in preference to their own. I accept that, as counsel for Ace contended, the principle of finality of litigation should preclude the Court from regarding this circumstance as a relevant 'misapprehension' on an application for leave to re-open. 26 As already noted, however, the overriding principle requires that the Court consider whether, taken as a whole, the justice of the case favours the grant of leave to re-open. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel's deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel. There is a matter of the public interest and public policy involved. There has been a serious breach on Bradshaw's part of his duties as a trustee, which also constituted a breach of the condition of his bond. There was evidence of loss to the Commonwealth before the Court at the first hearing. The Commonwealth has been obliged to investigate Bradshaw's misconduct and has determined to prosecute him for his criminal misconduct. This has involved time and money. If the Commonwealth were able to quantify its loss, then it would be entitled to payment under the bond to the extent of that quantified loss (but not exceeding $100,000). If the Court were to grant leave to re-open, the costs that the respondents have unnecessarily incurred might be met by a costs order in their favour. The evidence that the applicants seek to present concerns an issue that the Court has not previously considered and the respondents have indicated that they would not seek to cross-examine the relevant deponents. The applicants' conduct at the first hearing was explicable by reference the decision in Re Smith , although, as stated in Bradshaw (No 1) at [41], this decision provided only limited guidance. There were no pleadings in which issues of the present kind might have been ventilated prior to the first hearing. Apart from the matter of costs, the respondents identified no prejudice to them if leave were granted, save for the fact that the parties had at all times until the directions of 15 April 2005 proceeded on the basis that the applicants would not and could not quantify the Commonwealth's loss. 28 The above-mentioned considerations do not, however, persuade me to give the applicants leave to re-open. There are weightier factors militating against the grant of leave. These factors are as follows. This factor, though not conclusive, is a significant one. (2) Prior to the first hearing, the applicants had plainly led the respondents to believe that the applicants were proceeding on the basis that quantum was irrelevant and, in any case, that the loss could not be quantified. (3) The applicants opened and closed their case on the basis that they had not quantified their loss and did not need to do so. (4) The applicants did not make any application for a split trial, whether by the preliminary determination of a separate question under O 29 r 2 of the Federal Court Rules or otherwise, although it was open to them to do so. (5) By their correspondence and their conduct before and at the first hearing, the applicants led the respondents to understand that they had presented the totality of their evidence at the first hearing. (6) Before the first hearing, the applicants knew that it would be said against them that they could not succeed without evidence quantifying their loss. (7) The respondents prepared, planned and conducted their case on the basis that the applicants would not present quantification evidence. This factor is also significant. In the belief that the applicants were not going to present quantification evidence, Bradshaw contended that the applicants could not succeed without such evidence. As counsel for Bradshaw observed, if the applicants had provided the respondents with some evidence of the quantum of their loss, the respondents might have taken a different view of their claim for payment under the bond. Had he not been led to believe that there would be no evidence of quantification, Bradshaw would presumably have conducted his case differently. (8) Whilst there were no pleadings, the issue in debate was clearly addressed in the correspondence between the parties prior to the first hearing. (9) In circumstances where the applicants had full knowledge of the considerations relevant to their conduct and proceeded on a particular basis, the public interest in the finality of litigation weighs strongly against permitting them to depart from that basis: compare Silver Fox at [25] and the cases there cited. (10) In the circumstances outlined, a costs order is inadequate compensation to the respondents and, in any event, does not satisfactorily meet the public interest in finality of litigation. 29 In view of this conclusion, it is strictly unnecessary to consider the question of election, which is generally said to arise "when a state of affairs comes into existence which enables a person to exercise alternative and inconsistent rights against another": see GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 (" GEC Marconi ") at 89 [356] per Finn J. When faced with such a choice (e.g., the right to terminate a contract for breach or repudiation or the right to insist on performance of the contract), a person is required to elect which of the mutually exclusive courses of action the person wishes to take. Before such a choice arises, the person must be aware of the circumstances giving rise to the choice: GEC Marconi at 90 [357]. 30 Counsel for Ace contended that the applicants sought to exercise alternative inconsistent rights by seeking, at the first hearing, payment under the bond without proof of the quantum of loss and, now, payment under the bond to the extent of proven loss. This misconstrues the right in issue, which is the Commonwealth's right to payment under the bond. The relevant debate was whether the Commonwealth was entitled to the whole of the bond amount or to an amount that represented the Commonwealth's quantified loss. This was not a case of election in the sense discussed in GEC Marconi . 31 Since I would not grant the applicants' leave to re-open their case, it is also strictly unnecessary to consider the further question of quantification. I do so, however, since the parties have argued various issues relating to quantification. 32 The applicants' uncontested evidence was as follows. Between February and December 1996, Mr Clarke was employed by ITSA on a salary of $47,591 per annum and spent approximately 60% of his time in the investigation of Bradshaw's conduct as trustee of bankrupt estates. Between December 1996 and June 1998, he also spent some time in preparing for and attending court. In 1996, two other officers also spent about one week of their time assisting Mr Clarke in the investigation. At the time they were employed on annual salaries of $41,000 and $54,000 respectively. The applicants claimed $31,933 in respect of Mr Clarke and a total of $2,219 in respect of ITSA's other employees. Further, in the investigation and prosecution of Bradshaw, the Commonwealth, through ITSA, incurred out of pocket expenses in the sum of $4,729. 33 From April 1996 to October 1998, Mr Kane was seconded from the Australian Federal Police ("AFP") to what was then the Australian Securities Commission and, between October and December 1996, spent approximately 60% of his time in the investigation of Bradshaw on behalf of the AFP and the Commission. His salary at that time was $41,470 per annum and the applicants claimed $7,588 in respect of him. 34 The Commonwealth Director of Public Prosecutions ("DPP") was involved in the successful prosecution of Bradshaw. The DPP incurred disbursements in the sum of $16,936 for counsel's fees and $1,583 for process servers' fees. A cost consultant assessed the solicitor/client professional costs exclusive of disbursements on the County Court Scale "D" at $50,360. 35 The disbursements incurred by the Commonwealth, through ITSA, in investigating the misconduct of Bradshaw in the administration of the estates under his control may well be part of the loss to the Commonwealth. However, the evidence that the applicants have sought to rely on would be insufficient to establish that the Commonwealth, through ITSA or the AFP, suffered the further losses deposed to in the affidavits of Mr Clarke and Mr Kane. It was incumbent on the applicants to prove, on the balance of probabilities, not only that they suffered loss as a result of the breach of the condition of the bond but also the amount of that loss. This is not a case where the plaintiff cannot adduce precise, or at the least relatively precise, evidence of what has been lost: see Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ; (2003) 196 ALR 257 at 266 per Hayne J. 36 In the present context, had the Commonwealth expended monies in investigating Bradshaw's conduct as trustee, then it would have been entitled to payment under the bond in respect of such expenditure. The affidavits of Mr Clarke and Mr Kane provide no evidence of such expenditure. They show only that the Commonwealth, through ITSA and the AFP, expended monies in the employment of these officers who, in the course of their employment as salaried officers of the Commonwealth, undertook the investigation. There was no necessary correlation, causal or otherwise, demonstrated between the cost of the work done on account of Bradshaw's misfeasance and the cost of Mr Clarke's or Mr Kane's annual salary. Put another way, there is no necessary connection between Bradshaw's breach of the condition of his bond and the amount claimed in relation to Mr Clarke and Mr Kane. Further, there is nothing to indicate that their services would not have been retained or that they would have been more profitably employed but for their investigation of Bradshaw: compare National Coal Board v Galley [1958] 1 WLR 16 at 29-30 referred to by Harvey McGregor in McGregor on Damages (16 th ed, Sweet & Maxwell Ltd, 1997) at [1250]. There is nothing to show that their work on Bradshaw's account saved the Commonwealth from other expenditures: compare Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 4) (1995) 16 WAR 277 at 280. There is no evidence in the relevant affidavits about the work that they would have undertaken if they had not undertaken the investigations into Bradshaw's activities. 37 Moreover, whilst the Commonwealth might recover payment under the bond in respect of its expenditure in investigating Bradshaw, it does not follow that it would be entitled to recover its expenditure on Bradshaw's prosecution. The prosecution flowed from a decision by the DPP to prosecute Bradshaw and not from the breach by Bradshaw of the condition of his bond. The decision to prosecute is separate and distinct from the investigation that flowed from the breach of the bond. The costs of the prosecution cannot be said to flow from that breach. 38 For the reasons advanced by counsel for Ace, there is no basis upon which the Court might award exemplary damages. In accordance with my previous reasons for judgment, I would make the declarations sought in paragraphs 1 and 3 of the application filed 12 August 2004. I would not make the declarations sought in paragraphs 2 and 4 of this application. As they requested, I shall give the parties an opportunity to be heard on the question of costs. | application to reopen discretionary factors militating for and against reopening parties proceeded on an understanding that the applicants would not adduce evidence on quantification of loss interest in finality of litigation whether applicants made an election between alternative rights application to reopen refused bankruptcy |
The applicant, Jun Xue Wu, made this application by a notice of motion filed on 4 August 2004, which was part-heard on various dates until 27 April 2005. For the following reasons, I would not make the orders in the terms sought in the applicant's motion, although I would order that (1) the first and second respondents pay Ms Wu's costs forthwith, on an indemnity basis, such costs to be taxed; (2) these respondents pay the taxed costs within 14 days from the service of a certificate of taxation; and (3) in default of such payment, Ms Wu have leave to enter judgment against them for $334,000 and interest thereon. By her statement of claim, she alleges, amongst other things, that the first to fifth respondents breached ss 51AA , 52 and 53 of the Trade Practices Act 1974 (Cth) ("the TPA") and ss 7 , 9 , 11 and 12 of the Fair Trading Act 1999 (Vic) ("the FTA"), or were knowingly concerned in such breaches. It is unnecessary to refer to the other causes of action that she asserts. She seeks declaratory relief and damages. 3 Her statement of claim makes the following factual allegations. She maintains that Barry Armitage (the second respondent) was the director of Avin Operations Pty Ltd ("Avin") (the first respondent), father to Christopher Armitage (the third respondent), husband to Joan Armitage (the fourth respondent) and a former director of Asia Pacific Coating Pty Ltd (the fifth respondent). She alleges that, on or about 22 July 1997, she conducted negotiations with Barry and Christopher Armitage concerning a proposed investment of $334,000 by her in Avin. She further alleges that the second and third respondents represented that, if she invested monies in Avin, then (1) she would become a "joint-owner" and "partner" in Avin; (2) she would be repaid the money at the end of a two-year period commencing 25 July 1997; (3) she would assume a management role in the day-to-day running of Avin's business; (4) Avin was a successful company that would be able to repay the loan; (5) Barry Armitage was a registered migration agent and a lawyer skilled in migration matters; (6) Barry Armitage would be able to fill in the forms for permanent residence and Australian citizenship for her and act on her behalf in respect of these applications; and (7) upon investing the money and assuming a management role in the business, she would be eligible to obtain permanent resident status and Australian citizenship. 4 Ms Wu maintains that, pursuant to an agreement made on 25 July 1997 between her and Avin, she lent the sum of $334,000 to Avin. She says that the first and fifth respondents used the loan monies for their own purposes and that, despite her requests, she has not been repaid. She alleges that (1) none of the respondents intended that she would become a partner or co-owner, with a management role as represented; (2) Avin's business was not profitable and the company was unable to repay the loan to her; (3) Barry Armitage was neither a registered migration agent nor a lawyer skilled in migration matters; (4) Barry Armitage did not assist her as he represented he would; and (5) she has not been granted permanent residence or Australian citizenship. 5 By their defence, the respondents state that the fifth respondent was wound up by order of the Supreme Court on 17 September 2003. Barry Armitage admits that, on or about 22 July 1997, he engaged in negotiations with Ms Wu, assisted by Ms Minnie Xia, concerning a proposal to invest some $175,000 in Avin. Avin and Barry, Christopher and Joan Armitage otherwise deny Ms Wu's claims. They say that there were negotiations with a Mr Gu to invest a like amount in the company; and that Ms Wu and Mr Gu invested $325,082.07 in Avin pursuant to agreements made with them. They also say that this agreement gave Ms Wu the option of withdrawing her investment by giving 3 months' notice at any time for up to 2 years from the date of her contribution and she did not exercise the option. They allege that the communications with Ms Wu were entirely through Ms Xia, who advised Barry Armitage that they had arranged to take all documents to a Chinese speaking lawyer in Melbourne and that they had visited this lawyer. Accordingly, the procedural background of this case is relevant to Ms Wu's application. 7 As already noted, Ms Wu filed her application and statement of claim on 9 May 2003. On 12 and 14 August 2003, she filed notices of motion seeking an order for substituted service of the originating process on Barry and Joan Armitage. On 12 August 2003, Ms Wu filed affidavits sworn by the process servers Michael Barnett, John Ioannou, Steve Vlachos, Fotios Karamouratidis and Raymond Smith. In these affidavits, the process servers claimed that, despite their best efforts, they were unable to serve these two respondents. Mr Vlachos affirmed that he was able to serve Christopher Armitage by placing a sealed copy of the application and statement of claim under the windscreen wiper of his vehicle while he was stopped at traffic lights. There were also other affidavits filed in support of the motion. 8 On 20 August 2003, the Court made an order for substituted service. On 12 September 2003, all but Christopher Armitage filed a notice of appearance. Christopher Armitage filed a notice of conditional appearance (which was followed by a regular notice of appearance on 8 October 2003). Joseph Guss, solicitor, then represented the respondents. 9 As indicated, on 17 September 2003, the fifth respondent was wound up by order of the Supreme Court of Victoria. This proceeding was stayed against it by virtue of s 471B of the Corporations Act 2000 (Cth). 10 On 8 October 2003, the remaining respondents filed a defence. Also on that day, the parties, through their legal representatives, appeared before a Registrar of this Court for directions. The Registrar ordered that the parties exchange lists of discoverable documents by 10 November 2003; that inspection be completed by 24 November 2003; and that the matter be referred to mediation by 19 December 2003, with costs reserved. On 12 November 2003, Ms Wu filed her list of documents. The remaining respondents failed to comply with the Registrar's orders relating to discovery. 11 On 1 December 2003, Ms Wu filed a notice of motion, returnable on 16 December 2003, seeking orders that the respondents file and serve their lists of documents. On 15 December 2003, Christopher and Joan Armitage filed lists of documents. 12 Between 16 January 2004 and 4 February 2004, the parties' solicitors exchanged correspondence concerning the respondents' apparent failure to produce their discovered documents for inspection and to make good the outstanding costs order of 16 December 2003. On 9 February 2004, Ms Wu filed another notice of motion seeking orders that the first to fourth respondents file and serve lists of documents. 13 The notice of motion was listed for hearing on 18 February 2004. On that day, Avin and Barry Armitage filed their list of documents. Ms Wu, with her solicitor and counsel, attended the mediation on 24 February 2004 and so did the respondents' solicitor, Joseph Guss. None of the respondents appeared personally. Ultimately, the mediation did not take place on that date by reason of the ill health of Barry Armitage. 14 On 4 March 2004, at a directions hearing, a Registrar ordered, amongst other things, that Avin and Barry Armitage provide further discovery as to documents listed as 153 and 154 in their lists of documents. The document listed as 153 is Avin's accounts and statutory records. The document listed as 154 is the file kept by Barry Armitage in respect of Ms Wu's application for an Australian visa and her alleged investment in Avin. On 24 March 2004, Barry Armitage filed an affidavit stating that document 153 was "mistakenly removed by a waste paper removalist with various other papers and records" and that he believes the documents have been destroyed. Barry Armitage deposed that he was unable to locate document 154. 15 Between 4 March 2004 and 9 June 2004, Ms Wu was unsuccessful in her attempts to inspect the respondents' discovered documents. From 5 March 2004 until 8 April 2004, her solicitor sent numerous letters to the respondents' solicitor, Mr Guss, requesting an opportunity to inspect the documents. On 14 April 2004, Mr Guss filed a document, through the registry, purporting to remove him as the solicitor acting on behalf of the respondents. Ms Wu's solicitors then attempted to contact the respondents directly. By a letter dated 21 April 2004, Barry Armitage informed Ms Wu's solicitors that he was "unable to facilitate" the inspection of documents because the relevant documents "are located at the office of Joseph Guss". 16 On 9 June 2004, the matter came on for directions. Ms Wu's solicitor appeared on her behalf. The respondents did not appear, although Ms Wu's solicitor informed the Court that she had received a telephone call from a woman who stated that she was the daughter of Barry and Joan Armitage and that her parents were in Newcastle attending to her grandfather. Ms Wu served these orders by mailing them on 11 June 2004 to the respondents' address for service, but she was unable to inspect the respondents' discovered documents pursuant to this order. 17 On 4 August 2004, Ms Wu filed the notice of motion that is the subject of these reasons. The motion was listed before a Registrar, who, after a short hearing on 11 August 2004, adjourned the matter to 23 August 2004. On 23 August 2004, Ms Wu, represented by her solicitor, and Avin and Barry Armitage, represented by Ms Fregan of counsel, appeared before the Registrar. The Registrar referred the motion to me. Ms Fregan advised that she was instructed by solicitors who expected to act in the matter on the respondents' behalf. This expectation was not fulfilled. 18 The motion was subsequently heard on 13 October 2004, 8 December 2004, and 27 April 2005. 19 On 13 October 2004, the respondents appeared by counsel who informed the Court that he was instructed by Geoffrey Grantham & Associates. On this day, the Court adjourned the hearing of the motion to 8 December 2004, to enable the respondents to take steps to have a subpoena issued against the respondents' former solicitor to obtain documents relevant to the proceeding. The Court also ordered, amongst other things, that Geoffrey Grantham & Associates or any other solicitors retained by the respondents were to give notice that they acted for the respondents by noon on 14 October 2004. No notice was given. Instead, by letter dated 18 October 2004, Geoffrey Grantham & Associates informed the Court that they had no instructions to act for any of the respondents. 20 The Court further adjourned the hearing of the motion on 8 December 2004, 17 December 2004 and 28 January 2005, pending the resolution of issues arising under the subpoena. 21 On 3 December 2004, George Liberogiannis and Associates went on the record as the solicitor for Barry, Christopher and Joan Armitage. Also on 3 December 2004, Barry Armitage was granted leave to file a subpoena to be served on his former solicitor, Mr Guss. On the return of the subpoena on 10 December 2004, the Armitages' solicitor did not appear. The Registrar adjourned the matter until 23 December 2004. 22 On 23 December 2004, Mr Guss appeared before a Registrar on the return of the subpoena. The Registrar ordered, amongst other things, that any party wishing to inspect the documents produced under subpoena should contact the Registry on three days' notice and that the reasonable costs of production of the documents be paid by the respondents and taxed in default of agreement. On that same day, Ms Wu, through her solicitor, wrote to the Registry requesting that a description of the documents and things produced under the subpoena be provided; that the documents remain on the court file until the final hearing; and that she have leave to inspect the documents produced. The subpoena was not finally discharged against Mr Guss until 16 February 2005. 23 Mr Guss did not produce all of the documents listed in the subpoena, saying, on oath, that he was unable to locate anything other than those produced. The produced documents were, for the most part, copies of correspondence passing between Mr Guss and his clients and file notes of attendances. The respondents claim legal professional privilege in respect of many of them. Ms Wu has not challenged their claims. 24 Mr Liberogiannis appeared at the adjourned hearing on 27 April 2005, seeking leave to withdraw as the solicitor on the record. He gave sworn evidence that, notwithstanding his numerous calls to their cell phones and place of residence, Barry and Christopher Armitage had failed to keep appointments with counsel arranged for them and to provide him with instructions for the conduct of the matter. On the basis of his evidence, I gave Mr Liberogiannis leave to withdraw. On 28 April 2005, George Liberogiannis and Associates filed a notice of solicitor ceasing to act, stating that the firm no longer represented Barry and Christopher Armitage. 25 By a letter dated 18 January 2005, Ms Wu's solicitors indicated that, at an adjourned hearing on 28 January 2005, they would seek an order that Barry Armitage pay her costs in an amount of over $9,000; and, in default of payment, that his defence be struck out. At the parties' request, as already indicated, this hearing was subsequently adjourned to 27 April 2005, in order that matters arising under the subpoena could be concluded. They were affirmed at various stages of these proceedings. Ms Wu also relied upon an affidavit sworn by herself on 30 November 2004 and an affidavit from Ms Hairong Xia sworn on 26 November 2004. Ms Wu and Ms Xia's affidavits support Ms Wu's claims. It is unnecessary to set out their contents. 27 The respondents relied on three affidavits of Barry Armitage, an affidavit of Christopher Armitage and an affidavit of Joan Armitage. The respondents also relied on two affidavits from their former solicitor, Mr George Liberogiannis and an affidavit of Avin's former bookkeeper, Ms Helen Saldeneri. The affidavits of Christopher and Joan Armitage and Helen Saldeneri contest the claims made by Ms Wu against the respondents. It is also unnecessary to set out their contents. She referred to extensive correspondence between her and Mr Guss and between her and Barry Armitage. This correspondence (exhibits to her affidavits) reveals a lengthy pattern of delay on the part of Mr Guss and the respondents. 29 Ms Krycer's evidence is that, on 21 November 2003 - that is, three days before the lists of documents were first due - Mr Guss informed her that the respondents were unable to complete the list of documents because Barry Armitage was still searching for documents. Later, after the respondents were ordered to produce their list of documents by 15 January 2004, Mr Guss told Ms Krycer that he had mistakenly thought that the list was due on 30 January 2004. As noted above, Avin and Barry Armitage produced their list of documents only after Ms Krycer filed a second notice of motion seeking production. 30 Ms Krycer's third to seventh affidavits outline her extended efforts to obtain inspection of Avin's and Barry Armitage's discovered documents. Ms Krycer sent numerous letters to Mr Guss seeking inspection. After Mr Guss filed his notice of ceasing to act on 14 April 2004, Ms Krycer contacted the respondents directly. As can be seen from the procedural history outlined above, her efforts were not successful, although Ms Krycer has now had access to some of these documents by way of the subpoena directed to Mr Guss. He deposes to various personal matters which resulted in him having no knowledge of the notice of motion until 10 August 2004 (the motion being originally returnable on 11 August 2004) and no knowledge of the adjourned hearing date (29 August 2004) until 20 August 2004. 32 Barry Armitage's evidence is that he was unable to comply with the order of 9 June 2004 because he and the other respondents were in a dispute with Mr Guss. He deposes that the discovered documents are no longer in his custody or power. He states that, by providing Ms Wu's solicitors with the address of Mr Guss, he has done all he can to facilitate inspection. 33 In an affidavit of 12 October 2004, Barry Armitage also deposes to having no knowledge of Ms Krycer's "difficulties in dealing with Mr Guss" in relation to arranging for inspection of the discovered documents. He deposes to suffering from "a severe non-operable cardiac myopathy ... that prevents [him] from full and regular attention to [his] affairs". His evidence is that he is no longer a director or other officer of Avin, and has no authority to make any representations on its behalf. 34 By his first affidavit, Barry Armitage also seeks to have the notice of motion struck out for having allegedly been filed "in the full knowledge of the inability of the Respondents to provide access to the documents" and that all costs should be costs in the cause. 35 In his third affidavit, Barry Armitage deposes to the outcome of the subpoena issued by Mr Liberogiannis, on his instructions, calling on Mr Guss to produce his discovered documents to the Court. His evidence was that, on 23 December 2004, Mr Guss produced certain of the discovered documents but failed to produce all of them. 36 Barry Armitage also addressed the affidavits of Ms Wu and Ms Xia. It is sufficient to note that Barry Armitage denies the claims and contests Ms Wu and Ms Xia's evidence. He states he has never falsely represented to Ms Wu matters concerning her proposed investment in Avin and that all undertakings given concerning the investment have been fulfilled. According to him, Avin's "business failure" was "unexpected and caused by various unforeseen factors". Barry Armitage said that Ms Wu failed in her application for a business skills (residence) (class BH) visa because of matters within her own responsibility and control. His evidence was that Mr Guss did not produce all the documents listed in the list of documents provided by Avin and Barry Armitage. His assessment was that Mr Guss produced only correspondence and instructions passing between him and the respondents. Mr Liberogiannis also prepared a list of the documents produced by Mr Guss on subpoena over which legal professional privilege is claimed. I have already referred to Mr Liberogiannis's evidence in court on 27 April 2005. 40 In written submissions dated 7 December 2004, it was submitted for Ms Wu that she had been "forced" to take steps to progress the preparation of the case by bringing numerous motions before the Court. • Discovery: the applicant was "forced" to bring "two separate applications seeking orders that the First to Fourth Respondents provide their Lists of Documents". The First to Fourth Respondents were in breach of two separate court orders (of 8 October 2003 and 16 December 2003) for the provision of these lists. • Mediation: the respondents personally did not attend the mediation, although their solicitor did. • Status of the First Respondent : Barry Armitage resigned as the sole director of Avin on 23 August 2004 and there has been no replacement. • Varying legal representation of the respondents: Since Mr Guss ceased to act for them, "the modus operandi of the Respondents has been to engage a solicitor to brief Counsel to appear on several one-off occasions whenever this matter got to the doorstep of the Court. On each of these occasions, the solicitor who briefed Counsel has not filed a Notice of Solicitor Acting for the Respondents". There was no appearance for the respondents on 9 June 2004 and 11 August 2004. As previously noted, Ms Fregon of counsel appeared on 23 August 2004, stating that she was instructed (by Bailey Timms Hansen & Rossis). On 13 October 2004, Mr Baker of counsel appeared, stating that he was instructed by Geoffrey Grantham & Associates. Neither firm became solicitors on the record. Also in these written submission, Ms Wu submitted that her own affidavit and the affidavit of Minnie Xia proved sufficient evidence of the facts on which she relied to make out her causes of action. 41 In oral submissions, counsel for Ms Wu reiterated that the respondents' conduct in the proceeding showed a determination on their part not to cooperate in preparing the matter for trial. Counsel submitted that the first and second respondents remained in breach of the order of 9 June 2004. 42 On 8 December 2004 (when the respondents were represented by counsel) and on 27 April 2005, counsel for Ms Wu sought orders that Ms Wu have leave to enter judgment against the first and second respondents for $334,000 and interest; alternatively, indemnity costs and a self-executing order in the event of non-compliance with any such costs order. Prior to 27 April 2005, counsel for the Armitages had submitted that they have cooperated with the Court in preparing for trial and that the application for summary disposition depended on their failure to give inspection, but that they had in fact done all they could to facilitate inspection. He also said that the bulk of the respondents' discovered documents were known to Ms Wu. 44 Counsel had noted that the Armitages' defence denies each of Ms Wu's pleaded claims, except that she invested some $175,000 in Avin (for whom counsel did not have instructions to appear). On this basis, all facts relied on by Ms Wu were in contention. 45 Further, counsel for the Armitages had submitted that the Rules required direct evidence of the facts alleged in the statement of claim before the court could dispose of the matter summarily. In all the circumstances, counsel had contended that this matter would be more appropriately dealt with by a "stringent costs order" at trial. This rule was repealed with effect from 30 August 2004 by the Federal Court Amendment Rules (No 4) 2004 (Cth) and a new O 35A was introduced in its stead. Counsel for Ms Wu made it clear that she now relied on O 35A. Nothing turns on the reference in the motion to the former O 10 r 8. Order 10 r 8, which was introduced by the Federal Court Amendment Rules 2001 (No 3), elaborated on an existing power under Order 10 r 7. This rule provided that, if a party had failed to comply with an order of the Court directing the party to take a step in the proceeding, any other party could move the Court on notice for an order that the proceeding be stayed or dismissed as against an applicant in default, or for judgment or an order against a respondent in default. 49 In Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 (" Lenijamar "), Wilcox and Gummow JJ considered the nature of the Court's power when a party is in default. Although Lenijamar concerned the former O 10 r 7, certain of their Honours' observations can be applied to O 35A: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2004] FCA 1718 (" Cadbury Schweppes ") at [22]-[23] per Ryan J. As with O 35A, the power given by the former O 10 r 7 is conditioned only upon the failure of the party to comply with an order of the Court directing that party to take a step in the proceeding. There is no requirement of intentional default or contumelious conduct, or of inordinate and inexcusable delay, or of prejudice to the other party: Lenijamar at 395-396. These are, however, usually important factors to be weighed in the exercise of the discretion. Further, the power conferred on the Court must be "administered sensibly and with an appreciation both of the fact that some delays are unavoidable, and unpredictable ... and of the likely serious consequences to [the party in default]": Lenijamar at 396. 50 In Lenijamar , Wilcox and Gummow JJ also observed that, while it was undesirable to make any exhaustive statement of the circumstances in which the power granted by O 10 r 7 would be appropriately exercised, there were two obvious candidates for such exercise: "cases in which the history of non-compliance ... is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases ... in which the non-compliance is continuing and occasioning unnecessary delay, expense or other prejudice to the [other party]": Lenijamar at 396. 51 When applying these principles, the Court must balance the need for the expeditious conduct of litigation, particularly in a court committed to a case management system, and the "the strong reluctance of courts to prevent litigants having a proper opportunity to present their cases": KM & A Chadwick Pty Ltd v Yeung [1995] FCA 354 per Tamberlin J. Ms Wu's motion must also be considered in light of the other powers of the Court to sanction non-compliance, such as the use of costs orders. 52 The history of this matter is troubling. The first and second respondents have been in default numerous times in the course of this proceeding. They filed their first lists of discoverable documents on 18 February 2004, over three months after the original deadline and over a month after orders by consent that they be filed by 15 January 2004. Moreover, these lists were filed only after Ms Wu brought two motions for compliance. Subsequent to this, Ms Wu has been required to take extraordinary steps to secure inspection of documents. 53 In addition, it is clear that Ms Wu has been frustrated by other action, or inaction, by these respondents, even if not amounting to non-compliance with court orders. The application for substituted service, the initial failure to seek to have a subpoena issued to Mr Guss, the failure of the respondents personally to attend mediation, the resignation of Barry Armitage from office in Avin, and the frequent changes in legal representation are matters that have undoubtedly caused Ms Wu vexation and have made the conduct of litigation more difficult than it would otherwise have been. Having regard to their conduct, I find that the first and second respondents have failed to defend the proceeding with due diligence. They are therefore in default for the purposes of O 35A r 2(2)(h) of the Rules. 54 Despite this conclusion and the unsatisfactory history of the proceeding, I would not at this stage make orders precisely in the terms of the present motion. Instead, pursuant to O 35A r 3(2)(e), I would order that judgment for $334,000 and interest thereon against the first and second respondents be given under O 35A r 3(2)(c) if the first and second respondents do not comply with the costs order that I propose to make (see below). I would not order that judgment be entered without more because, following the return of the subpoena directed to Mr Guss, there remains no continuing and unexplained default on the respondents' part. If Barry Armitage's evidence is accepted, there is nothing more the respondents can do to facilitate inspection of documents. Although Mr Guss did not produce all of the documents the subject of the subpoena, Barry Armitage has affirmed that the remaining documents remain in Mr Guss' custody. Ultimately, the credibility (or lack thereof) of Barry Armitage's claims regarding these and like matters will be an issue for trial: see Australian Finance Group Ltd v Accent Financial Group Pty Ltd [2005] FCA 66 at [33] per Nicholson J. Whether he is believed or not is likely to have other consequences for this litigation. 55 I note too that there may be circumstances that partly explain the delays. These circumstances include the ill health of Barry Armitage and of a family member and the disturbance caused by changes in legal representation. Moreover, although the respondents have needed repeated prompting by Ms Wu's solicitor, they have filed their defence, various affidavits responding to Ms Wu's claims and lists of discoverable documents. They have mostly participated in court hearings and they were represented at the mediation by their solicitor. Barry Armitage ultimately took steps to have a subpoena issued to Mr Guss, in order that Ms Wu have access to the first and second respondents' discovered documents. 56 In these circumstances, any prejudice caused to Ms Wu can, at this stage, be met by an appropriate costs order, subject to an entitlement to enter judgment in the event of non-compliance with such an order. Plainly enough, this is not to condone the delay occasioned by Avin and Barry Armitage; and this is not an invitation to them to continue to litigate this matter in the unsatisfactory manner they have thus far done. As indicated below, it is appropriate that they pay Ms Wu's costs of the motion on an indemnity basis; and, since they are in fact in default, that there be orders of the kind contemplated by O 35A r 3(2)(e). I also note that there is again apparently no solicitor on the record. The repeated last-minute retainer of solicitor and counsel to is mischievous since it militates against the efficient conduct of the litigation. The evidence of Mr Liberogiannis about the Armitages' failure to cooperate with their legal advisers is concerning. Nothing in these reasons would preclude Ms Wu from bringing fresh notices of motions for summary judgment upon further breaches of court orders. 57 The respondents contended that Ms Wu's application should fail because she failed to provide legally admissible evidence of all the facts necessary to substantiate her entitlement to the relief claimed. Under the former O 10 r 7, an applicant was required to file proof by way of evidence of his or her claims when seeking judgment: see Australian Securities Commission v Macleod (1994) 54 FCR 309 at 312-313 per Drummond J. Under the new O 35A r 3, it now seems that reliance may be placed on the allegations in the relevant statement of claim. Judges of the Court have held that the rule does not require proof by way of evidence of the applicant's claim, but that on the face of the statement of claim there is a claim for the relief sought and that the court has jurisdiction to grant that relief: see Arthur v Vaupotic Investments Pty Ltd [2005] FCA 433 at [3] per Heerey J; Australian Competition and Consumer Commission v 1 CellNet LLC [2005] FCA 856 at [14] per Nicholson J; Australian Competition and Consumer Commission v Albert [2005] FCA 1311 at [6] --[7] per Jackson J and Deisel Spa v Hwang [2005] FCA 1619 at [2] per Tamberlin J. Having read the statement of claim, I find that these conditions are satisfied. Accordingly, the motion does not fail because of an insufficiency of evidence showing entitlement to relief claimed. 58 As indicated above, I am not prepared to make the order that Ms Wu principally seeks because, although the first and second respondents have failed to defend the proceeding with due diligence, there is no continuing and unexplained failure to comply with an extant order and, having regard to the nature of the case, including the respondents' defence and supporting affidavits, I do not consider that it is in the best interests of justice to deny them the chance of defending themselves against the serious allegations made by Ms Wu. 59 It is clear, however, that Ms Wu's conduct in filing the motion on 4 August 2004 was appropriate. There had by then been considerable delay in providing inspection. The second respondent took steps to have the subpoena issued to Mr Guss only after the motion was part heard. Plainly enough, the first and second respondents should pay the costs of the motion. 60 Counsel for Ms Wu has sought costs on an indemnity basis. Although costs in this Court are ordinarily awarded on a party and party basis, this is a case in which indemnity costs are justified. In Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 72 FCR 151 at 156-157, Cooper and Merkel JJ said that, in order to exercise its discretion as to costs judicially: (a) the court ought not to depart from the usual party and party basis for costs unless this was warranted by the circumstances of the case; and (b) these circumstances arise "as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course". In this case, the first and second respondents have repeatedly failed to comply with the orders of this Court; and Ms Wu's motion for summary judgment was precipitated by these recurring violations. Further, as already stated, the first and second respondents' conduct (e.g., the last minute and short-term retainer of legal representatives, the failure to take steps promptly to have a subpoena issued to Mr Guss, the failure to cooperate with their own legal advisers and/or to attend court) delayed the hearing of the motion and increased the costs associated with it. In these circumstances, it is appropriate that Ms Wu should be indemnified for all reasonable costs incurred in relation to this motion. 61 Further, having regard to the first and second respondents' conduct to date and to the fact that they are in default, I would, as already indicated, order, pursuant to pursuant to O 35A r 3(2)(c) and (e), if the first and second respondents do not pay these costs, as taxed in accordance with these orders, within 14 days from the service of a certificate of taxation upon them, then there be judgment against the first and second respondents for $334,000 and interest thereon. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | application for summary judgement o 35a, federal court rules respondents in default for failure to defend the proceeding with due diligence appropriate relief in the circumstances indemnity costs practice and procedure |
I directed the parties to file written submissions on costs. Notwithstanding the very tight time frame dictated by the onset of the long vacation, the parties have provided concise and well argued submissions, for which I thank them. 2 Because the Liquidator has succeeded in obtaining the relief claimed there will be an order that he recover his costs of and incidental to the interlocutory applications dated 22 September and 5 December 2006 out of the Guarantee Fund. These are part of his costs and expenses in terms of the Winding Up Order as amended. 3 While it is true that the Liquidator failed in his primary submission that the District Registrar's confirmation of the remuneration and expenses in question was final and conclusive, the making of that submission did not significantly increase costs. The hearing was disposed of in a day. 4 The payment of the Liquidator's costs out of the Guarantee Fund is consistent with the terms of the Winding Up Order as amended and s 108(2)(a)(iii) of the Legal Profession Act 1993 (Tas). Payment out of the proceeds of the winding up is not appropriate. I am informed that there is no present fund against which costs orders could operate and there is no guarantee that there will be any further funds in fact recovered. Moreover, the fund derived from recovered monies is not a pooled fund and there would be great practical difficulty in apportioning the costs across individual loans. 5 Counsel for ASIC undertakes on behalf of his client not to seek or otherwise procure payment of costs. I should note in this context that nothing in my substantive decision should be taken as criticism of ASIC, which has been acting properly in performance of its statutory functions and, through its counsel, provided the Court with helpful submissions. 6 The Solicitors' Trust was given leave to be heard, read affidavits and made submissions opposing the Liquidator's application. It was reasonable for it to do so in order to protect the integrity of the Guarantee Fund. 7 As I read its counsel's submissions, the Trust does not seek any costs order for itself. Presumably this is because its costs will be recovered from the Guarantee Fund as an ordinary cost of administering the Fund. If there is any doubt about this, I would be prepared to make such an order. 8 However, the Trust did seek an order that ASIC should pay a "substantial proportion" of the Liquidator's costs since the Liquidator's application was brought as a result of ASIC's stance. I do not propose to make such an order. ASIC has not acted unreasonably. In substance this was a case where both the Liquidator and ASIC were seeking the advice and directions of the Court in the course of a winding up by the Court. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | liquidator's application for remuneration costs |
The Yindjibarndi Aboriginal Corporation is to hold the native title rights and interests of the Yindjibarndi People in trust for the Yindjibarndi People. Any party has liberty to apply within 21 days from the date the name and the rules of the proposed prescribed body corporate are filed and served in accordance with order 19 above. If order 19 is not complied with in the time specified then it is determined that the native title rights and interests of the Ngarluma People are held by the Ngarluma People as common law holders. If the native title rights and interests of the Ngarluma People are held by the Ngarluma People as common law holders in accordance with order 21 above then the matter is to be relisted by the Registrar in order that the Court can consider the making of orders in accordance with section 57(2) of the Native Title Act 1993 (Cth). Until such time as there is a registered native title body corporate in relation to the native title rights and interests of the Ngarluma People, any notices required under the Native Title Act 1993 (Cth) or otherwise to be served on the Ngarluma native title holders or the Ngarluma registered native title claimants may be served on the representative Aboriginal/Torres Strait Islander body in relation to the land or waters concerned or such other address for service for the Ngarluma People as may be notified to the Court and the parties by the said representative Aboriginal/Torres Strait Islander body, and such service shall be deemed to be sufficient. On the same date they also filed and served a consent of the Ngarluma Aboriginal Corporation to the nomination as the prescribed body corporate for the Ngarluma People. 3 Notice has been given to the respondents of the nomination and no opposition to it has been made. The first respondents have filed submissions in support of the making of the appointment. 4 In the appellate proceedings instituted with respect to the Determination, the first respondents have cross-appealed part of the Determination, being the reference to the Ngarluma People and Yindjibarndi People without further definition of those terms. The first respondents have reserved their rights that, should their cross-appeal be successful, it may affect the validity of the rules of the corporation which adopted and refer to the terms in the Determination. One of the respondents 2A (Commonwealth of Australia) has also cross-appealed in relation to the provision in the Determination for more than one prescribed body corporate. 5 However, the submissions for the first respondents on the prescription of the Ngarluma Aboriginal Corporation state that, notwithstanding these cross-appeals, it is appropriate for orders to be made appointing that Corporation as the prescribed body corporate for the Ngarluma People. Three reasons are given for that. 6 Firstly, the Determination is taken to be valid and operational until overturned. The presumption is, therefore, that the Determination made by the Court on 2 May 2005, programming the nomination of determination of a prescribed body corporate for the Ngarluma People is in conformity with the Determination, and should proceed. Secondly, orders have already been made determining the Yindjibarndi Aboriginal Corporation as the prescribed body corporate for the Yindjibarndi People, similarly in conformity with the Determination. If either cross-appeal is successful, the Full Court may need to make orders dealing with the Yindjibarndi prescribed body corporate determination. There is, therefore, no further disadvantage to the Full Court in also dealing with a Ngarluma prescribed body corporate determination. Thirdly, the first applicants have acknowledged that an amendment to the rules of the prescribed bodies corporate (to redefine the membership of each corporation) will be required if the first respondents' cross-appeal is successful. If the Commonwealth's cross-appeal is successful, new prescribed bodies corporate will have to be constituted, in any event, in respect of both the Ngarluma People and the Yindjibarndi People. 7 It is therefore apparent that the cross-appeals will not be prejudiced by the proposed determination of the Ngarluma prescribed body corporate and nor will the success of either cross-appeal be occasioned excessive or inappropriate inconvenience. This is particularly the case given that the Yindjibarndi prescribed body corporate has already been brought into existence. 8 I am therefore persuaded that the application should be allowed and the order appointing the Ngarluma prescribed body corporate should now be made. | prescribed body corporate ngarluma prescribed body corporate advent of appeals not make determination of prescribed body corporate inappropriate or inconvenient one prescribed body corporate already in existence appropriate for discretion to be exercised to make determination of the prescribed body corporate native title |
It competes in an international market. One of its major competitors is the Incat Group of Companies (Incat) whose principal shipbuilding facilities are located in Tasmania. In May 2006 Mr Steven Thurlow, a Marketing Consultant employed by Incat Europe Ltd, sent an email to a Norwegian company called Master Ferries which attached a confidential, in-house report prepared by Austal. The report contained a mathematical modelling of the comparative seakeeping characteristics of its catamaran and trimaran ferries. The report was of a preliminary and confidential nature and indicated that the seakeeping characteristics of the 126 metre Austal trimaran were inferior to those of the 101 metre catamaran. Mr Thurlow used the Austal Report in his email as a basis for making disparaging remarks about the Austal trimaran. A former employee of Austal, Mr Justin Merrigan, had left Austal's employ on 28 January 2005 and from June 2005 commenced employment as a Public Relations and Marketing Officer for the Incat Group of Companies. As an employee of Austal he had had access to its confidential research and development reports, including the report attached to Mr Thurlow's email. Austal is concerned that the report which came into Mr Thurlow's hands may have been obtained as a result of a breach of obligations of confidentiality on the part of Mr Merrigan and that its reproduction involved infringement of Austal's copyright in the report. Austal says that the report has since been superseded by more extensive investigations which show the trimaran to be superior to the catamaran. Austal seeks preliminary discovery orders against Messrs Merrigan and Thurlow and members of the Incat Group of Companies. It does this in order to determine whether it has a cause of action against any, and if so which, of them. For the reasons which follow, I am satisfied that there is reason to believe that some or all of the respondents have, or are likely to have, possession of documents which would tend to assist Austal in determining against whom it has a cause or causes of action, at least for breach of confidence and infringement of copyright. I am satisfied also that Austal, having written to the respondents seeking discovery of the documents, before commencing action, has, in the circumstances, made all reasonable enquiries, for the purposes of the Rules so as to justify the making of orders for preliminary discovery. The orders sought by Austal however range far wider than is appropriate and while I propose to accede to their application, the orders made will be considerably narrower in scope than those which have been sought. It is a leading designer and manufacturer of high performance aluminium vessels. It is a wholly owned subsidiary of Austal Ltd, which was listed on the Australian Stock Exchange in 1998 and which has a current market capitalisation of about $450 million. Austal manufactures a range of light weight, high speed vessels including monohulls, catamarans and trimarans which range in size from 20 to 130 metres for commercial, military and naval applications. It employs 1,700 people at its shipbuilding facilities located on the waterfront at Henderson, immediately south of Fremantle in Western Australia and at Mobile in Alabama in the United States. Since it was formed Austal has designed and secured orders for manufacture and delivery of about 160 vessels including fast passenger and vehicle-passenger ferries. In June 2003 Austal entered into a contract for the design and construction of a 126 metre trimaran vehicle-passenger ferry for a European ferry operator, Fred Olsen SA. At that time the high speed vehicle-passenger ferry market had been dominated by catamarans. The use of trimarans was a relatively new concept in that market. In September 2003 Austal's Research and Development Department prepared an internal report dated 25 September 2003 entitled 'Analysis of the Ship Motion Performance of an Austal 101m Catamaran and a Comparison with a 126m Trimaran in the Irish Sea' (the Austal Report). The analysis was carried out by a process of mathematical modelling based on wave data for a ferry route from Dublin to Douglas in the Isle of Man and then to Liverpool and return. Wave height statistics for these routes were derived from data collected by service ships during the period from 1854 to 1997 and found in the Global Marine Climatic Atlas (GMCA). For the purpose of analysing the ship's motion performance a wave scatter diagram for the whole of the year was utilised as illustrated in tables set out in the report and said to represent a through-year surface. Wave direction statistics were also obtained from the GMCA. Three motion criteria were assumed as indicative of the comfort level of passengers travelling on these routes. They were: Motion sickness indices (MSI) --- a measure of the level of motion sickness resulting from vertical acceleration over a range of frequencies in accordance with an established methodology. The values were calculated for a position at the centre of the ship's main passenger cabin over a two hour period. Lateral force estimator (LFE), being a measure of the force in plane with the deck that is an indicator of the force creating a loss of balance of a standing person. This was said to be a function of the vessel's roll, sway and yaw and was calculated at the centre of the main passenger deck. Roll, which was the estimated rms value of ship roll. The characteristics of each in terms of length, displacement and speed were set out in a table. Both vessels were assumed to be fitted with T-foils forward and transom interceptors or flaps. The trimaran was also assumed to be fitted with roll stabilisers on the main hull. The analysis was carried out for both ships on reciprocal headings (out and return journeys). Vertical acceleration and roll angle were calculated by standard means based upon vessel response information obtained from numerical analyses which had been carried out for the 126m trimaran and for the 101m Auto Express. The MSI values were calculated from vertical acceleration values over one-third octave bands. By plotting maximum wave height for a given wave period at which the individual criteria were met on the wave scatter diagram, it was said to be a simple matter to sum the percentage occurrence below the line which represented the percentage occurrence in which selected criteria would not be exceeded. By integrating the percentage of wave directions with directional maximum operating limits, the maximum 'operability' for both vessels travelling in both outward and inward directions was calculated. These values were given in Tables 5 to 8 of the paper. The result was expressed numerically by a value attached to 'the overall mean of the operability'. This figure, which was in terms of a percentage, was assessed for route 1 which was the Liverpool to Douglas return route and route 2, which was the Douglas to Dublin return route. The overall mean of the operability for the Austal 101 Auto Express Catamaran was 97.1% for route 1 and 89.8% for route 2. The overall mean of the operability for the 126m trimaran was 94.6% for route 1 and 87.5% for route 2. As put in Austal's submissions, the key finding of the Austal Report was that the catamaran was, in effect, superior in terms of seakeeping when compared with the trimaran in this mathematical modelling. According to the affidavit of Christopher Scott Gerrard, Austal's Commercial Manager, sworn on 16 June 2006, the Austal Report was prepared as part of an initial investigation by the Austal sales team of a suitable vessel design for a commercial ferry operator in the Irish Sea. He described it as 'a preliminary or opening basis for further work' which was 'entirely superseded by later research and development work on the subject'. He referred to a series of later investigations culminating in a report dated 10 June 2004 which concluded that the catamaran was significantly inferior to the trimaran on the routes and in the conditions stated by the Austal Report. He exhibited from the report of June 2004 an Executive Summary which compared an Austal 127m trimaran with a 101m catamaran. The Austal 127m trimaran was said to exhibit an improved MSI, LFE and roll motions for all wave headings on the Dublin/Douglas/Liverpool routes. The Austal Report and subsequent reports were stored in a computer archive by the Research and Development Department. The Austal report was not used by the sales team for any proposal nor, according to Mr Gerrard, was it sent outside Austal to any potential customer or to any other person. A major competitor of Australia is the Incat Group of Companies which includes each of the first to seventh and ninth respondents named in the proceedings WAD 165 of 2006. It designs, constructs and sells large catamarans for use as ferries for people and goods. It has its principal ship building facilities in Tasmania. It mainly builds vehicle-passenger ferries. These range in price from $15 million to $100 million. Justin Merrigan, who is named as the respondent in WAD 163 of 2006, was employed by Austal as a Public Relations and Marketing Officer in April 2004. He was bound under his contract to keep confidential all knowledge and information concerning the interests of Austal acquired in the course of his employment. He had access to Austal's database and material relating to its research and development activities. This included work in connection with the Irish Sea. According to Mr Gerrard, the Irish Sea was a market of particular interest to Mr Merrigan as he had worked with ferry operators there previously. Mr Merrigan also had access to the Austal report and those which superseded it. Mr Merrigan resigned from Austal on 14 January 2005 and left its employ on 28 January 2005. He relocated to Tasmania where, at some time prior to June 2005, he was employed as a Public Relations and Marketing Officer with the Incat Group of Companies. Mr Steven Thurlow, who is named as the respondent in WAD 162 of 2006, is a marketing consultant employed by Incat Europe Ltd, which is incorporated and domiciled in Guernsey in the Channel Islands. It is not a subsidiary of any of the respondent members of the Incat Group and does not carry on business or have a registered office in Australia. I accept nevertheless that it is part of the Incat Group. Mr Thurlow's business card was exhibited to the affidavit of Matthew Holgate, a legal practitioner acting for the Austal Group. It bears the letterhead 'www.INCAT.com.au'. It describes him as a 'Marketing Consultant, Europe'. It gives addresses and telephone numbers in Tasmania, Denmark and the United Kingdom. Neither Mr Merrigan nor Mr Thurlow filed affidavits in reply to the evidence put on by Austal. On about 26 May 2006 one of Austal's European service agents received a copy of an email which had apparently been sent by Mr Thurlow on or about 3 May 2006. The addressee of the email was whited out. The email bore the endorsement 'Confidential --- As requested' and the heading 'Seakeeping report Austal 101 versus 126 tri on Irish Sea pdf'. (sic) I believe this will be the case with the trimaran and having read the attached report I am absolutely convinced that this trimaran is a con. It is well known in the market that the Austal 101 is far inferior to the Incat 98 metre in terms of seakeeping, yet in this Austal report the Austal 101 comes out significantly better than the trimaran which is around 26 metres longer on the waterline and offers a 4 metre wider beam. In terms of capital, Incat 060 costs a little over half the capital cost of a trimaran, it is proven in service, and it is available quickly. It will be considerably easier to berth in port as it is 28 metres shorter overall. Austal and, in particular, its Commercial Manager, Mr Gerrard, thought that the email had been sent to Irish Ferries, a prominent commercial ferry operator in the Irish Sea. As has subsequently emerged however, particularly from the affidavit of Mr Simon Carter, the Legal Manager for the Incat Group, the email was in fact sent to Mr Tom Bringsvaerd and Mr Bernt Mykjaland, who are principals of a Norwegian registered and domiciled company known as Master Ferries Holding AS (Master Ferries). It appears that Master Ferries had been in commercial negotiations with the Incat Group which led to them purchasing a second hand ship from the Incat Group on 27 February 2006. According to Mr Carter's instructions from Mr Thurlow, Master Ferries had not previously owned or operated high speed vessels. It is clear from the text of Mr Thurlow's email that it attached a copy of the Austal Report. On 12 June 2006 Stables Scott, solicitors acting for Austal, sent letters to the Incat Group respondents and to Messrs Merrigan and Thurlow. injunctive relief. The letter was predicated upon the belief that Mr Thurlow's email had been sent to Irish Ferries. The letter repudiated some of the allegations contained in Mr Thurlow's email and asserted Austal's concern that Incat and Mr Thurlow had come into possession of the Austal Report with the assistance, direct or indirect, of Mr Justin Merrigan. Similar letters were sent to Messrs. Thurlow and Merrigan. On 16 June 2006, after Mr Gerrard had sworn his first affidavit, Mr Carter, in his capacity as 'Legal Manager Incat Group of Companies', advised Stables Scott by email that he had received initial instructions on behalf of each of the respondents in these proceedings. In the meantime, on the same day, Austal's discovery request not having been met, Mr Gerrard instructed Stable Scott to file the present applications seeking preliminary discovery. The instructions which must necessarily be obtained include those from persons who are travelling overseas. On 21 June 2006 Mr Craig Clifford, who is a Director or the Managing Director of a number of the Incat Group of Companies, sent an email to John Rothwell the Chairman and Chief Executive Officer of Austal. The email was marked 'Without Prejudice' but privilege is waived by the respondents. In the email, which was evidently not received by Mr Rothwell, Mr Clifford expressed surprise at the commencement of Federal Court proceedings. He said that over the years Incat and Austal had enjoyed a healthy rivalry and competition accompanied by what he would classify as relatively normal 'tit for tat' exchanges and banter in the market place about the merits or otherwise of the products they each offered. He said that generally the rivalry was addressed in good spirit between themselves and he believed the market place respected the two leading Australian companies. Neither was revealed to us, and indeed the only response to this approach was the formal filing of documents with the Court. We will of course formally respond to the Court in the normal manner. I do know however, from bitter experience in a very protracted and very public litigation pursued by our mutual friends at Sea Containers, that there are few certainties once litigation gets fully underway, and potentially out of hand. Litigation generally takes on a life of its own and tends to bite indiscriminately. This, to my mind at least, just serves to underline how unedifying and potentially profitless to both sides these proceedings could become. If one of our marketing guys has been out of line, then I'm quite happy to investigate same, address the individual and make sure that it doesn't happen again. At the moment, my advice is that the email you have taken issue with was sent on a confidential, one on one, basis to a Norwegian gentleman representing a customer in Norway and in an attempt to compare and explain differences in the type of product we each offer to the marketplace. I am instructed that the said Norwegian has vehemently confirmed that the email went no further, which obviously can not be correct, as it has found its way into your hands. I am making further enquiry about this discrepancy. If you are prepared to reveal the means by which the email found its way to you, then that will speed up my investigation. I would be disappointed from both our perspectives if the gloves now needed to come off completely, as I can see this doing no one any good, particularly the industry, which we have each fought so hard to establish. It was suggested by Mr Gerrard that it may have been caught up in a spam email filter. This was just a theory. I accept that, for whatever reason, the email was not seen by Mr Rothwell. It seems likely that some sort of response would have followed had it been seen and that the response would have been put in evidence. Even if it had been seen it would not, in my opinion, affect the outcome of these applications. On 3 July 2006 Mr Carter spoke by telephone with Mr Holgate and they discussed the letter of demand. Their conversation was without prejudice and they were unable to reach any agreement to resolve the matter. The respondents did not waive the privilege attaching to that without prejudice communication. In an affidavit in support of the applications, Mr Holgate of Stables Scott, the solicitors acting for Austal, asserted his belief that from the evidence presently available to Austal it had reasonable cause to believe that it has, or may have, a right to claim relief against Messrs Thurlow and Merrigan and the various companies comprising the Incat Group in respect of the various matters raised in the letters of request mentioned earlier. He made particular reference to an action for infringement of copyright in the Austal Report and the fact that such cause of action would extend to any party who authorised the infringing act as well as third parties who might innocently be in possession of the Austal Report and engage in infringing conduct. He also asserted his belief that Austal's rights to obtain relief might well go beyond Mr Thurlow and involve his relationship with other persons or entities who may have authorised or been responsible for his actions or who might possess infringing copies of the Austal Report. Mr Holgate expressed his concern that evidence currently in the possession of Austal, as set out in the Gerrard affidavits, was insufficient for a proper determination to be made as to who might be the appropriate respondents in any substantive proceedings which might be contemplated by Austal in relation to a potential claim for infringements of its copyright, as well as contravention of s 52 of the Act. Mr Holgate said that he could not get from the public domain sufficient evidence to identify the party or parties who might have been responsible for the alleged infringement and who might possess infringing copies. He asserted that these circumstances justified an application for discovery being made under O 15A r 3, as well as under O 15A r 6. He said that he was unable to ascertain a direct or indirect involvement, if any, of the first to ninth respondents in the distribution of the Austal Report attached to Mr Thurlow's email. In relation to Mr Thurlow, he could not determine from the material currently in possession of Austal from whom, if anyone, Mr Thurlow received instructions to distribute the report. He was unable to determine whether Mr Thurlow was employed or otherwise engaged by any, and if so which of, the first to ninth respondents. In this respect he referred to Mr Thurlow's business card which was provided to him by Mr Gerrard. The evidence and information in the possession of Austal did not allow him to determine how Mr Thurlow came to be in possession of the Austal Report and the circumstances surrounding his apparent distribution of that report to Irish Ferries. This latter reference of course was based on the inference, apparently drawn by Mr Gerrard, that the email had been sent to Irish Ferries and not, as subsequently emerged, to Master Ferries. Similar limitations arose in connection with the information available about the involvement (if any) of Mr Merrigan and the basis of his employment or engagement with any of the respondents. The first rule applies, inter alia, where an applicant, having made reasonable inquiries, is unable to ascertain the description of a prospective respondent sufficiently for the purpose of commencing proceedings and some person has or is likely to have documents or things tending to assist in such ascertainment. The second rule applies where a prospective respondent has, or is likely to have, possession of documents relating to the question whether the applicant has a right to obtain relief. Both rules are relied upon to support the orders for preliminary discovery in each of the proceedings now brought. Rule 3 is also relied upon to support an order for examination of the respondents before the Court, but the applicant accepts that whether such an order should be made can await the outcome of the discovery and inspection of documents if such is ordered. I recently discussed the principles applicable to preliminary discovery under O 15 r 6 in East Grace Corporation v Xing (No 2) [2005] FCA 1266. It is not necessary to repeat here that discussion and the citation of authorities there set out. The applicant has made what, in the circumstances, are all reasonable enquiries. The term 'reasonable' in this context falls to be considered having regard to the degree of urgency necessary to act upon what is, on the face of it, a potentially serious breach of an obligation of confidentiality and unauthorised reproduction of a sensitive internal report of Austal. Wider enquiries are unlikely to elicit information relevant to the decision that Austal has to make as the necessary documentation is likely to be held by the respective respondents. No offer of disclosure has been made in response to the requests which have been sent. The offer of further investigation by Mr Clifford in the email sent to Mr Rothwell did not promise the kind of disclosure necessary for Austal to make the decision which it wants to make in relation to the institution of proceedings. There is reasonable cause to believe that Mr Merrigan and Mr Thurlow are likely to have in their possession documents, including email communications and copies of the Austal Report, relevant to the question whether Austal has a right to obtain relief against them. In the case of the Incat respondents, there are a number of companies some of which may have had no involvement at all in Mr Thurlow's apparent conduct in sending a copy of the Austal Report to Master Ferries. An order for discovery against the Incat respondents is likely to assist Austal in ascertaining against which, if any of them, it may have a cause of action. As to those of the respondents which are not involved, such respondents would have knowledge of facts as to their non-involvement which will assist the process of ascertainment of the relevant respondents which is contemplated by O 15A r 3. Discovery against Incat will also serve to assist Austal in ascertaining whether Mr Merrigan or some other person had breached confidentiality or infringed its copyright. Mr Thurlow is said to be a marketing consultant employed by Incat Europe Ltd. Whether or not he has any, and if so what, connection with other members of the Incat Group was not apparent, although it is apparent that Incat Europe is a member of the Group. The orders sought by Austal are, in my opinion, much wider than would be justified by the Rules. The Court is not here concerned with any cause of action based on disparaging statements about Austal's product made in Mr Thurlow's email. It is concerned primarily with the circumstances surrounding his acquisition of the Austal Report and the reproduction and publication of it to third parties. The orders proposed reflect this concern. The question of whether, and to what extent, any cause of action upon which Austal could rely arises in whole or in part within Australia may emerge with greater clarity when discovery is provided. The precise geographical location of elements of the acts which may give rise to a cause of action is not apparent from the materials before the Court although it is clear that Mr Thurlow has a Tasmanian point of contact, evidenced by his business card, that Mr Merrigan works or worked for Incat in Tasmania at relevant times and that Incat itself is an Australian-based corporate group. I will make orders reflecting these reasons but will allow liberty to the parties to apply to vary them for practical and timing reasons. | preliminary discovery to ascertain prospective respondents to ascertain whether right to obtain relief confidential internal research report procured by employee of competitor published to third parties to disparage applicant's product former employee of applicant now working for competitor criteria for preliminary discovery satisfied orders made practice and procedure |
The application by the plaintiff was filed on 11 July 2008 together with the supporting affidavit of Mr Peter Szental sworn on 8 July 2008. That offer, described by the defendant as a "Calderbank offer", remained open for acceptance until 4.00pm on 4 August 2008. The matter came before the Court for directions on 5 August 2008 when directions were given for the filing of material and the fixing of a trial date. The offer remained open for acceptance until 4.00pm on 14 August 2008. The appellation "Calderbank offer" has its origin in the decision of the English Court of Appeal in Calderbank v Calderbank [1976] Fam 93 at 106. In essence, a Calderbank offer is one which is made in a proceeding before judgment on the basis of it being without prejudice save as to costs and in which an offer for settlement or resolution of the proceeding is made. The right is reserved to refer to the offer if any issue arises as to costs once judgment is delivered. A court can take the offer into account in determining what costs order should be made notwithstanding that the payment into court procedure provided in the court's rules has not been followed. If the party to whom the offer is made does not obtain a more favourable result than the offer made and it is established that in the circumstances of the case that party ought to have accepted the offer, then costs will be awarded on the same basis as if there had been a payment into Court prior to judgment and judgment for a lesser amount had been obtained. The refusal or rejection of a Calderbank offer, of itself, does not automatically mean, or give rise to a presumption, that the Court should make an order for costs on either a party/party basis or (depending on the circumstances) an indemnity basis where the result is less favourable to the offeree than the offer. It must be established that it was unreasonable in all the circumstances for the offeree to reject the offer : Jacomb v Australian Municipal, Administrative, Clerical & Services Union [2004] FCA 1600 at [6] ; Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at 440. Pursuant to s 43(1) of the Federal Court of Australia Act 1976 (Cth) the Court has a broad general discretion in determining how, in what manner, and whether, costs should be borne and paid as a result of the conclusion of any proceeding. The usual order for costs is that costs follow the event and are paid on a party/party basis unless there are special circumstances which warrant the making of some other order. However, it has long been established that the Court may award costs on a solicitor/client or indemnity basis where the particular circumstances of the case warrant the Court departing from the usual order of party/party costs: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536 ; (1993) 46 FCR 225. It has also been long established that in an appropriate case indemnity costs may be awarded against an unsuccessful party where it is established that a proceeding has been commenced in circumstances where the applicant properly advised by legal advisers should have known that it had no prospects of success: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202 ; (1988) 81 ALR 397 at 401. Those circumstances included "an imprudent refusal of an offer to compromise". In Hazeldene's Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (supra), the Victorian Court of Appeal accepted the proposition that the rejection of a Calderbank offer should only lead to the making of a special costs order, other than a party/party costs order, where the rejection of the offer was unreasonable. That question gives rise to a threshold issue --- were the offers genuine offers of compromise? The plaintiff submitted that they were not genuine offers of compromise, but rather were "invitations to capitulate by discontinuing the proceedings on a basis that each party bear its own costs". There is support in a number of cases for the view that an offer by a defendant that a plaintiff discontinue the proceeding on the basis of each party bearing its own costs is not a genuine offer for the purpose of considering the effect of a Calderbank offer on a question of costs: McKerlie v State of New South Wales (No 2) [2000] NSWSC 1159 at [9] - [11] ; Australian Competition & Consumer Commission v Universal Music Australia Pty Ltd (No 2) [2002] FCA 192 at [59] - [64] ; Vasram v AMP Life Limited [2002] FCA 1286 at [12] ; Fyna Foods Australia Pty Ltd v Cobannah Holdings Pty Ltd (No 2) [2004] FCA 1212 at [10] ; Jacomb v Australian Municipal, Administrative, Clerical & Services Union (supra) at [7]; Dresna Pty Ltd v Linknarf Management Services Pty Ltd (In Liq) (No 2) [2006] FCA 755 at [20] . (The reasoning in Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 and Townsend v Townsend (No 2) [2001] NSWCA 145 does not support the proposition that an offer by a defendant that the proceeding be discontinued with no order as to costs cannot be regarded as a genuine offer to compromise. ) I do not agree with the proposition that an invitation to a plaintiff to discontinue proceedings with no order as to costs is not a genuine attempt to resolve the proceeding by way of compromise for the purposes of considering the consequences of an offer made in a Calderbank letter. In an appropriate case, the giving up by a defendant of the opportunity to recover from the plaintiff the costs it has incurred in defending a proceeding can constitute consideration for a compromise which is real, particularly where the costs incurred have been substantial. The reasoning of the New South Wales Court of Appeal in Leichardt Municipal Council v Green [2004] NSWCA 341 supports this proposition. The cases to which I have referred in the previous paragraph do not appear to have taken into account the fact that such an offer involves the defendant giving up the opportunity to recover its costs from the plaintiff. If the proceeding was pursued to judgment in favour of the defendant, then the defendant would be able to obtain an order to recover its costs from the plaintiff. The renunciation of that opportunity, in my opinion, clothes the offer with the cloak of a genuine compromise of substance. The defendant relies upon the two letters sent by its solicitors to the plaintiff's solicitors to argue that the costs it should be paid following the event should be paid on an indemnity basis after the receipt of the second letter because the plaintiff was persisting in what, on proper consideration, should have been regarded as a hopeless case and that it was unreasonable for the plaintiff to reject, or not to accept, the offer which the defendant made. If the plaintiff had accepted the offers made by the defendant it would have avoided altogether paying the costs incurred by the defendant in the proceeding up to that point in time. In order to consider the defendant's submission it is necessary to put its two Calderbank offers in the chronological context relied on by the defendant. I should respond to the defendant's submissions that at the directions hearing on 5 August 2008 I had expressed a preliminary view of the relief sought. The defendant relies upon a number of comments I made to counsel in the course of submissions that I had formed a preliminary view, subject to submissions, that the appointment of an investigating accountant to make a report was not an appropriate form of relief. On that occasion I said that that form of relief was a matter of concern to me in that it did not resolve issues between the parties, but I made it clear that if that order was sought as a final order, I would need to hear final submissions on it. The views I expressed at that time on the effect of a winding-up order and the other alternatives opened to Mr Szental were in no way a concluded view, nor were they views which were a rejection of the plaintiff's case at that time. The plaintiff submitted that the defendant has failed to establish that its rejection of the offers was unreasonable. It contended that the offers were not genuine offers of compromise but rather were invitations "to capitulate" by discontinuing the proceeding on the basis that each party bear its own costs. The critical date for the purpose of the defendant's application is 14 August 2008, the date specified in the second Calderbank letter up to which the offer remained open for acceptance. In the course of oral submissions, I put to counsel for the defendant that as the plaintiff's alternative claim that the defendant should be wound-up on the just and equitable ground was only abandoned on the first day of the trial, 6 October 2008, that date might be a relevant date in determining whether the plaintiff should pay indemnity costs after a particular point of time. I understood counsel for the defendant then to submit that the plaintiff should pay the defendant's costs on an indemnity basis from 14 August 2008 or alternatively from 6 October 2008. At the time each of the Calderbank offers was sent to the defendant, in addition to the order the plaintiff was seeking for the appointment of an accountant to prepare a report to the members of the defendant in relation to a number of matters pertaining to the conduct of the affairs of the defendant, the plaintiff was also seeking, in the alternative, an order that the defendant be wound-up on the just and equitable ground. There was material before the Court at that time from which it was open to the Court to find that the conduct of the defendant's affairs had been contrary to the interests of the members of the Council as a whole although not oppressive to, unfairly prejudicial to, or unfairly discriminatory against members of the defendant. In particular, there were issues as to the finances of the defendant which were ongoing and which were only resolved by the audit report and financial statements of the defendant certified by the auditors on or about 1 October 2008. As I have found, by the commencement of the final hearing the substantive matters complained of by the plaintiff had been attended to by the defendant. It follows that as at the date of the second Calderbank letter the claim of the plaintiff that the defendant should be wound-up on the just and equitable ground was still alive. In the events which occurred that claim was never adjudicated upon nor was there any investigation as to whether it had any merits. The solicitors also noted that although a winding-up order was not the plaintiff's preferred outcome and constituted a last resort, it was at that time the only relief that remained for the plaintiff to pursue. In these circumstances, I do not consider that it was unreasonable for the plaintiff to reject the defendant's offer. Even if it could be argued that the claim for the principal relief sought was hopeless, there still remained the winding-up claim on the just and equitable ground, which at that time could not be determined to be hopeless. Affidavits by Mr Szental and Mr McIndoe had been filed and they raised a number of factual issues which were contested and which needed to be the subject of cross-examination and specific findings. Winding-up the defendant may have been a last resort for the plaintiff, but it was nevertheless a live issue which, having regard to the issues which had been raised by the plaintiff and the defendant, needed to be determined. However, the position changed on 6 October 2008. The claim to wind-up the defendant on the just and equitable ground was abandoned. The only live claim for relief was for the appointment of the accountant to investigate matters and make a report to members of the defendant. Although that relief was novel and although I have ultimately found that such an order was not appropriate in relation to the defendant, it does not follow that the Court could not fashion an order designed to meet the complaints of the plaintiff having regard to the wide and general discretion to make orders committed to the Court by s 233 of the Corporations Act 2001 (Cth) ("the Act"). The discretion granted to the Court under s 233(1) is very wide and, as I noted earlier, it is not restricted to the forms of order set out in subs (1) of s 233. As I observed earlier, that section empowers the Court to make "any order" that it considers "appropriate in relation to the company". Nevertheless, I consider that the order sought is not appropriate in relation to the Council. On 6 October 2008 there were, still alive, a number of factual issues which, although ultimately not warranting the specific relief sought by the plaintiff, were matters which justified a consideration of the range of relief which might be granted to the plaintiff pursuant to s 232(d) and s 233 of the Act. Having regard to all these circumstances, I do not consider that it was unreasonable for the plaintiff to reject the offers contained in the first and second Calderbank offers. True it is that I found that the ultimate relief sought by the plaintiff was not appropriate in all the circumstances. However, the factual background facing the plaintiff as at the date of the first and second Calderbank offers and at the commencement of the hearing on 6 October 2008 was such that it was not unreasonable for the plaintiff to seek relief from the Court pursuant to ss 232 and 233 of the Act which related to the complaints which the plaintiff had made. The plaintiff submitted that if I rejected the defendant's application to be awarded indemnity costs, I should order that the defendant pay to the plaintiff the costs incurred in relation to the defendant's application for indemnity costs. The plaintiff submitted the application for indemnity costs was a discrete application and that as the defendant had lost that application the costs should follow the event. In the ordinary course, when a judgment is delivered any issue of costs can usually be resolved on the day that judgment is handed down and the final orders made. In the present case that could not be achieved. On the day when I handed down my reasons for judgment and the orders I proposed to make, senior counsel for the defendant announced that he was proposing to make a submission that the defendant should be paid indemnity costs on the basis of the sending of the two Calderbank letters, of which I had no prior knowledge. It was apparent to me that the plaintiff was not in a position to argue that issue and make submissions in relation to costs on that day. That position was confirmed by the solicitor for the plaintiff who appeared. It would be necessary for the plaintiff's counsel to appear. I did not consider it appropriate nor equitable, either to force the solicitor for the plaintiff to make submissions on the issue of indemnity costs or to force that issue on that day notwithstanding the warning in the Calderbank letters that in the circumstances referred to the defendant would be seeking indemnity costs. Although the defendant has not succeeded in its submission that it be awarded indemnity costs in the circumstances which existed on the day I handed down my reasons, I do not consider that it is appropriate to penalise the defendant by ordering it to pay the plaintiff's costs of the application for indemnity costs. I consider the appropriate order to make is that the parties bear their own costs of the defendant's application to be awarded indemnity costs. I therefore propose to order that the usual order as to costs be made namely, that the plaintiff pay the defendant's costs of and incidental to the application on a party/party basis and that the defendant's application for indemnity costs be dismissed and that the parties bear their own costs of that application. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. | plaintiff ordered to pay defendant's costs defendant sent calderbank letter whether offer that claim be discontinued with no order as to costs a genuine compromise plaintiff's claim dismissed whether plaintiff should pay indemnity costs. costs |
That order operated as a conditional stay of execution of the judgment. The parties have agreed on payment of the judgment sum into a joint interest bearing account. 2 Prior to the stay application, the solicitors for the respondent had offered a compromise which accorded with that outcome. That offer (also repeated shortly prior to the primary stay application being heard) was rejected. On the arguing of the primary stay application, the principal position taken by the respondent was that she was entitled to the fruits of her victory and there should be no stay. However the respondent was also willing to accept the payment into a joint trust account solution. For reasons expressed in Harbour City Real Estate No 1 at [15], I was of the view that the appropriate disposition was for the funds to be paid into an interest bearing account. The respondent seeks costs on an indemnity basis by reason of the rejection of her offers. The rejection is said to have been unreasonable. 3 By virtue of that offer being made and not accepted, I would ordinarily have considered that the respondent should have the costs of the motion. 4 However, that is not the end of the matter. (2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first mentioned party to pay some or all of those costs. 6 Parliament has made clear that in proceedings under the WR Act, costs should be awarded only when costs have been incurred as a result of an unreasonable act or omission. As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Association 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138-139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being "an unreasonable act or omission" for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as "unreasonable" in the circumstances of this case. Indeed, while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best. 8 The appellants contend therefore that the respondent is not entitled to costs at all, let alone on an indemnity basis. The appellants argue that the appropriate order is either that the parties each bear their own costs (or there be no order as to costs) or that the costs be in the cause. 9 However it seems to me that to make an order for costs to be in the cause may also constitute a contravention of s 824. 10 In my view the appropriate disposition is that there be no order as to costs. I cannot say that rejection of the offer was unreasonable within the meaning of s 824. Nor was the application for the stay incompetent or unsupportable. There were good reasons for the stay application to be brought and I have touched on those in Harbour City Real Estate No 1 at [13] and [14]. While there would, in circumstances to which s 824(2) applies, be scope for an award of indemnity costs, the mere fact alone that an offer is made and rejected is not of itself generally regarded as being sufficient to justify an award of indemnity costs. Rather, the rejection of the offer must be unreasonable or imprudent: see Black v Lipovac [1998] FCA 699 ; (1998) 217 ALR 386 ; Seven Network Ltd v News Ltd (2007) 244 ALR 374 at [59]-[62], University of Western Australia v Gray (No 21) [2008] FCA 1056 at [36] and MGICA v Kenny (1996) 70 FCR 236. There be no order as to costs in relation to the orders of 9 September 2008 made in Harbour City Real Estate Pty Ltd t/as Re/Max Harbour City Real Estate (ACN 111 210 023) v Cargill [2008] FCA 1382. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | indemnity costs whether rejection of offer reasonable or prudent costs |
The University alleges, inter alia, that Dr Gray, while in its employ as a Professor of Medicine, developed technologies for the treatment of cancer, that intellectual property rights in relation to them belong to the University and that he has infringed those rights and University regulations relating to intellectual property. 2 The case raises some complex legal and factual issues. A trial of the action has been set down for four weeks commencing 4 September 2006. The University has sought leave, under O 27A of the Federal Court Rules , to issue subpoenas for the production of documents prior to trial. I directed that parties affected by the proposed subpoenas be given prior notice of the application and an opportunity to make submissions about any practical issues likely to arise in relation to the production of the documents. In the absence of any suggestion that a party affected by a proposed subpoena might destroy or conceal documents if given prior notice of its issue, it is a convenient practice to endeavour to resolve practical issues, including questions as to confidentiality regimes, at the point of the grant of leave rather than leaving them to be raised subsequently or in applications to set aside the subpoena. 3 On 2 May 2006 I gave leave to the University to issue subpoenas to the Lions Cancer Institute, Davies Collison & Cave, Patent Attorneys and Raffaele Cammarano. Because of practical issues raised by three other respondents to proposed subpoenas, who had been given notice of them, I stood the leave question over to today for decision and the filing of additional affidavit material. The party concerns were related largely to the very wide range of documents sought in each case. All file notes, memoranda, or other documentation made in relation to any Meeting or provided by Dr Chen to any staff or partners of Wray and Associates for the purposes of any Chen Meeting. All patent attorneys' day book entries, file notes, memoranda or other documentation made in relation to any Gray Meeting where that Gray Meeting related to the Letter or any matter raised in the Letter. All patent attorneys' day book entries, file notes, memoranda, advices, patent specifications (including drafts), correspondence or other documentation relating to the Technology. All patent attorneys' day book entries, billing information, correspondence, reports, advices, file notes, memoranda, minutes of meetings, or records of telephone conversations relating to services provided by Wray and Associates in respect of protecting (including by patent) the Technology. All patent attorneys' day book entries, file notes, memoranda, written correspondence, including annexures, exhibits and attachments, or other documents recording communications between Wray and Associates and any foreign patent attorney who is not registered under the Patents Act 1990 (Cth), relating to the Patent Applications and/or the Inventions. They have also raised concerns that some of the documents sought fall within the scope of patent attorney/client privilege. 6 The latter question can be resolved by reference to particular documents or classes of documents at the point of production. The applicant and the patent attorneys should, prior to production, have discussions to endeavour to narrow the range of any dispute about privilege. 7 The classes of documents sought are not on the face of it confined to the documents dealing with technologies which are the subject of the litigation. The definition of the term 'Technology' in the draft subpoena is not confined to inventions which are the subject of the action. The term 'Chen Meeting' is defined in terms which are wide enough to encompass meetings on matters other than those relevant to the proceedings. So too is the term 'Gray Meeting'. The term 'Inventions' is, in my opinion, appropriately defined. 8 The subpoena as presently drafted potentially extends beyond the legitimate requirements of the litigation. I will give leave to issue a subpoena in a revised form dependant upon suitably narrowed definitions of the terms 'Chen Meeting', 'Gray Meeting' and 'Technology'. I assume that the first two lines of par 1 of the Schedule which refer to 'any Meeting' are intended to refer to 'any Chen Meeting'. I will also expect the applicant to make suitable arrangements with Wray & Associates for the costs of production of the documents. 9 The second subpoena in contention is addressed to Professor Mark Andrew Burton. The Schedule to the subpoena sets out a list of copy laboratory books numbering some 57 in total and a date range from 2 May 1991 to 27 July 1999. In addition there are some nine classes of documents the production of which is sought. Professor Burton has responded to notification of the proposed draft subpoena. He objects to the list as 'extraordinarily extensive and generalised'. The list of laboratory books, he says, extends long after he left the University and/or relates to the work of others. Acronyms are used that he is unfamiliar with and requests for items of information that are 'mystifying'. He says he suspects he has very few of the sort of documents that are described. 10 Professor Burton says he has moved his residence and work office many times over the past 14 years and is unsure where any materials related to Perth might be packed away. He is presently Dean of the Faculty of Health Studies at another university which has multiple campuses. Because of the demands that this and a pending restructure of the faculty puts upon his time, he seeks 'more directive instruction' on what the University seeks. 11 In an affidavit filed 20 April 2006 in support of the grant of leave, the University's solicitors, Mr Cox, refers to relevant aspects of the pleading. He states his belief, on the basis of documents in the possession of the University, that Professor Burton was employed there as a Research Fellow between 4 March 1985 and March 1993. He exhibits a bundle of copies of correspondence relating to the appointment and resignation of Professor Burton. 12 While working at the University Professor Burton undertook a range of research projects with Dr Gray and others in the general field of the relevant Technology. 13 Mr Cox points out that research by Professor Burton and/or his associates was reported in laboratory books. A record of the issue of laboratory books was kept. At some time he had in his possession at least the laboratory books numbered 7 to 13 in the relevant record book. 14 Dr Burton is listed as an author or co-author of many of the published articles referred to in the amended defence in relation to the alleged disclosure of Dr Gray's research to the University. He is also listed as an applicant for funding in many of the applications for funding relied upon as constituting disclosure of Dr Gray's research. 15 Mr Cox states his belief on the basis of those matters that Professor Burton may be in possession of documents which relate to the development and/or discovery of the relevant inventions, is likely to have entered into an assignment of them with Dr Gray and other parties and is likely to have received consideration for any assignment. 16 On the basis of the above materials, I am prepared to grant leave to issue the subpoena subject to narrowing of categories 3 and 4 which, on their face, go beyond any issue arising or likely to arise out of the litigation. I will therefore grant leave to issue the subpoena in relation to all other categories of documents mentioned. If the University seeks to pursue documents in categories 3 and 4 it will have to narrow them to make those categories relevant to issues likely to arise in the proceedings. 17 It appears that Professor Burton may have some practical difficulties in identifying some of the relevant documents. He has of course the option of moving to set aside the subpoena in whole or in part on the ground of oppressiveness, but it will be necessary for him to do so on the basis of affidavit evidence. If the subpoena is issued in the form for which leave is granted and served upon him, he should make every reasonable effort to identify what he can and to comply with the subpoena. If there are insuperable practical difficulties, then an approach can be made to the applicant to discuss those or, alternatively, to the Court. 18 A similar request is made for leave to issue a subpoena to Dr Stephen Jones and is supported by similar evidence in the form of an affidavit sworn by Mr Cox. Some of the categories of documents sought in this subpoena run wider than those in relation to Professor Burton and are not, on their face, limited to matters likely to be of relevance to the issues in the litigation. In particular, categories 2, 3, 4, 6 and 12 are, in my opinion, oppressively wide and not justified by reference to the issues on the pleadings. I will not grant leave to issue a subpoena to Dr Jones unless the proposed subpoena is redrawn to deal with the concerns that I have expressed in connection with certain of the categories to be covered by it. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | range of categories of documents sought oppressively wide relevance to present proceedings patent attorney/client privilege categories to be limited to present proceedings leave to reissue subpoenas subpoenas |
He arrived in Australia on 5 October 2000 and made a protection visa application on 15 November 2000. This application was refused by a delegate of the Minister on 3 January 2001. On 19 December 2002, the Refugee Review Tribunal handed down its decision affirming the decision of the delegate. 2 The applicant subsequently sought judicial review of the delegate's decision in the Federal Magistrates Court (Lloyd-Jones FM) and subsequently in the Federal Court of Australia, and ultimately in the High Court of Australia. He was unsuccessful on each occasion. The applicant then in effect recommenced the process of seeking judicial review of the delegate's decision in the Federal Magistrates Court. Understandably Smith FM dismissed that further application on 23 December 2005, holding that the same constituted an abuse of process. Yet the applicant has now sought leave to appeal that latter decision. Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides of course that an appeal should not be brought against an interlocutory judgment unless leave to appeal is first obtained. Nor did the application identify, with any meaningful specificity, any error in the decision of Smith FM below, or any jurisdictional error in the delegate's original decision or that of the Tribunal. Moreover, the affidavit deposed to in support of the application for leave to appeal did not identify any ground of appeal which would have any conceivable prospect of success if leave to appeal was to be granted. Rather the applicant invited the Court to enter into some form of impermissible merits review based on a handwritten affidavit of 11 January 2005. The reasons given by Smith FM were not addressed adequately or at all by the draft notice of appeal, and no written submissions were provided by the applicant. The 'grounds' identified seek in substance, as I have stated above, impermissible merits review, and did not distil any conceivably viable error in the reasons for judgment of Smith FM. 5 Accordingly his Honour was plainly correct in his dismissal of the application for the reasons that his Honour provided. The present application constitutes plainly an abuse of process. Accordingly, no substantial injustice would result if leave to appeal was to be refused, particularly in the light of the applicant's prior history of unsuccessful applications outlined above. | application for leave to appeal from federal magistrates court prior history of unsuccessful applications to refugee review tribunal, federal magistrates court, federal court and high court subsequent further unsuccessful application to federal magistrates court abuse of process migration |
The Tribunal had affirmed a decision of a delegate of the first respondent to refuse to grant the appellant a protection (Class XA) visa. The appellant had left Russia on 30 October 2001 for New Zealand. 3 Before the Tribunal the appellant claimed to have a well-founded fear of persecution because he was a Jehovah's Witness, and had requested the release from military service of other Jehovah's Witnesses, as it was against their religion to join the army or use arms. Following his activities he was arrested, beaten, and interrogated by the authorities. The appellant claimed that he went into hiding as police searched for him at his home and work. The appellant was finally arrested outside a Kingdom Hall and interrogated and beaten. In his visa application, the appellant also stated that groups from the Russian Orthodox Church had broken windows from their Kingdom Hall. The appellant claimed he attended a few Kingdom Halls around Sydney and provided a document that he was not to have a blood transfusion, but the appellant could not provide evidence from a bible study group that he was a Jehovah's Witness. 5 The appellant provided the Tribunal with letters that he had attended weekly meetings at a Kingdom Hall in Christchurch New Zealand and had shown an interest in continuing his studies which started in St Petersburg Russia. However, the Tribunal noted that the author's knowledge of the appellant's studies in St Petersburg could only have come from the appellant. The Tribunal also had regard to an email from a friend of the appellant in St Petersburg to corroborate his claim of being arrested and beaten. However, the Tribunal did not consider that this evidence outweighed the problems with the appellant's own evidence. 6 The appellant also produced a letter in Russian which was from a Jehovah's Witness elder which the interpreter confirmed indicated the appellant had been baptised in April 2001. However, the Tribunal found it difficult to give weight to the document as it was unsigned. The Tribunal noted that even if it called the telephone number provided in the letter, there was no guarantee of the identity of anyone who answered. 7 In relation to the appellant's claim as to what happened to him in Russia, the Tribunal found that it was not consistent with country information which indicated no Jehovah's Witnesses were currently imprisoned in Russia for evading military service as their matter would be placed in a pending file for alternative civil service. Do you know whether the Jehovah's Witnesses who successfully appealed their military service on the basis of conscientious objection were conscripts or reservists? Are you aware of the specific grounds of their appeal and of the courts' reason for their findings? Are you aware of any other cases which have been unsuccessful in utilising the constitutional provisions concerning conscientious objection? We have numerous cases when young Jehovah's Witnesses have appealed their military service on the basis of conscientious objection as conscripts. So far, all cases concerning reservists have been resolved without going to court. Does not apply to reservists. While the Constitution guarantees a right for alternative civil service, the Federal law making the actual provisions for such service was adopted only on July 25, 2002 and will not become active before January 1, 2004. Therefore, when young Jehovah's Witnesses refuse military service as conscientious objectors and apply for alternative civil service, usually their cases are put into a pending file waiting for the implementation of the alternative civil service. Currently there are no Jehovah's Witnesses imprisoned in Russia for this reason. (Emphasis in original). Consequently, the Tribunal found the appellant was not telling the truth regarding his claims in Russia. The Tribunal did not accept the appellant had been arrested. The Tribunal did not accept the appellant had been persecuted for his religious beliefs or for his imputed political beliefs or as a member of a particular social group. Firstly, the appellant asserted the Tribunal did not consider the country information that stated it was possible for Jehovah's Witnesses who refuse military service to be detained. Secondly, that the Tribunal did not comment on the appellant's medical alert form which stated he was unable to have a blood transfusion. Thirdly, that in relation to the findings regarding the baptism, the Jehovah's Witness elder had written his name instead of signing it. Fourthly, that the appellant was unable to obtain corroborating documents due to his offence. 11 The appellant noted that the Tribunal did not inquire from the government but from Mr Kalin about Jehovah's Witnesses being imprisoned. The appellant asserted that Mr Kalin was interested in the matter and did not wish the members of the appellant's organisation to seek refuge. The appellant also attached a new document from the Jehovah's Witness elder attesting to the appellant's baptism with a signature included. 12 The federal magistrate, in considering the Tribunal's decision in light of the claims made by the appellant, found that the Tribunal had discussed the general information with the appellant at the hearing and he had been on notice that the country information did not support his claims. His Honour found the grounds of appeal essentially sought a review of the merits and the Tribunal was not obliged to conduct further inquiries. In relation to the appellant's medical alert, his Honour held that it was open to the Tribunal to find it did not overcome the absence of direct corroborating evidence the appellant was a Jehovah's Witness. It was open to the Tribunal to attribute the weight to the documents in the manner it did. His Honour held that the new letter of baptism the appellant submitted was not before the Tribunal and further, the appellant did not explain to the Tribunal why he could not obtain the corroborating documents at the time of the hearing. Taking into account all the arguments presented by the appellant, his Honour was unable to identify jurisdictional error and dismissed the application. I informed the Federal Magistrates Court in submission 5.2.2007 about RRT did not inquire if the conscientious objectors Jehovah's Witnesses were sent to prison from official government of Russia, who would have such information, but from member of our organisation Mr Kalin, who is interested in this matter, does not wish the members of my organisation seeking refuge. Federal Magistrates Court ignored that. I was told that such information was filed with the Court and sent to the first respondent. Such information did not appear to be on the Court file, but the appellant handed me such additional information which I have marked for identification. Only the first five folios are additional as the other material consists of documentation before the Tribunal and in fact appears in the appeal book. I was told by the appellant that the additional information, other than that which was already before the Tribunal, was obtained by the appellant himself from the Internet, after the Federal Magistrates Court decision. It is material relevant to the year 1998 and indicates that, at that time, at least two Jehovah's Witnesses who were conscientious objectors were imprisoned. This is not inconsistent on its face with the statements of Mr Kalin as Mr Kalin only stated that "currently", namely in October 2002, there were no Jehovah's Witnesses imprisoned in Russia for reason of the conscientious objection. The appellant, however, says that the additional information is relevant to support his version of events because it is relevant to the time he was in Russia. In this way he says it supports his credibility of the facts he placed before the Tribunal. 15 Before going to the question of the admission into evidence of the additional information, I will deal with the substantive ground of appeal raised in the notice of appeal filed on 6 March 2007. This was that the Tribunal should not have relied upon the statements from the chairman of the church, but should have obtained information from the Russian authorities as to how objections to military service by Jehovah's Witnesses were dealt with by police and other authorities. He argued that the chairman "is interested in this matter, and does not wish the members of my organisation seeking refuge" . In my opinion, this argument only challenges the merits of the Tribunal's factual assessment, and does not reveal jurisdictional error. 17 It would appear that s 422B of the Migration Act 1958 (Cth) applies to the appellant's application. Prior to the introduction of s 422B there was generally no obligation on the Tribunal to conduct its own investigation or to make some particular inquiry: see generally, WAGJ v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 277 at [25] ; Applicant S214 of 2003 v Refugee Review Tribunal (2006) 90 ALD 632 at 641; and S1194/2003 v Minister for Immigration and Multicultural Affairs [2006] FCA 1133 at [13] . With the introduction of s 422B this position is made clear: see SZGQN v Minister for Immigration and Citizenship [2007] FCA 428 at [28] . 18 In any event, it is apparent from this case that the Tribunal did make inquiries as to whether conscientious objectors were sent to prison. It relied upon information from Mr Kalin in forming its view on whether conscientious objectors were sent to prison. I see nothing wrong with the approach of the Tribunal in making this choice in its assessment of the information, and this is clearly a factual matter for it: see NAHI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 10 at [11] to [13]. 19 I now turn to the question of the additional information. In my view the appellant has had ample opportunity to put material to the Tribunal and to place any evidence to rebut the statements of Mr Kalin. In fact, the appellant did address the Federal Magistrates Court as to Mr Kalin possibly being wrong. Even before the federal magistrate no additional information was sought to be tendered into evidence. No sufficient explanation is now offered in relation to the additional information sought to be relied upon and why it was not sought to be relied upon earlier: see generally, Chopra v Minister for Immigration and Multicultural Affairs [1999] FCA 480 at [68] and following. 20 It is not sufficient to say, as the appellant does, that upon the Federal Magistrates Court making its decision, he tried harder to find further material. The appellant was well aware that his credit was in issue before the Tribunal, and he should have made all efforts to produce all the material he wished to rely upon before the Tribunal. Even if the new evidence would now be admissible, to which I refer to, for example, Australian Retailers Association v Reserve Bank of Australia [2005] FCA 1707 ; (2005) 148 FCR 446, remembering that this is a review procedure, in my view, I should not allow the additional information to be adduced by the appellant before me. 21 There is a public interest in disposing of public law cases in a timely manner and this is not a case where the issue to be agitated here was not appropriately and clearly put to the appellant before the Tribunal. Fairness does not dictate in this case that I should allow the appellant to tender into evidence any new material for the purposes of this appeal. My function is to review the decision of the federal magistrate and the Tribunal and not to consider the appellant's visa application on the merits and de novo. This is particularly so where the Tribunal did not accept the appellant as a witness of truth. 22 I further observe that the additional material seems to me to be relevant to the appellant's credibility. The Tribunal, in considering the material of Mr Kalin, was treating it as confirmatory of its view that the appellant was not telling the truth about his involvement with Jehovah's Witnesses. Even if the Tribunal had the additional information before it, any response, in my view, would not have affected the Tribunal's finding about the credit-worthiness of the appellant. I am not satisfied that there is any significant possibility that the decision of the Tribunal or the Federal Magistrates Court would have been different if the additional information now sought to be relied upon was in fact before either the Tribunal or the federal magistrate. 23 In my view, the approach of the Tribunal and the federal magistrate, and their conclusions, were correct. Accordingly, the appeal will be dismissed. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton. | review of a decision of the refugee review tribunal whether obligation on tribunal to make its own further inquiries whether new evidence can be admitted in review proceedings migration |
He is a citizen of Bangladesh. He applied to the Department of Immigration and Citizenship for a Protection (Class XA) visa on 10 April 2008. That application was rejected by a delegate of the Minister on 30 June 2008. An application was then made on 24 July 2008 to the Refugee Review Tribunal. That Tribunal affirmed the delegate's decision on 1 September 2008. An application was then filed with the Federal Magistrates Court on 25 September 2008. That Court dismissed the application on 9 December 2008: SZMUF v Minister for Immigration and Citizenship [2008] FMCA 1731. The Appellant now appeals to this Court. He appeared before the Court this morning unrepresented, although he did have the assistance of an interpreter. Written submissions filed by the Appellant with this Court on 18 February 2009 have substantially repeated these arguments. Again this proceeding exposes a yet further instance in which an Appellant does not identify any error as made by the Federal Magistrate. The jurisdiction of this Court is relevantly to entertain an appeal from a decision of a Federal Magistrate; no jurisdiction is conferred upon this Court to again review the decision as made by the Refugee Review Tribunal. And, yet again, the Notice of Appeal fails to comply with Order 52, r 13(2) of the Federal Court Rules 1979 (Cth). Each of the purported " Grounds of Appeal ", however, was an argument advanced for resolution before the Federal Magistrate. It is thus possible to construe the " Grounds of Appeal " as being a contention that the Federal Magistrate erred in rejecting the same arguments as are now sought to be advanced on appeal. So construed, the Appeal is to be dismissed. The fundamental difficulty confronting the now Appellant in both his application as filed with the Federal Magistrates Court --- and this Court on appeal --- is the adverse finding as to credibility made by the Tribunal. The Tribunal had difficulties in accepting the genuineness of the documents presented --- the posters on inspection exposed a difference in the size of the font and the police document appeared to have material cut out and other portions inserted. The Tribunal gives weight here to the Applicant's inability to describe and consistently distinguish the roles of "Press Secretary" and "General Secretary". The letter intended to support the Applicant's claims about having been a "Press Secretary" is undermined by the Applicant's inability to identify consistently the position held by the author who, he said, was his direct superior. The Tribunal gives the letter no weight and, in view of the obvious forgery of the purported police letter, goes so far as to form the view that this letter too is a fake. The Applicant's credibility is so damaged both by his oral evidence and by the poor contrivance of the purported police document, in particular, that the Tribunal gives no weight to either of the two posters, irrespective of the font size under his image in each. The written submissions unquestionably made a criticism as to the absence of weight given by the Tribunal to some evidence; those written submissions, however, also contended that if the Tribunal had any doubt as to the authenticity of documents, it could have made further enquiries. In his brief oral submissions this morning, the Appellant (via his interpreter) maintained that the Tribunal should have made those further enquiries in Bangladesh. However the argument be advanced, it is to be rejected. The weight to be given to the evidence before it is a matter for the Tribunal: Abebe v The Commonwealth of Australia [1999] HCA 14 , 197 CLR 510. In the end, the criticisms made by the applicant of the Tribunal's reasoning are criticisms of the factual findings it made and are criticisms that fasten upon the weight that the Tribunal attributed to various pieces of information that it had available for consideration. But what weight the Tribunal gave to those various pieces of information was for it to say. Where there is conflicting evidence from different sources, questions of credit of witnesses may have to be resolved. Reference may also be made to SZKRR v Minister for Immigration and Citizenship [2008] FCA 145 at [7] per Bennett J; SZJMH v Minister for Immigration and Citizenship [2008] FCA 270 at [27] per Lander J. Each of the findings made by the Tribunal in the present proceeding was a finding of fact open to it. The findings as made by the Tribunal were based upon probative material and the reasons it advanced in support of its conclusions do not expose any departure from the duty of the Tribunal to act " judicially " and in accordance with law: WAIJ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 74 at [19] to [24], [2004] FCAFC 74 ; 80 ALD 568 at 573 to 574 per Lee and Moore JJ; SZLGP v Minister for Immigration and Citizenship [2008] FCA 1198 per Gordon J. Nor did the Tribunal err in the manner in which it went about making its findings. It may be accepted that circumstances may arise where the Tribunal may be exposed to a duty to make further enquiries: eg., Minister for Immigration and Citizenship v Le [2007] FCA 1318 at [77] to [79], [2007] FCA 1318 ; 164 FCR 151 at 178 to 179 per Kenny J. But no such duty arose in the present case. The Tribunal in the present proceeding inspected the documents placed before it by the now Appellant. Its inspection of those documents occasioned it to have reservations as to the authenticity of the documents. The Tribunal showed the Applicant that the interpolations by pen made a deep enough impression in the paper for them to be discernible through the paper both to the eye and to touch. The Tribunal noted that the blank space created by the obscuring white cut-out ended just above the typed text stating the offence and a space provided within that typed text for the date of the offence. The Tribunal showed the Applicant where the blank cut-out obscured part of the date, and put to the Applicant that all these features indicated that the part of the document linking him to the police and to the purported offence and charge appeared very clearly to be falsified. Both of these purported to be notices calling people to come and hear BNP officials speak on issues of the day. Both included photographs of a number of purported BNP officials including the Applicant. The Tribunal put to the Applicant that the font appearing under his photograph in each of the two posters was not consistent with the font under the photographs of the others. The Tribunal put to the Applicant that [if] it found that it could not rely on the other two documents as being genuine reliable documents it would have good reason to give no weight to these posters. The Applicant insisted the posters were genuine and said they had lain in his office a long time. The Tribunal then asked the Applicant why the font under his image was slightly larger than the font under the other pictures, and he said that because the poster was for use in his own area, his name was given prominence. The Tribunal considered this, but was not impressed on sight as to any conscious effort to highlight the Applicant's name, the difference in font was so marginal as to look more like the product of oversight than a deliberate intention to highlight. It brought to the now Appellant's attention its concerns and did indeed make further enquiries of him. He was given an opportunity by the Tribunal to respond to those concerns. He was given a further opportunity this morning to make any further submissions he saw fit as to the genuineness of the documents in issue. He confirmed that the Tribunal had made enquiries of him and that there was nothing further he wished to add, other than his submission that further enquiries should have been made overseas. A denial of procedural fairness may arise where the Tribunal does not alert an applicant to the prospect that documents may be found to have been fabricated: eg., Meadows v Minister for Immigration and Multicultural Affairs (1998) 90 FCR 370. In applying this decision, a Full Court has concluded that there had been a denial of procedural fairness in circumstances where a claimant had not been given an opportunity to address a question as to whether documents were genuine: WACO v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 171 , 131 FCR 511. However, it can be said that a finding that the letters were forgeries could turn upon the credit of the appellant in so far as the finding is that the letters have been concocted by the appellant to advance his case. But if this is the case fairness would require that before a finding of forgery is made the person so accused be given the opportunity of answering it. A finding of forgery, just like a finding of fraud is not one that should lightly be made. Both involve serious allegations. Forgery, indeed, is a criminal offence. The Tribunal could easily have relisted the matter and have arranged for the appellant to be apprised of its doubts as to the authenticity of the letters and be given the opportunity to comment upon those doubts and call, if possible, evidence to the contrary. But where reservations as to the authenticity of one document have been brought to the attention of a claimant, there may be no necessity to separately warn a claimant as to reservations being experienced in respect to corroborating material: Applicant S214 of 2003 v Refugee Review Tribunal [2006] FCA 375 , 90 ALD 632. The Tribunal had there found a newspaper article to be a fabrication. Corroborating evidence was from the claimant's sister. The corroborating evidence was in the form of a statutory declaration; the question was whether its contents were correct. There was there held to be no necessity for the Tribunal to go back and warn the claimant that the Tribunal would find the sister's evidence also to be fabricated. The simple answer to that contention is that it was not obliged to do so. The applicant had the critical issue, viz., the authenticity of the newspaper article, drawn to his attention. He proffered further evidence on this point, including the sister's statutory declaration, which was rejected. There was no requirement for the Tribunal, acting in an inquisitorial capacity, to go back to the applicant warning him that this was one of the reasons why it would ultimately reject the newspaper article. While it is the case that it is the Tribunal which "obtains" or "acquires" evidence ... this says nothing about whether the Tribunal was obliged to call the applicant's sister. It was for the applicant to place such material as was necessary to persuade the Tribunal of his claims before the Tribunal. The Tribunal was under no obligation to verify or investigate the applicant's claims, including by calling his sister as a witness. The Tribunal has no duty to investigate, nor any duty to consider utilising such permissive statutory powers as it had which might enable it to investigate ... Even if the applicant had made a request under s 426 that the sister be called (which he did not) the Tribunal would not have been obliged to do more than have regard to the applicant's wishes. The Tribunal did not commit jurisdictional error by failing to call the applicant's sister as a witness, or by making the findings it did, having not called the sister as a witness. An assessment as to credibility may in turn lead to adverse conclusions being made as to the genuineness of documents: WAGU v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 912 at [34] per French J (as His Honour then was). Wherever the line may be drawn in individual cases, a party must be sufficiently put on notice of those matters which place him in a position where he can meaningfully avail himself of an opportunity to be heard. But procedural fairness does not require " a running commentary upon an applicant's prospects of success, so that there is a forewarning of all possible reasons for failure ": Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22 at [31] , [2001] HCA 22 ; 206 CLR 57 at 69 per Gleeson CJ and Hayne J. In the present proceeding, and as explained by the Tribunal, there were indications on the face of the documents themselves to question their authenticity, and the now Appellant was put on notice by the Tribunal as to its concerns and given an opportunity to address those concerns. It was clearly open in such circumstances for the Tribunal to make the findings that it did. The now Appellant could have been left in no uncertainty as to the basis of the Tribunal's concerns about the genuineness of the documents he sought to rely upon and in no uncertainty as to the concerns being expressed about his credibility. There was no " duty " imposed on the Tribunal to make further unspecified enquiries in Bangladesh. The Tribunal set forth the various accounts being advanced as to the positions of " General Secretary " and " Press Secretary " and the responsibilities of each position. Given the rejection by the Tribunal of the now Appellant's claimed involvement in the BNP, the Federal Magistrate was also correct in his conclusion that no error had been exposed in the Tribunal's reasons. Each of the findings sought to be impugned by the now Appellant was a finding of fact open to be made by the Tribunal. The Appeal must be dismissed and there is no reason why the Respondent Minister is not entitled to his costs. The Appellant is to pay the costs of the First Respondent. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | challenge to the weight given to evidence adverse findings as to authenticity of documents findings open to tribunal no duty to make further enquiries migration |
Other orders relating to the form of Opt Out Notice proposed by Jarra Creek and general directions were made on the day of the hearing. In addition, the hearing of questions of privilege and confidentiality was stood over until 7 April 2008. 2 The motion is opposed by the fourth to sixth respondents ("the Visy parties") and the Australian Competition and Consumer Commission ("ACCC"), which is not a party to this proceeding but has made submissions on the basis that its interests are affected by the orders sought. The first to third respondents ("the Amcor parties") do not object to the orders sought, nor does Cadbury Schweppes Pty Limited, which is not a party to this proceeding. 3 The ACCC's position (and the reason it claims its interests are affected by the orders sought) is that to allow disclosure of proofs of evidence and other materials served on the Visy parties in the ACCC proceeding is premature because the implied undertaking which applies to those proofs of evidence are presently the subject of a reserved decision by Gordon J in the Cadbury proceeding. The implied undertaking, which arises from the production of documents under compulsion of a court order, is that the documents may not be used for purposes other than use in the proceeding in which they were required to be disclosed. 4 On 19 February 2008, Gordon J published reasons for decision (see Cadbury Schweppes Pty Limited v Amcor Limited [2008] FCA 88) in which her Honour invited further submissions from the Amcor parties, the Visy parties and the ACCC as to whether the Visy parties are bound by an implied undertaking given in the ACCC proceeding "not to produce the 111 documents enumerated in the Lists of Witnesses Statements filed and served by Visy dated 16 November 2007 and 21 November 2007". These submissions have been filed with the Court, but to date there has been no ruling by her Honour. 5 In these circumstances, I consider that I should await the ruling of her Honour in relation to the documents referred to by the ACCC rather than make a ruling without the benefit of her Honour's reasons in circumstances where there are common legal and factual issues. 7 In relation to the first question it is settled law that where documents are required to be produced under compulsion of a court order, an implied undertaking arises that the party who secures access will not make the contents of the documents public, communicate them to any stranger to the litigation, or use them for any purposes other than those related to the litigation in the course and for the purposes of which they were disclosed. Such an undertaking, however, must give way to any inconsistent statutory provision and to orders of a court in other proceedings for discovery and inspection: see Esso Australia Resources Ltd v Plowman [1995] HCA 19 ; (1995) 183 CLR 10 at 32-33 (per Mason CJ). 8 In this case I have made orders for discovery, but the relevance of an implied undertaking arising out of other proceedings was not raised or considered in the making of those orders. I do not regard the discovery orders granted to date as having the effect of automatically overriding any implied undertaking given by the Visy parties in relation to the documents now sought to be inspected. Accordingly, I reject this basis of Jarra Creek's application. 9 The second and more substantial question before me is whether I ought now to grant discovery and inspection of the documents in respect of which the implied undertaking applies, leaving aside for the moment the documents in respect of which the ACCC objects to production at this stage. 11 These factors were considered and applied by the Full Court in Liberty Funding Pty Limited v Phoenix Capital Ltd (2005) 218 ALR 283 at 289-290, and were regarded as a helpful guide when making a determination as to whether a release from an implied undertaking should be granted by the Court. 12 In Holpitt Pty Ltd v Varimu Pty Ltd [1991] FCA 269 ; (1991) 29 FCR 576 at 579, Burchett J held that the requirement of "special circumstances" when considering an application for release from an implied undertaking meant that the applicant for release must show "some circumstance which takes the matter out of the ordinary course", and that the Court should consider whether the exercise of its discretion would be "in the interests of justice". His Honour also accepted that one relevant circumstance was whether a release from the undertaking could occasion injustice to the person who was required to give discovery. 13 The reasoning in Springfield 38 FCR 217 was also applied by Jacobson J in Lombe v Pollak [2004] FCA 593 at [19] , where his Honour referred in particular to the question of whether any prejudice may be suffered by the owner of the document. 14 It follows from these authorities that it is appropriate, where a release from an implied undertaking is sought, for persons who may be prejudiced by the disclosure of documents to have an opportunity to make submissions as to any prejudice they might suffer as a result of that disclosure. This enables the Court to take into account the consequences of any order for disclosure it might make. In the present case, it seems clear that it is possible that non-parties to the proceeding may be adversely affected by disclosure of documents which they have been ordered to produce under a compulsory court process in other proceedings. 16 The Visy parties submit that there should be no blanket release from the implied undertaking in this case, and that an opportunity should be provided to non-parties to the litigation whose documents may be disclosed to make submissions as to why any such documents should not be released on discovery in this proceeding. This, it is said, will provide the Court with a chance to consider both the relevant documents and any submissions of non-parties, and then determine whether any prejudice or detriment may accrue to the person providing the information: see the remarks of Wilcox J in Springfield 38 FCR at 225. 17 The Visy parties also refer to s 155AAA(1) of the Trade Practices Act 1974 (Cth) ("the Act ") which prohibits an official of the ACCC from disclosing "protected information". This expression covers information given to the ACCC in confidence or which was obtained under the search and seizure provisions in Part XID of the Act (which includes information obtained under s 155). These provisions, it is said, justify the expectation of a person producing documents in either the ACCC proceeding or the Cadbury proceeding that the information will not be disclosed in this proceeding, a matter which is said to be a relevant consideration for the Court in its exercise of discretion whether to grant the release. 18 On this point relating to the provisions of the Act , the ACCC also refers to the public interest in enforcement of the Act , the need for transparency in the Act 's application and the interests of judicial decisions being fully informed in the light of all relevant material. 19 In respect of the s 155AAA submission, Jarra Creek responds by referring to the exception to the prohibition on officials of the ACCC disclosing protected information contained in s 155AAA(b)(i). That exception provides that the prohibition does not apply when the official is required or permitted by the Act or any other law of the Commonwealth to disclose the information. Jarra Creek says that an order of this Court is properly described as a law of the Commonwealth, and therefore the officials of the ACCC are not prohibited from disclosing the information the subject of the implied undertaking. 20 Having regard to the formulation of the relevant considerations by Wilcox J in Springfield 38 FCR at 225, in this case it appears that it is necessary to consider granting the release in respect of particular documents, rather than simply granting release in respect of a broad class of documents. Accordingly, in this case, I do not think that an order should be made in the unqualified terms sought by Jarra Creek at this stage. Although I accept that cogent reasons have been advanced by Jarra Creek for the grant of a release in the present case, I am not satisfied that I should grant that release on the global basis sought without first investigating the question of prejudice to non-parties. 21 The position taken by the Visy parties on this application is to oppose the grant of a general release until an opportunity has been given to investigate the position of non-parties. The Visy parties suggest that a practical way forward is for them to prepare a list of those documents in their possession which they consider could reasonably be seen to adversely impact non-parties if disclosed, so that the position of such parties could be investigated if necessary. While I agree that a release from the implied undertaking should not be granted until the issue of prejudice has been canvassed, in my view, all other documents which will not either appear on the list prepared by the Visy parties or be the subject of claims for privilege or confidentiality, should be disclosed immediately so that the matter may progress. 22 An opportunity might be given, if appropriate and necessary, to non-parties who may be affected to submit to the Court what prejudice, if any, might arise if a release from the implied undertaking is granted. Clearly such an exercise may be both expensive and time consuming. In the event that there proves to be a great number of such documents which will require investigation, a suitable modus operandi should be agreed upon to deal in a timely and efficient manner with such investigations. However, it may well be that there are only a few (or even no) documents which would give rise to any arguable prejudice. In this way, the discovery process can move forward. 23 Accordingly, I do not consider that, at this stage, there should be an unqualified release of the implied undertaking which affects the Visy parties until the list of the documents which may give rise to any prejudice to non-parties has been compiled and consideration given to whether any such claims for prejudice can be substantiated. When this has been done, I will hear any interested non-parties in relation to those claims. Otherwise, the documents other than those of the ACCC, those contained in the list to be prepared by the Visy parties and those which are the subject of claims for privilege or confidentiality should be immediately disclosed. 24 In my view, for the above reasons this application, insofar as it seeks release from the implied undertaking, should be stood over pending determination of issues relating to privilege and confidentiality. 25 Insofar as this application is concerned, I reserve the question of costs. I also give the parties liberty to apply to restore this matter to this list on two days' notice. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | implied undertaking not to disclose discovered documents for another purpose disclosure in special circumstances relevant considerations for special circumstances whether implied undertaking in different proceedings overridden by orders for discovery in this proceeding whether discretionary release from implied undertaking should be granted. discovery |
The order sought by Chanel would restrain the Customs CEO until further order from releasing a consignment consisting of 100 scarves bearing the ' CHANEL ' trade mark or Chanel's ' Crossed C's Device' mark. The consignment of scarves was seized by the Customs CEO on 19 September 2007 pursuant to s 133 of the TM Act . This action was taken on the ground that the scarves had applied to them a sign that, in the opinion of the Customs CEO, was substantially identical with, or deceptively similar to, a registered trade mark. 2 The motion was brought before me by Chanel ex parte , on 13 December 2007. At that time, I raised concerns with Mr Bova, who appeared for Chanel, as to whether the evidence demonstrated that Chanel had complied with the time constraints imposed by s 137 of the TM Act . I also drew attention to an issue of construction that appeared to arise in relation to s 137(5) of the TM Act . I adjourned the matter until 18 December 2007 and directed Chanel to file written submissions and to serve the submissions on the Customs CEO. 3 Chanel duly filed written submissions and served them on the Customs CEO. Although the Customs CEO's solicitors sent a response by email to Chanel's solicitors, the response did not address the question of construction of s 137(5). It was therefore not entirely clear to me whether the Customs CEO wished to be heard on that question. 4 Section 137(2)(b) of the TM Act provides that the Court hearing an action for infringement of a notified trade mark in respect of seized goods ' must allow the Customs CEO to appear and be heard '. While that provision is not entirely free from ambiguity, I thought the appropriate course was to adjourn the proceedings again in order to give the Customs CEO a further opportunity to address the question of construction I had identified. I sent an email to Customs CEO's solicitors inviting a submission on that question. In the event, the Customs CEO filed further written submissions but made no comment on the construction issue. The judicial authorities shall also have the authority to order that materials and implements the predominant use of which has been in the creation of the infringing goods be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to minimize the risks of further infringements. In considering such requests, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account. In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce. 8 The Customs CEO must, as soon as practicable, give notice to the ' designated owner ' of any seized goods, identifying the goods and stating that they have been seized: s 134(a). The ' designated owner ' is the person identified as the owner on the Customs entry: s 6. 9 In addition, the Customs CEO must give a notice to the ' objector ': s 134(b). ' Objector ' means a person who has given a notice to the Customs CEO, pursuant to s 132, objecting to the importation of goods infringing the objector's trade mark: s 6. The notice must include a statement, among others, that the goods will be released to the designated owner unless the objector brings an action for infringement of the notified trade mark in respect of the goods within ten working days after he or she has been given the notice or, if the Customs CEO extends that period, within the extended period: s 134(b)(iii). It is also the registered proprietor in Australia of Trade Mark Nos 463755 and 1012493 in class 25 for the ' Chanel Crossed C's Device ' in respect of clothing, footwear and headgear. The second applicant is the exclusive distributor in Australia of the first applicant's clothing. 13 On 19 September 2007, the Australian Customs Service (' Customs ') sent a notification of seizure to Chanel's agent, Trademark Investigation Service (' TIS '), pursuant to s 134(b) of the TM Act . The notification related to a seized consignment of 100 scarves bearing the CHANEL mark and addressed to the respondent at an address in Hurstville. It is not clear whether the scarves also bore Chanel's Crossed C's Device, but some may have. 14 The notification of seizure was received by TIS on 24 September 2007. The notification included a statement to the effect of s 134(b)(iii) of the TM Act . Accordingly, Chanel was entitled to bring an action for infringement of the trade mark in respect of the seized goods within ten working days from 24 September 2007 (s 137(1)(a)), or within any extended period allowed by the Customs CEO on application made by Chanel before the expiration of the ten working days (s 137(1)(b)). 15 On 4 October 2007, within the ten day period, TIS requested the Customs CEO to extend the period pursuant to s 137(1) for Chanel to commence infringement proceedings. On the same day, the Customs CEO extended the period until 22 October 2007. 16 On 22 October 2007, Chanel commenced the present proceedings against the respondent, seeking remedies for infringement of its trade mark. 17 On 4 December 2007, a representative of Customs informed Chanel's solicitors that the time had expired for Chanel to seek a court order restraining the Customs CEO from releasing the goods to the respondent. This was apparently a reference to the terms of s 137(5), the terms of which are reproduced at [11] above. 18 On 12 December 2007, Chanel filed its notice of motion seeking an order against the Customs CEO pursuant to s 137(5). 19 The Customs CEO has not yet released the seized goods to the respondent. The oddity in Chanel's position is that s 137(5) appears to impose a duty on the Customs CEO to release seized goods if, after the expiration of the 20 day period, there is no court order in force preventing their release. Obviously enough, there is no practical utility in the objector seeking such an order after the goods have been released. If it is correct that an objector can seek an order preventing release of the seized goods at any time after the expiration of the 20 day period, the utility of any such order apparently depends on the Customs CEO not giving effect to his or her statutory duty to release the goods at the end of the period. 21 Chanel confronts this difficulty by stressing the significance of s 15AA of the Acts Interpretation Act 1901 (Cth) (' Acts Interpretation Act '). It follows, so Chanel argues, that the Court should prefer an interpretation of s 137(5) that promotes the protection of trade marks over one that does not. The only construction which does this is one that allows the Court to make an order preventing the goods from being released regardless of whether or not the application for such an order is made within 20 working days of the commencement of the infringement action . 23 In addition, Chanel points to the words ' is in force at any time ' in s 137(5). It submits that the use of the present tense, together with the phrase ' at any time ', shows that Parliament intended the Court's power to be exercisable even outside the 20 working day limit. Any other construction, so it contends, would render the phrase superfluous. 24 Mr Bova supported these submissions by contending that it would be impracticable for customs to review every file as soon as the 20 working day period expired. An obligation to release the goods as soon as the period expired would impose an intolerable burden on the Customs CEO. 26 Section 137(5) imposes an obligation on the Customs CEO to release seized goods to the designated owner. If the period of 20 days has passed without a court order being in force, the Customs CEO ' must release the goods '. This suggests that the Customs CEO is under an obligation to release the goods immediately upon the expiration of the 20 day period. 28 On the other hand, the words ' at any time ' in s 137(5) suggest that the position might change even after the expiration of the 20 day period, in that an order of the court may be made and come into force at a later time. If this is correct, the obligation of the Customs CEO to release the goods would presumably be terminated once the court order comes into force. Yet, as I have pointed out, if the Court has power to make an order after the expiration of the 20 day period, the utility of any such order seems to depend upon the Customs CEO not having complied with his or her statutory duty to release the goods in a timely fashion. If the Customs CEO had already complied with the duty to release the goods, there would be no point in the objector seeking an order restraining the Customs CEO from releasing the goods; such an order would be futile. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". ... Thus, the process of construction must always begin by examining the context of the provision that is being construed. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. [It is] "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent". ' (Citations omitted. But, in my view, the same general principles apply to a provision which appears to contain an internal inconsistency or anomaly. 30 It seems to me that when s 137(5) of the TM Act is read within the context of Part 13, the better view is that the sub-section is not intended to preclude the Court from making an order preventing the Customs CEO releasing seized goods even after the expiration of the 20 day period. The sub-section does not expressly preclude the Court from making an order after the expiration of that period. Moreover, the statutory language appears to contemplate at least that an order preventing release of the goods may come into force ' at any time ' after the expiration of the 20 day period. 31 Had the drafter wished to make it clear that no application for an order preventing release of the goods could be made after the 20 day period, or that the Court could not make any such order, it would have been easy to say so. Section 137(1), for example, makes it quite clear that an action for infringement must be brought within the 10 day period specified in the notice or within any extended period granted by the Customs CEO, provided the objector has applied for an extension ' before the end of the notified period '. There would have been no difficulty about incorporating similar language in s 137(5). 32 No doubt this interpretation creates uncertainties in determining the precise nature of the obligation imposed by s 137(5) on the Customs CEO to release the goods, once the 20 day period has expired without any order of the Court being in force. Whatever uncertainties might arise for the Customs CEO, they do not, in my opinion, require a construction that prevents the Court making an order preventing release of the goods after the expiration of the period. The Court may wish to take into account the delay in seeking an order and the reasons for the delay when considering whether or not to make the order. In a particular case, the Customs CEO may wish to make submissions as to why an order should not be made. But I do not think that the Court is precluded from making an order in the circumstances I have identified. 33 I have not found it helpful to rely on s 15AA of the Acts Interpretation Act . It is an over-simplification to characterise the purpose of Part 13 of the TM Act (as does Chanel) as the ' protection of registered trade marks '. Section 131 provides that the purpose of Part 13 is the protection of registered trade marks by making provision allowing the Customs CEO to seize and deal with infringing goods. This objective does not necessarily suggest that any time limits imposed by the legislation in relation to the exercise of the powers of the Customs CEO should be read narrowly, or even overridden, if to do otherwise would adversely affect the objector. Chanel's difficulty in complying with time limits in the present case was essentially of its own making. 34 Nonetheless, for the reasons I have given, I think that the Court has power to grant the relief sought by Chanel. The respondent has not appeared in the proceedings. In these circumstances, I think it appropriate to grant relief to the effect of that sought in the motion. I certify that the preceding thirty-five (35) numbered Paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. | trade marks infringing goods seized by customs whether order should be made restraining release of seized goods customs |
The Tribunal had affirmed a decision of a delegate of the first respondent, the Minister for Immigration and Citizenship who formed the view that the appellant is not a person to whom Australia has protection obligations under the Convention Relating to the Status of Refugees 1951 , amended by the Protocol Relating to the Status of Refugees 1967 (Convention) and accordingly refused to grant a protection visa on 2 June 2008. On 17 March 2008 the appellant lodged an application for a protection visa with the Department of Immigration and Citizenship. A delegate of the first respondent refused the application for a protection visa on 2 June 2008. On 4 July 2008, the appellant applied to the Tribunal for a review of that decision. Before the Tribunal, the appellant claimed that he arranged a protest against the actions of a construction company that had previously employed him. In his second year of employment the company had paid him no wages, only a very small living away from home allowance. The appellant asked the company to pay him what they owed him so that he could pay for his father's medical treatment, but this was refused. The appellant also requested to return home to see his father, but this was declined as well. In July 2007, as his father's condition deteriorated, the appellant was again refused assistance by the construction company so he left the site and went back home. His father died in August. He returned to the construction company in September 2007, but was told that he had been dismissed and all his outstanding benefits were confiscated. The appellant claimed that by organising the protest he thereby came to the attention of the Public Security Bureau (PSB) who arrested and detained him for about a month on the grounds that he was causing problems of a political nature. He claimed that he was tortured in detention and forced to admit to anti-government feelings. After the month in custody he was returned to the construction site where he was made to work in very poor conditions for no pay. In December 2007, he escaped with the help of people around the site and went to another province where he said he had a friend who was in the travel business. He stated he had saved the life of this friend and that was why the friend agreed to help him. The friend obtained a false passport for the appellant, which he gave to him on the day that he was due to leave, and the appellant arrived in Australia on this false passport. It did not consider that the appellant was a witness of truth. The Tribunal indicated that it did not find it plausible that the appellant did not know that his friend was going to get him a false passport. It noted that he had given what were described as "confused and at times contradictory evidence" about his work and his wife's work. The Tribunal found it difficult to understand how, on the appellant's evidence, his family had managed to survive on the very small amount of money that he claimed he had received working for the construction company and felt the part of his story about his escape from the construction site and the method of leaving Australia were contrived. The Tribunal concluded that there was no plausible evidence before it that the appellant has suffered or will suffer persecution because of his political opinion, his imputed political opinion, because he is a member of a particular social group or for any Convention reason, from Chinese police/authorities or anyone else in the country, either now or in the reasonably foreseeable future, if he returned to China. The Tribunal therefore affirmed the decision under review. The Federal Magistrate held that there was no information to which these sections would relevantly operate in the appellant's case and, even if the sections did apply and had been breached, he would exercise his discretion not to grant relief (at [18] to [19] at AB 20 to 21). Having found no jurisdictional error in the decision of the Tribunal, his Honour dismissed the application. The appellant has not filed any written submissions. The first four grounds in the Notice of Appeal, which are accompanied by particulars, were rejected by the Federal Magistrate. The final allegation that the Tribunal failed to comply with s 425 of the Act is entirely new. The particulars of that allegation refer to the Tribunal's finding that the appellant's explanation of his escape from his worksite and the methods by which he arranged to leave China were not plausible (AB 150 [46]). The appellant failed to appear at the hearing despite being given notice of the hearing. In the circumstances, the Court decided to continue with the hearing and heard from counsel for the first respondent on each of the grounds (and particulars) of the appeal. GROUND 1: HIS HONOUR ERRED IN FAILING TO FIND THAT THE TRIBUNAL FAILED TO ACT ACCORDING TO SUBSTANTIAL JUSTICE AND THE MERITS OF THE CASE, COMMITTED JURISDICTIONAL ERROR IN FAILING TO FIND THAT THE TRIBUNAL'S REASONING AND FACT FINDING WERE IRRATIONAL/ILLOGICAL/UNREASONABLE; THAT THE TRIBUNAL HAD A REASONABLE APPREHENSION OF BIAS; AND THE TRIBUNAL'S FINDINGS WERE BASED ON UNWARRANTED ASSUMPTIONS. These were the allegations that: The Tribunal had unfairly rejected his application because it thought that he used a passport and a false name. His friend had obtained the passport because his name was on the wanted list and he had to use a false name. He said that his friend only gave him the passport on the day he left and he did not know there was going to be a false passport before that. In response to the first allegation, the Federal Magistrate found that these were matters that were raised with the Tribunal. A careful reading of the Tribunal's decision indicated that it was not the use of the false passport that brought the Tribunal to its conclusion that the appellant did not have any convention based grounds for claiming that he was being persecuted in China. Rather, the Tribunal came to that conclusion because it was unable to be satisfied that the appellant was telling the truth (at [20]). In response to the second allegation, the Federal Magistrate noted that this was discussed at para [45] of the Tribunal's decision. In this regard, the Tribunal's point was not that there was no opportunity to farm after 2000, but that the appellant had given contradictory and confused evidence concerning this aspect of the matter. I do not detect any error in the way the Federal Magistrate dealt with these issues. The Tribunal's findings were open to it on the evidence before it and for the reasons it gave. The findings of the Tribunal were not 'irrational' or 'illogical' in the sense of SZLGP v Minister for Immigration & Citizenship [2008] FCA 1198 or SZMDS v Minister for Immigration and Citizenship [2009] FCA 210 , nor were they unreasonable in the sense of Wednesbury unreasonableness (see, for example, Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56 ; (2003) 216 CLR 212 at [30] ). Further, it should be noted that if the appellant is claiming that the failure to act according "to substantial justice and the merits of the case" amounted to a breach of s 420 of the Act, such a failure would not in any event constitute a jurisdictional error: Minister for Immigration & Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611. Nor is there any evidence of actual or apprehended bias in the decision of the Tribunal. Allegations of bias and lack of good faith must be distinctly made and clearly proved ( Minister for Immigration and Multicultural and Indigenous Affairs v Jia [2001] HCA 17 ; (2001) 205 CLR 507) , and rarely will bias on the part of the Tribunal be apparent from the written reasons only ( SBBF v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 358). There is no evidence upon which a fair minded lay observer, properly informed as to the nature of the proceedings, the matters in issue and the conduct of the Tribunal, might reasonably apprehend that the Tribunal may not have brought an impartial mind in determining the application for review ( Re Refugee Review Tribunal; Ex parte H (2001) ALJR 982 at 27-32). Nor does a fair reading of the Tribunal's decision disclose a lack of an honest or a genuine attempt by the Tribunal to make a decision, including in the conduct of its review ( NAAG of 2002 v Minister for Immigration Multicultural and Indigenous Affairs (2002) ALR 207). As noted by the Federal Magistrate (at [15]), the fact that the Tribunal came to conclusions which were unsatisfactory to the appellant, is not itself a ground of judicial review. Ground 1 in effect invites the Court to undertake merits review of the Tribunal's decision, which is not its function: Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham [2000] HCA 1 ; (2000) 168 ALR 407 at [67] ; Minister for Immigration and Ethnic Affairs v Wu Shan Liang & Ors (1996) CLR 259. In sum, the Tribunal found in this respect that the evidence about his escape from supervised work was contrived, and the details about his travel with a friend after the escape were not plausible. Ultimately, the Tribunal reached its decision in the present matter because it found that the appellant was not a credible witness. It found that the oral evidence given by the appellant was inconsistent, and that there was no plausible evidence that the appellant had suffered or will suffer persecution because of his political opinion, or his imputed political opinion. It is not necessary for the Tribunal to put to an applicant, in so many words, that the applicant is lying or that the applicant may not be accepted as a witness of truth or that the applicant may be thought to be embellishing the account that is given of certain events. Procedural fairness does not require the Tribunal to give an applicant "a running commentary" upon what it thinks about the evidence that is given. To adopt such a course could run a serious risk of conveying an impression of prejudgment ( SZBEL v Minister for Immigration & Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 228 CLR 152 at [48] ). Further, in this case, it is quite clear that the appellant was 'put on notice' (in the SZBEL sense) that his credibility was in issue by reason of the delegate's decision (see AB 113.2). For the above reasons, it is submitted that there is no substance to the appellant's contention that the Tribunal failed to comply with s 425 of the Act and, by implication the Federal Magistrate erred in not so finding. ANY OTHER ERROR? Nor can any other error be detected in the decision of the Tribunal. The Tribunal identified with particularity all of the appellant's claims and supporting material before it; explored his claims with him at a hearing; raised with the him the inconsistencies in his evidence and doubts over his claims; made findings based on the evidence and material before it; and, applied the correct law to its findings in reaching its conclusion that it was not satisfied that the appellant was a person to whom Australia has protection obligations under the Convention. The appeal should be dismissed with costs. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. | appeal from federal magistrate no jurisdictional error appeal dismissed migration |
The proceeding was subsequently transferred to this Court. The proceeding is brought under the Workplace Relations Act 1996 (Cth) ("the Act ") and the applicant seeks orders imposing upon the respondents a pecuniary penalty under subs 407(1)(b) of the Act for contravention of subs 400(5) and of subs 410(1) of the Act and a civil penalty under subs 846(2)(g) of the Act for contravention of reg 8.11(1)(c) and of reg 8.13(2) of the Workplace Relations Regulations 2006 (Cth). 2 On 7 August 2007, I made an order that the applicant file and serve on or before 21 August 2007 a list of documents enumerating each document in its possession, other than those that are reasonably believed to be in the respondents' possession. By consent, the date for filing and serving the list of documents was varied to 28 August 2007 by order made on 21 August 2007. On 29 August 2007 the applicant filed its list of documents. Claims of legal professional privilege were made in respect of several of the documents in the list. In respect of some documents, legal advice privilege was claimed; in respect of others, litigation privilege was claimed. An affidavit of Mr Steven David Ronson sworn on 28 August 2007 was filed in support of the claims of privilege. My reasons for making that order follow. At the hearing of the notice of motion, the applicant identified seven documents in his list of documents in respect of which a claim of advice privilege was no longer made. The documents in relation to which advice privilege is claimed by the applicant and disputed by the respondents are tabulated in the appendix to these reasons ("the documents"). In summary, they are documents which were made in the course of an investigation by the OWS into the respondents' possible breaches of the Act and provided to the OWS' Legal and Advice Branch. 6 The OWS was abolished as from 1 July 2007. From that date, its functions have been exercised by the Workplace Ombudsman. The OWS was an executive agency within the responsibility of the Minister for Employment and Workplace Relations whereas the Workplace Ombudsman is a statutory agency. The documents in issue on the notice of motion are documents created on or before 23 October 2006. In that sense, reference to the Workplace Ombudsman is irrelevant. However, Mr Ronson, who is the State Director of the Workplace Ombudsman and was previously the State Manager of the OWS, gave his evidence as if, for the purposes of this application, there was no material difference between the OWS and the Workplace Ombudsman. The parties proceeded on that basis and I will as well. 7 For reasons which will later become apparent, it is convenient to state now that a subset of the documents in issue comprises records of interviews conducted during the investigation and related documentation ("the interview documents"). This subset is identified in the last column in the table of the appendix to these reasons. The documents within the subset were identified by counsel for the applicant from the bar table for the purposes of the submission discussed below [17]-[18]. Mr Ronson has been involved, and has participated at an investigatory level, at all stages of the case which has given rise to the present proceeding. In addition to his affidavit, Mr Ronson gave oral evidence at the hearing of the notice of motion. I found Mr Ronson to be an honest and straightforward witness and I accept his evidence. It provides nationwide legal advice to inspectors and senior management. The decision whether or not to institute a proceeding was to be made by Ms Heather Byrne, who was the head of Legal and Advice Branch. On the latter date the Legal and Advice Branch made a decision to seek external legal advice and the firm of Minter Ellison was instructed on 5 October 2006. On 23 October 2006 the Workplace Ombudsman (in fact, at that time, it must have been the OWS) received advice on the prospects of litigation. There was a suggestion that Ms Byrne consulted others before making her decision, but the precise details were not the subject of evidence. Section 118 of the Evidence Act 1995 (Cth), which creates a statutory legal advice privilege, applies only to the adduction of evidence. Where, as in the present case, privilege is claimed at the pre-hearing stage of discovery, the claim is to be determined by reference to the common law: Esso Australia Resources Ltd v Commissioner of Taxation (Cth) [1999] HCA 67 ; (1999) 201 CLR 49 at 59 [16] - [17] per Gleeson CJ, Gaudron and Gummow JJ, 73-4 [64] per McHugh J and 100-1 [149] per Callinan J. See also Northern Territory v GPAO [1999] HCA 8 ; (1999) 196 CLR 553 at 571 [16] per Gleeson CJ and Gummow J, 606 [135] per Gaudron J and 629 [199] per McHugh and Callinan JJ. The Federal Court Rules , in particular O 33 r 11, do not extend the operation of s 118 beyond 'circumstances in which the order to produce the document or thing is made to facilitate its being immediately adduced in evidence': Seven Network Ltd v News Ltd [2005] FCAFC 125 ; (2005) 144 FCR 379 at 382-3 [17] per Branson J; see also at 384-5 [33] per Allsop J. 12 The privilege asserted is legal advice privilege, which protects confidential communications between a client and his or her legal adviser. The protection of communications passing between third parties and the client's legal adviser does not arise in the present case: all the documents in question are said to be communications created by the OWS or Mr Ronson as State Manager of the OWS (the client) and communicated to the Legal and Advice Branch (the legal adviser). The relevant communications in respect of which privilege is claimed are all contained in documents. Therefore, in determining whether the communications enjoy the privilege claimed, the relevant test to be applied in each case is whether the document was brought into existence for the dominant purpose of obtaining or giving legal advice: Esso Australia Resources Ltd v Commissioner of Taxation (Cth) [1999] HCA 67 ; (1999) 201 CLR 49. Although no submissions were put directly on the point, it appears from the applicant's list of documents that several of the documents may be copies of documents which, in their original form, are not the subject of privilege. Whether these copy documents enjoy legal professional privilege will depend upon whether the copy was brought into existence for the dominant purpose of obtaining legal advice: Australian Federal Police Commissioner v Propend Finance Pty Ltd [1997] HCA 3 ; (1997) 188 CLR 501. 13 The party asserting the privilege --- in this case, the applicant --- bears the onus of proving it. 14 These applicable principles give rise to two issues to be decided in the present case. The first issue is whether the dominant purpose for which the documents were brought into existence was the obtaining of legal advice. The second issue is whether the Legal and Advice Branch is a legal adviser for the purposes of the law relating to legal advice privilege. Although the second issue I have identified might be seen as logically antecedent to the first, it is convenient to begin with the purpose issue, because that issue disposes of the notice of motion. The applicant puts its claim of privilege on the basis that despite this purpose, which I will call the investigatory purpose, the dominant purpose for which the documents were brought into existence was to obtain legal advice from the Legal and Advice Branch. 16 The applicant made two submissions in the alternative. The first related to all the documents in dispute and relied on the fact that Mr Ronson decided on or about 18 August 2006 that legal advice would be sought in relation to the matter being investigated. The submission was that once Mr Ronson decided that he was not going to be able to determine whether there had been a breach of the Act , or whether to recommend the institution of proceedings, without obtaining legal advice, the documents brought into existence thereafter were brought into existence for the main purpose, or the ruling or prevailing purpose, of obtaining legal advice. I am unable to accept this broad submission. Even though I accept Mr Ronson's evidence that on or about 18 August 2006 he decided that it would be necessary for him to seek legal advice, that fact supports, at its highest, only the conclusion that obtaining legal advice was one purpose, alongside the admitted investigatory purpose. To prove the asserted privilege, the applicant is required to show that obtaining legal advice was the dominant purpose. Without 'focused and specific evidence' ( Barnes v Commissioner of Taxation [2007] FCAFC 88 at [18] per Tamberlin, Stone and Siopis JJ) I am unable to find that obtaining legal advice was the dominant purpose behind the creation of the documents. I wish to make clear that I do not regard Mr Ronson's evidence as being in the nature of bare assertions as to his purpose. His evidence usefully explains the particular circumstances of the relevant investigation, including the political and media interest, and how they informed him in reaching the view that seeking legal advice would be necessary. But it does not follow that obtaining legal advice was his dominant purpose in creating any of the several documents, let alone all of them as a general class of document defined only by the fact that they were created after 18 August 2006. 17 The applicant's second submission, put in the alternative, was that the interview documents were privileged. The submission was that those documents either would not have been created but for the purpose of obtaining legal advice, or, if they would have been created regardless, would not have been created at the time that they were in fact created. As a matter of legal principle, this is a sounder basis upon which to assert a claim for legal professional privilege. The applicant conceded that this submission cannot support each claim for privilege made, but only the claims in respect of what I have called the interview documents. 18 I am not satisfied that the evidence before me supports the alternative submission. Mr Ronson did not suggest in his evidence that statements from witnesses would not be obtained in investigations where there was no intention to seek legal advice. His evidence was only that statements were taken more formally where, as in the present case, seeking legal advice was intended. The more formal procedure involved seeking authorisation to record the witness' voice, issuing a caution to witnesses and advising the witnesses that legal proceedings may eventually be instituted. It is not clear on the evidence whether in the present case the reduction into documentary form of the information obtained in the investigation occurred for the dominant purpose of obtaining legal advice. It was for the applicant to establish that, and he has not done so. 19 In the result, I am not satisfied that the dominant purpose for the creation of the documents was the obtaining of legal advice. The Legal and Advice Branch was a branch of the OWS or, as Mr Ronson put it in the context of the Workplace Ombudsman, its "central legal division". I think it is appropriate to infer that there are qualified lawyers within the Legal and Advice Branch and that they were employees of the OWS. 21 Ms Byrne is the head of the Legal and Advice Branch and one of her functions is to approve or otherwise a recommendation made by Mr Ronson. The effect of the evidence is that she is the decision-maker with respect to the institution of proceedings under the Act or, at least, the proceedings which have been instituted against the respondents in this case. The matters she takes into account and the persons she consults were not the subject of evidence. 22 The claim of privilege relies on an assumption that the Legal and Advice Branch was a legal adviser. The respondents put two submissions to the effect that the Legal and Advice Branch was not independent of the OWS and therefore was not a legal adviser for the purposes of legal professional privilege. 23 First, they submit that the onus was on the applicant to establish his claim for privilege and that included adducing evidence that the Legal and Advice Branch was independent of the OWS. It was submitted that the applicant had put forward no evidence, or insufficient evidence, of the Legal and Advice Branch's independence. It was submitted that this case is similar to that before Graham J in Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts (No 2) [2007] FCA 1445 (" Telstra ") in which his Honour held that the absence of evidence establishing the independence of the internal legal advisers was fatal to the claim of privilege. 24 In Waterford v The Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 the High Court held that salaried lawyers within the Government were legal advisers to a Government department for the purposes of legal professional privilege and the requirement of independence was discussed in that context. It must be a professional relationship which secures to the advice an independent character notwithstanding the employment. In the case of a person engaging a private firm of solicitors, independence almost invariably will be established by those facts alone. In the case of a lawyer employed by a private company more may be required to establish independence, particularly if there is evidence suggesting that the solicitor was on occasion asked to advise on management or commercial matters (see, for example, Seven Network Limited v News Limited [2005] FCA 142 at [4] and [38] per Tamberlin J). I do not think Graham J in Telstra was saying any more than that in the circumstances before him the evidence was insufficient to establish the required degree of independence of the internal legal advisers. 26 In this case the applicant might have put forward more detailed evidence as to how the Legal and Advice Branch operated and its role in the OWS organisation. However, in my opinion, this case has similarities with the facts in Waterford and, subject to the respondents' second submission, the necessary degree of independence has been established, or, put another way, it has been established that the Legal and Advice Branch was a legal adviser for the purposes of legal professional privilege. 27 Secondly, the respondents submitted that the fact Ms Byrne, as head of the Legal and Advice Branch, was the decision-maker meant that documents brought into existence for the purpose of submission to the Legal and Advice Branch could not have been brought into existence for the purpose of obtaining legal advice. It was submitted that they must have been brought into existence as part of the process of making a recommendation to the Legal and Advice Branch. I reject this submission. One of the Legal and Advice Branch's functions was to provide legal advice and Mr Ronson said that from 18 August 2006 it was clear to him that he was going to seek legal advice in relation to the matter. He said that some time between the end of September 2006 and 5 October 2006 he sought legal advice from the Legal and Advice Branch. I infer that it was not until some time after 23 October 2006 that he made his recommendation and Ms Byrne made her decision. In those circumstances, the fact that the head of the Legal and Advice Branch was the decision-maker does not foreclose a conclusion that a purpose for the creation of the documents was the obtaining of legal advice. 28 Although I reject the respondents' submissions to the effect that the applicant had not shown the necessary degree of independence for the purpose of legal professional privilege none of my conclusions on this issue affect my conclusion on the first issue, namely, that the applicant has failed to establish that the dominant purpose for the creation of the documents was the obtaining of legal advice. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Document Description Date of Document 'Interview Document' within the Applicant's Alternative Submission? | where discovery made of documents where claim of legal professional privilege where claim of legal advice privilege where application to produce for inspection where documents created in course of investigation by office of workplace services where documents communicated by office of workplace services to legal and advice branch of office of workplace services where multiple purposes for creation of documents where head of legal and advice branch had power to approve state manager's recommendation to institute proceedings whether legal advice privilege established whether documents brought into existence for dominant purpose of obtaining legal advice whether legal and advice branch of office of workplace services a legal adviser whether necessary to establish independence in all cases whether power to approve state manager's recommendation deprived legal and advice branch of independence. procedure |
The Tribunal affirmed a decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs to refuse to grant a Protection Visa (Class XA) ('a Protection Visa') to the appellant. 2 The appellant is a citizen of Bangladesh who arrived in Australia on the 29 March 2003. On 15 April 2003 the appellant lodged an application for a Protection Visa. This application was refused by a delegate of the Minister on 30 May 2003, who found that there was not a real chance that the appellant would be persecuted for his political opinion, or for any other Convention reason, if he returned to Bangladesh. 3 On 22 June 2003 the appellant filed an Application for Review with the Tribunal. He attended a hearing on 7 November 2003, where he gave evidence and was represented by a Migration Agent. He claims he completed his SSC in 1992 and then went to the Model College for his HSC where he met "many intellectuals, writers, scholars, poets, dramatists, progressive thinkers and filmmakers" and completed his HSC in 1994. The [appellant] claims that after commencing his Bachelors degree at the same college he "could not continue my studies due to my strong stand against religious fanaticism" and he was adamantly opposed to followers of Mohammed. He claims that 22 March 1995 he was grabbed by a group of Chatra Sibir who "beat me mercilessly" and said he was "kafir" (does not belong to a the Islamic religion) and should stop drama. He claims he reported this to the police but they "did not take any action against them" and the situation did not change in 1996 when the Awami League came to power. He claims he staged a number of dramas "against the fanatic forces of the country" and on 27 November 1999 he was attacked and stabbed "by a group of Islamic activists those who saw me at Baitul Mokkram while I was buying a gift for a friend's wedding" but was saved by the police. He claims that while the police arrested and charged his attackers, "they were released on bail from Court" and he spent a week in a private clinic. He claims on 23 June he "led a procession from Samilito Sangskritik Jote" but "the procession was disrupted by the police and the police implicated a number of false charges against me" and he was "hunted by the police and finally I received an opportunity to come out from Bangladesh". It also accepts that in this capacity he, along with one other from his group, went to India on 16 October 2002 in connection with a planned drama production series, but agreement could not be reached about the money for the series when they arrived in India so, unexpectedly, the production was cancelled and they returned to Bangladesh after only two days. The Tribunal finds that it is significant that having claimed to have been involved in drama for so long, the only three articles that he produced that referred to him in any language (these were in Bengali) were published within four days of each other --- and at the time of his visit to India. And notwithstanding the adviser submitting that he was a talent of some renown, the Tribunal is satisfied that to have only received media mention at the time of his planned international visit to India is a reflection on his limited artistic profile in Bangladesh. The Tribunal also finds it significant that he did not claim that he receive any media coverage either after his return from India or "Chayachandra", the Tribunal is also satisfied that the fact that he only claims he was only mentioned on one occasion is a substantial weekly publication further demonstrates his limited profile as a dramatist. Accordingly, given all the above, the Tribunal does not accept the [appellant's] claim that he is "a leading artist in the movement" and "became one of the renowned artists in Bangladesh", and finds that he has embellished his claims in order to enhance his claim for refugee status . The Tribunal is satisfied that there is not a real chance that the [appellant] would experience serious harm amounting to persecution for a Convention reason on this basis if he returns to Bangladesh, either now or in the foreseeable future. Accordingly, the Tribunal is satisfied that even if legal action is taken against him over property rights, human rights or indeed the claimed false charges, the [appellant] could appeal to the courts for independent consideration of his entitlements and legal protection and so finds that there is not a real chance that will be subjected to serious harm amounting to persecution for a Convention reason on this basis. Moreover, and based on independent country information put to the [appellant] at the hearing ... the Tribunal is also satisfied that if he chose to live elsewhere in Bangladesh, and even if he continues to espouse his views on Islam and it becomes known that he is a non believer, there is not a real chance that he will be subjected to serious harm amounting to persecution for a Convention reason on this or any other basis. The Tribunal accepts that there are some ongoing security and human rights difficulties in Bangladesh. However, having already considered these claims in the context of his opposition to Islam and fundamentalism, the Tribunal has not been able to satisfy itself that the essential and significant reason for any other difficulties the [appellant] may have on this basis would be for a Convention related, including his claimed "non-believer" beliefs, his social group or his imputed political opinion. The [appellant] claimed that he "led many demonstrations against anti liberation forces and on the 9 October 2001 his house was ransacked and his brother was beaten". The Tribunal dealt with this claim by finding that the fact that the appellant returned to Bangladesh from India in October 2002 meant he did not have a well-founded fear of persecution at the time. The Tribunal fell into jurisdictional error in the above reasoning process. The Tribunal accepted "that serious charges have been made against the [appellant] for throwing bombs", but found that the courts are independent in Bangladesh and, in the circumstances, the [appellant] did not have a well-founded fear of persecution on the basis of the charges. However, the Tribunal ignored or overlooked the existence of corruption in the lower courts and the effect this may have on whether the applicant had a well-founded fear of persecution. On this basis, the Tribunal fell into jurisdictional error. 14 Concerning the appellant's complaint about the manner in which the Tribunal dealt with the appellant's return to Bangladesh in October 2002, the Federal Magistrate found that the Tribunal did not consider the appellant's return to Bangladesh as a factor negating the existence of a well-founded fear of persecution, but as a piece of evidence on which the Tribunal was entitled to rely in deciding whether or not there was a well-founded fear of persecution at the time of the hearing. His Honour found that although the Tribunal did not put to the appellant its concern about his return to Bangladesh, there was no obligation to do so. His Honour held that there is no obligation under s 424A of the Migration Act 1958 (Cth) ('the Act') for the Tribunal to reveal its thought processes, relying on VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 206 ALR 471 at par 24, and SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 (' SZEEU ') at par 206 per Allsop J . 16 Scarlett FM considered the second ground, being the claim that the appellant's incarceration before the charges against him were ventilated in the corrupt lower courts constituted persecution, a claim that the Tribunal had failed to consider. His Honour found that this argument, ' whilst ingeniously and eloquently framed ', was, in effect, a merits review, and impermissible in a Court conducting judicial review. His Honour therefore rejected it. 17 The Notice of Appeal to this Court asserts three grounds. 18 The first is an assertion that the Tribunal failed to exercise jurisdiction by acting unreasonably, construing the applicant's evidence illogically, selectively relying on independent country information and relying on independent country information that was either irrelevant and/or out of date. Seven matters which are said to constitute particulars are given. 19 The second ground alleges that the Tribunal committed jurisdictional error in failing to consider the meaning and scope of the term 'persecution' for purposes of the Migration Act 1958 (Cth) ('the Act') and the Geneva Convention on Refugees. The essence of this ground appears to be a claim that it was incumbent on the Tribunal to consider whether the appellant would be persecuted for Convention reasons if temporarily imprisoned for false charges, ' while corrupt lower courts deal with these charges '. 20 The third ground alleges that the Tribunal breached the requirements of s 424A of the Act. 23 The Tribunal commits an error of law only if the findings and inferences made by the Tribunal were not open on the material before the Tribunal: Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 (' Bond ') at p 355, per Mason CJ. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law. So long as there is some basis for an inference --- in other words, the particular inference is reasonably open --- even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place. That other decision-makers may have reached a different view, and have done so reasonably, is not to the point. Each of the particulars of what is said to be ' irrational or illogical or based on independent country information that was irrelevant or out of date ' is supported by material that was before the Tribunal. True it is that there was conflicting material as to whether the judiciary, particularly at the lower levels, was corrupt, but it was a conflict for the Tribunal to resolve. The weight given by the Tribunal to these bodies of conflicting evidence was a matter for the Tribunal, and does not provide a basis for review by this Court. 28 The second ground alleges a failure to consider the meaning and scope of the term 'persecution' for the purposes of the Act. The ground that was raised before the Federal Magistrate was that the Tribunal had failed to deal with the issue of whether detention on the basis of false charges may, based on independent country information, have been influenced by the executive, and therefore constitute persecution. Scarlett FM regarded this claim as an attempt by the appellant to have the Federal Magistrates Court conduct merits review. 29 The Tribunal accepted that the judiciary was independent of the executive, and considered the independent country information that the courts provide protection for those falsely charged. Scarlett FM found no error in the Tribunal's finding that the appellant did not have a well-founded fear of persecution based on a Convention reason. 30 The final ground alleging a breach of s 424A(1) of the Act was that responses by the appellant to questioning by the Tribunal is ' information ' which falls within the exception to the application of s 424A , found in s 424A(3)(b). Because this application for review was filed before the commencement of s 422B on 4 July 2002, the Tribunal was also obliged to accord natural justice at common law in respect of the hearing. 31 In my judgment, no breach, either of s 424A or of the requirements to accord common law natural justice, is made out here. 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 [2001] FCA 1109 at [3] , approved in [VAF v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 206 ALR 471] at [24] or knowledge which has come to, or has been gained by, the Tribunal: [Paul v Minister for Immigration and Multicultural Affairs [2001] FCA 1196 ; (2001) 113 FCR 396] at [95] . There is no requirement, either by that section or by the common law requirement of procedural fairness, requiring the Tribunal to give the appellant an opportunity to respond to adverse findings it proposes to make. 34 For the above reasons, none of the grounds of appeal is made out. 35 The appeal is dismissed with costs. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. | status of findings of fact of the refugee review tribunal impermissible merits review weight given by tribunal to conflicting evidence migration |
2 Riley FM dismissed with costs an application for judicial review filed by the appellant on 11 March 2005. That application sought review of the decision of the Refugee Review Tribunal ('The Tribunal') dated 19 January 2005 and handed down on 10 February 2005. The Tribunal affirmed a decision of a delegate of the respondent given on 21 September 2004 to refuse the appellant a Protection (Class XA) Visa ('a Protection Visa'). The Tribunal failed to carry out its statutory duty. The Tribunal failed to notify the reason or part of the reason for affirming the decision before making the decision to refuse my application for a protection visa. The Tribunal failed to consider the full information that I provided at my hearing as well as some documents that I had provided before the hearing. The Tribunal failed to consider my claims. Federal Magistrates Court did not consider my application accordingly even though I had listed the above mentioned errors in full. Refugee Review Tribunal fell into jurisdictional errors when considered my application for a protection visa. The Tribunal failed to carry out its statutory duty. The Tribunal did not notify me the reason or part of the reason for affirming the decision. I lost the opportunity to explain my reasons, and to comment upon it. 6 The appellant claimed before the delegate of the respondent and before the Tribunal to fear harm because he was a Falun Gong practitioner. The appellant is a citizen of the People's Republic of China. In 2000 he participated in a demonstration in Tiananmen Square. He claims that on 2 October 2000 he was detained by the police, interrogated, beaten, tortured, required to undertake self-criticism and write letters of regret. He was released after two weeks but was required to report to the local PSB office. He was downgraded when he returned to work, and left that position to work for a private company, where he was soon promoted. The local police, he claimed, warned him not to leave his house during large events and holidays. In May 2004, with three other persons, he claimed that he put up Falun Gong posters. He feared he would be detained at any time if he returned to China, because he was persistent in his Falun Gong beliefs. The appellant claimed a belief that he was on a blacklist, and could only practise Falun Gong secretly. In Australia, he said he practised Falun Gong and handed out literature in Chinatown in Sydney. 7 The Tribunal found that photographs of the appellant handing out Falun Gong literature in Chinatown were taken for the express purpose of presenting evidence to the Tribunal. The Tribunal further found that apart from attending some Falun Gong activities in Chinatown, the appellant was otherwise unconnected to the Falun Dafa Association in Australia. 8 Riley FM noted that no meaningful particulars were provided of the alleged breach of s 424A of the Migration Act 1958 (Cth) ('the Act'). His Honour said that the appellant indicated at the hearing that he did not wish to make any further submissions on that ground. The Federal Magistrate was unable to determine any proper basis for this argument on the material before the Court. In these circumstances, it is not possible to conclude that the Tribunal committed jurisdictional error constituted by a breach of s 424A of the Act. 9 Except in respect of what was alleged in grounds 1(a) and 1(c), it is unnecessary to refer to the basis for the Federal Magistrate rejecting the appellant's grounds of appeal, other than to say that no error is revealed in his Honour's reasons. I was persecuted. I was detained by the Chinese authorities and suffered mental and physical torture from them when I was in China. I was required to reported to police weekly. I lost basic human rights and freedom when I was in China. However, the Tribunal did not believe that I was detained in October 2000 without any evidence. The Tribunal did not accept that I am a genuine devotee of Falun gong without any reasons and evidence. The Tribunal regarded the photos that I submitted to them were obtained just for the purpose of presenting evidence to the Tribunal without proper reasons. The Tribunal refused my application just because I had been able to get my passport to leave China, then refused to accept any of my explanation and evidence, however he refused to accept my explanation about paying large sum of money for getting my passport . From the bar table, he spoke of his involvement with activities of Falun Gong in Australia, including extensive activity since the decision of the Federal Magistrate. They said since I came to Australia I had no contact with the Falun Gong in Australia, so at the RRT hearing I did provide the Tribunal with some photos of my activities in Chinatown when I went to promote Falun Gong and also, I also provided evidence about my involvement in China and this is all recorded. I live in Cabramatta so it is quite a distance for me to go to Strathfield, and I have no change trains in Central. I have been involved in that including some major activity. The major ones include on 19 February 2006 from 11 in the morning until 2 o'clock in the afternoon in the Central Station Park. The commemorative activity of eight million withdrawals from the Communist Party and on 28 April the demonstration against the organ-taking from living people, including recently, and also the protest on 1 October in Canberra, 6 November activity for the 15 million withdrawal from the party. I have been actively involved in the activities in Australia and there is no doubt about that, and I can provide a lot of evidence including witnesses and photos for that. As a practitioner, I shouldn't openly publicise those photos, but, if the Court needs it, I can provide them. Also at the Federal Magistrates hearing, the Court said since I am a practitioner, how am I able to get a passport? But there is a misunderstanding in concept in their part. All the Falun Gong practitioners are included in this five type, but I said I was detained in China. Being detained is different from committing a crime. For committing a crime, one would get a sentence or a reform school labour, but detention is not a crime in China. It is just a means that local police station deals with one person. In China in order to get passport, four kinds of documents are required. The first one is a certificate given by your workplace. And the second one is criminal clearance from the police station. The third one is a household register, and the fourth one is the ID card. So one can easily get a passport once you have four of these documents. For me, I have been detained, so I do have a certain difficulty in getting a clearance from the police station, but I am not a criminal. So that is a fact that I am not a criminal. China is full of corruption, so if you offer some benefit, you can get one. That is what I meant by going through the connection to get the passport. So it is not that Falun Gong practitioners can't get a passport; it is those practitioners who have been sentenced that can't get a passport. So the Court kept on saying, "You are a practitioner, then how can you get a passport? ", and I have been trying to explain that concept, but they refuse to understand me. They ask me how I got through the customs as a practitioner. I said to them, "I am not on the wanted list. I am not a criminal. That is why the customs does not have my record. That is why I could easily get through the immigration. I felt there is a need for me to explain everything to your Honour today. As a democratic country as Australia, according to the treaty signed by Australian and the UN in 1958, Falun Gong is persecuted in China and such persecution have been reported in China, in Australia, in newspapers all over the world. So given such persecutions are happening in China, I think as a Falun Gong practitioner, I should be regarded as a refugee, and I think I should get protection from Australia. I hope your Honour can give me a fair judgment. 15 What the appellant seeks to do is engage in impermissible merits review, because he seeks to take issue with the Tribunal's findings of fact. (Waterford v Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 at 77 per Brennan J; Attorney-General (NSW) v Quinn [1990] HCA 21 ; (1990) 170 CLR 1 at 35-36 per Brennan J). 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. Those submissions are directed at correcting what is seen as errors in the factual findings of the Tribunal. At the hearing the Applicant did not impress the Tribunal in responses in giving evidence which were often equivocal, unconvincing and at times evasive. As such the Tribunal is not satisfied that the Applicant left China because of the circumstances he has described. 21 None of the grounds in the appellant's Notice of Appeal or affidavit to this Court contain any particulars to advance the appellant's case in this Court in any meaningful sense. 22 No error has been shown in the reasons of Riley FM. 23 The respondent indicated in his written submission that they would seek, in the event the appeal was unsuccessful, that the appellant pay the first respondent's costs in a fixed sum. 24 For the above reasons, the appeal is dismissed. 25 The appellant is to pay the respondent's costs fixed in the sum of $2000. | whether appellant seeking merits review status of findings of fact of refugee review tribunal migration |
On 28 June 2007 I dismissed the appellant's appeal against a judgment of the Federal Magistrates Court ( Penhall-Jones v State of NSW [2007] FCA 925). In the earlier judgment I noted that the respondent had sought its costs if the appeal was dismissed but no submissions about costs had been made by the appellant. I gave her leave to make submissions about that issue. She has now done so. 2 The appellant's submissions draw attention, in the first instance, to the judgment of the Court in Ogawa v The University of Melbourne (No 2) [2004] FCA 1275 at [40] --- [42]. In that judgment Kenny J gave consideration to the circumstances in which costs, including indemnity costs, might be awarded against self represented litigants. Having regard to the circumstances of that matter, her Honour awarded costs on a party/party basis and also on an indemnity basis against a self represented litigant. The discretion is a general one. The Court takes special care when asked to make an order for indemnity costs against an unrepresented litigant but there is no bar to such an order (see Bhagat v Global Custodians Ltd [2002] FCA 223 at [55] --- [60] and Wu v Avin Operations Pty Ltd (No 2) [2006] FCA 792 at [41] --- [46]). Rather, she made a series of submissions directed to quantifying the precise amount which should be allowed to the respondent as costs for particular aspects of the hearing. I accept Ms Penhall-Jones' submission that any order for costs should be made on the basis that she pay party/party costs and not indemnity costs. As that is the usual position it is not necessary to state that explicitly in the order. 6 One specific issue raised by Ms Penhall-Jones was whether costs should be allowed to the respondent for senior counsel. She submitted they should not. In a written submission in response the respondent sought a 'certification or declaration from the Court that senior counsel's involvement was appropriate'. 7 Whether costs should be allowed for two counsel, or for senior counsel, is normally a matter within the discretion of the taxing officer. If costs are required to be taxed the taxing officer will be guided by O 62 of the Federal Court Rules . In my view the issues in the case appear sufficiently from the earlier judgment. I see no reason to fetter the normal exercise of the taxing officer's discretion in the way suggested by either party. The taxation of costs may, if necessary, be reviewed by a judge (O 62 r 11). 8 As to Ms Penhall-Jones' other submissions directed to quantifying the amount of costs which she should pay, these, like an allowance for senior counsel, are matters for the taxing officer if agreement is not reached. 9 Ms Penhall-Jones also submitted that any order for costs should be stayed until the outcome of other proceedings which are pending between herself and the respondent and which are listed for hearing commencing 3 December 2007. I can see no reason why an order for costs in the present matter should be stayed. 10 There will be an order that the appellant pay the respondent's costs as taxed if not agreed. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice BUCHANAN J. | no reason why costs should not follow the event care to be taken where self-represented litigants are involved but no bar to an order for costs. costs |
2 Having heard argument on the questions in issue, I considered the material and delivered Reasons on Wednesday, 15 March 2006, De Bruyn v The Minister for Justice and Customs [2006] FCA 232 upholding the claim of the Respondent to withhold production of certain documents containing information received by Australian agencies from the Republic of South Africa properly the subject of a claim of public interest immunity. I was not satisfied, however, that the claim was established in respect of other classes of documents and, in particular, communications from the Attorney-General's Department to the Australian High Commission in the Republic of South Africa or communications from the Australian High Commission to the Department. 3 Accordingly, I elected to look at those documents accepted by the Respondent as relevant to the issues in the proceeding before me on Wednesday, 22 March 2006 and assess whether, with the benefit of that examination, the public interest in ensuring access to the documents so as to enable the Applicant to properly conduct its case outweighed the public interest in preventing damage or harm to the national interest which might be occasioned by disclosure of the documents. 4 In forming a view about where the balance in those competing interests might lie, I formed the view that it would be necessary to examine the documents carefully to be satisfied that a claim for public interest immunity was made out on the affidavit material. 5 Accordingly, I examined "privately" 20 documents handed to me by Counsel for the Respondent. 6 Having examined those documents, I formed the view that parts of those documents could properly be disclosed in the interests of the conduct of the proceedings next Wednesday without occasioning damage to the public interest through disclosure and parts of the documents ought not to be disclosed. Accordingly, I marked-up the 20 documents and masked those parts of them which ought not be disclosed. I foreshadowed making an order for production of the documents so marked-up. 7 I provided the Respondent with a copy of the 20 documents appropriately marked-up for proposed production. Counsel suggested that with the benefit of a precise indication of those documents or parts of documents which might be the subject of disclosure, Counsel would be in a position to take instructions from the Respondent as to its attitude to the proposed order. Counsel also indicated that the Respondent may wish to formulate a further affidavit addressing reasons why the disclosure of the proposed documents or parts of documents ought not occur. 8 Yesterday, Counsel conferred with the Respondent and then indicated to my Associate that the Respondent would wish to put further submissions to me in relation to the proposed order. I invited Counsel to put written submissions before me as to those matters and the basis upon which further affidavit evidence might properly be put before me. Counsel for the Respondent requested the matter be listed today and with a view to determining finally these issues, recognising that the hearing of the proceeding is to occur on Wednesday, 22 March at 10.15am, the matter was listed for final determination today at 12.00 o'clock. 9 In support of the proposition that parts of the documents marked for disclosure ought not be disclosed, the Respondent sought to rely upon a further affidavit from Joanne Sheryl Blackburn. The affidavit was marked Exhibit "A" for identification. The affidavit is marked confidential on the basis that it contains sensitive expressions of opinion about aspects of the relationship between the Australian Government and the Government of the Republic of South Africa concerning extradition arrangements, protocols and factors influencing Government opinion. Ms Blackburn says that the material in the affidavit warrants a "confidential" national security classification having regard to the guidelines set by the Australian Government in the Protective Security Manual adopted by the Government for such matters. 10 The first question to determine was whether I ought properly receive a further affidavit elaborating upon the basis upon which the claim for public interest immunity had been made in the earlier affidavit of Ms Blackburn sworn 2 March and filed on 6 March 2006. The further affidavit elaborating on paragraph 8 of the earlier affidavit is 12 pages in length and comprises 23 paragraphs. 11 In determining whether the public interest might be prejudiced by the disclosure of the material said by reference to the supplementary affidavit to be prejudicial, I took the view that a proper exercise of the discretion involved receiving the further material to aid in the final determination of the preliminary view I had formed that certain material ought properly be disclosed. 12 In exercising the discretion to receive the supplementary affidavit, Counsel for the Respondent made submissions that the affidavit did not assert new or additional grounds for a claim of public interest immunity but sought, consistent with the expressions of opinion contained in paragraph 8 of the earlier affidavit, to identify the particular risks to the public interest associated with disclosure. 13 In exercising the discretion to receive the additional material and assess it on the question in issue, support is found in the observations of Lord Blandesburgh in Robinson v State of South Australia No. 2 (1931) AC 704 at 722. I have also been referred to National Crime Authority v Gould & Anor (1989) 23 FCR 191 at 199, Foster J; Haj-Ismail & Ors v Minister for Immigration and Ethnic Affairs & Ors (No. 2) (1982) 64 FLR 112; and Zarro & Ors v Australian Securities Commission (1992) 36 FCR 40, Lockhart, Ryan and Gummow JJ. 14 In receiving a further affidavit from the Respondent on the question, there is inevitably some real difficulty in terms of ensuring a balanced opportunity to the Applicant to deal with the additional material. The affidavit necessarily deals with matters which explain the thinking, approaches and dialogue between the two national governments which for the reasons indicated in the affidavit can not be put into public domain. One approach suggested by Counsel for Mr de Bruyn, as a mater of practice and procedure, is that the Respondent might file and serve an affidavit which identifies foundation facts persuasively demonstrating a need to adduce additional "confidential information" going to additional factors supporting the ground already identified as the basis for the claim of public interest immunity. Once the judge is satisfied on the basis of the threshold or preliminary affidavit that a further, more expansive affidavit ought be received, then and only then should the second affidavit be received. 15 It seems to me as a matter of principle the suggestion is a sound one and in practice parties seeking to supplement an affidavit deposing to grounds, particulars and details of a claim for public interest immunity ought first file a preliminary affidavit properly identifying the basis for a supplementary affidavit and perhaps explaining the reasons for any lack of particularity in an earlier affidavit. Once satisfied of that matter, the judge might receive the additional material. 16 In the current matter, the affidavit of Ms Blackburn reflects a conjunction of the background explanatory matters and the discursive treatment of the sensitive matters. In the interests of properly determining the question, I elected to exercise the discretion to receive the affidavit in its aggregated form. 17 I stood the matter down over the luncheon break to read Ms Blackburn's affidavit carefully and the material attached to it comprising the marked-up 20 documents with comments directed to conclusions as to why parts of those documents ought not be disclosed. As to the affidavit itself, I have indicated this afternoon that I take the view that paragraphs 1, 2, 3, 4, 5, 6 and 7 do not reflect facts which contain views damaging to the public interest if disclosed. I accept that paragraphs 7, 8, 9, 10, 11, 12, 13, 14, 16, 17, 18, 19 and 20 ought not be disclosed. Paragraphs 15, 22 and 23 ought be disclosed. I have indicated that I propose to make an order effective from Monday, 10.15am that those paragraphs that seem safely susceptible to disclosure ought be disclosed and a copy of the affidavit of Ms Blackburn ought be provided to the solicitors for the Applicant masking the confidential paragraphs. 18 Having regard to the affidavit itself, I have formed the view that some aspects of the material marked in a preliminary way for a proposed order for disclosure ought be further marked for non-disclosure on the ground that the additional matters go to the content of possible arrangements government to government. However, enquiries about the gathering of information that might influence the formulation of a particular proposition are capable of disclosure without injury to the national public interest, in the interests of the conduct of proceeding. It seems to me that the chronology of events and aspects of the content of the communications are relevant to the question of whether the Respondent has acted "as soon as is reasonably practicable having regard to the circumstances, after [Mr de Bruyn] becomes an eligible person" , in determining whether the Respondent has refused or constructively refused to discharge a statutory duty cast upon him. 19 Although, as I have said previously, it seems to me that disclosure of the content of each of those communications is not necessary, some disclosure which provides appropriate contextual information without prejudice to the national public interest ought to occur. Additionally, the Respondent makes a claim to withhold some material which, it seems to me, could not qualify for protection as sensitive information on the ground of public interest immunity going to a national threat to the public interest. In document number 6, for example, the Respondent seeks to withhold a paragraph which describes briefly information drawn from a publicly accessible website. 20 Accordingly, I have reviewed each of the 20 documents and marked some further information for non-disclosure on the basis of the assessment indicated in paragraph 18. I am satisfied that disclosure of this information would not be injurious to the public interest and that the interests of the administration of justice would be advanced by disclosure. 21 Accordingly, I have ordered that the Respondent produce to the Applicant copies of the 20 documents in the marked-up form provided this afternoon to Counsel for the Respondent. In terms of precision, for the purposes of the Order, I have enclosed a copy of the marked-up documents the subject of the order, in an envelope and placed that material on the file cross-referenced to the Order so there can be no subsequent confusion as to the marked-up documents which correlate with the Order. I have also ordered a stay of the Order until 10.15am on Monday. 22 Counsel for the Respondent is to advise my Associate by then as to its attitude to the matter and its attitude to those paragraphs of the affidavit of Ms Blackburn marked "A" for identification. 23 Additionally, I have ordered the Respondent to pay the costs of today. The costs of the motion on Tuesday, 14 March 2006 remain reserved for determination. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | extradition arrangements claim by the commonwealth of public interest immunity concerning documents relevant to the question of whether the minister has refused or constructively refused to discharge a statutory duty consideration of the principles generally matter brought forward for urgent determination prior to hearing commencing in one week. practice and procedure |
The application was filed with the Court on 6 July 2001 and registered with the National Native Title Tribunal ('the NNTT') on 3 August 2001. Leave was granted to the applicants to amend the application by this Court on 25 February 2003. The amended application was accepted for registration by the Registrar of the NNTT on 17 March 2004. A further amendment to the application was made on 4 February 2009. The parties to the application have reached agreement about the existence of native title and about the nature and extent of those native title rights. They now ask the Court to make an order in the terms that they have agreed. The order sought gives recognition to a native title claim group comprising fifteen Mudburra or Jingili or mixed Mudburra/Jingili estate groups. The primary estate group is the Elliott (Gurungu/Kulumintini) estate group who, in accordance with traditional law and custom are recognised to have exclusive and non-exclusive native title rights and interests within the claim area. The other fourteen neighbouring estate group members and their spouses, in accordance with their and the Elliott (Gurungu/Kulumintini) estate group's traditional law and custom are also recognised to have exclusive and non-exclusive native title rights and interests within the claim area. These fourteen estate groups are described in the following way: The Marlinja (Collins) group; The [Y]Ijiparta (Kingston) group; The Warranangku (Beetaloo) group; The Kulaja (North Waterhole) group; The Powell Creek (Walanpiri) group; The Ngapurr (Nellis Waterhole) group; The North Western group; The Murranji (Narlwan/Nyirrinji) group; The Tururrutpa (Hidden Valley) group; The Powell Creel (Japurla-japurla/Yapa-yapa/Mali-mali) group; The Top Springs (Yingawunarri) group; The Badpa (Daly Waters) group; The Bamarrnganja (Walanja) group; and The Kinbininggu (Peter's Hole), Abie Thomas and Major Taylor group. In support of the orders sought the parties have filed their minute of proposed orders, joint submissions in support of the minute, and a statement of agreed facts. In addition to this material the Applicants have filed a number of supporting documents, including two anthropological reports by Mr. Robert Graham. The determination area is part of Mudburra-Jingili country lying to the south and east of the determination area recognised in the matter of King v Northern Territory of Australia [2007] FCA 944. (Hereafter referred to as the Newcastle Waters matter. ) The proximity of the determination area to that of Newcastle Waters is relevant to this proceeding as the Applicants are the same estate groups recognised as Native Title Holders by the Newcastle Waters Determination. Schedule A of the parties minute of proposed orders describes the determination area by reference to lot and portion numbers and an accompanying map (referred to as schedule B) clearly identifies the location of all parcels. The parties' joint submission informs the Court that section 47 B of the Native Title Act 1993 (Cth) (the Act) have been met in relation to a number of the parcels, with the effect that any prior extinguishment of native title over these parcels can now be disregarded. That section requires the period of notice under s 66 of the Act to have elapsed, that a signed copy of the agreed orders has been filed with the Court, and that the Court is satisfied that the orders are within its power and appropriate to make. In this application the period of notice under s 66 of the Act expired on 16 January 2002. A written agreement, signed by the parties, relating to the whole of the application area was filed on 15 July 2009. It remains for the Court to be satisfied that the orders sought are within power and are appropriate to make. For the reasons that follow, I am satisfied that the Court can, and should, make an order in the terms the parties seek. The material before the Court in support of the application informs the Court of the history of the application and the process that the parties engaged in to reach the agreement. The joint submission explains the agreement and informs the Court that the peoples who comprise the fifteen estate groups relationship with the land is governed by a body of laws and customs which are expressed through spiritual, religious and physical associations, and through descent and processes of succession. This material supports the finding that the peoples have native title in the determination area. That native title is regulated by the law and custom of the groups. The material speaks in support of this and the observance of it is reflected in the order sought. In relation to that part of the determination area where native title rights and interests are to be recognised to the exclusion of all others, the rights and interests are to be held by members of all of the fifteen estate groups. In relation to those parts of the determination area where non-exclusive native title rights and interests are to be recognised, the determination sought differentiates between the primary rights of the Elliott (Gurungu/Kulumintini) estate group members and the secondary rights and interests of the other fourteen estate groups. The words of the section make it clear that the question for the Court is whether it is appropriate to make an order in the terms of the agreement reached between the parties, with the central focus of the section being the existence of an agreement. Satisfying the Court that it is appropriate for an order to be made should not be seen as the last hurdle to be overcome before the parties reach their ultimate goal of a consent determination of native title. Instead s 87 should be regarded as the opportunity for the Court to recognise the parties' success in reaching the ultimate goal of a negotiated agreement, and facilitating that agreement by making an appropriate determination in accordance with its terms. The mere fact that the State was a party may not be sufficient. The Court may need to be satisfied that the State has in fact taken a real interest in the proceeding in the interests of the community generally. That may involve the Court being satisfied that the State has given appropriate consideration to the evidence that has been adduced, or intended to be adduced, in order to reach the compromise that is proposed. The Court, in my view, needs to be satisfied at least that the State, through competent legal representation, is satisfied as to the cogency of the evidence upon which the applicants rely. The parties have had the benefit of independent and competent legal representation in arriving at this agreement, the terms of the order are clear and the agreement has been produced as a result of a process of negotiation. In this matter the Northern Territory is the sole respondent party. It is clear on the evidence before me that it has taken a real and significant interest in the proceedings. Before the proposed consent orders were signed the Northern Territory had Emeritus Professor Sansom, who had also been the expert anthropologist for the Northern Territory in the Newcastle Waters matter, consider the anthropological material going to the existence of native title. Professor Sansom's queries in relation to the material initially provided in this matter were subsequently answered to his satisfaction by the applicants. Furthermore, the Northern Territory Cabinet considered the proposed consent orders and instructed the Solicitor for the Northern Territory to agree to the proposed consent determination of native title. I am therefore satisfied that the interests of the community generally have been properly considered by the Northern Territory. There can be no doubt about the jurisdiction of the Court to make the orders sought (see s 81 of the Act) and there is nothing in the agreed terms that would suggest that the power of the Court would be exceeded. The proposed order set out details of each of the matters mentioned in s 225 thus satisfying the requirements of s 94A of the Act. I am therefore satisfied that it is appropriate that the Court make the orders sought. Because of a long history with the Northern Territory land claims process and native title claims, the legal practitioners employed with both the Northern Land Council and the Central Land Council are generally very experienced and competent. The legal practitioners employed to deal with land claims and native title claims in the Northern Territory government are similarly experienced and competent. Moreover from my experience with the native title list in the Northern Territory, all of the legal practitioners involved appear to be willing to progress the matters in the list, as quickly and efficiently as possible. There is, however, a large number of outstanding native title applications in the Northern Territory native title list. The Court and the parties are presented with a considerable challenge - to ensure that they are dealt with appropriately in accordance with the provisions of the Act, but in an efficient and timely manner. To that end, and with the support generally of the parties, the Court adopted a strategy of hearing selected cases to determine particular issues of principle, or perhaps more accurately, issues which relate to the decided case and to a number of others with similar geographical, cultural, social or legal characteristics. That process has now been completed. It was and continues to be my expectation that, as a result of those cases having been decided and the commitment of the parties in 2008 to finalise all matters in the Northern Territory native title list by 2013, most of the outstanding applications will be progressively resolved by a series of consent determinations. I therefore hope this is the first of many consent determinations that the Court will be making in the Northern Territory as a result of this strategy. I congratulate the parties to the agreement, in so doing I congratulate the native title holders whose rights are now recognised over two areas of land and waters within the Northern Territory. I am encouraged by this determination and encourage the parties to continue with their active engagement in the resolution of native title cases by consent. I now make the order sought. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. | consent determination request for orders to be made under s 87 of the native title act 1993 (cth) consideration of whether the orders appear appropriate to the court and whether orders ought to be made as sought determining native title rights and interests in the gurungu/kulumintini and other groups. native title |
The following are the reasons why I made those orders. One of them, Destra Corporation Limited (DCL), is named in the title to this proceeding. I will call all of those companies collectively the Destra Group. Section 436B(2) of the Act provides that a liquidator of a company must not appoint himself or herself, or any of his or her partners, as an administrator of the company in question unless at a meeting of the company's creditors, the creditors pass a resolution approving the appointment or the appointment is made with the leave of the Court. The plaintiffs have sought the leave of the Court in order to appoint themselves as administrators of the companies in the Destra Group. Section 448C(1) of the Act provides that except with the leave of the Court, certain persons must not seek or consent to be appointed as, or act as, administrator of a DOCA. One of those persons is a partner of an officer of the company: s 448C(1)(g). Therefore, in order to consent to being appointed as administrators of a proposed DOCA in respect of each company in the Destra Group (see below), arguably the plaintiffs need the Court's leave. I say "arguably" because it must be hypothesised that by that time the plaintiffs will have become administrators of the company, their functions and powers as liquidators will have been suspended (see s 437C(1) of the Act); and s 444A(2) of the Act provides that where creditors resolve that the company execute a DOCA, the administrator of the company "is to be" the administrator of the DOCA unless the creditors appoint someone else to that office. Section 447A of the Act provides that the Court may make such order as it thinks appropriate about how Part 5.3A of the Act is to operate in relation to a particular company. It appeared to me for the reasons that I give below that it would be: superfluous and wasteful for the plaintiffs to have to convene the first meeting of creditors otherwise required by s 436E of the Act; too restrictive that the requirement imposed by s 439A(2) of the Act that the "second" meeting of creditors be held within five business days before or within five business days after the end of the convening period apply (cf Re Daisytek Australia Pty Ltd (admin apptd) [2003] FCA 575 ; (2003) 45 ACSR 446) ; and superfluous and wasteful for the plaintiffs to have to invite and deal with fresh proof of debt forms when proof of debt forms have previously been lodged with them in the circumstances referred to below. The Destra Group's core business encompasses media and entertainment interests including video, music, magazine, online communities, media sales and brand funded content production activities. DCL's largest shareholder is Prime Media Group Ltd (Prime) which holds 43.96% of the shares in DCL. DCL's shares have been suspended from trade on the Australian Stock Exchange since 12 November 2008. St George Bank Limited (St George) holds first ranking fixed and floating charges over 19 of the companies in the Destra Group, including DCL itself. On 13 November 2008 each of the companies in the Destra Group appointed the plaintiffs administrators of that company pursuant to s 436A of the Act. On the same day, St George appointed Messrs D Winterbottom and M Brereton of Korda Mentha (Receivers) as receivers and managers of DCL and of the other 18 companies within the Destra Group in respect of which St George held security. On 3 December 2008 the plaintiffs obtained orders in this Court pursuant to s 439A(6) of the Act extending the time for the convening of the second meeting of creditors until and including 12 February 2009 (in proceeding NSD 1867/2008). The Receivers commenced an orderly sale of assets. The evidence shows that all of the assets the subject of St George's security have been realised. As at the time of the appointment of the plaintiffs as administrators, the Destra Group owed St George in excess of $29 million, and 23 September 2009 the Destra Group still owes approximately $21 million to St George. On or about 6 February 2009, the plaintiffs sent out notice of the second concurrent meeting of creditors to be held on 19 February 2009. At or prior to this meeting, Prime advised the plaintiffs that it intended to submit a DOCA proposal. On 19 February 2009 the creditors resolved to adjourn the second meeting in order to allow time for creditors to consider the foreshadowed DOCA. (Five companies failed to obtain a quorum of creditors at the second meeting, and it was the administrators who adjourned the second meeting of the creditors of those companies). On 13 March 2009, the plaintiffs received the DOCA proposal from Prime. Under that proposal, Prime was to contribute $1.4 million in addition to $350,000.00 already contributed. The sum of $1.4 million was to be paid into a fund for the benefit of unsecured creditors. However, the DOCA proposal was conditional upon the plaintiffs, St George and the companies in the Destra Group executing full releases in favour of Prime, the Destra Group and the directors and associates of the members of the Destra Group. At subsequent creditors' meetings, creditors of a majority of the companies within the Destra Group resolved that DOCAs should be executed in terms reflecting Prime's DOCA proposal, while the creditors of other companies within the Destra Group resolved on 24 April 2009 that those companies should be placed into liquidation. The DOCAs that were approved were expressed to be subject to the fulfilment of a number of conditions precedent by 11 May 2009. One of these was that St George agree to execute releases and covenants not to sue in favour of Prime, all former, present and future directors and associates of Prime, the companies in the Destra Group, and all former, present and future directors and associates of those companies. As well, St George was to agree by 11 May 2009 not to prove in respect of the deed fund to be created by the DOCAs. The conditions precedent were not fulfilled, with the result that the DOCAs were automatically terminated and the companies that had been the subject of them were placed into liquidation. In the result, all 23 companies within the Destra Group are now in liquidation and the plaintiffs are their liquidators. The plaintiffs are of the opinion that it will be in the interests of the unsecured creditors to agree to the new DOCA proposal because they will stand to receive a dividend of 0.05 cents in the dollar as opposed to no dividend at all should the DOCA not be accepted and the Destra Group companies remain in liquidation. Employees will receive their full entitlements plus a dividend of 22.85 cents in the dollar in respect of "loyalty payments" provided for in their respective contracts of employment. As I noted in Palmer and Collis and Terraplanet Limited (in liquidation), in the matter of Terraplanet Limited (in liquidation) [2007] FCA 2092 at [22] , a liquidator is at liberty under s 436B(1) of the Act to appoint another person as administrator without the necessity of leave. The requirement of leave is therefore not directed to the liquidator's view and decision that the company should be placed in administration, but to the identity of the person to be appointed administrator. Also as I noted there, it has been suggested that the court should also have in mind considerations of commercial morality: see Re Data Homes Pty Limited (in Liq) [1972] 2 NSWLR 22 ; Re Depsun Pty Ltd (1994) 13 ACSR 644 ; Deputy Commissioner of Taxation v Foodcorp Pty Limited (1994) 13 ACSR 796 at [798]-[9]. I am satisfied that the plaintiffs are appropriate persons to fill the office of administrators and that there are no considerations of commercial morality telling against their appointment. The plaintiffs are familiar with the history of the Destra Group. Each of the plaintiffs has practised in insolvency for many years. Each is a registered liquidator and an official liquidator. There is evidence negating any suggestion of conflict between interest and duty. I also considered it appropriate to dispense with the first meeting of creditors because it would be wasteful to allow s 436E to operate under circumstances in which a first meeting of creditors was previously held. Section 439A(2) of the Act requires the second meeting to be held within five business days before or within five business days after the end of the convening period. According to this provision, if the plaintiffs are ready to convene and hold the meeting earlier, they must "sit on their hands" until five business days before the end of the convening period. The plaintiffs should be at liberty to convene the meeting to be held on an earlier date during the convening period. It also seemed desirable, efficient and economical for the plaintiffs to be at liberty to treat the proofs of debt that have previously been lodged with them as having been lodged in the new administration which will commence once they have appointed themselves as administrators: see s 435C(1)(a) of the Act. The plaintiffs have received 204 proofs of debt since their initial appointment as administrators on 13 November 2008. Clause 11 of the previous DOCAs provided for creditors to prove their debts in accordance with Subdivisions A, B, C and E of Div 6 of Pt 5.6 of the Act. It would be wasteful if the plaintiffs had to ignore those proofs and to seek proofs again from the same creditors. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. 119 608 669 A.C.N. 007 357 495 BECKER MAGNA FILMS PTY LTD A.C.N. 095 385 783 A.C.N. 100 517 860 A.C.N. 118 954 046 A.C.N. 073 153 705 A.C.N. 064 966 963 DESTRA CORPORATION LTD A.C.N. 006 070 480 DESTRA MEDIA PTY LTD A.C.N. 094 832 694 DESTRA MUSIC PTY LTD A.C.N. 122 385 826 DESTRA MUSIC (HOLDINGS) PTY LTD A.C.N. 128 663 721 DESTRA VISION PTY LTD A.C.N. 128 657 278 DESTRA MP PTY LTD (FORMERLY MAGNA PACIFIC PTY LTD) A.C.N. 010 465 666 DESTRA MP (HOLDINGS) PTY LTD (FORMERLY MAGNA PACIFIC (HOLDINGS) PTY LTD) A.C.N. 010 731 718 MP3.COM.AU PTY LTD A.C.N 093 883 295 MRA ENTERTAINMENT GROUP PTY LTD A.C.N. 083 796 178 NICE SHORTS PTY LTD A.C.N. 119 343 654 RAJON DISTRIBUTION PTY LTD A.C.N. 107 483 474 RAJON VISION PTY LTD A.C.N. 113 091 393 ROCVALE ENTERTAINMENT PTY LTD A.C.N. 081 708 590 THE SQUARE GROUP PTY LTD A.C.N. 113 147 916 A.C.N. 056 128 235 3D WORLD AUSTRALIA PTY LTD A.C.N. | group of 23 companies in liquidation previously in voluntary administration earlier proposal for deed of company arrangement (doca) in respect of each company had come to nothing because of non-fulfilment of conditions precedent fresh proposal for doca submitted to liquidators leave granted under s 436b(2) of corporations act 2001 (cth) (the act) to liquidators to appoint themselves as administrators leave granted under s 448c(1) of the act for them to accept appointment as administrators of new doca order made under s 447a of the act: that s 436e 's requirement of a first meeting of creditors not again apply; that the second meeting of creditors be able to be held at any time during the convening period, notwithstanding s 439a(2) of the act; and that the liquidators, if appointed as doca administrators, be permitted to treat as proofs of debt those proofs of debt that had previously been submitted by creditors. corporations |
Upon the applicant giving the usual undertaking as to damages, the first respondent, whether by itself, its servants, agents or otherwise, is restrained until further order from collecting the goods referred to in paragraph 14 in the Statement of Claim. Costs of the proceedings to date are reserved. The matter is adjourned to 9:30am on Monday 17 March 2008 before Rares, J. The applicant notify the Chief Executive Officer of the Australian Customs Service of Order 1 and provide a copy of that Order as entered by 6:00pm today, 11 March 2008. I granted leave to the applicant to file a notice of motion supported by affidavits of Blair Mark Beven and John Dominic Lee each sworn 12 March 2008. Those affidavits disclose that, notwithstanding the orders which I made yesterday, representatives of the first respondent collected the goods subject of order 1 at around 2 pm today. Customs apparently felt obliged in accordance with its own statutory obligations to release the goods but took steps to ensure that the person who came to collect them was aware of the orders made and both sighted and signed a copy of the order. Customs takes the view that it should not disclose the name of the person who collected goods, or provide any form of copy of the signed order without an order from the Court. I make no criticism of the conduct of any Customs officer based on the material which is before the Court. The applicant made a conscious and, I think, proper decision when it sought orders in the first instance not to seek orders directly against the Australian Customs Service. I emphasise that the material before the Court at this moment consists only of evidence from the applicant. The respondents have not yet provided any explanation of their own conduct, or had an opportunity to address submissions to the Court about it. However, in the circumstances, I am satisfied that further interlocutory relief is appropriate in a further attempt to preserve the status quo until the matter receives attention by the judge to whose docket this case has been assigned and the respondents have an opportunity to make submissions to that judge about the question of further interlocutory relief and other matters. In those circumstances I make orders in accordance with the short minutes of order provided to the Court today as amended by me during the proceedings in discussion with counsel. | goods seized and held by customs collected notwithstanding the existence of an interlocutory injunction further urgent interlocutory relief sought and granted intellectual property |
Under its former name GMCA Pty Ltd it was found to have infringed Black & Decker's standard and innovation patents: Black & Decker Inc v GMCA Pty Ltd (No 2) (2008) 76 IPR 99. I subsequently ordered that Black & Decker's costs be the subject of a gross sum order under O 62 r 4(2)(c) and (d) of the Federal Court Rules : Black & Decker Inc v GMCA Pty Ltd (No 4) [2008] FCA 1737. 2 For this exercise the Court appointed Ms Margaret Gourlay of the Law Institute of Victoria's Costing Service as a court expert under O 34. In a very limited time Ms Gourlay provided a comprehensive and detailed report for which the Court is grateful. 3 The respondent retained Mr Allan McGregor, a solicitor, who provided a report commenting on Ms Gourlay's report. Both gave evidence. As is often the practice in such matters, Deputy District Registrar Tim Luxton sat with me to provide the benefit of his practical experience in taxation of costs. 4 The relevant principles and details of previous cases where O 62 r 4(2)(c) gross sum assessments have been made are summarised by Sackville J in Seven Network News Limited v News Limited [2007] FCA 2059 at [25] - [34] . I incorporate that passage in these reasons. 5 Mr McGregor identified 10 items where he disagreed with Ms Gourlay's assessment. With one exception, it seemed to me that Ms Gourlay had taken quite a conservative approach and that her opinion should be accepted. The one exception was in relation to expert witness fees where the fees paid were very much in excess of the scale rate. I thought the sum suggested by Ms Gourlay should be reduced by $33,000. 6 The net result is that I assess the gross sum at $825,000. By way of a check, this sum is roughly half of the amount actually paid by Black & Decker, so that gives additional comfort that the gross sum assessed is not excessive. 7 Black & Decker elected to take an account of profits, which were duly assessed at $77,275.10: Black & Decker Inc v GMCA Pty Ltd (No 5) [2008] FCA 1738. Under O 62 r 36A where a party is awarded judgment for less than $100,000 for a money sum or damages any costs ordered to be paid will be "reduced by one-third of the amount otherwise allowable under this Order unless the Court or a Judge otherwise orders". A gross sum would be an amount "allowable" under O 62. 8 I am satisfied the Court should otherwise order. The case was a substantial one concerning patent and design infringement and validity. The trial ran for seven days. There was substantial expert evidence and no less than 45 pieces of prior art advanced at various times by the respondent. 9 Practically speaking, Black & Decker had no alternative to commencing this proceeding in the Federal Court or some other "prescribed court" --- i.e. the Supreme Court of a State or Territory; see Patents Act 1990 (Cth) s 120(1) and the definition of "prescribed court" in Sch 1. Such a proceeding could have been brought in "another court having jurisdiction to hear and determine the matter". However the Federal Magistrates Court is not such a court, nor is the County Court of Victoria, although it may have jurisdiction to determine patent infringement issues in the course of other proceedings: AR Jamieson Investments Pty Ltd v Robak Engineering & Construction Pty Ltd [1998] VSC 69 ; Bucknell D, Beattie K, Goatcher A, Rofe H, Australian Patent Law (LexisNexis Butterworths, 2004) at 186. 10 The respondent, which vigorously prosecuted a cross-claim for revocation of Black & Decker's patents and design, can hardly complain that the present proceeding was commenced in a "prescribed court", being the only court in which a revocation proceeding could be brought: Patents Act s 138 ; see LED Builders Pty Ltd v Hope [1994] FCA 1353 ; (1994) 53 FCR 10 at [17] ; Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 64 IPR 57 at [8]-[9]; Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228 ; (2005) 215 ALR 788 at [203] ; Axe Australasia Pty Ltd v Australume Pty Ltd (No 2) [2006] FCA 844 at [6] ; Tu v Pakway Australia Pty Ltd (2006) 227 ALR 287 at [32]. 11 The injunctive and non-monetary relief (declaratory, validity certificates and delivery up) granted in addition to the account of profits was significant. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | patent and design infringement claim cross-claim for revocation gross sum assessment deduction where expert witness fees in excess of scale rate whether court should otherwise order under federal court rules o 62 r 36a given judgment less than $100,000 costs |
I found that the applicant's claim was entirely without merit and fraudulent. I gave the applicant leave to file written submissions within seven days to show cause why costs should not be on an indemnity basis. 2 The applicant filed three submissions, each bearing the date 16 October, although they were in fact filed later. 3 Essentially the applicant's arguments against indemnity costs were based on his status as an unrepresented litigant who was not legally qualified. He made various complaints about the substantive merits of my decision and alleged procedural injustices, but I do not see that as relevant for present purposes. 4 Section 43(2) of the Federal Court of Australia Act 1976 (Cth) gives the Court a wide discretion to award costs in a proceeding. Traditionally costs only depart from the ordinary party-party basis where there is a particular or special circumstance: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, at 232-233 per Shepphard J and Ruddock v Vadarlis (No 2) [2001] FCA 1865 ; (2001) 115 FCR 229 at 234 per Black CJ and French J. An order for indemnity costs aims to compensate a party fully for costs incurred when the Court takes the view that it has been innocently and unreasonably subjected to the expenditure of costs: Hamod v New South Wales (2002) 188 ALR 659 at 665 (Gray J, with whom Carr and Goldberg JJ agreed). 5 In Colgate-Palmolive Shepphard J (at 232-235) summarised some of the special circumstances which have led to an award of indemnity costs, including the making of allegations of fraud knowing them to be false, making of irrelevant allegations of fraud, commencing proceedings in wilful disregard of known facts, the making of allegations which ought never to have been made and the undue prolongation of a case by groundless contentions. In these circumstances a party's behaviour in the conduct of the proceeding means it is so unreasonable as to be unjust that the innocent party is limited in its recovery to party and party costs: Sony Computer Entertainment Australia Pty Ltd v Dannoun (No 2) [2001] FCA 1350 at [4] . 6 The first and second respondents submitted that the indemnity costs were appropriate because the applicant's conduct went beyond unreasonable and was found to be fraudulent. They submitted that full compensation of costs as innocent respondents was appropriate where an action has been commenced or continued where "an applicant, properly advised, should have know that he had no chance of success... and must be presumed to have been commenced or continued for some ulterior motive": Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401. 7 In Spalla v St George Motor Finance Ltd [2006] FCA 1537 Kenny J at [26] recently noted that courts have from time to time overcome a reluctance to order indemnity costs against self-represented litigants: Bhagat v Global Custodians [2002] FCAFC 51 and Ogawa v The University of Melbourne (No 2) [2004] FCA 1275. Kenny J considered the competing interests in determining whether to make an award of indemnity costs against a self-represented litigant. A lack of knowledge of the law, unfamiliarity with court practice and a lack of objectivity are common traits of unrepresented litigants. A person's ability to get redress should not depend on lawyerly skills or an ability to pay for legal representation. However, the Court owes a duty to all parties to ensure that the trial is conducted in a fair and timely fashion (at [28]) and without significant difficulties and unnecessary expense for the parties against whom an unrepresented litigant proceeds. see Bhagat v Royal & Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at [13] per Hodgson CJ. In this instance the expense, delay and difficulties caused by the applicant's fraudulent and unreasonable behaviour overshadow any limitations that arose from his status as self-represented. 8 The applicant applied for a stay in respect of costs because he intended to appeal. I decline to order a stay. In my view an appeal would have no reasonable prospects of success. No good reason has been shown to deprive the respondents of the benefits of their costs order. 9 The applicant also sought a stay of my direction that the matter be referred to the Director of Public Prosecutions. However this referral has already occurred. 10 I order that the applicant pay the costs of the respondents, including reserved costs, on an indemnity basis. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey. | indemnity costs unrepresented litigant costs |
2 The Court may give judgment for an applicant in relation to the whole or any part of a "proceeding" if it is satisfied that the respondent (appellant) has no reasonable prospects of successfully prosecuting the proceeding or that part of the proceeding: s 31A(2) of the Federal Court of Australia Act 1976 (Cth) ('the Act'). 3 A single judge of the Federal Court of Australia has jurisdiction to give summary judgment: s 25(2B)(aa) of the Act. "Proceeding" includes an "appeal": s 4 of the Act. 4 Section 31A of the Act relaxes the test in relation to which a proceeding may be struck out or summarily dismissed from the test set out in General Steel Industries Inc v Commissioner for Railways (New South Wales) [1964] HCA 69 ; 1964 112 CLR 125. See also Jewiss v DCT [2006] FCA 1688 at 26 per Mansfield J and Lawrenson Light Metal Die Casting Pty Ltd (in liq) v Cosmick Pty Ltd [2006] FCA 753 at [15] per Heerey J. The former test as Heerey J said required that the allegations be quite clearly so untenable that they cannot possibly succeed. 5 A proceeding need not be hopeless or bound to fail for it to have no reasonable prospects of success. Section 31A of the Act has established a lower standard for summary judgments in this context than that imposed in other cases: Australian and International Pilots Association v Qantas Airways Ltd [2006] FCA 1441. However the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 at [45] . Thereafter orders were made by the Local Court in relation to various matters but including costs in favour of BGC and against the respondent on 9 June and 28 February 2003. Those costs were taxed and in total amounted to $18,422.69. 7 BGC caused a bankruptcy notice to be served pursuant to s 41(2) of the Bankruptcy Act 1966 and pursuant to Regulation 4.01 and 4.02A of the Bankruptcy Regulations 1996 (Cth) (" Bankruptcy Regulations "). The amount claimed was in respect of the judgment summary costs referred to but by reason of the fact that payments or credits had been allowed in the sum of $2,010.40 the amount the subject of the bankruptcy notice was $26,412.29. 8 The respondent, Mr Genovese, applied in the Federal Magistrates Court at Perth to set aside the bankruptcy notice. The application was heard on 29 September 2006 and was dismissed by Lucev FM on 29 January 2007. The respondent has appealed against this order for dismissal and it is in relation to that appeal that BGC seeks summary judgment. It follows, Mr Genovese contended, that a judgment or orders obtained from the Magistrates Court was not a judgment or orders of the 'Court' for the purposes of Regulation 1.03(1) under the Bankruptcy Regulations . 10 By the Courts Legislation Amendment and Repeal Act 2004 (WA) (the Courts Repeal Act), the Local Courts Act 1904 (WA) (the Local Courts Act ) was repealed. The Courts Repeal Act was one of a triumvirate of interrelated Acts. The others were the Magistrates Court Act 2004 (WA) and the Magistrate Court (Civil Proceedings) Act 2004 (WA). Each came into operation on 12 May 2005. The Local Court was replaced by the Magistrates Court established under the Magistrates Court Act 2004 (WA) s 4(1). The Magistrates Court (Civil Proceedings) Act 2004 (WA) gives the Magistrates Court the former civil jurisdiction of the Local Court. The date of the commencement of the Magistrates Court and its civil jurisdiction and the abolition of the Local Court and the repeal of its civil jurisdiction was the transition date to which I have referred. 11 The orders referred to above, and made prior to the transition date, were not extracted until 3 January 2006, being a date after the transition date. Each was sealed with the seal of the Magistrates Court under the signature of a person purporting to be a Registrar of the Magistrates Court. 12 Mr Genovese submitted that the Magistrates Court had no jurisdiction to issue any judgments or orders "for and on behalf of" the former Local Court and this because of the terms of s 7 of the Courts Repeal Act. 14 Mr Genovese's submission was that as judgment had been given by the Local Court in 2003 there was no case "pending" before the Magistrates Court and accordingly no case "to be heard and determined ...". It was said that the determination was "the determination of the action or matter (as defined in the Local Courts Act ) and that this means "judicially determined" and that it was not appropriate for the matter to be referred to the Magistrates Court to be "heard and determined" again. It followed, so said the applicant, that the orders were not orders of the Magistrates Court and could not be treated as such because they were in fact orders of the Local Court. BGC was required, so it was submitted, to extract the orders as orders of the Local Court prior to the transition date. Otherwise it was said that any orders were not orders of "the Court" (as defined in Reg 1.03(1) of the Bankruptcy Regulations ) for the purposes of Reg 4.01(1)(b) of the Bankruptcy Regulations . His Honour concluded that it was. 19 His Honour then considered the meaning to be given to s 7(b) of the Courts Repeal Act. It did not matter he said, that the extraction of the written order was not sought before the transition date, because what mattered was that it could have been. It followed that the action was taken to then be a case pending before the Magistrates Court. Lucev FM observed that his primary reasoning was premised on s 37 of the Interpretation Act not being applicable. The learned Federal Magistrate erred in law in not dealing with the Appellant's Res Judicata argument. 2. The learned Federal Magistrate erred in law ( see paragraph 11 ) because he failed to observe that as a matter of factual correctness the person purporting to be a Registrar of the Magistrates Court had before placing the seal on each of the documents deleted the words By the Court ; that is the Magistrates Court The Appellant contends logically it follows that they are not orders of the Court. The learned Federal Magistrate erred in law by misinterpreting section 7 of the Courts Legislation Amendment and Repeal Act 2004. 5 The learned Federal Magistrate erred in law and in fact because (see paragraph 52 and 53) a proper interpretation of the legislation, section 7 of the Courts Legislation Amendment and Repeal Act 2004 does not contain or make any reference to sub paragraph (d). 6. The learned Federal Magistrate erred in law by misinterpreting the transitional provisions of the Courts Legislation Amendment and repeal Act 2004. The Learned Federal Magistrate erred in law in relation to the construction point (see paragraph 58 ) because he followed the same reasoning as with the jurisdiction point, which the Appellant has already addressed at paragraph 5 herein. The learned Federal Magistrate erred in law and fact and was in inconsistent in reasoning that the Appellant's submissions on Proposch not be allowed into evidence. (see paragraph 59 (b)). Consequently, no other ground was relied upon at the final hearing and there was no other issue for the Federal Magistrate to determine: Genovese v BGC Construction Pty Ltd [2007] FMCA 71 at [60-61] . 27 Before me Mr Genovese, in effect, conceded this. However, he submitted that, after the final hearing, BGC had sought leave of the Court to file further submissions in relation to the case of Proposch v Anne French Investments Pty Ltd [2006] WADC 47. In so doing, it was submitted by Mr Genovese that other related issues were necessarily, thereby, introduced including the ground of res judicata and his Honour below could have and should have dealt with this argument. 28 However it is plain that the res judicata argument and other arguments were at the voluntary election of the appellant's counsel not pressed before his Honour and that the leave granted to file further submissions was confined in the way I have outlined. His Honour expressly so stated and declined to consider this argument at [64]-[66]. 29 In my opinion, it was open to his Honour to do so and it is now too late for Mr Genovese to reverse the position taken by him before his Honour. I am satisfied that, accordingly, he has no reasonable prospects of successfully prosecuting this ground of appeal. Leave would be required to raise it in the appeal. By it the applicant contends that the several orders extracted on 3 January 2006 are not "orders of the Court". This is said to be so because it is apparent that each of the extracted orders contain the words "by the Court" which have been scored through and the word 'Deputy' in front of the word 'Registrar' has likewise been scored through. Accordingly the signature is of a person who purports to be the Registrar of the Magistrates Court of Western Australia. 31 This is to misconceive what the position is. The seal on each order purports to be the imprint of the Magistrates Court of Western Australia. Unless the contrary is proved it is presumed that the imprint is the imprint of that Court's seal and that the document was duly sealed as it purports to have been sealed: Evidence Act 1995 (Cth), s 151(f). The Magistrates Court of Western Australia was established by a law of the State of Western Australia. I am of the view that this ground, assuming leave to raise it were given, has no reasonable prospects of being successfully prosecuted. It is submitted that his Honour was there in error by reason of the provisions of Order 23 rule 4(1) of the Local Court Rules 1961 . As the applicant submits and as I accept, the effect of rule 4(1) is not to prohibit the extraction of interlocutory orders. Rather it provides that interlocutory orders need not be drawn up or served unless otherwise ordered. That is an entirely different proposition. Furthermore, the orders for costs and the order for payment of the judgment sum of $10,000 are not interlocutory orders. Again, this ground is wholly misconceived. I am satisfied that it has no reasonable prospects of being successfully prosecuted. There was no action or matter which was pending at the transition date because it had been finally determined by that date. 34 It follows, so the appellant's argument runs, that the judgment and orders were orders of the Local Court, not a judgment and orders of the Magistrates Court and therefore the extracted judgment and orders attached to the bankruptcy petition were not capable of being relied upon in the bankruptcy proceeding against the appellant. 35 Accordingly the judgment and orders of the Magistrates Court were not a judgment or orders of the 'Court' for the purposes of Regulation 1.03(1) of the Bankruptcy Regulations . 36 I have deduced the above to be the effect of these grounds of appeal because that was the way in which these matters were argued before me by Mr Genovese and they simply reflect the arguments put in the Court below and to which I have referred above [9]. 37 I am in agreement with the Federal Magistrate below and substantially for the primary reasons set out by him that the action in the Local Court was still 'pending', immediately prior to the commencement of the Courts Repeal Act and was therefore, at that time, to be taken to be a case pending before the Magistrates Court. 38 I would however add the following in respect to the proper construction of s 7 of the Courts Repeal Act. It may stay proceedings of the judgment, either wholly or partially, and the cause is still pending, therefore, for this purpose, as it appears to me, and must be considered as pending, although there may have been final judgment given in the action, provided that judgment has not been satisfied". 42 In Cavanagh v Bank of New Zealand (1990) 22 FCR 124, von Doussa J was there concerned with the particular provisions of ss 37 and 43 (2) of the Bankruptcy Act 1966 (Cth). However his Honour set out certain observations which are helpful to the disposition of the matter before me. The judgment or order has not yet passed from the control of the judge who made it, and it is open to reconsideration and review by that judge: Re Harrison's share under a settlement; Harrison v Harrison [1955] 1 Ch 260; Addison v City Mutual Life Assurance Society Ltd [1933] HCA 22 ; (1933) 49 CLR 106 at 110-111; Re Edgar; Ex parte Davidson v Michael Hunt's Health Club Pty Ltd (1973) 2 ALR 649 at 656-657; Permanent Trustee Co (Canberra) Ltd v Stocks and Holdings (Canberra) Pty Ltd (1976) 28 FLR 195 at 198 and Pittalis v Sherefettin [1986] QB 868 (p 126). We think that an order pronounced by the judge can always be withdrawn, or altered, or modified by him until it is drawn up, passed and entered. In the meantime it is provisionally effective, and can be treated as a subsisting order in cases where the justice of the case requires it, and the right of withdrawal would not be thereby prevented or prejudiced. ... But an order which could only be treated as operative at the expense of making it, in effect, irrevocable, for example an order for the payment of money, cannot be treated as operative until it has been passed and entered ...". 45 In my opinion, the power resident in the Local Court to reconsider and review the judgment and orders made, they being inchoate and incomplete, further supports the conclusion that immediately prior to the transition date the respondent's action or matter against the appellant in the Local Court was within the meaning of s 7 of the Courts Repeal Act, a "pending" action or matter and in certain respects therefore one which was still available to be heard and determined within the meaning of s 7(b). 46 Accordingly, in my opinion, this ground has no reasonable prospect of being successfully prosecuted by the appellant. His Honour was there determining the proper construction of the phrase "hearing and determination". Subparagraph (d) was simply an expression of facts or circumstances which in the view of his Honour were encompassed within that phrase. 48 In my opinion, this ground has no reasonable prospect of being successfully prosecuted by the appellant. That election was made following an adjournment specifically granted for the purpose of considering whether the Applicant would make that election. It stands in contrast to the position earlier in the hearing when Counsel indicated that the point was probably just a preliminary one. Why this was done is unclear given the orders made. [63] It is against that observation with which this ground is concerned. However, that observation, and therefore this ground which relates to it is besides the point. The point is that his Honour refused to admit the affidavit into evidence in its entirety for the reasons stated, and, in my opinion, correctly so. 53 Accordingly, in my opinion, this ground has no reasonable prospect of being successfully prosecuted by the appellant. The applicant's order for summary judgment should be granted. The respondent's notice of appeal dated 16 February 2007 will be dismissed. I will hear the parties on the question of costs. | order sought for summary judgment in relation to appellant's notice of appeal whether appellant has a reasonable prospect of success in the appeal summary judgment granted appeal dismissed. bankruptcy |
2 Limited (Challenger) are each registered life insurance companies pursuant to the Life Insurance Act 1995 (Cth) (the Act). By a Deed dated 28 February 2007 between Metlife, on the one hand, and Challenger and two other companies related to it, on the other, Metlife is to transfer certain of its life insurance business to Challenger by way of a scheme under Pt 9 of the Act. Life insurance companies are closely regulated under the Act. It is unnecessary to set out all of the details of that regulation. The Australian Prudential Regulatory Authority (APRA) has considerable powers connected with its administration of most of the Act and the Australian Securities and Investments Commission has general administration of certain of the provisions. For the purposes of this application, Pt 4 , dealing with the statutory funds of life companies, is to be noted. Broadly speaking, all life insurance policies are referable to a particular statutory fund, the assets of which back liability under the policies. The one life insurer may have more than one statutory fund. There is a complex web of regulation concerning the administration of those funds in Pt 4 of the Act and Pt 5 deals with solvency and capital adequacy of those funds. The purpose is to quarantine each statutory fund from the general liabilities of the company and from the liabilities of other statutory funds. 2 In the present case, Metlife operates three statutory funds, with all of its investment and annuity policies issued from Funds No. 2 and No. 3. Challenger operates three statutory funds, of which No. 2 relates to immediate annuity business and is open to new business. Under the scheme, it is proposed to transfer all of the policies of Metlife referable to Metlife's No. 2 and No. 3 Funds (as at the transfer date) to Challenger's No. 2 Fund. 3 In broad terms, the Metlife policies to be transferred had annuity liabilities in the order of $1.9 billion as at 31 March 2007. Challenger's No. 2 Fund as at 31 March 2007 had existing annuity liabilities in the order of $2.1 billion. All liabilities to pay benefits in respect of the Metlife policies will be transferred to, and become liabilities of, Challenger's No. 2 Fund. Assets referable to Metlife's No. 2 and No. 3 Funds with a value assessed as equal to the Metlife policy liabilities will be transferred to, and become part of, Challenger's No. 2 Fund. All costs of the scheme are being met out of shareholders' funds of the applicants and not the affected statutory funds. 4 The principal proceeding is for confirmation of the scheme pursuant to s 190 of the Act. The present interlocutory applications are for dispensation pursuant to s 191(5) of the Act from the need to comply with certain of the notification requirements of s 191(2) of the Act. Each application proceeds upon the footing that every owner of a policy referable to Metlife Funds No. 2 and No. 3 and Challenger Fund No. 2 is "affected" within the meaning of s 191(2)(c). A narrower view is possible. It could be contended that only those holders of Metlife policies which are actually transferred are "affected" and that the mere fact that a policy is referable to a statutory fund, which either has funds out of which or into which other policy liabilities are transferred, cannot be so categorised. A distinction might be drawn between being legally affected and commercially affected. For the purposes of dealing with this application, it is appropriate to take the wider view upon which the parties are proceeding. 6 It follows that the parties are proceeding upon the basis that holders of policies referable to other statutory funds of the applicants are not "affected". In my opinion, that is a safe assumption for present purposes. Counsel for both applicants have made submissions in support of that view which appear persuasive to me in the absence of contrary argument. The regulatory structure established by the Act is designed to relate a policy to a statutory fund and there is a regime to ensure that the assets attributable to the statutory fund are adequate to meet the liabilities of the fund and that a statutory fund is quarantined from other liabilities. Section 191(2) can be taken to have been framed with that in mind. The actuarial evidence in this case supports this analysis. 7 Dispensation is sought in relation to notification of two categories of policy holders. The first is in relation to a policy holder where the insurer has no record of a current mailing address as at 15 June 2007 or where the policy holder ceases after that date to maintain the mailing address noted in the records as at that date. I am satisfied from the evidence that appropriate steps have been taken to maintain a current mailing address for policy holders and that appropriate steps will continue to be taken to endeavour to ascertain addresses for those not presently known. I am also satisfied that the general notification regime which is proposed might well draw the attention of such a policy holder to the proposed scheme. I am satisfied the dispensation sought is appropriate and accords with prior practice. 8 The second category is those persons who become owners of policies issued by the insurers referable to the relevant statutory funds less than 15 days prior to the hearing of the application and up to the transfer date as defined in the draft scheme. If that dispensation is not granted, then the applicants would, in practical terms, have to cease taking relevant new business until the scheme is approved. I am satisfied that the alternative notification regime that has been proposed and the extension of the cooling off period that is proposed will meet, in a practical way, the purpose of s 191(2)(c) of the Act. Again, this dispensation is in accordance with other cases. 9 I take into account the lack of objection by the relevant regulator, APRA, to the dispensations sought. 10 The relief sought will be granted to each applicant. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | scheme for transfer of business limited dispensation from notification "affected" life insurance words and phrases |
2 The respondent is a citizen of the People's Republic of China and claims to have a well-founded fear of persecution by Chinese authorities if he is returned there. His fear is as a result of his practice of Falun Gong. The Tribunal accepted that since 1999 the Chinese government has cracked down on the activities of Falun Gong adherents. However, the Tribunal had reservations about the strength of the respondent's convictions with respect to his practice of Falun Gong and found that he would not face a real chance of persecution on account of this practice. The Tribunal found that he was not a witness of truth. 3 One of the reasons for the Tribunal disbelieving the respondent, and the reason giving rise to the question in this appeal, was his failure to mention in an earlier visa application his practice of Falun Gong. The respondent argued, and the Federal Magistrate accepted, that this was an irrelevant factor and in taking it into account, the Tribunal committed a jurisdictional error. For this reason, his Honour allowed the appeal. 4 The respondent last arrived in Australia in 1997 on a temporary business visa. Whilst in the country, he applied for a 'Subclass 850 --- Resolution of Status (Temporary)' visa some time in 1997 or 1998. This application was refused. At the end of 2000, and with the assistance of a migration agent, he then asked the then Minister to exercise his discretion under s 351 of the Migration Act 1958 ('Act'), which empowers the Minister to substitute for the Migration Review Tribunal's decision one more favourable to the applicant. 5 In that request, the respondent did not make any reference to his Falun Gong activities. This was despite the fact that he claimed to have practised Falun Gong virtually every day since 1996. The respondent's response was that he didn't consider his practice of Falun Gong to be relevant to his s 351 request and he had not told his migration agent about his beliefs. The practice of Falun Gong was exactly the kind of matter that would be understood to possibly encourage the Minister to exercise his discretion to allow an applicant to remain in Australia. I am therefore satisfied the reason the applicant did not mention his practice of Falun Gong at that time (ie in late 2000), was because he was at best, nothing more than a mere occasional participant in Falun Gong activities at that time. Thus I am not satisfied the applicant was a sincere Falun Gong practitioner in late 2000, as he has sought to claim; at least to the extent that his practice may have warranted refugee protection. I believe the applicant has fabricated this part of his case in order to enhance his claim to invoke protection obligations in Australia. Further, this is the first reason which has ultimately satisfied me the present applicant is not a witness of truth. The respondent then applied for a protection visa on 8 June 2004. In his visa application, he claimed to face a real chance of persecution by Chinese authorities if he were to return to China because of his Falun Gong activities. On 17 February 2005 a delegate of the Minister refused to grant the protection visa. Section 349, referred to in s 351(1), empowers that Tribunal to affirm the decision under review, vary the decision or set it aside and substitute a new decision. 8 Section 417 of the Act is in substantially the same form as s 351. Section 417(1) employs the same verbiage as s 351(1) save that the decision amenable for substitution is one made under s 415. Section 415 is in essentially the same form as s 349 except that it concerns the Refugee Review Tribunal not the Migration Review Tribunal. Section 417(2) is in the same terms as s 351(2), save that it relates only to exercises of power under sub-s (1) after 1 September 1994. Section 417(3) is in the same terms as s 351(3). Section 417(4) is in the same terms as s 351(4) save that the word 'must' replaces the words 'it to'. Section 417(7) is in the same terms as s 351(7). 10 The Federal Magistrate noted that s 351 is in almost identical terms to s 417 of the Act. Section 417 provides for the Minister to substitute a more favourable decision than the Tribunal in protection visa cases. Section 351 applies to decisions of the Migration Review Tribunal which does not review protection visa decisions. The first, which occupied the majority of the hearing, was concerned with the matters that may be relevant to the Minister's exercise of her discretion under s 351. The Minister submitted that the discretion cannot be limited to consideration of matters that might be determined by the Migration Review Tribunal and must include matters that would go to an application for refugee status. The second argument was made after a suggestion from the bench that it might be relevant for the Tribunal to consider not what the Minister was entitled to consider under s 351, but what it might be expected an applicant would submit. This argument was to the effect that even if it was not relevant for the Minister to consider the respondent's Falun Gong practice under s 351, he would still be expected to draw that practice to his migration agent's or to the Minister's attention. 13 The Minister submitted that the Federal Magistrate's construction of s 351 would lead to a serious practical difficulty and therefore cannot have been intended by the legislature. His Honour's construction would require the Minister, when exercising her discretion under s 351, to exclude from her consideration of the public interest any matter that might be relevant to a refugee claim. The converse would also be true, namely that in exercising the similar discretion under s 417, the Minister could not take into account any matter relevant to the application for any visa other than a protection visa. The Minister also drew the Court's attention to a number of other provisions under the Act that confer a discretion to substitute a decision more favourable to an applicant. Presumably the Federal Magistrate's construction of s 351 and its attendant difficulties would apply equally to these sections. 14 The Minister submitted that the reason for the existence of multiple 'public interest' discretionary provisions, such as s 351, is that there are a number of different decisions for which the Minister may substitute her own, more favourable to an applicant. The scheme of the Act is such that for each decision that may be made by a tribunal, there is a concomitant discretion on the Minister's part to substitute a more favourable decision. This should not, according to the Minister, be construed as requiring each discretionary provision to be applied discretely. 15 The Minister's relied on a series of decisions that have noted the broad discretion under ss 351 and 417: NATB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 292 ; (2003) 133 FCR 506; M38/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 131 ; (2003) 199 ALR 290; SAAK v Minister for Immigration and Multicultural and Indigenous Affairs (No 4) [2004] FCA 104 and Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Applicants S134/2002 [2003] HCA 1 ; (2003) 211 CLR 441. These decisions were apparently not drawn to the Magistrate's attention. This is a general humanitarian power. The power would be available to the Minister where, for example, a person had a well-founded fear of loss of life or liberty, or of torture or other mistreatment, but for a reason which is not a Convention reason. Section 351 of the Act gives the Minister the same power in relation to decisions of the Migration Review Tribunal under Pt 5 of the Act. See also Minister for Immigration and Multicultural and Indigenous Affairs v VFAY [2003] FCAFC 191 at [6] --- the discretion may be exercised on "compassionate or humanitarian grounds". 18 In SAAK v Minister for Immigration and Multicultural and Indigenous Affairs (No 4) one question was whether for the purposes of s 198(6) of the Act the exercise of the discretionary power in s 417(1) is a review of an application for a substantive visa. Mansfield J held it was not. The power to substitute a more favourable decision is not one which readily fits into the concept of a review. The power may be exercised independently of the Tribunal's decision, and irrespective of the reasons for the Tribunal's decision. The respondent may exercise the power even where the Tribunal had no power to have made the more favourable decision, for example where the application to the Tribunal for review was made outside the period specified in s 412(1) of the Act. That follows from the terms of s 417(2). Subdivision AC contains the central provision in s 65 obliging refusal to grant a visa if the Minister be not satisfied that the criteria prescribed by the Act or the Regulations for the relevant visa have been satisfied. Further, s 417(3) stipulates that the power under the section may only be exercised by the Minister personally. The identification of the Minister as the sole repository of the power indicates the legislative intention that the question of the substitution of a more favourable decision to disappointed applicants is to be answered by the taking of a broad approach. They are factors which might warrant reconsideration upon grounds divorced from the issues that have arisen for resolution on the appeal, being factors to which reference has already been made in the course of the reasons for judgment". As his Honour said, these were factors that were extraneous to the refugee related matters with which the relevant Tribunals' decisions were concerned. As appears from [7] and [8], s 351 is in essentially the same form as s 417. The purpose and object of the two sections must be the same: to enable compassionate and humanitarian relief to be granted. In each case a broad approach is to be applied. The public interest referred to in each section is itself a broad concept, and there is no reason to confine the exercise of the power to ameliorate an applicant's position consequent on the denial of a visa by reference to matters relevant only to the granting or refusal of that visa. 325/2002 is an example of matters proper for the Minister to take into account under s 417 that were not relevant to the grant or refusal of a protection visa. The same approach should be available under s 351. 22 The Magistrate's decision, if correct, would apply to s 417, and would confine the Minister acting under that section to what might be called refugee related matters relevant to visa applicants within the jurisdiction of the Refugee Review Tribunal. As NATB and 325/2002 show, that is not the case. 23 The Magistrate did not refer to any of the authorities set out above. The basis of his Honour's decision lies in the existence of two sets of provisions: those in Part 5 of Division 3 (where s 351 appears) dealing with the review of decisions of the Migration Review Tribunal and those in Division 2 of Part 7 (where s 417 appears) dealing with review of protection visa decisions. From this the Magistrate discerned an intention that the factors to be taken into account in the exercise of the discretion under s 351 "are factors which would normally be raised in relation to an application to the Migration Review Tribunal". By providing two separate sections within two separate parts dealing with different visa applications, it is my view, that it is an error for a Tribunal to take into account omissions of an Applicant made when making application under that part of the Act which clearly does not relate to protection visas. 26 In my view the Magistrate drew too much from the existence of the two sets of provisions. The authorities on s 417 to which I have referred would have provided better guidance, especially given that the Full Court in NATB described s 351 as conferring "the same power" on the Minister in relation to decisions of the Migration Review Tribunal as that conferred on her by s 417 in relation to decisions of the Refugee Review Tribunal, namely a general humanitarian power. 27 In my view the Tribunal did not take into account an irrelevant consideration when it relied on the respondent's failure to mention his Falun Gong practices in his request under s 351 by reason of the fact that it was not a matter that could be taken into account by the Minister. 28 In what I have said thus far I have addressed the issue upon which the parties distinctly crossed swords: whether it was relevant to the Minister's consideration of the respondent's request under s 351 that he feared that if he were to return to China he would be harmed by reason of his practice of Falun Gong. In my view it was. 29 Despite the parties' preference for debating that issue, in my view the Minister's alternative submission is determinative of the appeal. It looks not to what it would be relevant for the Minister to take into account, but rather involves a common sense enquiry as to whether someone in the position of the respondent, fearing persecution on return to China consequent upon the failure of his visa application, would be expected to include this fear and the reasons for it in his s 351 request. The respondent was possessed of a great deal of information about Falun Gong which he put before the Tribunal. He had practised Falun Gong nearly every day since 1996. The Tribunal found that he must have known that the authorities commenced the suppression of Falun Gong in mid 1999. In those circumstances, one would expect him to have deployed all available arguments, humanitarian, compassionate or otherwise, to remain in Australia. His failure to do so was capable of being seen by the Tribunal as indicative that he was inventing or exaggerating his Falun Gong activities. 30 Where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject-matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard. See Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 40. Accordingly, a consideration will be irrelevant only if the applicable statute expressly or impliedly prohibits a tribunal from taking it into account: Telstra Corporation Ltd v Seven Cable Television Pty Ltd [2000] FCA 1160 ; (2000) 102 FCR 517 at [137] . 31 The matters relied on by the Magistrate at [23] to [25] did not justify the conclusion that the Tribunal was expressly or impliedly prohibited from taking into account the respondent's failure to mention in his s 351 request his fear of harm by reason of his Falun Gong practice. On the approach I favour, the respondent's failure to mention his Falun Gong practice was a matter the Tribunal was entitled to take into account and view with suspicion. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. | application for protection visa irrelevant considerations migration act 1958 s 351 whether refugee review tribunal erred by taking into account applicant's failure to raise fear of persecution in s 351 application migration |
The details of the proceeding in which the application is made are summarised in the judgment of Gordon J in Haslam v Money for Living (Aust) Pty Ltd (Administrators Appointed) [2007] FCA 897 at [2] - [4] . The settlement has been reached between certain of the applicants, acting on behalf of all group members, and the first and second respondents. It will be convenient to refer to it as "the MFL settlement". The terms of the settlement were contained in a deed dated 13 November 2007. The deed was a confidential exhibit in the proceeding. 4 The applicant's solicitors complied with order number three which I made on 30 November 2007. On 3 December 2007 the applicant's solicitors sent to each group member a notice of proposed settlement in the form approved by the Court on 30 November 2007 and an opt-out notice in a form approved by the Court. The group members were each advised of his or her right to object to the approval of the MFL settlement by notice filed in the Court. 5 No opt-out notices and no notices of objection to the settlement have been filed by any group member. 6 Counsel for the applicants submitted that the MFL settlement was fair, reasonable and adequate, in the interests of the group members as a whole and should, therefore, be approved. This submission was supported by counsel appearing for the first and second respondents. 7 The principles which guide the exercise of the Court's power under s 33V and the considerations which are, or may be, relevant in the exercise of the power have been identified in a series of cases. Those authorities have, conveniently, been collected by Gordon J in Haslam at [17]-[20]. I have had regard to those principles and considerations which arise in the present application in dealing with it. 8 The application is supported by an affidavit of Mr Leonard Adrian Warren, a principal of Russell Kennedy, the solicitors for the applicant. A broad outline of the settlement was explained to them and all of them were in favour of the settlement. • He had explained to each of the group members the strength and weaknesses of their legal position on various legal issues and had concluded "that the proposed settlement is fair and reasonable, having regard, in particular, to the possibility that a worse result may have been achieved at trial. It is sufficient for present purposes to note that it provides for measures by which title to their properties will be restored to group members. 10 It is clear from the material exhibited to Mr Warren's affidavit that the applicants' legal advisers have dealt with the considerations that were identified in the authorities, which bear on the exercise of the Court's discretion under s 33V of the Act . Having examined that material I am satisfied that the MFL settlement was fair, reasonable and adequate, in the interests of the group members as a whole and that it should be approved. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. | settlement of part of a representative proceeding relevant considerations in determining exercise of court's power under s 33v of federal court of australia act 1976 (cth) settlement fair reasonable and adequate and in the interests of the group members as a whole court approved settlement conveyancing |
2 The first application QUD324/2005 was filed in the Federal Magistrates Court on 16 June 2005. The application relates to an incident at the Cairns Base Hospital on 16 November 2004 during which the applicant was refused services at the hospital whilst accompanied by his dog, Knuckles. The applicant claims that Knuckles is an animal trained to assist the applicant to alleviate the effect of his psychiatric disability within the meaning of Disability Discrimination Act 1992 (Cth) ("DD Act") and, in refusing the provision of services to him whilst accompanied by the dog, the respondent acted in breach of the DD Act . 3 The matter was transferred to the Federal Court by order of Coker FM of 31 August 2005. The application relates to incidents at the Smithfield Community Health Centre in late 2004 and early 2005 in which the applicant was refused access to the respondent's premises and refused services, whilst he was accompanied by his dog Knuckles and on one occasion his dog Buddy. The applicant claims that the animals in question are trained to assist the applicant to alleviate the effect of his psychiatric disability within the meaning of the DD Act and, in refusing access to its premises and the provision of services to him whilst accompanied by the dogs, the respondent acted in breach of the DD Act . 6 This matter was transferred to the Federal Court by order of Coker FM of 28 November 2005. 9 At a directions hearing before me on 7 September 2006 I ruled on objections to evidence in these proceedings. At that time, I provisionally admitted paras 13-17 and 28 of the affidavit of John Grist (sworn 10 February 2006) and the entire affidavit of Wade Grosser (sworn 9 February 2006), pending hearing the evidence of Dr Jillian Newland at the trial (TS 7 September 2006 p 17 ll 21-33 and p 19 ll 18-31). In my view, having heard the evidence of Dr Newland, the evidence of Mr Grist and Mr Grosser as found in their affidavits is relevant, and I admit that material on which I had provisionally ruled to evidence in this matter. 10 The matters were heard by this Court during the same sitting in Cairns in September 2006. Counsel for the applicant, the respondent and the Commissioner have each provided a set of written submissions which relate to both matters. There is a significant overlap in the issues relevant to both matters. Buddy is a border collie/kelpie cross-breed. Buddy was approximately eight years old at the time of the incidents giving rise to these claims. The applicant has some history of psychiatric illness. In about 1997 or 1998, when the applicant was suffering a bout of depression, he claimed that Buddy learned to be very sensitive to his mood variations and extra responsive to his instructions. Further, the applicant stated both in oral and affidavit evidence that from 1999 he began to rely on Buddy to accompany him when he went places and that he was unable to go out unless he was accompanied by Buddy. The applicant deposed that he became "reliant on [Buddy] to help me to cope rather than being merely a companion" and that since 1999 he had relied upon Buddy to assist him with his psychological difficulties (affidavit of Che Forest 27 January 2006 para 26 and para 27). The applicant deposed that he trained Buddy to perform a number of tasks specifically to assist him with the effect of his disability (affidavit of Che Forest 27 January 2006 para 28). 12 Knuckles is a boxer dog, which was being trained by the applicant during the relevant period to replace Buddy as Buddy was "nearing retirement". At the relevant times in this claim Knuckles was approximately 6 months to 1 year old. The applicant deposed that Knuckles was trained to complete learned tasks roughly the same as those completed by Buddy (affidavit of Che Forest 27 January 2006 para 63). 13 In December 2003 the applicant established an organisation known as Partners AWARE which was subsequently incorporated as Partners AWARE Australia Inc under the Associations Incorporation Act 1981 (Qld) on 24 June 2004. The association has programs involving the use of assistance dogs for people with mental illness. 16 It appears that the applicant attended the Cairns Base Hospital on 16 November 2004 to collect a document that he had previously requested. The applicant deposed that after entering the main entrance of the hospital, accompanied by Knuckles, he went to the social work department and sat in the hall in front of the office awaiting attention. While waiting he was approached by security (Mr Taylor). The applicant deposed that he was asked to leave the hospital with his dog, as dogs were not permitted on hospital premises (affidavit of Che Forest of 27 February 2006 at paras 10 and 11). The applicant claims that he explained that his dog was an assistance animal and that the security guard could radio his superior because the hospital was aware of the applicant's status. It appears that shortly thereafter Mr Gibson arrived, and then the Director of Social Work appeared and advised the applicant that hospital administration had issued a notice that the applicant was not to be allowed into the hospital with his dog. There is some dispute in the evidence as to then what exactly took place, but it appears that there was a somewhat heated exchange between the applicant and security as the applicant was escorted from the premises with his dog. The applicant says that he then returned to the hospital after putting his dog in his vehicle in order to make a complaint. 17 The applicant lodged a complaint about the Cairns Base Hospital with the Human Rights and Equal Opportunity Commission ("HREOC"). By letter dated 17 May 2005 HREOC terminated the complaint on the basis that the delegate of the President was satisfied that there was no reasonable prospect of the matter being resolved by conciliation. The applicant stated that this was despite informing the manager that the DD Act states that access is permitted, and showing his AWARE identity card that identified him and Knuckles. The applicant left the centre without receiving dental treatment, advising the centre that he was not prepared to be separated from his dog. 19 On 7 February 2005 the applicant attended the centre for treatment and left his dog Buddy in his vehicle within sight. The applicant said that Buddy was taken on that occasion rather than Knuckles, due to Buddy being allowed into the centre in the past. On that occasion the applicant advised the centre that next time he attended he wished to be able to bring his dog inside. He provided the centre with information about himself and the dog and AWARE. The applicant then attended the centre again on 24 and 28 February 2005 and 3 March 2005 and was advised that he could not receive treatment whilst accompanied by the dog. The applicant noted that on each of these last three occasions a security guard was present at the centre. 20 The applicant made a complaint about the Smithfield Community Health Centre to HREOC. By letter dated 29 September 2005 HREOC terminated the complaint on the basis that the delegate of the President was satisfied that there was no reasonable prospect of the matter being resolved by conciliation. In the absence of information, the respondent cannot recognise that dogs allegedly trained by the organisation founded by the applicant, Partners AWARE are assistance dogs. It is in similar terms to the defence filed in respect of QUD324/2005. The interaction of s 6 and s 9 DD Act . 2. The nature of the applicant's disability. 3. Did the respondent discriminate against the applicant within the meaning of s 6 DD Act ? b. can a substantially higher proportion of persons without the applicant's disability comply or are they able to comply with the requirement or condition? c. was the requirement or condition reasonable having regard to the circumstances of the case? d. did or could the applicant comply with the requirement or condition? Did the respondent discriminate against the applicant within the meaning of s 9 DD Act ? b. did the dogs assist in alleviating the effect of the applicant's disability? c. did the respondent treat the applicant less favourably because he was accompanied by an assistance animal? Did the respondent act unlawfully within the meaning of s 23 or s 24 DD Act , and if it did can the respondent rely on the defence of unjustifiable hardship? This is consistent with the decision of Stone J in Grovenor v Eldridge [2000] FCA 1574 where her Honour considered the issue of discrimination against a person with a guide dog in the context of s 9 alone. I also note the decision of McInnis FM in Haar v Maldon Nominees Pty Ltd (2001) 184 ALR 83 where his Honour adopted the same approach. Sections 7 , 8 and 9 are so grouped in the Explanatory Memorandum to the Disability Discrimination Bill 1992 (Cth). It is difficult to discern the intention of Parliament from this structure, in view of the fact that it would be expected that discrimination against a person with a disability could generally be considered as either "direct" or "indirect" depending on the circumstances of the case. However, it is possible that ss 7 , 8 and 9 were enacted to ensure that a person who had been the subject of discrimination on the grounds articulated in those sections would have a specific claim of discrimination rather than needing to prove either s 5 or s 6 discrimination. In any event, the ordinary reading of ss 5 , 6 , 7 , 8 , and 9 is that it may be possible for a person to have been the subject of discrimination under two or more of these sections. 29 Prior to closing submissions, Mr O'Gorman for the applicant stated he no longer pressed the applicant's direct discrimination claim under s 5 DD Act (TS p 285 ll 29-31). I note that it has been held in numerous cases that findings of direct and indirect discrimination are mutually exclusive ( Australian Medical Council v Wilson (1996) 68 FCR 46, Waters v Public Transport Corporation [1991] HCA 49 ; (1991) 173 CLR 349), and that the applicant in this case chose to pursue an indirect discrimination claim under s 6 DD Act , as well as a separate claim pursuant to s 9. 30 While I accept this approach, and propose to consider the applicant's claims of discrimination separately under s 6 and s 9 DD Act , in my view interpreting the sections as operating independently does not mean that they are to be interpreted in isolation, either from each other or the balance of the DD Act . The respondent conceded in submissions, both written and oral, that the applicant did suffer a disability, however there was some conflict in the medical evidence as to the exact nature of the disability suffered by the applicant. Notwithstanding the concession as to existence of a disability, Mr Murdoch for the respondent submitted that there is a need for the Court to come to a factual conclusion as to the nature of the applicant's disability, because the concept of alleviation of a disability in the meaning of s 9 DD Act (upon which the applicant's case to a significant degree rests) can only be considered properly and effectively in this case in light of a precise, factual decision as to the disability held by applicant (TS p 286 ll 38-45). I agree. 33 At the hearing, expert evidence as to the nature of the applicant's disability was given by consultant psychiatrists Dr Paul Trott and Dr Alston Unwin. There was no dispute as to the expertise of either Dr Trott or Dr Unwin. This was the diagnosis of Dr Trott at p 6 of his report dated 25 February 2005 (attached to Dr Trott's affidavit sworn 20 December 2005). This was the diagnosis of Dr Unwin on p 8 of his report dated 11 January 2006 (attached to Dr Unwin's affidavit sworn 20 June 2006). Both affidavit and oral evidence of Dr Unwin were called by the respondent. I understand that Dr Trott first met the applicant in the late 1990s where he saw the applicant during his role as a consultant psychiatrist with the Cairns Integrated Mental Health Services at a Kuranda clinic, at which time Dr Trott formed the impression that the applicant suffered from dysthymic disorder. 38 In his report, Dr Trott noted that the applicant had attended the clinic accompanied by his dogs on 8 February 2005, when a psychiatric evaluation of the applicant was conducted. 40 Dr Trott also considered that the applicant had suffered a substance use disorder and dysthymic disorder as a consequence of his significant character disturbance. 41 At the hearing during cross-examination, Dr Trott disagreed with Dr Unwin's conclusions that the applicant suffered schizo-typal personality disorder on the ground that "A person with the schizotypal personality tends to be somewhat more fanciful...suggestible in their thinking and imaginative, with the issue of...then losing touch with reality, but not to the point of chronic psychotic disorder" (TS p 112 ll 1-4). However Dr Trott also said that he did not strongly disagree with Dr Unwin, but rather described his approach as more conservative than that of Dr Unwin (TS p 112 ll 16-18). Further, Dr Trott acknowledged Dr Unwin's expertise in the area of personality disorders (TS p 112 ll 11-13). His curriculum vitae indicates that he also has more than thirty years experience in formal lecturing and supervision of trainee psychiatrists. 43 In his report, Dr Unwin states that he saw the applicant for three hours on 11 January 2006, and subsequently received two emails from him. 44 At the hearing Dr Unwin described schizo-typal personality disorder as having "more of a genetic, inheritable, biochemical basis...made worse...by early environmental and continually environmental development things" (TS p 181 ll 21-23). Dr Unwin also said that the applicant did not suffer from social anxiety disorder to any degree of "caseness" but did have communication and socialisation problems, which were not disorders per se. To the extent that the diagnoses differed, the applicant did not make any submissions as to whose evidence should be preferred. In written submissions on behalf of the applicant it was contended that the applicant was suffering from personality disorder of a mixed type and/or schizo-typal personality disorder. 47 In considering DSM-IV to which both experts had reference, I note the following diagnostic criteria pertinent to schizo-typal personality disorder diagnosed by Dr Unwin: (DSM-IV p 701). Ideas of reference (excluding delusions of reference). 2. Odd beliefs or magical thinking that influences and is inconsistent with subcultural norms (eg, superstitiousness, belief in clairvoyance, telepathy, or "sixth sense"; in children or adolescents, bizarre fantasies or preoccupations). 3. Unusual perceptual experiences, including bodily illusions. 4. Odd thinking and speech (eg vague, circumstantial, metaphorical, overelaborate or stereotyped). 5. Suspiciousness or paranoid ideation. 6. Inappropriate or constricted affect. 7. Behaviour or appearance that is odd, eccentric or peculiar. 8. Lack of close friends or confidants other than first-degree relatives. 9. Excessive social anxiety that does not diminish with familiarity and tends to be associated with paranoid fears rather than negative judgments about self. Neither expert appears to have an advantage in familiarity with the applicant, beyond a single comprehensive consultation (in the case of Dr Trott on 8 February 2005, and in the case of Dr Unwin on 11 January 2006). DID THE RESPONDENT DISCRIMINATE AGAINST THE APPLICANT WITHIN THE MEANING OF SECTION 6 DD ACT ? 52 Mr Murdoch for the respondent submitted that the requirement or condition imposed by the respondent is that a person cannot attend the Cairns Base Hospital or the Smithfield Community Health Centre with a dog that is not a guide or hearing dog recognised by legislation or a dog that has not been approved by hospital management. 53 The concept of "requirement or condition" within the meaning of s 6 or its State equivalents has been considered in a number of cases. However in my view Mr O'Gorman's submission mis-states the nature of the requirement or condition in this case. Although ultimately the respondent refused to allow the applicant access to the premises accompanied by his dogs, the policy of the respondent was not to unequivocally deny the applicant such access, whether comfortably or otherwise. Rather, the nature of the "requirement or condition" in this case can be drawn from the conduct of the respondent (through the management of the hospital and the centre) and the policies of the respondent applicable to persons accessing its premises accompanied by animals. 56 In relation to the Smithfield Community Health Centre, the relevant policy is also the IRM, which was exhibited to the affidavit of Ms Alison McLennan, Acting Health Centre Manager, Smithfield Community Health Centre sworn 9 February 2006 and also to the affidavit of Ms Sonja Lousick, Administration Officer, Smithfield Community Health Centre, sworn 9 February 2006. Visiting dogs must be on a leash and must be controlled by the person bringing the dog. The dog must not disturb other patients (ie through barking). 2) An inpatient with a guide dog should be encouraged to have the guide dog for the duration of the patient's stay if needed for mobility. It is the patient's responsibility to make arrangements to feed, exercise and toilet the dog. Ideally the patient should be accommodated in a single room. The dog is not permitted in operating theatres, sterilising areas, procedure rooms or food preparation areas. 2. However, there are health and safety issues for animals within health facilities. Many animals harbour micro-organisms that have the ability to cause disease in humans. Some animals may also have the potential to behave aggressively and cause harm to persons or property. 3. 4. 5. If this criterion cannot be met, then the animal should not be introduced into the facility. However they are not permitted to enter sterile supply areas, operating rooms, labour wards, in-patient wards, sterile stock storage areas, food preparation and eating areas and ambulances. • Would the health care facility be able to cover any associated veterinary expenses in the event of illness or injury to the animal? • If so, how severe and what control measures will be introduced to prevent exposure to fur, feathers etc? • Are there likely to be people who object to or have phobias of the animal? • If so how severe and what control measures will be introduced to prevent contact with animal? • Are adequate food storage areas provided away from patients/other food storage needs? • Can the animals food be protected from vermin such as rats? • What control measures will be in place to prevent the animal from entering prohibited areas? • What contingencies are in place if the animal escapes from controlled environment eg dog entering area of direct clinical care, dog leaving controlled environment and wandering the facility? • Is the animal located in an area with relevant ventilation and positioned away from any inherent workplace health and safety risks eg hazardous substances? • Who will feed and care for the animal when it is not feasible for the animal to remain in the health care facility unsupervised eg overnight or on weekends? • Has the animal had either obedience training or is the animal a low risk to humans (eg fish) in terms of attack, bites or scratches? In my view this is not surprising. The policies are not clear as to application to animals other than visiting pets and guide dogs, where there is an acknowledgment that guide dogs are permitted on the premises of the respondent other than sterile areas by reason of legislative recognition. The only reference which could possibly construed to encompass assistance animals other than guide dogs is on p 3 of the IRM where the question is posed whether the animal provides "a clinical or therapeutic benefit to clients". However even in that context, the IRM refers to "Animal/Pet Assisted Therapy", and it is by no means clear that assistance animals are contemplated. 61 Nonetheless, it is apparent from evidence given by Dr Newland, Ms McLennan and Ms Lousick that the respondent had assumed that these policies, in particular the IRM, applied to the applicant's circumstances. In particular, it is clear from cl 3 of the IRM which contemplates liaison between an owner of or a person in control of an animal, and the relevant work area of the respondent, and requires the respondent to conduct a risk assessment and proposed care plan for the animal, that the respondent considered that it should assess the animal in question and the relevant circumstances, and determine whether it was prepared to permit the animal access to its premises. 62 Accordingly, in my view the requirement or condition of the respondent with which the applicant was required to comply was that he not attend the respondent's premises with an animal, unless the animal is a seeing-eye dog or a hearing dog or unless the animal had been assessed by the respondent as having training and hygiene standards acceptable to the respondent. This characterisation of the requirement or condition more clearly accords with Mr Murdoch's submission, than Mr O'Gorman's. 63 It is clear from the evidence that the respondent had communicated to the applicant the nature of this requirement or condition. But as Dawson J observed in Australian Iron & Steel v Banovic at 187, a 'proportion must be a proportion of something'. This suggests that the second comparator is a group of persons with the disability. The comparison is not with the aggrieved person, since that person's ability to comply with the requirement or condition is addressed in s 6(c). In any event, it does not accord with the ordinary use of language to refer to the 'proportion' able to comply with a requirement in relation to only one person. There is however dispute as to the nature of the comparator group, namely whether it constitutes people with the specific disorder suffered by the applicant (as submitted by Mr Murdoch) or people with a psychiatric disability (as submitted by Mr O'Gorman). Even in relation to the nature of the group, should it be defined as people with the applicant's disorder, evidence is scanty. As was made clear in the evidence of Dr Unwin, schizo-typal personality disorder is the rarest of the personality disorders (TS p 181 ll 40-43). 68 Mr Murdoch has submitted that I should make no finding as to this issue in light of the lack of evidence of the proportion of people with the applicant's disability who cannot comply, and the medical evidence of Dr Unwin that there is no difference between the proportion of people with and without the applicant's disability who can comply. There is no evidence before me as to the proportion of members of the comparator group (however defined) who would have difficulty complying with the requirement or condition of the respondent in this case. 69 However, I am persuaded, as submitted by Mr O'Gorman, that commonsense dictates that the majority of people in the community, including the community which seeks to access Cairns Base Hospital and/or Smithfield Community Health Centre, would have no difficulty accessing the premises without an animal, and do not require an assistance dog to be able to access the respondent's premises. Accordingly for the purposes of s 6 , I am prepared to hold that a substantially higher proportion of persons without the applicant's disability are able to comply with the requirement or condition imposed by the respondent in this case. Was the requirement reasonable having regard to the circumstances of the case? The test of reasonableness is an objective one, which requires the Court to weigh the nature and extent of the discriminatory effect, on the one hand, against the reasons advanced in favour of the condition or requirement, on the other: Bowen CJ and Gummow J in Secretary, Department of Foreign Affairs and Trade v Styles (1989) 23 FCR 251 at 263; Deane J in Waters v Public Transport Corporation at 395-396 per Dawson and Toohey JJ, at 383. The test of reasonableness is less demanding than one of necessity, but more demanding than a test of convenience: Styles at 263. The Court must weigh all relevant factors. While these may differ according to the circumstances of each case, they will usually include the reasons advanced in favour of the requirement or condition, the nature and effect of the requirement or condition, the financial burden on the alleged discriminator of accommodating the needs of the aggrieved person and the availability of alternative methods of achieving the alleged discriminator's objectives without recourse to the requirement condition: Waters v Public Transport Corporation at 395... The nature and extent of the discriminatory effect of the applicant being unable to access the hospital and clinic without his assistance dog is of much greater significance than the reasons advanced by the respondent in favour of the condition or requirement. 2. While the test is objective, the subjective preferences of the applicant are relevant in assessing whether the requirement or condition is reasonable. 3. The dogs in question are well-behaved. 4. The respondent took no meaningful steps to request the applicant to do anything to enable his dogs to be allowed access to its premises other than sending him the IRM with a with compliments slip. The respondent has a logical and understandable basis for prohibiting dogs other than guide and hearing dogs and other dogs approved by management in its hospital or health centre, being the safety of staff, patients and visitors, and infection control. 2. The question is whether it is reasonable for people with alleged assistance dogs to have to comply with the policies, including obtaining prior permission. 3. Unlike guide and hearing dogs there are no registered training providers for assistance dogs in Queensland, and therefore it is far more difficult for the respondent's staff at the hospital and the health centre to determine on the spot whether the dog is a legitimate assistance dog. 4. The Guide Dogs Act 1972 (Qld) only recognises dogs trained by certain organisations, which are listed in the Guide Dog Regulation 1972 . 5. It is reasonable for the respondent to deal with alleged assistance dogs on a case by case basis in accordance with its policies, because when an animal is first presented for access to its premises the respondent has no idea whether the animal is safe or otherwise and within its premises it has a broad range of people, visitors, patients and other people requiring care. Further, I accept that the respondent needs to maintain high levels of hygiene and infection control and institute procedures to ensure the health and safety of its staff, patients and visitors, and that both premises in question are public health premises where members of the community attend, including those needing medical care, and vulnerable members of the community including children and the elderly. 74 However in my view the requirement or condition of the respondent in this case was not reasonable, for the following reasons. The Act contemplates that a disabled person is entitled to this assistance, or other forms of support such as, for example, a stool in appropriate circumstances ( Daghlian v Australian Postal Corporation [2003] FCA 759) , studies in Auslan for a deaf child ( Clarke [2004] FCAFC 197 ; 138 FCR 121; Hurst v Queensland [2006] FCAFC 100 ; (2006) 151 FCR 562) or wheelchair access ( Cooper v Human Rights & Equal Opportunity Commission [1999] FCA 180 ; (1999) 93 FCR 481). 77 Second, there is no dispute that the applicant suffers a disability within the meaning of s 4(1)(g) DD Act . While the applicant does not have a guide dog as defined in s 3 Guide Dogs Act 1972 (Qld), namely a dog trained at an approved institution and used as a guide by a blind person or as an aid by a deaf person, nonetheless he claims, and claimed in his dealings with the respondent, that he has assistance animals as contemplated by the DD Act . The DD Act does not differentiate in substance between see-eye dogs, dogs to aid hearing, and other assistance animals. 78 Third, the respondent in its policies and procedures accommodated guide dogs on the basis that legislation - presumably the Guide Dogs Act 1972 (Qld) - legitimised the presence of such dogs. I presume that this view of the respondent was not based on the DD Act , which as I have noted does not differentiate in substance between different types of assistance animals. 79 Fourth, the respondent in its policies reserved its rights to admit or deny access to animals which are pets or other animals in respect of therapy, and to exercise a discretion as to whether such animals should be admitted. While the respondent may be within its rights to do so in relation to such animals, assistance animals as recognised by the DD Act are not pets or therapeutic animals any more than a see-eye dog or a hearing dog is a pet or a therapeutic animal. 80 Fifth, I accept the submission of Mr Murdoch to the extent that it is reasonable for the respondent to deal with alleged assistance dogs on a case by case basis because when an animal is first presented for access to its premises the respondent has no idea whether the animal is safe or otherwise. There is no certainty in this requirement or condition, and there are no objective criteria for the applicant to satisfy. The decision as to whether the applicant has complied with the respondent's requirement or condition as contemplated by s 6 DD Act lies totally at the subjective discretion of the respondent. One might ask, even if the applicant or another person with the applicant's disability wanted to comply, how could he put himself into a position that he could be confident that he could comply, or alternatively understand that he could not comply, with the requirement or condition of the respondent? 82 In attempting to comply with the requirement or condition, the applicant gave evidence that he had supplied the hospital with "public access confirmation from a vet as well as (Knuckles) confirmation of vaccination to C5 standard" in relation to Knuckles and had assumed that this was sufficient information (TS 12 September 2007 p 93 ll 41-44). Clearly, however, it was not sufficient to satisfy the respondent. The decision of the respondent to deny access to the applicant in the company of his dogs appeared to derive from numerous incidents at the hospital involving the applicant and his dogs, which I discuss later in this judgment, and in the case of Smithfield Community Health Centre, evidence that the applicant had been sent a copy of the IRM in January 2005 (affidavit of Ms Lousick para 13) and the applicant had not provided information to the centre upon which an assessment as to his dogs could be made. 83 I have considered whether the requirement or condition could be considered reasonable if a term were to be implied that the respondent, in making its decision, were to act reasonably. However I am not satisfied that I should so find. First, I consider that it is straining the terms of the requirement or condition in this case beyond what was contemplated by the respondent - in my view the respondent, for what it may see as good reasons, sought to retain a discretion which entailed a wholly subjective assessment by the respondent as to whether an animal should have access. Secondly, I find this to be inappropriate in light of the objects of the DD Act and the intention of Parliament to ensure as far as practicable that persons with disabilities have the same fundamental rights as the rest of the community. 84 I note the submission of the respondent that, in light of the absence of legislatively-endorsed accreditation other than in relation to guide dogs, the respondent cannot be confident that an unknown animal will meet training and hygiene standards in premises which are health facilities other than by assessment on a case-by-case basis. While this is of concern - and I shall return to this issue at the conclusion of my judgment - this is no answer to circumstances where compliance with the requirement or condition, which has the potential to deprive a disabled person of their support animal, is totally within the subjective assessment of the respondent. Did or could the applicant comply with the requirement or condition? 86 I have taken the view that the requirement or condition was not reasonable. In the circumstances I find that the respondent has discriminated against the applicant in terms of s 6 DD Act . DID THE RESPONDENT DISCRIMINATE AGAINST THE RESPONDENT WITHIN THE MEANING OF SECTION 9 DD ACT ? Was the animal - in this case Knuckles and Buddy - "trained to assist" the applicant alleviate the effect of his disability? • were they trained to assist the applicant " alleviate the effect of his disability "? The respondent has submitted as an alternative that, if the dogs have been trained by the applicant, it is questionable whether such "training" satisfies the meaning in s 9(1)(f) DD Act . Further, the respondent submits that "trained" in the context of s 9(1)(f) carries with it the requirement that the animals are adequately trained to be allowed public access. The respondent refers to comments of McMurdo J in Matthews v Commissioner of Police [2005] QSC 122 where his Honour noted that it was not plain that the dogs in question in that case had been trained "in the sense which is relevant for the operation of section 9". 92 In my view however there is nothing in the DD Act , in particular s 9(1)(f) , which justifies an interpretation of the word "trained" beyond its ordinary meaning as found in the Macquarie Dictionary. Be accredited by or registered with a particular agency or organisation. 94 Further, I accept the submissions of the applicant and the Commissioner that there is no pre-requisite as to the type of animals that can be assistance animals for the purposes of s 9(1)(f). I do not read any limitation to the terms of s 9(1)(f) from paras (d) and (e) notwithstanding that those paragraphs were limited to dogs. Further, while I accept the evidence of Ms Sara Walker of Assistance Dogs Australia that Labradors and Golden Retrievers are trained as assistance dogs because of the social acceptability of the breeds and their extremely good nature, and that it is very uncommon for other breeds of dogs to be trained as assistance dogs (affidavit of Sara Walker sworn 9 August 2006 paras 7-8), there is no limitation in the Act as to the types of dogs which can be assistance animals. There is no evidence of any training apart from the applicant's own statement to me, in the course of his submissions, that he trains his dogs. It isn't plain that they are dogs trained in the sense which is relevant for the operation of section 9. In acknowledging that it was necessary to establish as a minimum that the disabled persons' quality of life would be enhanced because the effect of their disability would be ameliorated by the accommodation of the animal (at 429), the United States Court of Appeals Seventh Circuit held that lack of formal schooling did not mean that the dog did not have enough skills to actually aid in the daily functions of a deaf person (at 430, 431). The relevant legislation in that case was Wis Stat Ann SS101.22 (4)(bm) which related, inter alia , to "an animal that is specially trained to lead or assist the individual with impaired vision, hearing or mobility...". • In Green v Housing Authority of Clackamas County 994 F Supp 1253 (D Or 1998) where the landlord argued that the dog was not an appropriate accommodation for a deaf person because the plaintiffs were unable to produce any "verification" that the dog was a "certified" hearing assistance trained animal, the United States District Court found in favour of the plaintiff on grounds including that there was no relevant certification process for hearing dogs and no requirement as to the amount or type of training a service animal must undergo (at 1255-1256). The relevant legislation in that case was Or Rev Stat SS346,690 which prohibited a landlord from refusing to rent a dwelling unit to a physically impaired person on the basis of the use or possession of an assistance animal. Are the applicant's dogs "trained"? 102 Ms Christine Coop gave evidence that Buddy had been trained to meet all the command requirements of the "Assistance Dog Public Access Certification Test". Ms Coop is an occupational therapist specialising in mental health rehabilitation, who gave evidence that she has had contact with the applicant since early April 2004 and has observed the applicant and his dog Buddy working as an assistive-dog unit on two occasions other than in her immediate clinical environment (p 6 expert report attached to Ms Coop's affidavit 9 February 2006). 103 It is not in dispute that the purpose of that test is to ensure that dogs who have public access are stable, well-behaved and unobtrusive to the public, and to ensure that the client has control over the dog and that the team of person and animal is not a public hazard. In her report, Ms Coop stated that Buddy had completed the test with the applicant on 23 February 2005, with Ms Coop and Dr Owens Lavers present as observers. Dr Lavers stated in his report that Buddy "was stable, well behaved and unobtrusive to the public. I also judged that Mr Forest had complete control over the dog and he and his dog were not a public hazard" (p 2 of report dated 10 March 2005, attached to affidavit of Dr Lavers sworn 24 January 2006). 105 Evidence was also given by Ms Simone de la Fonteyne, Assistant Chief Instructor, Mooroobool Dog Obedience School in an affidavit sworn 25 January 2006 that she participated in an "Assistance Dog Public Access Test" for Knuckles on 25 January 2006, that Knuckles completed the test competently, and that in her view Knuckles was stable, well-behaved and unobtrusive to the public at all times throughout the assessment. Ms de la Fonteyne concluded that during the test the applicant showed complete control as the team leader, and that the applicant and Knuckles did not present to be a public hazard at any time (affidavit paras 21-24). A minimum of one hundred twenty (120) hours of training over a period of no less than six (6) months, takes place under the supervision of a qualified trainer. During that time at least thirty (30) hours or regularly scheduled training is devoted to field trips and public exposure. 2. Basic obedience skills the dogs must master with voice and/or hand signals are: sit, stay, come, down, heel and off leash recall. 3. The dog must show social behaviour skills of no aggression, no inappropriate barking, no biting, no snapping/growling, no inappropriate jumping on strangers, no begging and no sniffing of people. 4. The assistance dog must be trained to alleviate effects of the disability experienced by its partner. 5. The training time with the student prior to placement is a minimum of no less than thirteen (13) days. This is both public and private. All graduates are given a solid education in appropriate behaviour of the team. The dog should stay as unobtrusive as possible and not interfere with people. 6. AWARE DOGS requires the recipient to complete a follow-up progress report once a month for the first six months following the placement. Personal contact will be done by qualified staff or program volunteer within twelve to eighteen (12-18) months of graduation and annually thereafter. 7. Identification of the Assistance Dog will be accomplished with a plastic ID card with a photo of the dog and partner and names of both recipient and dog. In public the dog will wear a harness, backpack or slicker with the AWARE DOGS logo that is clear and easy to read and identifiable as an assistance dog. 8. AWARE DOGS, as a service provider maintains staff able to demonstrate knowledge of the disabilities of the clients it works with. 9. The recipient must agree to abide by the Minimum Standards for Assistance Dog Partners. 10. At the onset of training, every dog will be spayed or neutered and will have a thorough medical evaluation to determine that the dog does not have any physical problems that would cause difficulty for a working dog. I understand from the oral evidence of the applicant that Buddy and Knuckles are trained to higher standards than the minimum standards of Partners AWARE, but including those standards (TS pp 6-13). 108 The training of the dogs to a high standard of obedience would not of itself necessarily be training which could assist to alleviate the effect of the applicant's disability (although in my view it could be a relevant factor in the sense that a badly-behaved animal may in certain circumstances aggravate the effect of a disabled person's disability rather than assist to alleviate the effect. However, this issue did not arise in this case). However, Ms Coop gave evidence that the applicant used Buddy in a very deliberate and sophisticated way, and that the applicant was training Knuckles as a replacement for Buddy. It seems from the evidence given by the applicant at the hearing that some of the skills displayed by his dogs, particularly Buddy, are instinctive. Ms Walker gave evidence that some dogs instinctively know when their owner is upset or anxious and may respond accordingly, perhaps with a lick of the hand or by sitting close to their owner (affidavit of Sara Walker para 36(c)) and I accept that this is the case. The applicant gave examples of behaviour of his dogs which appeared to be instinctive, for example his dog Buddy avoiding the applicant in the mornings (TS p 19 ll 40-41). However the applicant also gave evidence as to the tasks which he had trained Buddy and Knuckles to do, and their impact on him. He deposed that he commenced training Knuckles to be an assistance dog, Buddy's replacement, the day he purchased him (affidavit of 27 January 2006 para 54). 113 Finally, I note that Ms Walker of Assistance Dogs Australia conceded that it would be possible for a person to train their own dog as an assistance dog to provide help around the home environment, however the dog could lack the high degree of socialisation and behaviour required for the dog to be suitable for public access (affidavit of Sara Walker para 33). There is no requirement in the DD Act that an assistance animal for the purposes of s 9(1)(f) be suitable for public access. However in any event, I note that over four days of hearing the applicant was in the witness box for much of two of those days, accompanied by his dog Knuckles. I formed the view at that time that Knuckles was extremely well-behaved, responsive to the applicant and his commands, and at all times under the control of the applicant. From viewing Knuckles, and evidence given by witnesses who are familiar with both of the applicant's dogs including Ms Coop, the applicant's general practitioner, Dr David Cuming (letter attached to his affidavit sworn 24 February 2006) and Ms de la Fonteyne I am satisfied that the applicant's dogs Buddy and Knuckles are suitable for public access. 114 In my view, the applicant's dogs are "trained" within the meaning of the DD Act . At the hearing, Ms Coop gave, as an example of therapy, circumstances where a person conducted breathing exercises or used animals as a way to allow him or her to calm down (TS p 88 ll 20-39). This makes me feel tense or anxious and isolated. When Buddy is with me I still experience these things. However I do not feel alone because I have Buddy's support. 117 The word "alleviate" is defined in the Macquarie Dictionary (4th ed) as meaning "to make easier to be endured; lessen; mitigate..." In my view the word should be given its natural meaning. The Commissioner has also submitted that the terms of s 9(1)(f) , in requiring that the trained animal assist in "alleviating" the effect of the disability, does not require the Court to be satisfied that an aggrieved person "needs" an assistance animal. I accept this submission. In my view an appropriate analogy to draw is in relation to a person who is blind and who possesses both a white cane and guide dog. While on occasions the blind person may dispense with the guide dog in favour of the cane for reasons of their own, and accordingly it is arguable that as such the person does not "need" the dog, it is unquestionable that a guide dog alleviates the effect of that disability, namely inability to see. 118 Although Dr Trott and Dr Unwin reached different conclusions as to the nature of the disability suffered by the applicant, the opinions of the experts as to the applicant's disability significantly overlap in relation to their views of the effects of his disability. 120 I accept evidence given by Ms Coop at the hearing that the applicant's dogs are instructed to perform tasks which assist the applicant to navigate a social environment (TS p 89 ll 3-5). So therefore that puts him on a back foot in terms of starting interactions with people. The dogs, by getting in and actually stepping in and giving him that bit of space, gives him a bit of time to go through his anxiety enough to then pick up, you know, some of the more subtle information that will help him negotiate socially in an appropriate way. Do you mean the effect of the impairment that leads to the disability? Yes?---Inasmuch as my observations would say that, you know, knowing his difficulty with reading the environment and being able to have conversations with people and how that affects him, the dogs actually do step in my their action (sic) mean that he is actually able to participate in social interactions where he couldn't before. And therefore they are alleviating an effect of that disability?---Yes. 124 In my view it is clear that a number of tasks performed by the dogs, for which they have been trained by the applicant, assist the applicant to alleviate the effect of his disability. In particular, relevant tasks are to interact, assist to leave a situation and alert to extended time spent. Further, I accept that a number of tasks to which the dogs have been trained, such as "come and hold", while therapeutic, also assist the applicant to alleviate the effect of his disability in the sense that actions of the dogs stabilise his mood, give him time to process events in his social environment, and accordingly reduce the incidence of eccentric behaviour which is a characteristic of the applicant's disability. Notwithstanding that some actions of the dogs including responding to signs of the applicant's distress are in my view probably instinctive, I accept the evidence of both the applicant and Ms Coop that the dogs perform a range of tasks which assist in alleviating the effect of the applicant's disability through the use of both verbal and non-verbal commands to which the dogs have been trained to respond by the applicant. 125 I note that both Dr Trott and Dr Unwin were generally of the view that the applicant's dogs neither improved nor exacerbated his disorder. Under cross-examination Dr Trott concurred with Dr Unwin that there is no treatment recommendation, clinical evidence or best practice guidelines for the presence of a dog in relation to Mr Forest's social anxiety or depression (TS p 112 ll 33-35). Dr Trott said that "the issue really is more that the dog...is that of a companionship" (TS p 112 ll 45-46). Dr Unwin in his report opined that the presence of a dog gives the applicant some confidence and companionship however it "does not improve or deteriorate his disorder" (p 8 of Dr Unwin's report). The doctor also said that in the case of schizo-typal personality disorder there is no evidence of which he was aware that animals could help in relation to the problem. Both experts agreed that it was possible that the possible improvement in the applicant's behaviour was as a result of his assistance dogs, however it was not a view which Dr Unwin endorsed (TS p 179 ll 3-7). Dr Trott conceded that, in relation to alleviating the effects of the disability, any "alleviation" was referable to a subjective response by the applicant (TS p 113 ll 15-19), it was untested (TS p 113 l 16), and the usefulness of the dogs in helping the applicant was unclear (TS p 113 ll 22-23). Dr Trott also said "it was difficult to objectify the treatment which relied upon a patient's subjective experience" (TS p 113 ll 30-32), that there was no evidence in the literature to suggest that this treatment of using dogs was effective for these conditions, and it would be too difficult to measure objectively (TS p 113 ll 34-35). 126 While I accept the evidence of these experts, it is not the role of the Court to consider whether the assistance of the dogs improves the applicant's medical condition or is effective treatment for his disability. It is the role of the Court to consider whether, in the context of s 9(1)(f) , the assistance of the trained animals alleviates the effect of his disability. Again in my view an analogy can be drawn with a blind person, who uses a guide dog for assistance - it is not the case that the use of the dog either improves the person's sight or is an effective treatment for their disability, however it is well-recognised in the community, and indeed legislation, that such dogs do alleviate the effect of blindness. Similarly in this case, in my view while it is indeed possible that the assistance of the applicant's dogs do not contribute to an improvement in the schizo-typal personality disorder from which he suffers (such as allowing him to more easily identify boundaries of "normal" behaviour), nonetheless the assistance of the dogs do alleviate the effect of that disorder for the applicant. Did the respondent treat the applicant less favourably because he was accompanied by an animal? The reality though is that the actual fact Mr Forest was accompanied by an assistance dog was not the reason for the refusal of entry. The actual reason was that as at 16 November 2004 his dogs had not been approved by management and, once management had considered the matter after 16 November 2004, because it was believed that his dogs were ill-behaved, ill-controlled and that there was inadequate evidence of proper assistance dog training. Accordingly, Mr Forest did not receive less favourable treatment because he was accompanied by an assistance dog. Unlike s 6 DD Act which contemplates requirements or conditions in terms of reasonableness, s 9 is not similarly qualified. Section 9 does not permit a person to discriminate against a person accompanied by an assistance animal as contemplated by ss 9(1)(d) to (f) on the basis of reasonableness - the issue is whether the discriminator treats the aggrieved person less favourably because of the fact that the aggrieved person possesses or is accompanied by the animal. Accordingly, in terms of s 9(1)(f) , the legislation assumes that it is appropriate for a person to be accompanied by an animal trained to assist him or her to alleviate the effect of the disability, and provides no scope for the imposition of requirements or conditions on that accompaniment, including approval by the discriminator on any grounds. As I have already explained in my judgment, s 9(1)(f) does not, either explicitly or implicitly, require the animal to be trained to any standards of behaviour or control. 129 In my view, the respondent did treat the applicant less favourably at both Cairns Base Hospital and Smithfield Community Health Centre because he was accompanied by his assistance animals, in the sense that, as the respondent acknowledged, it refused him access to both premises and refused him services in the company of the dogs. It is no answer to say that it would have allowed the applicant access either without his dogs - which is implied by the respondent's submission that it refused the applicant access while accompanied by his dogs - or with dogs which it considered to be well-behaved, well-controlled and trained to a proper assistance dog standard. To otherwise hold, and to allow a distinction in these circumstances to be drawn between "because" of the accompaniment of the dogs, and "while" accompanied by the dogs, would in my view undermine the object of the DD Act to ensure, as far as practicable, that persons with disabilities have the same rights to equality before the law as the rest of the community (s 3(b) DD Act ). This object is recognised by s 9(1)(f) in relation to the accompaniment of a disabled person by an assistance animal. 130 Accordingly, I find that the respondent discriminated against the applicant, being a person with a disability, within the meaning of s 9(1)(f) DD Act . It is therefore appropriate to consider whether the respondent has acted unlawfully in so discriminating against the applicant within the meaning of s 23 and/or s 24 the DD Act . DID THE RESPONDENT ACT UNLAWFULLY WITHIN THE MEANING OF SECTIONS 23 OR 24 DD ACT ? The applicant's case was confined to non-sterile areas of the respondent's premises. Reference to sterile areas is made in the IRM, which provides that no animal is allowed into sterile supply areas, operating rooms, labour wards, in-patient wards, sterile stock storage areas, food preparation and eating areas and ambulances. I understand that it is in respect of these areas that the applicant does not press his case for breach of the DD Act . 133 I shall consider s 23 and s 24 in turn. Mr Murdoch for the respondent at the hearing submitted that the case does not concern access to premises, but rather access to services (TS p 305 ll 23-25). The reason for this submission was stated to be that if there were to be any finding of discrimination by me, it would be in the area of goods or services, primarily because on each of the occasions that have given rise to complaint the applicant was doing more than simply seeking to access the premises. In particular, Mr Murdoch submitted that the applicant was seeking to access the respondent's health services at Smithfield Community Health Centre; further when the applicant was at Cairns Base Hospital on 16 November 2004 he was attempting to obtain a report from someone as to the behaviour of the dog and was therefore attempting to obtain a service of a type from the respondent. 136 Section 23 DD Act is drafted in broad terms. Subparagraphs (1)(a) to (c) relate specifically to access to, or the use of, any premises that the public or a section of the public is entitled or allowed to enter or use, and subpara (c) is more specific again in that it applies to discrimination in relation to the means of access to such premises. Key aspects of these paragraphs are that the premises must be such that the public or a section of the public is entitled to or allowed to enter or use the premises (whether for payment or not); and that the discrimination is in relation to the access to the premises. 137 Subparagraphs (1)(d) to (e) relate specifically to the use of any facilities in such premises or the terms or conditions on which the alleged discriminator is prepared to allow the other person the use of such facilities. Subparagraph (1)(f) relates to circumstances where the alleged discriminator requires the other person to leave such premises or cease to use such facilities. 138 Section 23 can be contrasted with s 24 , considered later in this judgment, which concerns discrimination in relation to the provision of goods or services or the availability of facilities. 139 Section 23 has been considered in a number of cases previously before this Court. In Grovenor [2000] FCA 1574 , the applicant, who was visually impaired and accompanied by a guide dog, visited a furniture store in Young in New South Wales. On entering the store the applicant was told by the respondent, the owner of the store, to take the dog out. The respondent refused to accept the applicant's claim that she was visually impaired, and ordered her out of the store saying he did not care if the dog was a guide dog. HREOC heard the complaint and found that the respondent's conduct in that case was unlawful by reason of s 23(1)(a) DD Act in that the respondent had refused to allow the applicant access to the premises. The discrimination in that case was that the respondent had acted in breach of s 9(1)(d) , namely that the respondent had treated the applicant less favourably because of the fact that she was accompanied by a guide dog. On hearing an application to enforce the payment of $1,000 compensation ordered by HREOC, Stone J found that the applicant's evidence in the proceedings was unchallenged, that the conduct amounted to discrimination within the meaning of s 9 DD Act and was unlawful conduct within the meaning of s 23(1)(a) of the Act. Accordingly, her Honour ordered the respondent to pay the applicant damages in the amount of $1,000. 140 Section 23(1)(c) DD Act - that is, the means of access to the premises - was in issue in Cooper [1999] FCA 180 ; 93 FCR 481 where the Coffs Harbour City Council had allowed redevelopment of a cinema complex without requiring that wheelchair access be incorporated as a part of the redevelopment. 141 Similarly in Sluggett [2002] FCA 987 ; 123 FCR 561 the nature of the complaint of the applicant, who suffered a disability as a result of childhood polio, in relation to long walks, many stairs, heavy doors, difficult stairways, open walk areas, crowded stairs, the distances between lifts, and the sometimes limited access to lifts at Flinders University, was such that the conduct was alleged to be unlawful in relation to the means of access to the premises pursuant to s 23(1)(c). 142 As I found earlier in this judgment, the respondent had a policy that persons entering its premises not do so accompanied by an animal unless the animal was a guide dog or a hearing dog or unless the animal had been assessed by the respondent as having training and hygiene standards acceptable to the respondent. I have found that the respondent discriminated against the applicant within the meaning of s 6 and s 9(1)(f). Further, as was specifically acknowledged by the respondent in its written submissions (written submissions of the respondent filed 5 September 2006 para 5.11), the respondent refused to allow the applicant with his dogs access to its premises at Cairns Base Hospital on 16 November 2004, or at Smithfield Community Health Centre on 19 November 2004, 24 February 2005, 28 February 2005 and 3 March 2005. 143 On the facts of this case, the respondent has discriminated against the applicant on the ground of his disability by refusing to allow him access to its premises, which conduct is unlawful pursuant to s 23(1)(a). As the respondent noted in written submissions, once management of Cairns Base Hospital had considered the matter after 16 November 2004 it refused to allow the applicant access because it considered that his dogs were ill-behaved, ill-controlled and that there was inadequate evidence of proper assistance dog training (written submissions of the respondent filed 5 September 2006 para 5.11). 144 I have also considered whether s 23(1)(b) is relevant in light of the written communications between the applicant and Cairns Base Hospital and Smithfield Community Health Centre, where the hospital and the centre informed the applicant of the respondent's policy of not allowing animals (other than guide dogs) into the hospital without a prior assessment by the respondent. Although the respondent ultimately refused to allow the applicant access to its premises with his dogs so as to enliven s 23(1)(a) , in my view s 23(1)(b) is also relevant because in discriminating against the applicant, the respondent had imposed terms or conditions upon which it was prepared to allow the applicant access to its premises. These facts may be compared with, and in my view are analogous to, Haar 184 ALR 83 where a person with a guide dog at a McDonald's restaurant was told that the next time she visited with the dog she should sit outside the "party" area of the restaurant as that area was frequented by children. McInnis FM considered that s 23(1)(b) applied, as the restaurant, in discriminating against the applicant in that case, had imposed conditions on which it was prepared to allow the applicant access to its premises in the company of her guide dog. 145 In relation to the application of s 23(1)(a) and (b) however, I note the oral submission of Mr Murdoch that the case is actually "about access to services " and not about access to premises . Following consideration of this issue however, I have formed the view that the issue of access to premises, and accordingly s 23(1)(a) and (b), is relevant. In this regard, I make the following observations. 146 First, the events which occurred at the premises of the respondent fall within the ordinary meaning of refusal of "access to premises". The applicant attended the premises of the respondent, and on the relevant occasions was requested to leave. At Cairns Base Hospital on 16 November 2004 he was escorted from the premises by security guards, and on three occasions at Smithfield Community Health Centre security guards were in place to ensure that the applicant did not enter the premises with his dogs. While the applicant may have attended the premises of the respondent, particularly Smithfield Community Health Centre, with a view to obtaining services, it is clear that the applicant was refused access to the premises because of the presence of his dog. He had received communications from the respondent indicating that it was prepared to allow him access to the premises with his dogs, but on the respondent's terms. To ignore the natural application of s 23(1)(a) and (b) to the facts of this case would be to do an injustice to the applicant. 147 Second, it is clear that the premises of the respondent in question were premises "that the public or a section of the public is entitled or allowed to enter or use" as contemplated by s 23(1)(a) and (b). The premises in question were public reception areas of Cairns Base Hospital and the Smithfield Community Health Centre, which were public areas of medical facilities provided to the public. 148 Third, I note the decision of Stone J in Grovenor [2000] FCA 1574 and her Honour's application of s 23(1)(a) in similar facts where denial of entry to a furniture shop by the proprietor was held to constitute a breach of s 23(1)(a) , and consider the facts of that case sufficiently analogous to this case to take the view that s 23(1)(a) is also applicable to the facts before me. I also note the decision of McInnis FM in Haar 184 ALR 83, and consider the reasoning of his Honour in that case correct. 149 Fourth, in this case the applicant has claimed the conduct of the respondent was unlawful pursuant to either or both sections, and I can see no reason why the facts of a case could not give rise to unlawful conduct for the purposes of both s 23 and s 24. It would limit the operation of s 23(1)(a) and (b) beyond its natural meaning if, as submitted by the respondent, it were confined only to access to premises where the disabled person was not also seeking provision of goods or services. 150 Finally, I note the very limited defence (or ground of exculpation as so termed by Madgwick J in Cooper [1999] FCA 180 ; 93 FCR 481 and Drummond J in Sluggett [2002] FCA 987 ; 123 FCR 561) in s 23(2) available to a respondent who has breached s 23(1). It is curious that s 23(2) is so narrowly drafted, in comparison for example with the much broader provision in s 24(2) in relation to conduct in breach of s 24(1). However the form in which s 23(2) is drafted is matter for Parliament, not the Court, and does not in my view limit the manner in which s 23(1) should be interpreted. The defence of the respondent as pleaded in relation to unjustifiable hardship was not referable to the design or construction of its premises as contemplated by s 23(2) , and accordingly is of no relevance in the context of s 23. 151 Accordingly, in my view the conduct of the respondent in refusing to allow the applicant access to its premises in the company of his dogs, which are assistance animals for the purposes of s 9(1)(f) , was unlawful pursuant to s 23(1)(a) and (b) DD Act . Further, in imposing terms or conditions upon which the respondent was prepared to provide the applicant with those services in the sense of informing the applicant of the respondent's policies concerning animals and requiring the applicant to comply with those policies, the conduct of the respondent was contrary to s 24(1)(b). 154 I consider the applicant's claim weaker in relation to the conduct of the respondent at Cairns Base Hospital in relation to the events of 16 November 2004 given that he was not there for a medical consultation or to receive medical services. I note however the concession of the respondent in Mr Murdoch's oral submissions that the applicant was at the hospital on that day seeking to obtain a service of a type from the respondent in the sense of obtaining a copy of a report (TS p 305 ll 19-25). The applicant was refused provision of services by the hospital because of the presence of his assistance dogs; further the hospital informed him in writing that it was not prepared to provide him with services in the presence of his dog except on its terms. Accordingly, I also find that the respondent acted in breach of s 24(1)(a) in relation to its conduct at Cairns Base Hospital on 16 November 2004 and in breach of s 24(1)(b) in relation to its communications to the applicant as to the terms and conditions on which the applicant was able to attend the hospital with his assistance animal to receive services. 155 The issue contended strongly by the respondent however was that, irrespective whether the respondent did breach s 24(1) , the provision of the services would have imposed unjustifiable hardship on the respondent pursuant to s 24(2) DD Act . Section 24(2) permits the ground of "unjustifiable hardship" to be raised if, inter alia , the provision of services would impose unjustifiable hardship on the person who provides those services. 157 A number of general principles have developed in relation to the concept of "unjustifiable hardship" within the terms of the DD Act . It is clear that in operating such facilities, the respondent is required to maintain high standards of hygiene, safety and security for patients, potential patients, visitors, and staff. However, in light of the fact that the DD Act recognises assistance animals (as contemplated by s 9(1)(f)) if the respondent had appropriate procedures in place to identify such animals (which in my view it currently does not) any resultant hardship to the respondent would in my view not be unjustifiable. 164 Further, while the respondent claims that it would be an unjustifiable hardship to be required to expend resources in conducting assessments for itself, I note that, according to the evidence before me, that is precisely what the respondent purports to do in relation to animals - in particular pets or animals for therapeutic purposes - which third parties wish to bring on to its premises. For example, the attachments to the IRM require the owner or person in control of the animal to provide information which is then assessed by the respondent, although the information sought in the attachments is referable to care of the animal, vaccinations, infection control issues, control of the animal and the benefits the animal provides to the client at the facility. As I have already noted however, in my view the information sought by the IRM or its attachment is not currently designed to accommodate owners of assistance animals. 165 The respondent submitted in detail of its need to be satisfied, in accordance with its various policies and procedures, of the standards of hygiene and training of the relevant animal. Attaining this level of satisfaction quite naturally entails an assessment of the animal, and use of resources of the respondent. There was no suggestion that the current procedures employed by the respondent in respect of animals constitute an unjustifiable hardship. 166 I am not convinced that development and implementation of appropriate procedures by the respondent to enable it to identify an assistance animal, to whose presence in defined circumstances a disabled person, including a person with a psychiatric disability as distinct from a physical disability, has a legitimate entitlement, causes unjustifiable hardship. Indeed, this is the very sort of hardship that the DD Act contemplates as justifiable, in that it allows a balance between the rights of the disabled and the interests of the public to be achieved. There is no evidence that information provided by the applicant with respect to, for example, hygiene standards of the dogs or public assess suitability was taken into account by hospital management (TS p 192). In my view Knuckles is a well-trained animal, which appeared docile and amenable to discomfort and handling over several days in Court while being held and patted by the applicant during the course of his cross-examination in the witness-box. Notwithstanding this, it appears that Knuckles was largely unrestrained in the hospital at a place where Professor Terry was about to conduct an invasive procedure upon the applicant, namely a liver biopsy, and I accept Professor Terry's evidence that he believed in the circumstances that the dog lunged at him and attempted to bite him. I do not consider that the provision of services by the respondent to the applicant in the presence of Buddy or Knuckles imposes unjustifiable hardship on the respondent. I note however that the applicant does not claim that services in this respect include services performed in a sterile environment. My findings do not extend to services performed in a sterile environment. 170 Accordingly, in my view the conduct of the respondent in refusing to provide services to the applicant in the company of his dogs, which are assistance animals for the purposes of s 9(1)(f) , was unlawful pursuant to s 24(1)(a) and (b) DD Act . I do not find unjustifiable hardship made out under either s 23(2) or s 24(2). 172 Having made these findings, however, I have a number of observations about the application of the DD Act , the interaction of provisions of the Act, and the ramifications of this decision. 173 First, although I presume that the rationale in specifying forms of discrimination in ss 7, 8 and 9 separately from definitions of direct and indirect discrimination in ss 5 and 6 was to provide more support to disabled people who had been the subject of specific discrimination as defined in ss 7, 8, and 9 (neither the Second Reading Speech of the Minister nor the Explanatory Memorandum illuminates this point), the nature of these sections as stand-alone provisions tends to lend itself to lack of clarity. It is usual that, in a claim for disability discrimination, the applicant will allege either direct or indirect discrimination. Providing further, separate grounds of discrimination in ss 7, 8 and 9, as distinct from a more comprehensive definition of discrimination to fall within ss 5 and 6, in my view can potentially result in confusion and overlapping claims. 174 Second, and more importantly, I have genuine concerns about the operation of s 9(1)(f) DD Act as presently drafted. I accepted the submissions of the applicant and the Commissioner as to the lack of qualification of the word "trained", because in my view it accorded with the meaning of the word in the Act. However, the language of the Act, in permitting a broad interpretation, in my view poses risks as to the functioning in the community of disabled persons with genuine assistance animals. 176 Finally, and perhaps of most importance, is the fact that there is public confidence in and acceptance of the guide dog regime, which has more than 30 years recognition in State law in Queensland, and recognition throughout Australia and indeed the international community. It would be of concern if, because of the breadth of s 9(1)(f) and consequent legislative endorsement given to animals with lower community acceptance and trained to inferior and less exacting standards, the public confidence and acceptance of guide dogs were to be in any way undermined. It is perhaps unfortunate that the DD Act does not, like the Guide Dogs Act 1972 (Qld) or the Dog Control Act 1996 (NZ), define assistance animals by reference to accredited training organisations. This would provide certainty for animal owners, service providers and members of the public, and strike a balance between the needs of the disabled as recognised in the DD Act and the confidence of service providers and the public as to standards of assistance animals in public places. 177 At the hearing I indicated that I would provide my findings to the parties, and then seek submissions as to appropriate orders to make in these circumstances once the parties have had time to consider my reasons. Accordingly, I shall make orders as to the substantial issues in the proceedings, and make directions for another hearing to receive further submissions. The respondent has discriminated against the applicant within the meaning of s 6 and s 9(1)(f) Disability Discrimination Act 1992 (Cth). 2. The conduct of the respondent was unlawful within the meaning of ss 23(1)(a) , 23 (1)(b), 24 (1)(a) and 24 (1)(b) Disability Discrimination Act 1992 (Cth). The respondent has discriminated against the applicant within the meaning of s 6 and s 9(1)(f) Disability Discrimination Act 1992 (Cth). 2. The conduct of the respondent was unlawful within the meaning of ss 23(1)(a) , 23 (1)(b), 24 (1)(a) and 24 (1)(b) Disability Discrimination Act 1992 (Cth). | disability discrimination personality disorder applicant accompanied by "assistance animal" refused entry to respondent's premises s 6 and s 9 disability discrimination act 1992 (cth) whether indirect discrimination nature of "requirement or condition" imposed by the respondent whether "requirement or condition" imposed by the respondent reasonable whether animal is a s 9(1)(f) assistance animal meaning of "animal trained to assist the aggrieved person to alleviate the effect of the disability" meaning of "trained" nature of applicant's disability whether presence of animal alleviates the effect of the disability whether applicant treated less favourably because he was accompanied by an assistance animal whether discrimination in access to premises whether discrimination in provision of goods, services or facilities respondent operates acute health care facilities whether unjustifiable hardship discrimination law discrimination law |
Most, if not all, are hopelessly insolvent. As a consequence investors will recover only a small proportion of their investment. The rate of return will not, however, be the same for each investor. The reason is that their money has gone into different companies in the group and the value of the assets of each company is different. This case is concerned with investors who have "transferred" their investment from one Westpoint group company to another. As a result of the transfer they may be worse off. The question that arises is whether those investors can undo the transfer and prove in liquidation of the company in which they first invested their money. This and other related questions come before the court on a liquidators summons for directions. To avoid the criticism that the questions are purely hypothetical the liquidators have identified an investor, Brendan Dunphy, who initially made an investment with York Street Mezzanine Pty Ltd (in liq. ) and then transferred that investment to Ann Street Mezzanine Pty Ltd (in liq. ) The facts of his case found the arguments. There are two defendants, one who is an investor in York Street Mezzanine and another being an investor in Ann Street Mezzanine. There are orders that the first defendant represent all York Street Mezzanine investors and that the second defendant represent all Ann Street Mezzanine investors. 2 The best place to begin is with a sketch of the background. The business of the Westpoint group was to construct large residential and retail developments. To finance a project most of the funds were borrowed from a traditional lending institution, such as a bank. Additional finance was raised from small investors. In the case of each development a structure along the following lines was established. A development company purchased the land and undertook the development. The development company borrowed funds from an institutional lender on the security of a first mortgage over the land and a charge over its assets and undertaking. What is referred to as a "mezzanine" company raised the balance of the funds from the public. Those funds were raised by way of promissory notes. The promissory notes had a minimum face value of $50,000 and a maturity date that was usually 36 months from the issue date. Investors were to receive interest on the amount of their investment, generally at the rate of 12% per annum payable monthly in arrears, together with an additional 2% of the capital invested payable on the maturity date. The fundraising was promoted by Information Memorandum issued by the mezzanine company. 3 Money raised from investors was first deposited into an account maintained by the mezzanine company. It was then transferred into an account of Westpoint Corporation Pty Ltd which, according to the liquidators, acted as "the primary administrative entity within the Westpoint group". The transfer was recorded as a loan by the mezzanine company to the development company. The loan was secured by a second registered mortgage over the land and a second charge over the developments company's assets. 4 By at least July 2004, if not much earlier, the Westpoint group began to run out of cash. Mezzanine companies could not meet their obligations under their promissory notes. A plan was devised to extend the maturity date of the promissory notes. The plan was to persuade investors to transfer (the word used was "rollover") their investment from one mezzanine company to another by accepting a new promissory note in exchange for their old note. The new note would be given a later maturity date. If an investor decided to rollover his investment the rollover was affected by a series of book entries in the books of the relevant companies. The book entries recorded that the investor had been repaid the face value of his promissory note and that the investor had lent that amount to another mezzanine company. 5 It is convenient now to look at Mr Dunphy's dealings. He invested money with York Street Mezzanine. That company had been established to raise funds for the development of the site of the Scots Church in York Street, Sydney. The Information Memorandum issued by York Street Mezzanine described the project as the construction of 148 apartments and 10 retail shops. The development had a forecast value of approximately $128 million. The Information Memorandum stated that York Street Mezzanine hoped to raise $40 million from the public, of which up to $36 million would be raised by the issue of promissory notes. The minimum investment was $50,000. The Information Memorandum explained that "investors will receive interest of 12% per annum payable monthly in arrears plus a flat 2% payable with the repayment of capital on the Expiry Date of the Promissory Note on 30 November 2005. " It was noted, however, that the "expiry date" could be brought forward to "any earlier date York Street Mezzanine in its sole discretion determines. " Investors were informed that the money raised would be lent to Scots Church Development Ltd, the company that was undertaking the development. 6 The Information Memorandum contained a detachable "Promissory Note Application Form" that an intending investor was required to complete and return to York Street Mezzanine together with a cheque for the amount of his investment. The application form contained the following undertaking: "The Applicant agrees to the issue of each Promissory Note by York Street Mezzanine Pty Ltd on the following terms: 1) The Applicant will not demand payment on each Promissory Note until the Expiry Date as referred to in the Promissory Note; and 2) Full or Part payment of the face value of each Promissory Note may be made at the sole discretion of York Street Mezzanine Pty Ltd at any time before the expiry date. It was described as a "Promissory Note". It contained a promise by York Street Mezzanine to pay the "Investor" a sum referred to as the "Principal Sum" (which would be the amount invested) and "Interest ... at the rate of 12% per annum on a monthly basis in arrears". The principal sum plus 2% of the principal sum was to be paid on the "Expiry Date" namely 30 November 2005. The note was "non-negotiable and non-transferable". 8 Mr Dunphy received a copy of the Information Memorandum in late 2004. He applied for a promissory note with a face value of $100,000. He paid that amount to York Street Mezzanine but the evidence does not indicate how the payment was made. At any rate, on 24 January 2005 York Street Mezzanine issued Mr Dunphy with a promissory note for $100,000. The note had a maturity date of 30 November 2005. 9 In about mid July 2005 Mr Dunphy received a letter from York Street Mezzanine inviting him to "rollover" his investment into a development referred to as the Ann Street Development. The letter provided a brief description of the development referring to it as "an investment product regulated by ASIC and the Corporations Act . " Enclosed with the letter was a copy of an Information Memorandum (the letter referred to it as a "prospectus") concerning the Ann Street Development. Mr Dunphy was given three options from which to choose. They were: "Option 1: Rollover your current principal sum early and be paid, in cash, your 2% redemption on [a specified date]; Option 2: Rollover your principal sum plus the 2% redemption amount effective from receipt of your signed application form; Option 3: Rollover your principal sum plus the 2% redemption amount and any top-up investment amount effective from receipt of you (sic) signed application form. " Also enclosed with the letter was a rollover application form. 10 The letter informed that if Mr Dunphy decided to accept the "special offer" and "secure this limited opportunity" he was required to complete the attached rollover application form (which, I note, was on York Street Mezzanine letterhead) and post it, together with his York Street promissory note, to York Street Mezzanine. The letter went on to say that if Mr Dunphy did not accept the offer the York Street Mezzanine promissory note would be "redeemed on the current expiry date". 11 The request that Mr Dunphy return his York Street promissory note was necessary to protect the issuer. At common law, where a note was negotiable or payable to a bearer, the position was that the holder could only demand payment upon presentment the note. If the note was not negotiable it was sufficient to either produce the note or to satisfactorily account for its loss: Story's Commentaries on the Law of Promissory Notes (4th ed 1856) paras 106-112. The common law rule regarding negotiable promissory notes was harsh. This led the Chancery Court to develop the rule that if a note had been lost relief could still be obtained provided the holder indemnified the issuer in case the issuer was compelled to pay on the note to another holder: Story at paras 445-450. Now, s 74 of the Bills of Exchange Act 1909 (Cth) provides that where a promissory note that is not overdue has been lost or destroyed the holder may request the issuer to provide a replacement note provided the holder indemnifies the issuer for any losses suffered as a result of re-issuing the note and (if required) provides adequate security for the indemnity. In addition s 75 provides that an action upon a note, the loss of the note shall not be set up as a defence, provided a satisfactory indemnity is given against the claims of any other person on the note. 12 Returning to the facts, Mr Dunphy chose to rollover his investment in accordance with Option 1. He completed the rollover application form noting (by ticking the appropriate section) that he had elected to take that option. The section read: "I/We the undersigned holder of a promissory/s note issued by York Street Mezzanine Pty Ltd direct York Street Mezzanine Pty Ltd to: 1. Rollover and pay the face value of the promissory note $100,000 to the Ann Street Development, as applications (sic) monies, which are to be issued to me/us pursuant to the Information Memorandum. Pay an amount equal to 2% bonus redemption premium to me. Following this advice appeared the following statement: "When signing the direction to pay form you are acknowledging, agreeing, and consenting to be bound by the provisions of the Information Memorandum as amended from time to time. The development site was at the corner of Ann Street and Hutton Lane in Brisbane. The proposal was to construct a tower comprising 206 residential apartments, 190 hotel apartments and 4 retail tenancies. The construction company was Ann Street Brisbane Pty Ltd. The amount required for the project was $103 million of which $63 million would be borrowed from institutional lenders and the balance raised by "the special projects company", Ann Street Mezzanine, on the security of promissory notes. Overall, the structure was the same as that adopted for the York Street development. 15 Mr Dunphy returned his completed rollover application form together with his York Street promissory note to York Street Mezzanine. A short time later, that is on 1 August 2005, Ann Street Mezzanine issued Mr Dunphy with a promissory note having a face value of $100,000 and a maturity date of 1 August 2008. In all other respects the note was identical to the York Street promissory note. 16 Each of York Street Mezzanine and Ann Street Mezzanine maintained detailed accounting records relating to the issue of promissory notes and payments made pursuant to those promissory notes. Each company also maintained detailed records of all dealings with the funds raised on the issue of promissory notes. The records included journals, ledgers, transaction reports and rollover and transfer details. They indicate that the following transactions were effected by book entry. On 1 August 2005 York Street Mezzanine paid Mr Dunphy the face value of his promissory note by making that payment to Ann Street Mezzanine. Ann Street Mezzanine lent the amount "received" from Mr Dunphy to Ann Street Brisbane. Corresponding book entries were made adjusting the inter-company liabilities between Ann Street Mezzanine, York Street Mezzanine, Scots Church and Ann Street Brisbane (the development companies) and Westpoint Corp (which also acted as group treasurer). In addition, York Street paid Mr Dunphy the 2% bonus redemption premium, not by "book entry" but either by cheque or deposit into an account Mr Dunphy maintained with his bank. 17 Following the issue of the Ann Street promissory note, Ann Street Mezzanine began to pay Mr Dunphy the interest due under the promissory note. Those payments continued until shortly before the collapse of the Westpoint group. 18 The first question that arises on these facts is whether the document issued by York Street Mezzanine as a promissory note is a document of that character. A promissory note may be described as a written engagement by one person to unconditionally pay a specified sum at a specified time to a person therein named or sometimes to his order, or often to the bearer at large: Blackstone's Commentaries , (1st ed. 1766) vol 2 at 467; Bills of Exchange Act , s 89. The liability of the maker of a promissory note is that he will pay it according to its tenor, that is in accordance with the terms of his promise. 19 The York Street promissory note was payable on 30 November 2005 or earlier at York Street Mezzanine's discretion. It is an established principle that a note cannot be expressed to be payable on a contingency: Carlos v Fancourt (1794) 5 Term Rep 482, 486; [(1794) 101 ER 272, 273]. The rule is now codified: see Bills of Exchange Act , s 16. The principle has led some courts to conclude that a document will not be a promissory note if the payer has an option to pay the sum due on any day of his choosing before the maturity date. For example, the majority of the Court of Appeal in Williamson v Rider [1963] 1 QB 89 decided that an instrument payable "on or before" a specified date was invalid. They held that the option to pay earlier than the specified date was a contingency in the time of payment. Ormerod LJ dissented . He said there was no uncertainty because the maker of the note was not under any obligation to pay the note until the maturity date. He went on to say ([1963] 1 QB at 102) that "if [the maker] chooses to pay --- and it is purely a matter for him --- at an earlier date ... then the holder of the bill is under an obligation to accept that payment. On the other hand the decision was rejected by the Supreme Court of Canada in John Burrows Ltd v Subsurface Surveys Ltd [1968] SCR 607. The judgment of the Supreme Court was delivered by Ritchie J. He said (at 614) of a promissory note that permitted the payer to make payments "on account of principal from time to time [of] the whole or any portion thereof upon giving thirty (30) days' notice of intention prior to such payment that "the fact that the maker was accorded the privilege of making payments on account of principal from time to time did not alter the nature of his unconditional promise to pay at the time fixed by the instrument, but merely gave him an option to make earlier payment. " Williamson v Rider was also rejected by the High Court of Ireland in Creative Press Ltd v Harman [1973] IR (Irish) 313. Two leading textbooks, Byles on Bills of Exchange and Cheques (27th ed. 2002) at para 24-06 and Chalmers and Guest on Bills of Exchange and Cheques (16th ed. 2005) at para 2-085 prefer the dissenting judgment of Ormerod LJ. See also A.H. Hudson , Time and Promissory Notes (1962) 25 MLR 593. 21 The position in Australia is complicated as there are conflicting decisions on the point. In Gore v Octahim Wise Ltd [1995] 2 Qd R 242 Williams J held that an instrument which permitted the maker to "repay the Principal Sum in whole or in part at any time" was subject to a contingency and so could not be characterised as a promissory note, following the decision of Williamson v Rider . In ASIC v Emu Brewery Mezzanine Ltd (2004) 52 ACSR 168 [(2004) 187 FCR 270] Simmonds J reached the opposite conclusion, preferring the approach taken by Omerod LJ instead of that in Gore v Octahim . 22 There is a difficulty with the Emu Brewery decision. Australian Securities Commission Ltd v Marlborough Gold Mines Ltd [1993] HCA 15 ; (1993) 177 CLR 485 at 492 required Simmonds J to follow Gore v Octahim unless the decision was "plainly wrong": see also Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [135] . Simmonds J decided, however, that the rule laid down by the High Court applied only to intermediate appellate courts and not to first instance judges from whose decisions there is a right of appeal to an intermediate appellate court. In this respect he followed the approach suggested by Owen J in Walker v Midlink Nominees Pty Ltd (2000) 34 ACSR 210 [(2000) 22 WAR 318]. There Owen J said that only "due respect" need be given to first instance decisions of equivalent courts. Yet the contrary view had been expressed in Re Brashs Pty Ltd (1994) 15 ACSR 477 by Hayne J, then a judge of the Supreme Court of Victoria. Hayne J said (at 483): "Although the court [in ASIC v Marlborough Gold Mines ] was speaking particularly of the decisions of intermediate appellate courts, I consider the point is one of general application and that I should be very slow indeed to depart from the decision of a single judge in relation to the Corporations Law unless... convinced that that interpretation is plainly wrong". Four months after his decision in Walker v Midlink Nominees Owen J was informed of Re Brashs Pty Ltd and applied it in Sentron Pty Ltd v Australian Securities and Investments Commission (2000) 158 FLR 147. Regrettably, Simmonds J seems not to have been referred to either Re Brashs Pty Ltd or Sentron Pty Ltd . In due course, however, his decision was confirmed by the Court of Appeal in Emu Brewery Mezzanine Ltd (in liq) v Australian Securities and Investments Commission (2006) 57 ACSR 752. 23 In the event, the situation which confronts me is covered by ASIC v Marlborough Gold Mines . Technically speaking, I must choose between the two decisions: --- Gore v Octahim and the Court of Appeal in Emu Brewery v ASIC . But, as a matter of comity, I am required to follow Emu Brewery v ASIC unless the decision is plainly wrong. The decision is not plainly wrong. I would, in any event, have followed the Court of Appeal for three reasons. First, it is the latest decision on the point. Second, and this is a more important reason, ASIC v Emu Brewery arises out of a transaction which, in all relevant respects, is the same as that now under consideration and also involved the Westpoint group. It would be productive of great uncertainty if promissory notes issued by one company in the group were to be treated differently from promissory notes issued by another company in the same group. It would also bring the law into disrepute. The third reason is that I agree in the analysis of both the Supreme Court of Canada and the Court of Appeal. 24 This brings me to another aspect of the law relating to promissory notes. The ordinary rule is that to discharge a bill of exchange, and so to discharge a promissory note, the issuer is required to make a payment in money to the payee or bearer: Morley v Culverwell (1840) 7 M&W 174 [(1840) 151 ER 727]; London Banking Corporation Ltd v Horsnail (1898) 3 Com Cas 105; Chitty on Bills of Exchange (8th ed 1833) at 432-433: Story's Commentaries on the Law of Promissory Notes (4th ed 1856) paras 113-115. In other words the payment must be in legal tender (money) or by the transfer of a money fund. 25 This method of payment is highly inconvenient, especially where large sums are involved. It is not uncommon, therefore, to find that parties to a bill of exchange agree that payment can be made by some other means which is commercially acceptable, such as by the delivery of a bankers cheque. Not surprisingly, it has been held that parties to a note may agree that the note can be satisfied otherwise than by the transfer of legal tender (money). In that way (that is by the agreement of the parties) the law relating to bills of exchange (including promissory notes) is brought in line with the law relating to contracts generally. Chalmers and Guest on Bills of Exchange and Cheques (16th ed, 2005) at para 8-005; Byles on Bills of Exchange and Cheques (27th ed, 2002) at para 13-04: The result is that, by agreement, payment of money due under a bill of exchange can be made by set off, by the delivery of goods, by a bond, by cheque or bankers draft or even by book entry: see eg. Pease v Hirst (1829) 10 B&C 122; [(1829) 109 ER 396]; Callandar v Howard (1850) 19 LJ CP 312 [(1850) 138 ER 117). For a recent example see Gokal & Co (HK) Ltd v Rippleworth Ltd [1998] CLY 370. 26 There is every reason to permit a payment to be made by a book entry. Often it is simply a short-hand for money or a cheque being handed across the table and money or a cheque being handed back. It would be entirely inconsistent with modern commercial life if a payment due by one person to another could not be effected in this manner. At any rate, that is how the law has progressed. See, for example Manzi v Smith [1975] HCA 35 ; (1975) 132 CLR 671; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55 ; (2004) 218 CLR 471. All that is required is an actual agreement by the relevant parties that payment be made by means of entries in books of account: Manzi v Smith at 674 . The agreement may be express or it may be inferred. In the case of a bill of exchange, however, in the absence of an express agreement the court will not readily infer an agreement that the payment, which must otherwise be in money, may be made by some other means. 27 I propose now to consider whether York Street Mezzanine discharged its obligation to Mr Dunphy under the York Street promissory note. If it did not Mr Dunphy remains a creditor of York Street Mezzanine. Here it is necessary to resolve several issues. The first is whether Mr Dunphy agreed to accept the discharge of the York Street promissory note by a payment by York Street Mezzanine to Ann Street Mezzanine of an amount equal to the face value of the note. The second issue is whether Mr Dunphy agreed that the payment to Ann Street Mezzanine could be effected by book entry. These issues are interrelated. The final issue is whether these arrangements, if they are found to exist, can be set aside ab initio and so be treated as never having been made. 28 There is no difficulty with the first issue. The answer is to be found in the rollover application form. By his acceptance of the rollover offer Mr Dunphy "direct[ed] York Street Mezzanine Pty Ltd to ... rollover and pay the face value of the [York Street] promissory note ... to the Ann Street Development. " This was an unmistakable direction to pay the sum due to Mr Dunphy to Ann Street Mezzanine. If the payment was made it is in law equivalent to a payment direct to the creditor and is a good discharge of the debt: Roper v Bumford (1810) 3 Taunt 76; [(1810) 128 ER 31]. 29 As to the second issue (could the promissory note be discharged by book entry), the rollover acceptance form is silent. That is, there is no express agreement that payment of the amount necessary to discharge the York Street promissory note need not be in legal tender. There may, however, be an implicit agreement to that effect. To analyse whether that is what the parties intended regard should be had to the following matters. First, Mr Dunphy's purpose in accepting the rollover offer was to purchase a promissory note from Ann Street Mezzanine. Second, to achieve that purpose he had to pay $100,000 to Ann Street Mezzanine. Third, it would have been obvious to Mr Dunphy that each of York Street Mezzanine and Ann Street Mezzanine were companies in the Westpoint group. Fourth, there was no instruction to pay Ann Street Mezzanine in cash. Lastly, there was no obvious reason for the money to be paid in cash. In my opinion (albeit after a good deal of hesitation) payment to Ann Street Mezzanine by book entry was both anticipated by the parties and, by implication, agreed to by them. 30 Even if it were not possible to infer the agreement of Mr Dunphy to a payment by book entry then his conduct would preclude him from denying the existence of such an agreement. Here I have in mind, Mr Dunphy's acceptance without complaint of the issue to him of a promissory note by Ann Street Mezzanine. It is now too late for Mr Dunphy to deny that York Street Mezzanine had paid out its promissory note or that Ann Street Mezzanine had been paid for the promissory note it issued to Mr Dunphy. 31 Of course, the conclusion about the efficacy of the payment by book entry depends upon there being a "valid" agreement (express or implied) that the York Street promissory note could be discharged by a payment by book entry: Deputy Commissioner of Taxation (NSW) v P Iori & Sons Pty Ltd (1987) 15 FCR 363, 379 . Accordingly, if Mr Dunphy could avoid the agreement to discharge the promissory note by a book entry payment (that is if the agreement could be set aside ab initio ), York Street Mezzanine would still owe Mr Dunphy the face value of the note. 32 It is necessary, therefore, to examine whether Mr Dunphy is able to avoid the agreement. The first step in the analysis is to identify rather more precisely than has been done thus far the agreement in issue. In a broad sense two discreet arrangements sprung up when Mr Dunphy accepted the rollover offer. The first was an arrangement between York Street Mezzanine and Mr Dunphy. Prior to the acceptance of the offer York Street Mezzanine had the right, but not the obligation, to discharge its promissory note before maturity. However, when the offer was accepted York Street Mezzanine became bound to discharge the note by making a payment in accordance with the direction in the rollover acceptance form. That document did not state when the payment was to be made. No doubt the payment had to be made either immediately or within a reasonable time of the acceptance of the offer. They imposed no duties upon Ann Street Mezzanine. Nor did they confer any benefits on Ann Street Mezzanine. But in due course an arrangement between Mr Dunphy and Ann Street Mezzanine did come into existence. Mr Dunphy had directed that his money be paid to Ann Street Mezzanine "as applications (sic) monies, which are to be issued to me/us pursuant to the [Ann Street Development] Information Memorandum" and had agreed "to be bound by the provisions of the Information Memorandum. " In my opinion this amounted to an offer by Mr Dunphy to take a $100,000 promissory note from Ann Street Mezzanine rather than the acceptance by him of an offer to issue a note. Even if it be assumed that when making the rollover offer York Street Mezzanine was also acting as agent for Ann Street Mezzanine, there is nothing in the language of either the rollover acceptance form or the Information Memorandum to suggest that any offer was being made by Ann Street Mezzanine. Nor do I consider that Mr Dunphy had entered into a unilateral contract of the kind discussed in New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154, 167-168, 171, 177. 34 The agreement between Mr Dunphy and Ann Street Mezzanine came into existence when Mr Dunphy's offer was accepted. It is not clear when this occurred. At the latest it was when Ann Street Mezzanine issued the promissory note in August 2005. There may have been an earlier acceptance of Mr Dunphy's offer but on the facts as presently known there was no evidence of an earlier act of acceptance which, of course, must have been communicated to Mr Dunphy. 35 The agreement Mr Dunphy made with Ann Street Mezzanine is not independent of his agreement with York Street Mezzanine. York Street Mezzanine's agreement to bring forward the maturity date of its promissory note and make a payment (by book entry) to Ann Street Mezzanine was dependant upon Ann Street Mezzanine issuing a replacement promissory note to Mr Dunphy. Put in more formal language, the performance of the obligations by York Street Mezzanine under its agreement with Mr Dunphy was conditional upon at least the existence, if not the execution, of the agreement between Mr Dunphy and Ann Street Mezzanine. The corollary is that if the agreement with Ann Street Mezzanine and Mr Dunphy can be avoided the agreement with York Street Mezzanine will fail as a consequence of the non-fulfilment of that condition. 36 In that situation the consequences would be as follows. First, the York Street promissory note would remain unsatisfied and Mr Dunphy would still be a creditor of York Street Mezzanine. Second with no payment having been made for the Ann Street promissory note Mr Dunphy would not be a creditor of Ann Street Mezzanine. 37 In this latter connection I note that because of their importance to trade all bills of exchange (including promissory notes) are prima facie deemed to have been made for valuable consideration: Philliskirk v Pluckwell (1814) 2 M&S 393 [(1814) 105 ER 427]; Crawley v Crowther (1702) 2 Freem 257 [(1702) 22 ER 1194]. But the presumption is rebuttable, at least in an action between the immediate parties to the bill: Holliday v Atkinson (1826) 5 B & C 501 [(1826) 108 ER 187]; Chalmers and Guest on Bills of Exchange and Cheques (16th ed, 2005) at paras 4-006 to 4-009; Byles on Bills of Exchange and Cheques (27th ed, 2002) at para 19-41 to 19-47. Likewise if a bill is founded on fraud, duress or illegality: Awde v Dixon (1851) 5 Eq 512 [(1851) 155 ER 798]; Bills of Exchange Act ss 95(1) and 35 (2). 38 This brings me to the question whether there is any basis upon which Mr Dunphy might be able to set aside his agreement with Ann Street Mezzanine. So far as the common law is concerned, the right of rescission for fraud or misrepresentation is so well known it needs no discussion. There are, however, one or two aspects of this common law right that are worth discussing. 39 Ann Street Mezzanine is in liquidation. It is common ground that prior to its liquidation Mr Dunphy took no step to rescind the agreement. This immediately raises the question whether the fact of liquidation is a bar to rescission. In Oakes v Turquand and Harding (1867) LR 2 HL 325; the House of Lords held that a person induced by fraud to become a shareholder lost the right to rescind his subscription contract upon the winding up of the company even though he might have been entitled to do so earlier. The reason was that "innocent third parties [that is creditors] have acquired rights which would be defeated by the rescission:" Tennent v City of Glasgow Bank (1879) 4 App Cas 615, 621. In my view the principle in Oakes v Turquand cannot be extended to a person who is not a shareholder and who wishes to rescind a contract with a company that has been placed into liquidation. In Southern British National Trust Ltd (in liq) v Pither [1937] HCA 28 ; (1937) 57 CLR 89 the High Court refused to extend the rule in Oakes v Turquand to debenture holders. Dixon J said at (113-114): "It is unnecessary to examine the basis of this firmly settled rule [established in Oakes v Turquand ]. But the decided cases show that its adoption was influenced by consideration of the position occupied by shareholders in an unincorporated company, who, of course, like partners, could not by repudiating their contract inter se escape liability to creditors. It was also influenced by the fact that creditors might be supposed to have acted on the face of the membership. But the fact that, when the company suspended and went into liquidation, and in time change took place in the relation of creditors and shareholders to the assets and of the shareholders inter se made the rule inevitable. It has, in my opinion, no application to the charge created in favour of other debenture holders in this case, which presents no analogy. Initially the position taken was that Oaks v Turquand applied only to the subscription contracts. See eg Morrison, The Principles of Rescission of Contracts (1st ed, 1916) at 195-197. There is a suggestion in the most recent edition of Chitty on Contracts (29th ed, 2004) vol 1 at 6-114 that the rule is of general application. I am not satisfied that that is the true position in England. It is not the rule in Australia. 41 If rescission at common law were available to Mr Dunphy the right once exercised operates ab initio on the ground that the fraud or misrepresentation is an initial invalidating act. Redgrave v Hurd (1881) 20 Ch D 1; Derry v Peek (1889) 14 App Cas 337. That explains why the party rescinding is not entitled to compensation for the loss of his contract, but only to restitutio in integrum . 42 It is by no means clear whether the common law remedy is available to Mr Dunphy. Even in cases of fraud and misrepresentation, the right to rescind may be lost if the wronged party has, by his conduct, elected to affirm the agreement. On the discovery of the facts which entitle him to rescind, the wronged party must elect between rescission and the confirmation of the agreement. An election once made is final and cannot be revoked: Sargent v ASL Developments Ltd [1974] HCA 40 ; (1974) 131 CLR 634. Rescission will also be impossible if there can be no restitution. In Clarke v Dickson (1858) EB&E 148, 154-155; [(1858) 120 ER 463, 466] Crompton J said: "When once it is settled that a contract induced by fraud is not void but voidable at the option of the party defrauded, it seems to me to follow that, when that party exercises his option to rescind the contract, he must be in such a state to rescind; that is, he must be in such a situation as to be able to put the parties into their original state before the contract ... That is founded on the plainest principles of justice. Mr Dunphy may be able to rely on the Corporations Act 2001 (Cth) to avoid his agreement with Ann Street Mezzanine. There are two provisions that appear to be relevant. The first is s 601MB. The definition of a managed investment scheme is found in s 9. The potential availability of s 601MB is based on the assumption that the Ann Street Development is a scheme that satisfies the definition. I have been asked to accept this assumption, at least for the time being. I think that is an appropriate course if for no other reason than that there are two decisions (including one of my own) in which it has been held that an arrangement that is in all material respects the same as the Ann Street Development is a managed investment scheme. The decisions are ASIC v Emu Brewery Mezzanine Ltd (2004) 52 ACSR 168 and Financial Industry Complaints Service Ltd v Deakin Financial Services Pty Ltd (2006) 60 ACSR 372. 45 There are several conditions that must be satisfied before a notice of avoidance can be given under s 601MB. Where the scheme is not registered the first condition is that the managed investment scheme is being operated in contravention of s 601ED(5). That section prohibits the operation of a managed investment scheme that is required to be registered under s 601EB unless the scheme is registered. It is common ground that the Ann Street Development is not registered under that section. 46 The second condition is that a person (the offeror) has offered an interest in the managed investment scheme for subscription or has issued an invitation to subscribe for an interest in the scheme. The facts here are rather sketchy but as things presently stand it does not seem that Ann Street Mezzanine made any offer to Mr Dunphy to acquire an interest in the Ann Street Development. Rather, the Information Memorandum (the contents of which have previously been described) published by Ann Street Mezzanine can fairly be described as an invitation by Ann Street Mezzanine to recipients of the memorandum to subscribe for an interest in the Ann Street Development. I have already explained how, at least in partial response to that invitation, Mr Dunphy made an offer to acquire a promissory note and when that offer was accepted. 47 If the conditions mentioned in s 601MB(1) are satisfied the contract to subscribe for the interest in the managed investment scheme is "voidable" at the option of the investor. If the investor wishes to exercise that option he must give a notice to that effect to the offeror. The offeror may within 21 days apply to the court to have the notice declared invalid (s 601MB(4)). Such a declaration will be made if "in all the circumstances it is just as equitable to make the declaration" (s 601MB(6)). If no application is made then at the end of 21 days, or if an application is made and no declaration is made after the application and any appeals have been determined, "the notice takes effect to void the contract" (s 601MB(3)). I take this to mean that the contract is void ab initio , with the consequence that the investor can recover what he paid for his investment. In other words, the parties to the contract are to be restored as far as may be possible to the position they were in before the contract was made. The alternative and unconventional meaning of "void" is that the contract is only dissolved as regards to future performance. That construction would run counter to the plain object of the section. 48 Thus, if Mr Dunphy were to give a notice under s 601MB(1) and the notice stands he would be required to return the Ann Street promissory note and repay any interest he had received from Ann Street Mezzanine. In return Ann Street Mezzanine would be obliged to refund the subscription money. Here there need not be (indeed could not be) a refund in cash. All that needs to be done would be to reverse the payment that had been effected by book entry presumably by a reversing book entry. 49 The foregoing discussion is based on an assumption that may or may not be correct. The assumption is that no money actually passed from York Street Mezzanine to Ann Street Mezzanine. That is to say, the discussion assumes that the only payment received by Ann Street Mezzanine on behalf of Mr Dunphy was a payment by book entry. However, if this assumption be incorrect and actual money did change hands, restitution by book entry would not be available. In that circumstance Ann Street Mezzanine would be indebted to Mr Dunphy for the face value of the note and because of the company's insolvency Mr Dunphy would stand in competition with all other unsecured creditors for the repayment of his debt. 50 The other provision pursuant to which Mr Dunphy might be able to set aside the agreement with Ann Street Mezzanine is s 925A of the Corporations Act . That section is located in Part 7.6 , Div 11, Subdiv B. That subdivision applies to an agreement between a person (the non-licensee) and another person (the client) that constitutes or relates to the provision of a financial service by the non-licensee if the agreement is entered into in the course of a financial services business carried on by the non-licensee and the non-licensee is required to but does not hold an Australian financial services licence: see s 924A. Section 925A is the key provision in Subdiv B. The section provides that, in certain circumstances, the client may give notice stating that the client wishes to rescind the agreement. The effect of such a notice is to rescind the agreement unless rescission would affect the rights of an innocent third party: s 925B. In that event the court may make an order for the partial rescission of the agreement under s 925C if that would avoid the prejudice. 51 To determine whether s 925A has application to the facts at hand requires an examination of several provisions in Part 7 of the Corporations Act . First reference must be made to s 766A which describes when a person "provides a financial service". A person will be taken to provide a financial service if, relevantly, they (b) "deal in a financial product. " According to s 766C(1)(b) a person deals in a financial product if the person "issues a financial product". A financial product is issued to a person when "it is first issued, granted or otherwise made available to a person": s 761E(2). That person "acquires the product from the issuer; and ... the issuer provides the product to the person": s 761E(1). 52 Section 764A(1) provides that a "financial product" includes, amongst other things, an interest in a managed investment scheme. Certain dealings are, however, not to be treated as a dealing in a financial product. Relevantly, for present purposes s 766C(4)(d) provides that a transaction by a body corporate is not to be taken to be a dealing in a financial product "if the transaction relates only to ... securities of that entity". 53 The effect, then, of s 766A and s 761E is that, subject to any statutory exceptions, an agreement will relate to "provision of a financial service" if it results in the issue to a person of an interest in a managed investment scheme. 54 In dealing with the application of s 925A I will, as before, assume that the acquisition by Mr Dunphy of a promissory note from Ann Street Mezzanine is an acquisition of an interest in a managed investment scheme. I note that an interest in a managed investment scheme is defined in s 9 to mean "a right to benefits produced by the scheme". Here the relevant scheme is not simply the issue of promissory notes by Ann Street Mezzanine. It is much wider than that. In ASIC v Emu Brewery Mezzanine Ltd (2004) 52 ACSR 168, 186 Simmonds J described an almost identical scheme as one by which "investors were asked ... to contribute their money so as to permit the special purpose corporate vehicle to make possible the "mezzanine" finance arrangements for the particular project described for them, and in return would gain the sorts of benefits the vehicle's participation in these arrangements would make possible for the investors. That provision is concerned to exclude from what would otherwise be 'a dealing in a financial product' (say a managed investment scheme) a limited class of "transaction". The use of the word "transaction" focuses attention not only on the agreement pursuant to which a financial product is issued but on the whole dealing or matter of which the particular agreement forms a part. On no view of the dealings between Ann Street Mezzanine and Mr Dunphy could it be said they relate only to securities in Ann Street Mezzanine. The dealings might be of that character if the issue of the promissory note was looked at in isolation. But that is not what the exception allows. 56 Going back to s 924A , the section provides that Subdiv B applies to an agreement for the provision of financial service by a non-licensee only if the agreement is entered into in the course of a "financial services business" that is carried on by the non-licensee. "Financial services business" is defined in s 761A to mean "a business of providing financial services". I will assume that Ann Street Mezzanine carries on a financial services business. This assumption, however, is not without its difficulties. Ann Street Mezzanine was set up to perform the following functions, namely to raise $40 million, lend that amount to Ann Street Brisbane, recover the money lent and finally return it to investors. It may be impossible to deny that Ann Street Mezzanine was carrying on a business. Normally "business" is a "wide and general" concept: Actors & Announcers Equity Association of Australia v Fontana Films Pty Ltd [1982] HCA 23 ; (1982) 150 CLR 169, 184. It may extend to anything a corporation does. But for s 925A to apply it would be necessary to characterise the business carried on by Ann Street Mezzanine as a "financial services business" and, it is not clear whether it was of that character. 57 Putting to one side the nature of the business carried on by Ann Street Mezzanine, s 925A is otherwise available to Mr Dunphy. This is because Ann Street Mezzanine, which did not hold a "financial service licence", entered into an agreement to provide a "financial service" to Mr Dunphy. In the result, Mr Dunphy may, at least theoretically, be able to give notice of rescission of his agreement with Ann Street Mezzanine. Whether such a notice would be effective will depend on three things. First, the notice must be given within a reasonable time after Mr Dunphy had become aware of the facts which entitle him to give the notice: s 925A(2). Second, Mr Dunphy must not by his conduct have affirmed the agreement: s 925A(3). Third, the rescission cannot prejudice the rights of innocent third parties: s 925B. Whether or not Mr Dunphy is able to satisfy those conditions is a matter for another day. 58 I trust that by now I have said enough to answer the questions raised by the liquidators. I will leave it to them to bring in short minutes of orders to give effect to these reasons. If any issue remains outstanding it can be raised by any party. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein. | promissory notes payable on or before maturity date whether uncertain or contingent discharge of promissory note otherwise than by payment in cash whether permissible procedure when promissory note is lost managed investment scheme issue of promissory notes whether subscription contract can be avoided pursuant to s 601mb whether contract relates to the provision of a financial service whether contract can be avoided under s 925a whether exception in s 766c(4) applies whether liquidation is a bar to rescission precedent duty of single judge to follow decision of another single judges unless 'plainly wrong' bills of exchange corporations practice and procedure |
On 10 May 2007 the Tribunal affirmed a decision of the delegate of the Minister for Immigration and Citizenship to refuse the appellant the grant of an Established Business (Residence) (Class BH) visa pursuant to s 65 Migration Act 1958 (Cth) (the Act). The wife and two children of the appellant were also included in the application. A delegate of the Minister refused the application on 17 May 2001. 3 On 18 November 2002 the appellant applied to the Tribunal to have the decision of the delegate reviewed. That review was successful and the Tribunal remitted the matter to the first respondent for reconsideration. 4 On 14 April 2003 the delegate of the first respondent again refused the visa application of the appellant. This decision was subsequently affirmed by the Tribunal and the Federal Magistrates Court. The appellant appealed that decision of the Federal Magistrate to the Federal Court. 5 On 12 September 2006 the Federal Court set aside the decision of the Federal Magistrate and returned the matter to the Tribunal for review ( Tran v Minister for Immigration & Multicultural Affairs [2006] FCA 1229). 6 On 10 May 2007 the Tribunal again affirmed the decision of the delegate not to grant the appellant a visa. The appellant appealed the Tribunal's decision to the Federal Magistrates Court. Burnett FM dismissed the application of the appellant on 21 November 2007. It is from this decision that the appellant appeals to this Court. The contentious scores were for attributes relating to English language ability and net assets provided for in Sch 7 Pt 3 and Pt 4 to the Migration Regulations 1994 (Cth) (the Regulations). 8 The assessment of the appellant's English language ability was made in accordance with policies contained in the Procedures Advice Manual (PAM) prepared by the Department of Migration and Citizenship to assist delegates of the Minister in making decisions in accordance with the legislation. It was not in contention that it was appropriate for the delegate, and subsequently the Tribunal, to be guided by the PAM in assessing the appellant's English language ability. The application by the Tribunal of the policy in the PAM is, however, in contention. The Tribunal noted that the appellant relied to a large extent on an interpreter at the hearing and that the appellant had not sat an IELTS test (International English Language Testing System). • The Tribunal found that the two Advanced Diplomas of Management awarded to the appellant, by the Australian Business and Retail Academy, were a result of study by correspondence over two years part-time. It could not be satisfied that the appellant attended classes, listened to lectures in English, or wrote assignments in English or that all instruction was in English. • Although in order to satisfy the points test in relation to assets it was necessary that the appellant have assets of not less than the equivalent of $2.5 million to transfer to Australia within two years of the granting of the visa, the Tribunal was not satisfied that the appellant had assets of this value. In particular, the Tribunal noted that several properties owned by the appellant could not be taken into account for the purposes of the valuation because they were not acquired prior to the application. The Tribunal also found that the appellant did not provide acceptable valuations of several properties. The Tribunal had denied the appellant procedural fairness and breached s 359A of the Act. The Tribunal gave various real estate valuations no weight based on the lack of translated valuations or any explanation of how the valuations were arrived at. The appellant was not given an opportunity to comment or provide further evidence. 2. The Tribunal had failed to take account relevant material and considerations. The Tribunal did not consider evidence of the appellant's qualifications and assets. 3. The Tribunal misinterpreted the law and/or failed to apply the law relevant to the application. The Tribunal attributed inappropriate status to the IELTS test and failed to attribute appropriate weight to the appellant's Diplomas. In any event the Tribunal noted there was no such evidence and that the Tribunal only had available before it the appellant's evidence comprising his Diplomas. • The Tribunal had carefully considered the evidence provided by the appellant in relation to his Diplomas. It noted that written assignments were not produced, but assessment was undertaken by "tick a box" multiple-choice assessment. The appellant was not required to attend class and listen to lectures conducted in English. • Classes given as part of the course of study for the Diplomas were by correspondence, although the appellant had attended some classes where he communicated with tutors in Vietnamese and English. • The fact that the appellant was dissatisfied with the Tribunal's determinations on questions of fact does not amount to a jurisdictional error or error of law and it is not appropriate for a court to review the merits of a Tribunal's determination ( Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 162). • Facts or findings as to credibility are the function of the primary decision-maker. • Although the issue of pre-and post-application values of property was determined by the Tribunal arbitrarily, the issue was decided in favour of the appellant. This is ultimately a question of fact for the Tribunal. 13 Accordingly his Honour dismissed the application. During the course of oral submissions on 21 May 2008 before me, an issue of contention arose as to whether the Tribunal had made findings of fact unsupported by evidence in relation to the assessment of the appellant's English language ability, whether the appellant had attended his Diploma courses part-time, and whether the courses were conducted in English or Vietnamese (TS 12 21 May 2008). The appellant had not raised these issues before the Federal Magistrate and did not include such grounds in the Notice of Appeal filed 6 December 2007. Once these issues were raised in oral submissions, however, the appellant foreshadowed a desire to seek leave to file an Amended Notice of Appeal so as to include further grounds. I adjourned the matter to allow the appellant time to prepare an Amended Notice of Appeal and to allow both parties the opportunity to prepare amended submissions in the event that leave to file the Amended Notice of Appeal was granted. 15 On 24 June 2008 the matter returned for hearing and the appellant applied for leave to file an Amended Notice of Appeal. 16 However I also considered that allowing the appellant to amend his Notice of Appeal would cause limited (if any) prejudice to the respondent (indeed, Counsel for the first respondent stated at this hearing that she was in a position to answer the new ground of appeal). 17 On balance, I decided it was in the interest of justice that the appellant be granted leave to file his Amended Notice of Appeal. The Tribunal fell into jurisdictional error in that it denied procedural fairness to the appellant as well as acting in breach of its obligations under the law (in breach of s 359A of the Act). a. The Tribunal stated that the appellant's estimations of real estate valuations were not supported by translated valuations or an explanation of how the values were arrived at, gave the valuations no weight and did not take them into account. The Tribunal denied the appellant the opportunity to comment or provide further evidence and documentation in relation to the real estate valuations. 2. The Tribunal fell into jurisdictional error in that it failed to take account of relevant material or considerations. a. The Tribunal "accepted" that the appellant has been awarded two (2) Advanced Diplomas and that under policy guidelines in the PAM, the qualifications may be accepted as evidence of the appellant having "better than functional English". However, the Tribunal failed to consider the evidence of the appellant's qualifications produced and concluded that the appellant only had functional English. b. The Tribunal gave the appellant real estate valuations no weight and failed to take them into account. The Tribunal concluded that the appellant and his spouse did not have net assets of not less than the equivalent of $2,500,000 as the Tribunal failed to consider a substantial amount of the appellant's assets. 3. The Tribunal fell into jurisdictional error in that it misrepresented the law or failed to apply the law relevant to the application before it. a. The Tribunal noted that, as an alternative, evidence of the appellant's English ability may be provided in the form of an IELTS test. The Tribunal made a preference as to the type of evidence provided of the appellant's English ability, as provided by the policy guidelines in the PAM. b. Further, the Tribunal concluded that the appellant has only "functional English" based on the absence of an IELTS test and commented that the appellant failed to take the IELTS test despite being invited to do so on many occasions. Therefore, the Tribunal placed a requirement on the appellant to sit an IELTS test, even though no such requirement exists in the Act. 4. The Tribunal fell into jurisdictional error in that it denied procedural fairness to the appellant, in making an error of fact upon the evidence presented upon it, which led it to misapplying the law. a. The Tribunal concluded that the appellant had completed the two Advanced Diplomas on a part-time basis, although he completed the course on a full-time basis. In making this conclusion, the Tribunal considered that the appellant only had "functional English" rather than "better than functional English" ability, which led to the conclusion that the appellant did not satisfy the required points test regarding English ability. Therefore, the Tribunal made an error of fact which led it to misapply the law. b. The Tribunal concluded that the instructions in completing the two Advanced Diplomas were given in Vietnamese, although they were given in English. In making this conclusion, the Tribunal considered that the appellant only had "functional English" rather than "better than functional English" ability, which led to the conclusion that the appellant did not satisfy the required points test regarding English ability. Therefore, the Tribunal made an error of fact which led it to misapply the law. 19 With the exception of the new fourth ground of appeal, the grounds submitted by the appellant were identical to those before the Federal Magistrates Court. An order that the decision of Burnett FM be quashed. 2. The matter be remitted to the MRT for rehearing. 3. The respondent be ordered to pay the costs of the appellant in these proceedings. 4. The respondent be ordered to pay the costs of the appellant in these proceedings and the proceedings below. • By not placing due weight on the appellant's assets, the overall points score was affected which lead to the Tribunal affirming the decision of the delegate. The Tribunal accepted that the appellant achieved two Advanced Diplomas but did not award the appellant 30 points for achieving "better than functional English" as provided for in policy. The fact that the appellant exercised his right to use an interpreter at the hearing was an irrelevant consideration. • The real estate valuations of the appellant were given no weight by the Tribunal and not taken into account. The Tribunal divided the value of the 93-95 Nguyen Cu Trinh Street property in half without giving any reasons. If the property were not divided in half, the appellant would have received 15 points under the Schedule to the Act. The appellant was not given the opportunity to provide further evidence or comment on the real estate valuations. The decision of the Tribunal is contrary to the authority in Wyse v Minister for Immigration and Citizenship [2006] FMCA 1362. By commenting on the appellant's failure to take an IELTS test, the Tribunal made a preference as to the type of evidence it would accept and imposed a requirement that an IELTS test be completed. The Tribunal concluded the appellant completed Advanced Diplomas on a part-time basis and the instructions were in Vietnamese. In fact the courses were completed on a full-time basis and instructions were in English. The factual errors led the Tribunal to conclude the appellant had "functional English". This does not extend to "information" encompassing the Tribunal's thought processes, determination, subjective appraisals, or relate to the existence of doubts, inconsistencies or absence of evidence ( SZBYR v Minister for Immigration and Citizenship [2007] HCA 26). • The Tribunal considered the information given by the appellant in relation to property valuations and decided not to place any weight on it. Such an approach is open to the Tribunal ( Tran v Minister for Immigration and Multicultural Affairs [2006] FCA 1229 at [55] ). • The appellant was invited by the Tribunal to provide further information supported by documentation in accordance with s 359A(2) of the Act. • The real estate valuations of the appellant were given to the Tribunal for the purposes of the review. Section 359A(4)(b) of the Act specifically excludes information, given for the purposes of the application for review, from the operation of s 359A. • In relation to the asset valuations, the Tribunal did consider and take into account the real estate properties and valuations but determined not to place weight on those valuations. The weight to be attributed to such valuations was an issue for the Tribunal ( Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40 ; (1986) 162 CLR 24). • The PAM policy guidelines as to functional ability in English and "better than functional ability" provide that either educational qualifications or the IELTS test results may be regarded as sufficient in deciding whether the appellant has better than functional English. The Tribunal merely adverted to the IELTS test as an alternative assessment. • A finding that the appellant undertook part-time study was open to the Tribunal upon the evidence. The facts before the Tribunal were that the appellant studied by correspondence, completing 12 subjects over two years while undertaking full-time work (seven days a week). • A finding that the appellant communicated with his tutors in both English and Vietnamese was open to the Tribunal on the evidence. The appellant at the Tribunal hearing stated that his tutors spoke with him in both languages and assessment was mostly by way of "tick the box" answers. An error in the factual findings of the Tribunal, or the weighing of facts by the Tribunal, is not a jurisdictional error. 24 In this case there is considerable overlap between the appellant's grounds of appeal and submissions in relation to those grounds of appeal. However in its statement of decision and reasons it is clear that the Tribunal carefully considered all the evidence relating to the assets claimed by the appellant. 28 The appellant in ground 1 does not identify the information upon which it is said the Tribunal should have invited comment. After consideration of the evidence, the Tribunal was of the view that little weight should be given to the valuations provided by the appellant. Inconsistencies and disbelief of the appellant's evidence are not, for the purposes of s 359A of the Act, "information" which must be provided by the Tribunal to the appellant. 29 In any event, s 359A(4)(b) of the Act stipulates that information provided by the appellant for the purposes of the application for review is excluded from the operation of the section. As the first respondent has correctly submitted, information in relation to asset valuation provided by the appellant was in fact provided to the Tribunal for this reason. The property valuation information is therefore excluded as "information" under s 359A(1) of the Act. 30 Finally, it is clear that contrary to the appellant's ground of appeal, the appellant was provided with an invitation and an opportunity to provide further information in relation to his current assets and liabilities with supporting documentation. 31 The learned Federal Magistrate held that there was no breach of procedural fairness as required by s 359A of the Act. No error has been demonstrated in relation to this finding of his Honour. Accordingly, the appellant's first ground of appeal fails. 33 I do not accept that the Tribunal was required to find that, because the appellant had been awarded two Advanced Diplomas, the appellant had "better than functional English" in terms of the policy guidelines in the PAM. The PAM makes it plain that the issue of having a qualification is one factor the Tribunal may take into consideration in determining whether a person has better than functional English. It is open to the Tribunal to find that a person does not have better than functional English notwithstanding having the qualifications listed in the PAM. 36 However in any event the policy provides for a finding of better than functional English in circumstances where the course of study is at least two years full-time in an institution where all instruction was conducted in English. The Tribunal found this was not the case in relation to the appellant's courses of study. The weight given to those valuations however is an issue for the Tribunal ( Minister for Aboriginal Affairs v Peko-Wallsend Limited [1986] HCA 40 ; (1986) 162 CLR 24). 38 The appellant raised issue with the Tribunal's decision relating to the value of the property at 93-95 Nguyen Cu Trinh Street. It appears from the evidence that the appellant held the property at 95 Nguyen Cu Trinh Street at the time of the application, but that the adjoining building No 93 was acquired after the application. The appellant's evidence was that the property at No 95 was worth $200,000 but that the combined worth of the two properties was $1,207,242. The Federal Magistrate noted that the Tribunal had divided the then value of 93-95 Nguyen Cu Trinh Street in half for the purposes of its consideration of the appellant's case. His Honour found that, while the value attributed to the properties by the Tribunal for the purposes of the application may have been decided arbitrarily, the Tribunal clearly decided the case in favour of the appellant. This is because No 93 had been acquired after the commencement of the application --- accordingly the Tribunal strictly did not need to take the value of that property into account. The Federal Magistrate found that the decision of the Tribunal in relation to these properties had no effect on the decision adverse to the appellant ( Tran [2007] FMCA 1929 at [33]). 39 Further, I agree with Ms Wheatley that the principles articulated in Wyse [2006] FMCA 1362 have no application in the context of these proceedings, as that case involved a different type of visa, a different policy and different requirements. 40 I do not consider this ground of appeal substantiated. It is clear from the Tribunal's decision that its reference to the IELTS test was merely to indicate its awareness of an alternative form of assessment available to it and the inferences open on the presentation of evidence of that kind. In the result however the Tribunal only had available before it the Applicant's evidence comprising the advanced diplomas. The Tribunal merely noted that the appellant did not present results of an IELTS test. The Tribunal mentioned the IELTS test because it is a consideration for which there is provision under the policy. 43 This ground of appeal is not substantiated. 45 Further, contrary to the appellant's ground of appeal that the Tribunal had found that the instruction in the appellant's courses was in Vietnamese, in fact the finding of the Tribunal was that the appellant "communicated with his tutors in English and in Vietnamese". This finding of the Tribunal was available to it given that, as the evidence demonstrated, the appellant had told the Tribunal during the hearing that he and his teachers spoke in both English and Vietnamese. The fourth ground of appeal as it relates to the Tribunal's finding that "instruction in the diploma courses were given in Vietnamese" is not supported by the evidence. The Tribunal simply did not make such a finding. However, like Burnett FM, I am satisfied that the Tribunal properly considered the application. Further, I am unable to identify any error in the decision of the learned Federal Magistrate below. Accordingly, the appropriate order is to dismiss the appeal with costs. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | appeal from decision of federal magistrate review of decision rejecting established business (residence) (class bh) visa whether jurisdictional error established denial of procedural fairness requirements of s 359a migration act 1958 (cth) error of fact failure to take account of relevant facts migration |
By amended notice of motion dated 20 February 2007 the respondent seeks a stay of the petition until his application for special leave to the High Court (P2 of 2008) and two applications made to the Administrative Appeals Tribunal ("AAT") have been finally determined. The application to the High Court concerns the validity of the Bankruptcy Notice which grounds the petition. The first AAT application is to reinstate a challenge to the disallowance by the applicant of objections to some but not all of the assessments issued to the respondent by the applicant. The second is an application for an extension of time for lodging an application for review of a decision. I will deal with these in more detail later. An "Infomercial", according to the respondent, is an advertising film which is generally shown on television and promotes a product in an informative and objective style. Those tax deductions were disallowed by the applicant. 7 On 3 August 2001 the respondent commenced review proceedings in the AAT in respect of each of the applicant's decisions to disallow the respondent's objections to the assessments issued on 23 October 2000. In February 2005 the respondent withdrew the proceedings. The respondent says that he did so because he did not have the assistance of the promoters of the Infomercial Schemes including Mr Peter Leslie Ambrosy and that without his assistance it was not possible for him to present his case in the AAT. Pursuant to s 42(A)1B of the Administrative Appeals Tribunal Act 1975 , the affect of the withdrawal was that the AAT proceedings were considered to have been dismissed. 8 In Australian Securities & Investments Commission v Infomercial Management Group Pty Ltd [2002] VSC 262 at [58] the Supreme Court of Victoria held that certain Infomercial schemes were a fraud on the investors, if not on the Australian Taxation Office. These schemes, so claims the respondent, were the ones in which he had invested. 9 Importantly, other than in relation to a very small sum comprised in the 1998 assessment, none of the November 2000 assessments concerned the respondent's investments in the Infomercial Schemes. The assessment for 1998 for $2,619,580.49 was subject to objections by the respondent. These objections failed as did a subsequent review before the Administrative Appeals Tribunal (AAT). In February 2005 an appeal to this Court from the decision of the AAT was dismissed by consent. The November 2000 assessments for 1995 and 1996 have never been the subject of an application for review or legal challenge. 10 On 15 June 2005 a summary judgment was entered in the Supreme Court proceedings against the respondent for the sum of $38,084,522.24 including interest. The respondent did not consent to the judgment but did not oppose it. The amount of the judgment attributable to the assessments made on 23 November 2000 was $4,778,969.82 including interest charges. The amount of $243,360.31 contained in the amended assessment issued on 23 November 2000 in respect of the 1995 financial year was not included in the judgment sum because it had by then been paid. However interest on this sum was claimed in the writ. 11 On 17 March 2006 the Deputy Commissioner issued a bankruptcy notice which was duly served on the respondent requiring payment, within 21 days after service, in the amount of $38,051,066.24. The amount demanded comprised the sum of the judgment less an amount of $33,456 described in the bankruptcy notice as "payments made and/or credits allowed since date of judgments or orders". 12 On 23 August 2006 the respondent filed a Notice of Appeal in the Supreme Court (CACV 107 of 2006) out of time, to set aside the summary judgment on the basis that he was defrauded by the promoters of a tax avoidance scheme. In February 2007 a single judge dismissed the respondent's application for an extension of time to appeal. In February 2007 the respondent filed an application for review by the Court of Appeal, which was ultimately dismissed. 13 The respondent also failed in proceedings in this Court by which he had sought to set aside the Bankruptcy Notice. This culminated in his appeal to the Full Court (WAD 361 of 2006) being dismissed on 24 December 2007: Cumins v Deputy Commissioner of Taxation [2007] FCAFC 207. The onus is on the respondent debtor to demonstrate "sufficient cause": Commissioner of Taxation v Bayeh [1999] FCA 1223 ; (1999) 100 FCR 144 at [12] . 15 Section 52(2)(b) of the Bankruptcy Act 1966 (Cth) is wide enough to entitle the Court, in a proper case, to adjourn or dismiss a petition in the exercise of its discretion, where the debtor demonstrates a genuine dispute as to the liability to pay the debt: Re Verma; Ex Parte Deputy Commissioner of Taxation (1984) 4 FCR 181 at 185 and 187. This power is discretionary: Clyne v Deputy Commissioner of Taxation (1982) 45 ALR 323 at 328. 16 The Court is entitled to inquire whether a judgment is founded on a real debt. In general, a court exercising jurisdiction should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings, provided that the appeal is based on genuine and arguable grounds: Ahern v Deputy Commissioner of Taxation (Qld) [1987] FCA 312 ; (1987) 76 ALR 137 at 148; Bayne v Baillieu [1907] HCA 39 ; (1907) 5 CLR 64. 17 The mere fact that an appeal has been lodged does not without more, give rise to a duty to postpone the hearing of the petition: in Re Flatau: Ex Parte Scotch Whisky Distillers (1882) 22 QBD 83 (CA) at 84-85; nor will the court as a matter of course inquire into the validity of a judgment debt: Wren v Mahony [1972] HCA 5 ; (1972) 126 CLR 212 at 222-223. 18 The test to be applied has been described variously. The judgment debtor must point to grounds having "a real chance of success on appeal": Re Lewin: Ex Parte Milner (1986) 11 FCR 312 at 318; or ensure "that substantial reasons are given for questioning" whether there was in truth a debt: Wren [1972] HCA 5 ; 126 CLR 212 at 225. It is not enough to rely upon mere assertion. The onus is on the applicant for a stay to show the existence of a genuine dispute by adducing evidence establishing the substantial nature of the grounds of challenge: Verma, Virendra Kumar v Deputy Commissioner of Taxation [1983] FCA 388 referred to with approval in Re Verma 4 FCR 181 at 187. 19 The respondent contends that, while arguments about the prospects of success of its application for special leave to the High Court and its two applications to the AAT, may be relevant on the hearing of the creditor's petition, they are not relevant to the present motion to stay the petition. It submits that on such an application the Court is precluded from considering the prospects of success of any review or appeal. It relies upon Deputy Commissioner of Taxation v Ho (1996) 131 FLR 188 and Deputy Commissioner of Taxation v Feldman [2006] NSWSC 378. There is one exception it submits: the Court may take account of the taxpayer's prospects of success in review proceedings if it is clear that the review is frivolous: Hall v Poolman [2007] NSWSC 1330 at [85] . It has not been said that Mr Cumins' AAT applications and AAT proceedings are clearly frivolous. For these reasons, the prospects of success of the application to the High Court for special leave to appeal, the AAT applications and the AAT proceedings are not addressed in the respondent's submissions. 20 Each of Ho and Feldman concerned applications to stay proceedings brought by the Deputy Commissioner of Taxation for recovery of tax in State courts. They involved consideration of the provisions of s 177(1) of the Income Tax Assessment Act 1936 (Cth) which renders a Notice of Assessment conclusive evidence that the assessment is correct. They also involved consideration of ss 14ZZM and 14ZZR of the Tax Administration Act 1953 (Cth). 21 Ss 14ZZM and 14ZZR provide that the fact that an appeal to the Federal Court (s 14ZZM) or review by the AAT (s 14ZZR) is pending in relation to a taxation decision does not in the meantime interfere with or affect the decision the subject of the appeal or review; and income tax may be recovered on the assessment as if no appeal or reference were pending. 22 As Ireland J observed in Ho, the effect of these sections is to give primacy to the general right which the Commissioner has to have tax paid irrespective of the pendency of an appeal and its merits: Deputy Commissioner of Taxation v Mackey (1982) 45 ALR 284 at 287. Feldman is to the same effect. 23 Poolman concerned corporate insolvency proceedings in the Supreme Court of New South Wales. Both generally, and at the passages cited by the respondent, [85] particularly, are of no assistance. 24 This is not a case like Ho or Feldman . This is an application to stay the hearing of a bankruptcy petition. Ho at 194-195 in fact supports the proposition that the substantive merits of an appeal are relevant to an application for a stay of a bankruptcy petition. 25 This, of course, is merely consistent with a long line of authority to that effect and to which I have already referred. 26 The respondent further submits that a stay of a creditor's petition may be ordered where there are exceptional circumstances which give rise to an application: Deputy Commissioner of Taxation v Feldman [2006] NSWSC 378 ; (2006) 62 ATR 253 and to avoid hardship on him: Deputy Commissioner of Taxation v Gergis (1991) 91 ATC 4510 ; Deputy Commissioner Of Taxation v Ho (1996)131 FLR 188. 29 This he says would arise if the hearing went ahead before the special leave application and AAT applications were determined. 30 French J, in Snow v Deputy Commissioner of Taxation (1987) 18 ATR 439 at 478 set out the principles which govern or guide the exercise of the power of State courts to stay tax recovery proceedings. Extreme personal hardship to the taxpayer is a relevant consideration. Cummins J referred to this with apparent approval at 4,512 in Gergis. I do not consider such considerations to be relevant to the question of an application to stay the hearing of a bankruptcy petition. 31 It follows that I do not accept the respondent's submissions in these respects and I will accordingly consider the prospects of success of both the proceedings before the High Court and the AAT to the extent that this is capable of being done on the material before me. I propose to do this despite the fact that counsel for the respondent, on the occasion of each of the hearings before me, did not attempt to articulate the merits in each case. This primarily was the result of the respondent's submission that the merits were irrelevant to the relief sought. His application before a registrar of the Court was dismissed. A subsequent appeal to a single judge was unsuccessful ( Cumins v Deputy Commissioner of Taxation [2006] FCA1847), as was a further appeal to the Full Court ( Cumins v Deputy Commissioner of Taxation [2007] FCAFC 207). The Full Court's decision was delivered on 24 December 2007 subsequent to the filing of the notice of motion for a stay of proceedings. The respondent has sought special leave to appeal to the High Court from the decision of the Full Court. 33 The relevant inquiry should proceed on the footing that an application for special leave to the High Court is different in character from the situation where an appeal lies as of right: Westpac Banking Corporation v Carver [2003] FCA 221 ; (2003) 126 FCR 113 at [12] . In such a case it is not sufficient to ask whether the appeal is genuine, and there is an obvious or manifest error of law or fact in the judgment from which special leave is sought. The respondent debtor must go further and show that there are arguable grounds for concluding that special leave to appeal will be granted having regard to the considerations relevant to a grant of special leave: Westpac Banking Corporation [2003] FCA 221 ; 126 FCR 113 at [17] - [18] . Even if it be established that an appeal has substantial prospects of success, (a fortiori that special leave to appeal will be granted) the Court is not required to adjourn the proceedings. It is but a circumstance to be taken into account in exercising its discretion whether to adjourn the petition: Re Lewin: Ex Parte Milner (1986) 11 FCR 312 at 318. 34 The respondent had contended that the bankruptcy notice was invalid because PAYG withholding in the sum of $9,516 paid to the applicant prior to the issue of the bankruptcy notice but after the date of the Supreme Court judgment ought to have been, but were not included as payments made by the respondent for the purpose of reducing the sum claimed by the applicant in the bankruptcy notice. 35 The respondent's contention was rejected by the registrar. That contention formed the sole ground of appeal to a single judge of this Court and the sole ground of appeal to the Full Court. 36 In his appeal to the Full Court the respondent raised a new argument which had not been raised with Siopis J, from whose judgment the appeal lay. 37 Particular reliance had been placed by the respondent upon the provisions of Pt IIB of the Tax Administration Act 1953 (Cth) which deals with, amongst other things, Running Balance Accounts or RBAs: Division 2 of Pt IIB. Detailed provisions are found within ss 8AAZA, 8AAZC, 8AAZD, 8AAZH, 8AAZL, amongst others which set out what constitutes an RBA and how it may be utilised: [27]-[34]. The respondent relied on s 18-15(1) of Schedule 1 of the Tax Administration Act 1953 (Cth) and submitted that the Commissioner had an obligation to deal with the withheld PAYG payment of $9,516 even before an assessment was made. 38 It was submitted that s 8AAZLA obliged the Commissioner to allocate the amount of a PAYG payment to an RBA and that the amount of $9,516 should have been so treated: [36]-[37]. 39 The Full Court dismissed the appeal: Cumins v Deputy Commissioner of Taxation [2007] FCAFC 207. The argument then went that, absent fulfilment of that obligation, the Commissioner should be treated, for the purpose of allowing credits, as though he had set up an RBA in respect of the taxpayer. The critical importance to the argument of the existence of an obligation to establish an RBA was acknowledged by counsel. Counsel accepted that absent such an obligation his argument had no purchase. The language is not obligatory. Nor is the language of s 8AAZC(2) which is facultative. The basis of establishment of RBAs is to be determined by the Commissioner. They may be established for different kinds of primary tax debts. It forms no basis for a contention that PAYG payments of the kind which were made in this case are to be credited against the taxpayer's liabilities to the Commissioner in advance of the issue of an assessment. He referred, in particular, to a passage from the judgment of the Full Court of the Supreme Court of South Australia in Ozone Manufacturing Pty Ltd 94 SASR 269. That case concerned an application by a corporation to set aside a statutory demand from the Commissioner on the basis of an offsetting claim for tax offsets in respect of research and development expenditure. The taxpayer had claimed tax offsets in respect of research and development expenditure in relation to three tax years, namely 2002, 2003 and 2004. It had not supplied relevant information and documentation to the Commissioner who rejected the claim for offsets for the 2002 year on that basis. The Commissioner had not yet determined the claims for the subsequent years but indicated that these would be rejected as well. The balance of the taxpayer's RBA was due for payment and constituted an "RBA deficit debt". The taxpayer argued, in support of his application to set aside the statutory demand, that it had a genuine offsetting claim. The Full Court held that the amount of a refund would be a credit for the purpose of the RBA and as the claim for tax offsets was long standing, bona fide and not artificial, the taxpayer had a genuine offsetting claim. This required the court to set aside the statutory demand. It will be seen that the question before the Full Court in that case was quite different from the question before the Full Court in this case. It throws no light on the issue before us. These provisions impose an imperative obligation upon the Commissioner to credit a tax offset to an RBA. Such an obligation would be contrary to the clear language of the relevant provisions. Indeed, as I said earlier, his submission was that generally the merits of those proceedings are irrelevant to this motion. 42 In considering the reasons of the Full Court and in particular the pointed reference to counsel's concession concerning the lack of 'evidentiary background' it seems in respect of the first ground that the respondent faces an insurmountable evidentiary difficulty in his application to the High Court. This is, as the Full Court mentioned, quite apart from the 'constructional merits' which it characterised as appearing to be "non-existent": [47]. 43 The Full Court did not make the findings attributed to it in the second of the respondent's grounds. Counsel for the respondent submitted that these grounds were an inelegant paraphrase of the Full Court's reasons at [41]. It is very difficult to discern this. 44 Applications for special leave ordinarily need to demonstrate that the issue they seek to agitate is of sufficient importance to merit the grant of special leave; that the case is a suitable vehicle for the resolution of that issue; and that their contentions on that issue are sufficiently arguable: Westpac Banking Corporation v Carver [2003] FCA 221 at [14] , and more generally Judiciary Act 1903 (Cth), s 35A. It was incumbent upon the respondent to show that there are arguable grounds for concluding that special leave will be granted having regard to the considerations relevant to a grant of special leave: Westpac Banking Corporation v Carver at [17]-[18]. He has not done so. This was shortly after the Court of Appeal dismissed the respondent's appeal against the decision refusing an extension of time within which to appeal. The Tribunal has yet to make a decision whether to reinstate the proceedings. The applicant has opposed the application for reinstatement. The application has been listed for directions on 27 February 2008. 46 As I outlined above the respondent deposes that it was the failure of Mr Ambrosy, one of the promoters of the Infomercial Schemes, amongst others, to cooperate in assisting him which was the reason for discontinuing the original AAT proceedings in 2005. 47 The respondent deposes that it was only when he received a summons, in mid to late November 2007, to give evidence in criminal proceedings against Mr Ambrosy that the prospect of obtaining his assistance became a real possibility. Ambrosy's trial, according to the respondent was due to commence in the County Court in Melbourne on 14 January 2008. I am informed by my solicitors and verily believe that they have been in direct contact with the Office of the Commonwealth Director of Public Prosecutions and Mr Ambrosy's solicitor, Paul Galbally of Galbally & O'Bryan. Annexed and marked "BC 10" is a copy of a letter dated 12 February 2008 to Mr Mark Pedley, Deputy Commonwealth Director of Public Prosecutions which summarises the contact made with the various parties. That letter also requests that the Commonwealth Director of Public Prosecutions provide Mr Ambrosy with an indemnity from further prosecution in the event that he gives evidence in the AAT proceedings. 12. I verily believe that there is now a real prospect that I can fully present my case in the AAT. As referred to in paragraph 9 of Chong's Affidavit, for the purpose of the AAT proceedings, the Applicant was ordered by the AAT on 18 December 2007 to re-file and serve all of the T-Documents which had previously been prepared for the AAT hearing, scheduled for early 2005 (see paragraph 15 of Chong's Affidavit). The only additional evidentiary matter is for me to obtain Mr Ambrosy's consent to give evidence. 13. The importance of Mr Ambrosy's evidence is apparent from [Australian Taxation Office] Amended Respondent's Statement of Facts and Contentions filed in the AAT Proceedings on 15 September 2004 as that Statement of Facts and Contentions is based upon actions by the promoters of the Infomercial Projects. A copy of that document is annexed and marked "BC11". 14. I verily believe that the Applicant's primary contention is that the Infornercial Projects were a sham designed to avoid tax. One of the key components of that contention is that a debt was allegedly incurred by the investors, as partners, which in reality was never incurred and hence would never be enforced. When I made by investments in the Infomercial Projects, at no time was I aware that the debt would never be enforced and I thought it proper to consider those amounts losses on an accruals basis. I verily believe that Mr Ambrosy can confirm that position. Their evidence, according to counsel for the respondent will demonstrate that from his perspective the Infomercial transactions were not a sham. In a further affidavit sworn by the respondent on 4 March 2008 he said that following the first hearing his solicitors had unsuccessfully attempted to obtain information from Mr Ambrosy's lawyer as to whether Mr Ambrosy would give evidence on his behalf in the AAT proceedings. 49 The respondent does not condescend to any particulars which might be said to give rise to arguable grounds before the AAT whether in respect to the application for reinstatement or the substantive application. The Infomercial scheme was described by the Supreme Court of Western Australia as a "contrived scheme to avoid the payment of income tax": Deputy Commissioner of Taxation v Cumins (2003) WASC 3 at [32] , [34]. The respondent's claim is that he was defrauded by the promoters of the Infomercial Projects. Even if that argument be accepted, no attempt was made on behalf of the respondent to show that it constituted an arguable ground that the AAT proceedings would succeed. The respondent asserts that he was not aware that the debt, the subject of the tax deduction, would never be enforced and that he believed that the Infomercial Projects were not a sham "from my perspective, as blinkered by the conduct of the promoters". Even if proved, this does not change the consequence that the scheme was, in truth, a sham. It was not explained how, even if proved, this assertion would establish a good and substantial argument in the AAT proceedings. 50 Importantly the reinstatement proceedings do not challenge the further assessments issued on 23 November 2000 and interest totalling $4,778,969.82. The respondent submits that it is not clear how the sum of $4,778,969.82 is calculated or that this amount will remain as a debt after the AAT proceedings have been heard (assuming leave to reinstate those proceedings is granted). 52 Included in the sum of $4,778,969.82 is the amount of $4,521,062.59 which was the subject of a failed application for review before the AAT and a subsequent failed appeal to the Federal Court. The figure of $4,521,062.59, which is unrelated to the matters the subject of the application before the AAT, comprises the sum of $2,619,580.49, the subject of an amended notice of assessment issued on 23 November 2000 together with interest of $1,901,482.10. That assessment, as deposed to by Ms Chong [17.3] and [18] was the subject of an application for review in the Ancillary AAT and a subsequent appeal to the Full Federal Court. These proceedings ultimately failed: [36]-[42] above. Ms Chong, in her affidavit of 29 January 2008, has annexed the relevant documents which disclose that the sum of $4,521,062.59 was unrelated to the Infomercial Projects: This was not controverted by the respondent. The remaining $257,907.23 has never been the subject of challenge or review. Accordingly, even if the respondent were successful in his attempt to have the AAT proceedings reinstated, and even if he were to be successful in those proceedings, there would still remain an amount owing of $4,778,969.82, an amount in excess of the statutory minimum of $2,000 on which a creditor may petition: s 44(1)(a) of the Act. 53 However this figure of $4,778,969.82 requires further consideration because of the further application made by the respondent to the AAT after the initial hearing. I will now turn to that matter. The application is to extend time for lodging an application for review of a decision. It concerns the sum of $9,375 which forms a part of the respondent's taxable income for the year ended 30 June 1998 and which was the subject of the amended tax assessment issued on 23 November 2000. It is yet to be determined. I will explain the background to this belated application. 55 Following the first hearing the applicant filed a supplementary affidavit of Ms Chong on 22 February 2008. It pointed out an apparent error made by her in her earlier affidavit of 29 January 2008 at [17]. 56 The error came to her notice when, again following the first hearing date, the respondent's solicitor wrote to the applicant's solicitors enclosing a letter dated 15 November 2000 from the Australian Taxation Office to the respondent. The letter had attached to it a number of schedules, which contained proposed adjustments to be made to the taxable income of the respondent in respect of a number of different years. 57 The schedule for the year ended 30 June 1998 disclosed that the amended taxable income of $19,550,012 was arrived at, in part, by the inclusion of the figure of $9,375 described as "Interest re monies borrowed re Infomercials". 58 The figure for taxable income of $19,550,012 is the subject of the Amended Income Tax Assessment issued on 23 November 2000 for the year ended 30 June 1998. It was from this figure that the amended tax assessment for that year was calculated in the sum of $2,619,580.49. 59 Ms Chong now says that her statement deposed to at paragraph [17] of her 29 January 2008 affidavit is incorrect to the extent that the amount of taxable income of $9375 is related to Infomercials. 60 It is difficult to see why this renders para [17] of her earlier affidavit inaccurate. There she described the three separate amounts in the assessments issued on 23 November 2000 as being "unrelated to the matters being reviewed in the AAT Proceedings". That assertion was, at the time she swore her affidavit of 29 January 2008, entirely correct. However, it is no longer correct because the respondent, following the first hearing, lodged a further application in the AAT. It concerns the sum of $9,375. 61 The application is to extend time for lodging an application for review of a decision. The purported reason for the extension is because the respondent seeks to review "the Decision" in respect of the "disallowance of interest claimed in respect of the Infomercial Projects ...". Counsel for the respondent informed me that the interest figure in question was the $9,375. 62 The applicant submits that the AAT has no jurisdiction to hear the underlying substantive application because, in relation to the interest amount of $9375 there has been no reviewable objection decision: s 14ZZA of the Taxation Administration Act 1953 . 63 It is unnecessary to decide that question. The issue may be disposed of on the basis that even if the latest application to the AAT were to be determined in favour of the respondent, he would still have an income tax liability of $2,612,237.67 which is a relatively small reduction from the previous figure of $2,619,580.49 under the 23 November 2000 assessment for the year ended 30 June 1998. This is evidenced by the affidavit of Kenneth George Phillips affirmed 7 March 2008. In an affidavit affirmed on 7 March 2008, Deborah Jayne Thiele, an ATO officer, states that the general interest charge to and including 15 June 2005 in respect of this reduced tax liability amounts to $1,897,859.38 [4]. Together they total $4,510,097.05 which is the amount in which the respondent was indebted to the applicant as at 15 June 2005 and which forms part of the Supreme Court judgment debt pronounced on that date. The effect of this is that the figure of $4,521,062.59 set out under para [52] above is reduced to the figure of $4,510,097.05. A further consequence is that the total amount of the judgment debt which is not related to the AAT proceedings is reduced from $4,778,969.82 set out under [52] above to the figure of $4,768,004.28. 64 I am not satisfied that the respondent has established genuine and arguable grounds in relation to either of its AAT applications. 65 Furthermore the Court should not go behind a judgment debt where to do so would, if the debtor's objections be successful, only support a finding that the debt be reduced but would still leave an amount in excess of the amount on which a creditor may petition. The reduction will only be relevant if the amount contained in the bankruptcy notice would be reduced to an amount below the minimum amount that supports a petition. In the present case, even if the AAT proceedings were successful, there would remain an amount owing on which the applicant may petition: Emerson v Wreckair Pty Ltd [1992] FCA 16 ; (1992) 33 FCR 581 at 589; Wilson v Official Trustee in Bankruptcy [1999] FCA 1760 ; Spencer v Lane Rowin Pty Ltd [2007] FCA 1519 at [21] - [24] . 66 The slightly reduced figure of $4,768,004.28 is indisputably owed by the respondent is still well in excess of the statutory minimum of $2,000. It cannot be affected by the outcome of the AAT proceedings even if they were to result in complete success for the respondent. This factor, of itself, is sufficient reason to refuse the application for a stay: Re Verma at 188-189; Re Lewin: Ex parte Milner at 320. 67 I am not satisfied that the respondent has demonstrated other sufficient cause to warrant a stay of the bankruptcy petition. 68 The notice of motion should be dismissed with costs. 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. | petition for sequestration order application for stay of proceedings pending application for special leave to the high court as well as applications to the administrative appeals tribunal whether other sufficient cause for granting a stay bankruptcy act 1966 (cth) s 52(2)(b) requirement to demonstrate genuine and arguable grounds in respect of applications both to the high court and the administrative appeals tribunal. bankruptcy |
2 Micheal Rana was charged with aiding, abetting, counselling, or procuring the commission of an offence contrary to s 155(5)(a) of the Trade Practices Act 1974 (Cth) (the Act) committed by NuEra Wellness Centre Pty Ltd, namely, the refusal or failure by NuEra Wellness Centre Pty Ltd to comply with a notice issued to it under s 155(1) of the Act. Micheal Rana is liable for committing the principal offence under s 11.2(1) of the Criminal Code (Cth). The offence was said to have been committed on 22 November 2006. 3 The hearing of that charge was preceded by a number of directions hearings in which the Court ordered that any affidavits to be relied upon by the parties would be filed according to a timetable stipulated. Documents were filed by Micheal Rana as well as by his father, Paul Rana. The contents of those documents and the circumstances in which they were filed are set out at [6] to [37] of the reasons for judgment in Australian Competition and Consumer Commission v Rana [2008] FCA 374 ( Rana ). They should be read in these reasons as if set out in full to the extent that they relate to Micheal Rana. 4 On 19 November 2007, the hearing of the charge against Micheal Rana was fixed to commence. On that occasion the Court sought to take the appearance of the defendant, Micheal Rana. No appearance was entered despite the fact that, as admitted later, Micheal Rana was present in court. As a consequence a warrant for his arrest was issued. 5 On 14 December 2007, the warrant for arrest was executed. Mr Rana was arrested at 2/10 Georgia Crescent in Werribee. That was an address that the police had attended previously and asked for Mr Rana and been told that he did not reside at that address. Even on this occasion a person told the arresting officer that Mr Rana did not reside at this address, but Mr Rana appeared and arrest subsequently took place. 6 On 17 December 2007, an application for bail was made on Micheal Rana's behalf and was refused in view of the uncertainty that he would appear to answer the charge. In circumstances described at [33] to [35] of Rana [2008] FCA 374 , the hearing of the charge was eventually listed for 22 December 2007. 7 On 22 December 2007, Mr Samargis appeared as counsel on behalf of Micheal Rana, and Micheal Rana entered a plea of guilty to the offence. On that occasion, the application for bail was successful. 8 In view of those circumstances the hearing of the plea in mitigation was fixed for 18 February 2008. On that date, submissions were made by Mr Samargis and also by Ms Orr. Significantly, on that occasion Micheal Rana himself gave evidence and was cross-examined. The essential features relevant to sentencing which Micheal Rana explained to the Court, were that he worked at the NuEra companies for the most part in an administrative capacity. He said that at the time of the service of the notice under s 155 of the Act he was in the midst of domestic turmoil, his wife having at that stage suffered a miscarriage of their first child. 9 Micheal Rana said he did not understand the documents which were filed in the course of the preparation for the hearing. He apologised for his conduct, both in respect of the filing of the documents and of the failure to comply with the notice under s 155. In relation to his failure to identify himself on 19 November 2007, he said that he had acted on the basis of what his father had said to him. 10 His evidence presented a difficulty for the Court. On the one hand, Micheal Rana apologised for his conduct and, on the other hand, the evidence showed at times that Micheal Rana seemed to have little understanding of the wrong that he had done. 11 A constant theme in much of Micheal Rana's evidence was related to the influence of his father and the fact that he had both failed to respond to the notice, and also sought to thwart the processes of the Court by the filing of the nonsensical documents referred to in the reasons for judgment delivered in Rana [2008] FCA 374 , as a result of the influence of his father. At the conclusion of that evidence, the Court indicated that it may be assisted in understanding more about Micheal Rana's attitude to his wrongdoing with the assistance of an expert report. Mr Samargis obtained instructions and proceeded with the obtaining of such a report. Indeed, the report was produced in very short time. 12 The matters which are required to be taken into account in this matter are set out in s 16A(2) of the Crimes Act 1914 (Cth) (the Crimes Act ). It is to those matters which I now turn. In favour of leniency for Micheal Rana is the fact that he has not been convicted of any offence before (s 16A(2)(b)). His plea of guilty, entered on 22 December 2007, is a factor to be taken into account, although it was hardly made at the first opportunity and therefore carries little weight (s 16A(2)(g)). 13 Micheal Rana is now 26 and married with a child. The circumstances of his involvement with the NuEra companies have caused devastation to his life. He is now bankrupt. He lost the house in which he was living. He has been arrested and was in custody for eight days. It is in Micheal Rana's favour that throughout the proceedings it has been obvious that he has the strong support of his wife, his mother and his in laws. That attests to loyalty which must be based on some characteristics which are positive. 14 Furthermore, since Micheal Rana's first appearance in the Court he has responded to the suggestion that he needed to demonstrate a greater understanding and responsibility of his wrongdoing. He applied for and obtained some voluntary work with the Salvation Army and has inquired into doing community work with the local council. Those efforts, timed as they were, should be taken into account as positive indications of an attempt to redress the wrongs which had been done (s16A(2)(f)). 15 At [49] to [50] of Rana [2008] FCA 374 there is a discussion about the importance of compliance with s 155 of the Act. These reasons will not set those sections out but rely upon that discussion to inform the sentencing in this case. 16 Importantly in this case is the evidence which was given on behalf of the prosecution by Mr Small, which is described at [47] of Rana [2008] FCA 374. That evidence demonstrates the sad and pernicious effects of the offending conduct on vulnerable people. Whilst Micheal Rana in cross-examination indicated some acceptance of responsibility for that, it is not entirely clear that his attitude as expressed was entirely genuine. This is especially so when weighed against some of Micheal Rana's other answers which suggested or expressed the view that the clinics operated by the various NuEra companies were misunderstood and in fact provided soothing and valuable services to those that attended. 17 However, in sentencing Micheal Rana, the Court was assisted greatly by the report of Mr Joblin, a forensic psychologist. He exposes clearly from consultation with Micheal Rana that what he describes as the psychological conflict in Micheal Rana's mind at present is the conflict between a son who has high admiration and loyalty to his father, and at the same time a dawning understanding that his father was involved in serious wrongdoing. The fact that his father is now in custody has produced some considerable psychological conflict for Mr Rana. He was emphatic that as he sees it, his father was simply dedicated to helping others and now he is in jail for trying to do so. For Mr Rana that is unconscionable and a matter that results in psychological conflict. Mr Rana reported that he has always respected his father for his dedication to helping others. He acknowledged that there has been negative media coverage about the "clinic". However, Mr Rana believes that those are persons who are not directly involved in the clinic and do not understand the nature of the treatments given. This may be somewhat of a rationalisation and again needs to be placed into the context of his extraordinary relationship with his father. Mr Rana acknowledged that when his father is released, he will have no business dealings with him but he emphasised that he will be continuing his close relationship with his father. From perusal of the affidavits and my discussion with him it does seem much of his difficulty has involved his father. Mr Rana seems to have had a blind adherence to his father's dictates. He reported, for example, that prior to going to court, his father had indicated to him that because they could not afford legal representation, his father and brother would run the defence. Mr Rana reported that his father indicated to him that if he attended court, he should sit in the back and literally say nothing in case anything he might say prejudiced the case. Thus, he reported that when he was asked about his presence in court or to account for himself in court and said nothing, he was acting on the instructions of his father. It is interesting to note that those instructions were not only from his father but also from his boss. Mr Rana indicated that he felt if he disobeyed his boss, he would lose his job. Therefore, it does seem that Mr Rana's mute presentation in court related to this extraordinary relationship with his father and his directive that he say nothing. 12. Mr Rana reported that he is somewhat confused about the court processes. He acknowledged that he was a director of the company and as a result he had a large degree of responsibility. However, that is all in conflict with the relationship he had with his father who indicated to him that there should be no difficulties in his business and if the ACCC questioned him, the worst that could happen would [be] that he would be made bankrupt. 13. This extraordinary relationship with his father is not the result of limited intellect but may relate to Mr Rana's somewhat acquiescent personality. Mr Rana seemed to have been somewhat in awe of his father and during my interview with him any discussion about his father was positive. In addition discussion about his father's history of employment and his various business was all positive. It does seem that the idea of his father opening the "clinic" to assist others reflected the ambitions Mr Rana had had when he was in school. Thus, he has had an extraordinary admiration for his father. ... 15. Mr Rana indicated his awareness that he should hate his father as he has caused the problems he now faces. However, he reported he cannot hate his father. ... 23. I am of the opinion that Mr Rana has the basis now to consider the inappropriateness of his behaviour and thus the prognosis in terms of re-offending must be reasonably good. That is in spite of my awareness from his report that he ... still maintains a positive emotional relationship with his father because as he reports he['s] still "my father". This does not mean however that relationship will dictate any further antisocial behaviour. 18 Ms Orr rightly pointed out that Mr Joblin tendered the opinion that Micheal Rana is not suffering from any mental illness, does not have an intellectual disability, that he is not psychotic and there is no mental impairment. Mr Joblin stated that he does not regard Micheal Rana as psychologically well. Ms Orr sought to explain this opinion as a reference to the anxiety caused by involvement in the legal system. Reading the report in full and in its context, the Court accepts that Mr Joblin was referring to the psychological conflict which he describes on a number of occasions as the conflict arising between the feeling and regard Micheal Rana has for his father and the recognition that there has been serious wrongdoing by him. 19 The question which arises from this analysis is how best to reflect this in the appropriate sentence for Micheal Rana. Micheal Rana's psychological conflict requires him to develop an understanding that he has been involved in a serious wrongdoing and to understand that it is important for him to exercise an independent evaluation of conduct which others suggest he engage in. It is clear enough that such an understanding has not yet fully developed. A further period of imprisonment would not assist in the specific deterrence which is required against this background (s16A(2)(j)). 20 On the other hand, it is necessary for Micheal Rana to have a period in which he is under threat of consequences if he were to act unlawfully by failing to exercise his own judgment. 21 That particular object is best achieved by the imposition of a recognisance release order under s 20(1)(b) of the Crimes Act . For that offence he is sentenced to two months imprisonment. This period of time takes into account the nature of the offence and Micheal Rana's liability as principal offender. Under s 20(1)(b) the Court directs that Micheal Rana be released forthwith upon giving security by recognisance in the sum of $1000 and on the condition that he be of good behaviour for a period of 18 months. This period allows for a sufficient period of time following Paul Rana's release from prison for Micheal Rana to demonstrate appropriate independence from the influence of his father or any other person. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. | sentencing aiding, abetting, counselling or procuring the commission of an offence refusing or failing to comply with a notice s 155 of trade practices act 1974 (cth) criminal law |
In that proceeding the first applicant, Peter Michael Benson (Mr Benson) and the second applicant, Benson Communications Pty Limited as trustee for The Grantham Project (Trust), sue the first respondent, Andrew Michael Carroll (Mr Carroll) and the second respondent, Hobbs & Carroll Partnership Pty Limited as trustee for the Hobbs & Carroll Property Trust. The current form of the pleading in that proceeding is found in an amended statement of claim filed on 18 May 2009. In general terms, in that proceeding the applicants sue the respondents for damages for misleading and deceptive conduct and on other causes of action in connection with a joint venture or partnership in respect of a proposed development of a site at 1 Grantham Street, Potts Point. The building project was known as "The Grantham Project". For want of a better name I will call that proceeding "the Misrepresentation Proceeding". The pleading in the Misrepresentation Proceeding is detailed and refers to representations and contractual arrangements made in 2004. On 30 September 2005 there was, it seems, pursuant to a Deed of Variation, a change of trustee of the Hobbs & Carroll Property Trust from Hobbs & Carroll Partnership Pty Limited to Mr Carroll. The question of the precise time when Mr Benson became aware of the change is apparently a matter of some dispute. Mr Benson says that he was not aware of it until he read a copy of the Deed of Variation in connection with a Supreme Court proceeding, to which I will refer below, in August 2007. There is other evidence, however, that he became aware of it earlier. The question is not presently material. In proceeding 4111 of 2006 in the Equity Division of the Supreme Court of New South Wales (the Supreme Court Proceeding), Mr Carroll as trustee for the Hobbs & Carroll Property Trust sought against Benson Communications Pty Limited as trustee for the Grantham Project (Trust), amongst other things a taking of accounts to determine what amount, if any, was owed by one partner/joint venturer to the other. On 24 September 2008 or 7 October 2008 (the evidence is confusing), judgment was entered for the plaintiff in that proceeding, that is, for Mr Carroll as trustee for the Hobbs & Carroll Property Trust against Benson Communications Pty Limited as trustee for the Grantham Project (Trust). This led to the commencement of this present proceeding (the Statutory Demand Proceeding) by which Benson Communications Pty Limited as trustee for The Grantham Project (Trust) applies for an order setting aside the statutory demand. The originating process (it was wrongly headed "Application") named as respondent (the parties should have been called plaintiff and defendant and I have so designated them in the above heading) Andrew Carroll as trustee for the Hobbs & Carroll Property Trust. An affidavit by Mr Benson sworn on 23 October 2008 was filed and served with the application (originating process). That affidavit, but no other, was filed and served within the 21 day period referred to in s 459G(3) of the Corporations Act 2001 (Cth) (the Act) (see below). The issue for decision is whether this supporting affidavit of Mr Benson satisfied the requirements of Div 3(ss 459G-459N) of Pt 5.4 of the Act. Section 459G provides that a company may apply to the Court for an order setting aside a statutory demand served on the company. The application may be made only within 21 days after service of the demand. I turn now to Mr Benson's affidavit sworn 23 October 2008 in support of the application to set aside. In that affidavit, Mr Benson explained that "the debt," referred to in the statutory demand, had arisen from the partnership to which I referred. He stated that the two trusts were members of a partnership known as "The Grantham Development Partnership" which was formed to develop the Grantham Project. In para 4 of his affidavit Mr Benson referred to the Misrepresentation Proceeding. He described the claims made in that proceeding as being for breaches of contract, negligence and misleading or deceptive conduct. He also referred to the Supreme Court Proceeding. ... I was previously unaware of the change of trustee. Mr Benson continued by referring to the anticipated net profit from the Grantham Project, according to several feasibility studies that had been commissioned by both partners between 2004 and 2006, as ranging from $4 million to $7 million. Exhibited to his affidavit were copies of the reports. He stated that the project had since been conducted by others in substantially the same way as was intended by the partnership and was due for completion in March 2009. Mr Benson's affidavit was generally consistent with the pleading in the Misrepresentation Proceeding which was to the effect that Mr Carroll had represented to him that Mr Carroll was in a position to obtain certain funding for the Grantham Project and that in reliance on that representation Mr Benson had refrained from seeking any other partner/joint venturer for the project. A substantial element of Mr Benson's claim as made in the Misrepresentation Proceeding, and confirmed in para 9 of his affidavit, was that he (or more precisely Benson Communications Pty Limited as trustee for The Grantham Project (Trust)) had foregone the profit that would have been available from the Grantham Project because of his reliance on the assurances given by Mr Carroll. The Applicant accordingly seeks an order that the statutory demand be set aside. He was relying on the offsetting claim ground (see [12] above). The problem, however, is that the judgment obtained in the Supreme Court Proceeding was not obtained by Hobbs & Carroll Partnership Pty Limited but by Mr Carroll personally. When I say "personally", of course I mean Mr Carroll as distinct from Hobbs & Carroll Partnership Pty Limited, in each case as trustee for the Hobbs & Carroll Property Trust. In the Supreme Court Proceeding the final judgment was, in fact, consented to by Benson Communications Pty Limited. I do not mean to say that the preceding taking of accounts was consented to but the formulation of the judgment in favour of Mr Carroll was. Notwithstanding this, Benson Communications Pty Limited has appealed the Supreme Court decision on the basis that it was not aware of or overlooked the fact that it was consenting to a judgment in favour of Mr Carroll as trustee of the Hobbs & Carroll Property Trust. In substance, and perhaps understandably, it wishes to achieve the position that its creditor is Hobbs & Carroll Partnership Pty Limited as trustee of the Hobbs & Carroll Property Trust, so that it can set off against the judgment in the Supreme Court Proceeding its own claim in the Misrepresentation Proceeding. It accepts that while its creditor is Mr Carroll as trustee of the Hobbs & Carroll Property Trust it cannot do so. In substance, the present application to set aside is now based on the other reason ground (see [13] above). The difficulty confronting Benson Communications Pty Limited in applying for an order setting aside the statutory demand, is that the nature of its case for setting aside the demand as it has now emerged was in no way disclosed in the affidavit that was filed within the 21-day period. The authorities establish that while supplementary affidavit material may be filed and served outside that period, the further affidavit or affidavits must be limited to filling out or supporting a ground that was set out in an affidavit or affidavits filed within that period. For this proposition, many cases could be referred to, including Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 , Energy Equity Corporation Ltd v Sinedie Pty Ltd (2001) 166 FLR 179 ; [2001] WASCA 419 ; Jian Xing Knitting Factory v Scasa Pty Ltd [2004] SASC 152 at [18] ; Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130 ; [2004] NSWSC 527 ; Arcade Badge Embroidery Co Pty Ltd v Deputy Commissioner of Taxation [2005] ACTCA 3 ; (2005) 157 ACTR 22 ; Tatlers.com.au Pty Ltd v Davis (2007) 213 FLR 109 ; [2007] NSWSC 835 at [19] , [28], [29]. Mr Evans, counsel for Benson Communications Pty Limited, has referred to Tatlers.com.au Pty Ltd v Davis (2007) 213 FLR 109 ; [2007] NSWSC 835 at [19] . In that case, White J in the Supreme Court of New South Wales rejected a contention that the purpose of s 459G was to enable the defendant to understand, to test and to respond to the material on which the plaintiff relies. His Honour considered that that aspect of case management and natural justice could be met, even though the plaintiff company might be permitted to file and serve further affidavits outside the 21 day period. White J observed that all that s 459G required was that the application and supporting affidavit be filed and served within the 21 day period, and that the question of how the application was dealt with subsequently was a matter for the ordinary pre-trial procedures directed to ensuring a fair hearing. I do not think that anything said by White J detracts from the line of authority that insists that the ground relied on for the setting aside of the statutory demand be identified in the affidavit or affidavits supporting the application that is or are filed within the 21-day period. The most that can be said of Mr Benson's affidavit is that in para 6 he accepts that there was a change of trustee. One might reason along the lines that by some unidentified mechanism his claim is that the identity of the trustee from time to time does not matter. Apparently, however, it is accepted that the identity of the trustee does matter. Indeed, the case to be put in support of the appeal is that if the Court of Appeal will allow evidence of the trust deed and Deed of Variation to be admitted, it will find that the change of trustee was invalid. This, however, is in no way remotely suggested in Mr Benson's affidavit. Another approach might be to say that since the affidavit was filed in support of an application to set aside and refers to an offsetting claim in excess of the judgment debt of $446,314.14, one should read the affidavit as somehow proposing as the "other reason" referred to in s 459J(1)(b) , that Mr Carroll brought about the change of trustee in a fraudulent or otherwise sinister manner. However, this would be mere speculation and is not suggested in the affidavit or in submissions. No matter how I read Mr Benson's affidavit, I can see it only as raising the offsetting claim ground. It is common ground that Benson Communications Pty Limited as trustee for The Grantham Project (Trust) does not have an offsetting claim against Andrew Carroll as trustee for the Hobbs & Carroll Property Trust. Having regard to the line of authorities to which I referred, I do not think that the requirements of s 459G are met. For the above reasons, the application to set aside should be dismissed with costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | application to set aside statutory demand offsetting claim company's claim was not against the individual who served the statutory demand as trustee of a particular trust, but against a company that had been the trustee of that trust prior to a change of trustee. held : application to set aside dismissed. corporations |
2 The appeal as stated in the notice of appeal is clearly unmeritorious. On the day before the hearing of the appeal the appellant, now represented by a lawyer, filed an application in which leave was sought to amend the notice of appeal. On the hearing of that application counsel for the appellant indicated that grounds 1 and 2 of the notice of appeal were being abandoned and that leave was being sought to argue a modified version of ground 3 of the original notice of appeal. His Honour erred in not finding that the RRT failed to accord procedural fairness and/or failed to comply with s.425 of the Migration Act 1958 in failing to inform the Appellant that there were inconsistencies between his written claims and his oral evidence and failing to invite the applicant to consider and comment on those inconsistencies. ... I have determined the application on the information given to the Tribunal and the inconsistencies between his written claims and oral evidence are not the reason or part of the reason for affirming the decision under review. Suffice it to say, for present purposes, that in a statement accompanying the appellant's visa application he made certain claims as to why he feared persecution. Particulars (i) and (ii) in the above ground of appeal come from that statement. The appellant was questioned at some length by the Tribunal at the hearing of the review application. In the Tribunal's reasons for decision rejecting the appellant's application, the Tribunal made the observation referred to in particular (iii) above. 4 The case now sought to be put, as best I can understand it, is that in dismissing the application for judicial review the learned Federal Magistrate is said to have made findings that the Tribunal did in fact rely upon inconsistencies between the claims in the appellant's visa application statement and in his oral evidence. These alleged findings of the Federal Magistrate are said to contradict the Tribunal member's own statement to the contrary. It is then sought to be put by the appellant that for the Tribunal to rely upon such inconsistencies without drawing them to the attention of the appellant was a denial of procedural fairness or a breach of s 425. I will return to this later in these reasons. First, though, it is necessary to set out the Tribunal's reasons for decision and the apparent basis of it. 6 At the Tribunal hearing, the appellant indicated that after finishing school he spent two months at college which he left in 1997. When asked what he did after 1997 and before he left for Oman in 2001 he told the Tribunal that "he stayed in Mumbai", Pune and Bangalore for a short time and after that he went "from state to state". He was questioned further about his travels by the Tribunal as will become apparent below. 7 The Tribunal indicated in its reasons it was quite difficult to obtain a "detailed account" of his claims. So in its questioning it "took him back to his claims of joining a political party and asked him to tell me about his history of involvement in politics". When I asked him to tell me a little bit about the goals and objectives of the Muslim League, he told me he did not know all those goals and was learning about the party whilst he was a member. I asked him whether he had joined the Muslim League because he had grown up in a Muslim family and he agreed it was one of the reasons that he joined the party. He then told me that he changed parties and became a member of the Marxist party while he was at school. I asked him why he would join the Marxist party, a party which did not support any religious goals or objectives, when he was a Muslim and member of the Muslim League. I put it to him that it was difficult to reconcile a person having a commitment to the Muslim League, then suddenly changing his allegiance and joining the Marxist party. He stated that at his age he did not think about those issues and was simply trying to avoid personal persecution as a member of the Muslim League. He claimed that as a member of the Marxist party he got greater protection from the party and this was the reason he joined. He claims that he returned to India from Oman in September 2004 and was attacked by members of the RSS and as a result he left India and has sought protection in Australia. He also claims that he does not wish to be a member of the Marxist party and that he will be targeted for harm by members of the Marxist party for reasons of his rejection of his previous membership. He claims that the police cannot provide him with reasonable protection and that he cannot relocate in India because the RSS has a network throughout India and he will not be safe wherever he lives. Whilst there are inconsistencies between his written claims and claims at hearing I have determined the application on the information given to the Tribunal and the inconsistencies between his written claims and oral evidence are not the reason or part of the reason for affirming the decision under review. 11 It found the appellant not to be a truthful or credible witness, that he was unprepared to be tested on the specific details of his claim and he found it difficult to fabricate those claims because, as the Tribunal said: "he had no experience to draw upon to give that specific evidence". The applicant knew nothing of the goals and objectives of the Muslim League. I do not accept that the applicant changed his membership to the Marxist party whilst he was at school. His reasons for changing membership were implausible and I do not accept his explanation that he was changing membership to obtain greater protection from the Marxist party. I do not accept that the applicant was a member, a supporter or even had a passing interest in any of the Marxist parties operating in Kerala at the time the applicant was at school. He admitted that he knew nothing about the Marxist or Communist party in Kerala and claimed he was going to find out more information after he joined. However despite claiming that he was a member from 1997 to 2001 he had not acquired the most basic knowledge of the party, its history or organisational structure. He was not aware that the party was organised in various factions and that one Marxist party has had a significant influence on state politics in Kerala. He did not know which faction to which he had belonged. When faced with basic questions about the nature of the party he admitted that he did not have an active role in the party. I consider that he gave evidence that he did not have an active role because at hearing he was unprepared to be tested on matters outside his experience. As I do not accept that the applicant was ever a member of a Marxist Party I do not accept that after 1997 he moved from state to state to avoid harassment and threats by members of the RSS. I am supported in this finding by the evidence of the applicant which was vague and generalised when he was pressed to give details of time spent in various residences and his means of support between 1997 and 2001. As I do not accept that the applicant was ever a member of a Marxist Party, I do not accept that the applicant returned to India from Oman in September 2004 and resumed his interest in the Marxist party thereby resulting in an attack by members of the RSS which caused him injury. I also do not accept that he will be harmed by members of the Marxist party because he has rejected continuing membership of that party. Those particulars were the same as in paras 3(i) and (ii) of the particulars of the amended notice of appeal set out above. 14 The Federal Magistrate approached his task mindful of the injunction against excessive zealotry in finding error in the language and expression of the Tribunal: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 277 and 291. Having referred to the Tribunal's inconsistencies comment, his Honour stated that the Tribunal's reasons clearly indicated that it was aware of the claims made in the visa application statement and that it had sought to address and test the claims in that statement in its questioning of the appellant at the hearing. Indeed the Federal Magistrate went so far (in [31] of his reasons) to indicate that in his view "the written statement provided the foundation for the Tribunal's questioning of the applicant throughout the hearing". Further, the reasons expressly acknowledged that it had considered the factual claims of the statement. I consider that the paragraph indicates no more than, as is apparent from the Tribunal's subsequent reasoning, that it was able to determine the lack of credibility of the applicant's claims by an assessment of the evidence he gave at the hearing, without a need to rely upon inconsistencies between that evidence and his original visa statement. I do not consider that the Tribunal's reasons should be read as indicating that it declined to consider the original refugee claims, to the extent that they might be capable of reconciliation to the applicant's later evidence given at the hearing. Thus, I would not read the Tribunal's statement: 'I find that the claims made at hearing represent the applicant's claims for refugee status' , as indicating a finding that his claims should only be found in his evidence given at the hearing. Rather, the Tribunal should be understood as meaning that, to the extent of any inconsistencies, it found that his later evidence indicated the claims relied upon by him. It was indicating that it intended to disregard the inconsistent parts of the earlier written statement, and also to disregard the fact that he had earlier made inconsistent statements, when assessing his refugee claims. ... In my opinion, the Tribunal's reference to not determining the application 'on ... the inconsistencies ...' was intended only to indicate to a reader of its reasons that it had not found it necessary to use those inconsistencies 'as a part of the reason for affirming the decision that is under review' so as to give rise to duties under s.424A(1). Noting the date of the Tribunal's decision soon after the Full Court's discussion of s.424A in SZEEU v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214, it is understandable that the Tribunal should have been concerned to explain why it had not felt it necessary to serve such a notice. In my opinion, this paragraph did no more than that. I find confirmation of this understanding of the paragraph in the Tribunal's subsequent reasons, rather than the converse. The first reason given by the Tribunal for rejecting the applicant's credibility was that he was 'unprepared to be tested on the specific details of his claim and found it difficult to fabricate those details because he had no experience to draw upon to give that specific evidence'. This indicates that the Tribunal drew a general conclusion about the content and manner of the applicant's responses to its questioning upon the contents of his original visa statement . The Tribunal then explained specific elements in his responses to questions which it found detracted from his credibility. It was implicit in the Tribunal that they had been dealt with and rejected in the above conclusion which embodied a finding "of greater generality": Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630 at [47]. In my opinion, this is how the Tribunal has decided this case. Unsurprisingly then the Federal Magistrate's findings were directed at showing that account had been taken of them. 20 The application for judicial review was rejected. 21 Because of the different course the appellant now seeks to take in this appeal there are two further matters, both noted by the Federal Magistrate, to which I should refer. The first is that, as indicated in the Tribunal's reasons, it put to the appellant at the hearing that it "had serious difficulty with his account of events for reasons already discussed with him during the hearing". The second is that at the end of the hearing the Tribunal asked the appellant if there "is anything you want to tell me about your claims you don't think we've covered". The appellant added nothing of present relevance. The first two grounds challenged his Honour's findings that the Tribunal did take account of the claims made in the visa application statement. The third ground asserted that "his Honour erred in not finding that the Refugee Review Tribunal failed to comply with s 425A [sic] of the Migration Act 1958 in failing to inform the appellant that there were inconsistencies between his written claims and his oral evidence. " As I have indicated, the first two grounds have been abandoned but leave is being sought to modify the third ground. Before dealing with that matter I should comment briefly on why in any event I consider that the Tribunal's alleged failure to take account of the claims in the visa application statement was unarguable. This provides some background to my view of the prospects of the proposed amendment. 23 The first substantive issue the Tribunal addressed in making its findings was the appellant's credibility. This it decided adversely to the appellant on the basis of the evidence given at the hearing. The Tribunal's questioning of the appellant at that time obviously was informed, inter alia, by the statement accompanying the original visa application, as his Honour observed. However, the credibility finding made was not, on its face, based at all on inconsistencies between the oral evidence and the statement. What the appellant said on the day sufficed for that purpose. When regard was had to what the appellant had said then and to the reasons given for rejecting his oral evidence, the bases of his claims to refugee status, whether made in the statement or at the hearing, fell away. This was not because of any inconsistencies between the two. It was because, at the hearing, he authored his own failure. The Tribunal clearly was aware of, and considered, the claims in the statement. There is no reason to doubt its truthfulness in this regard. Having heard the appellant giving evidence and having discussed his claims with him, it was quite proper for the Tribunal to observe that the claims made at hearing represented the appellant's claims for refugee status. These, at the close of the hearing, were the claims being prosecuted by the appellant. The Tribunal could disregard earlier inconsistent claims. And, as it indicated, it needed to have no regard to the inconsistencies themselves as part of its reason for affirming the delegate's decision. 24 Moreover, I should add that the Tribunal in any event had no need to make any specific reference to, or findings on the earlier claims. Its rejection of the claims put at the hearing was so comprehensive --- so all encompassing --- as to obviate any need for such particular reference or findings. They fell necessarily with the findings made, even if they were inconsistent with, or different from, the claims made at the hearing. I am satisfied the Tribunal was aware of this: cf Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 75 ALD 630 at [47]. 25 I refer to these matters by way of background to what is now sought to be raised in the proposed amended notice of appeal. It is to be alleged that the Tribunal not only took into account the claims that were made in the visa application statement, it also took into account the inconsistencies between that statement and the oral evidence without drawing these to the attention of the appellant and giving him the opportunity to consider and comment upon them. This failure is said to constitute a failure to accord procedural fairness and/or a failure to comply with s 425 of the Migration Act . 26 The first and most obvious point to make about the proposed new ground of appeal is that this matter was not raised in the court below. As was said by his Honour in his reasons "no issue is taken in the grounds of review in this Court to the fairness of the Tribunal's proceedings. It is not contended the applicant was denied the opportunity required by s 425 of the Migration Act , nor that he was not alerted to the issues that arose in the review before the Tribunal. Whether or not leave should be granted in this case will turn largely on the prospects of success of the proposed amended ground. For this reason, as I indicated at the hearing, I have heard argument both on the substantive ground and on the application to amend. 28 The manner in which the appellant's counsel has argued the matter has been somewhat unusual. He has conceded that in confirming the details of his protection visa application at the Tribunal hearing, the appellant thereby gave the information in the visa application statement "for the purpose of the application" to the Tribunal: cf s 424A(3)(b). It is not for me to consider whether this concession needed to be, or was properly, made: see SZDPY v Minister for Immigration and Multicultural Affairs [2006] FCA 627 at [29] ff. It was then said that the inconsistencies between the statement and the oral evidence were not required to be notified under s 424A of the Migration Act either because of s 424A(3)(b) or, in my view, more properly because inconsistencies in evidence given by an applicant are not "information" for the purposes of s 424A: see SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 at [18] . 29 The next step in the appellant's proposed challenge was premised upon what are said to be findings made by his Honour that the Tribunal did take account of inconsistencies between his visa application statement and his oral evidence, notwithstanding it disclaimed so doing. I will return to these findings below. What is contended is that because the Tribunal relied upon those inconsistencies in reaching its decision it was, as I noted above, obliged to put the inconsistencies to the appellant either as a matter of procedural fairness or because, in the circumstances it was required to do so by s 425 of the Act as explained in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 at [33] - [36] . 30 By way of background to my consideration of that contention, I should refer to aspects of the provisions of s 422B , s 424A and s 425. In consequence, it is said that provision did not relevantly deal with the requirement of the natural justice hearing rule in relation to putting the appellant's own inconsistent statements at the Tribunal to him. 34 It is difficult to see how s 424A has any significance in the resolution of the issue --- save perhaps as manifesting a legislative intent that the natural justice hearing rule will not apply to information provided by an applicant for the purposes of an application to the Tribunal. Given that the section imposes, and then delimits, the scope of a statutory obligation to provide information having prospectively a particular character (i.e. "would be the reason" etc), the fact of there being inconsistencies is not "information" for the purposes of the provision. Again, if the Tribunal affirmed the decision because even the best view of the appellants' evidence failed to disclose a Convention nexus, it is hard to see how such a failure can constitute 'information'. However broadly 'information' be defined, its meaning in this context is related to the existence of evidentiary material or documentation, not the existence of doubts, inconsistencies or the absence of evidence. The appellants were thus correct to concede that the relevant 'information' was not to be found in inconsistencies or disbelief, as opposed to the text of the statutory declaration itself. It prescribed the opportunity that was to be given in circumstances such as the present to an applicant at a Tribunal hearing by way of "the natural justice hearing rule" beyond what was required by s 424A: cf SZILQ v Minister for Immigration and Citizenship [2007] FCA 942. The applicant is to be invited 'to give evidence and present arguments relating to the issues arising in relation to the decision under review '. The reference to 'the issues arising in relation to the decision under review' is important. [34] Those issues will not be sufficiently identified in every case by describing them simply as whether the applicant is entitled to a protection visa. The statutory language 'arising in relation to the decision under review' is more particular. The issues arising in relation to a decision under review are to be identified having regard not only to the fact that the tribunal may exercise all the powers and discretions conferred by the Act on the original decision-maker (here, the minister's delegate), but also to the fact that the tribunal is to review that particular decision, for which the decision-maker will have given reasons. [35] The tribunal is not confined to whatever may have been the issues that the delegate considered. The issues that arise in relation to the decision are to be identified by the tribunal. But if the tribunal takes no steps to identify some issue other than those that the delegate considered dispositive, and does not tell the applicant what that other issue is, the applicant is entitled to assume that the issues the delegate considered dispositive are 'the issues arising in relation to the decision under review'. That is why the point at which to begin the identification of issues arising in relation to the decision under review will usually be the reasons given for that decision. And unless some other additional issues are identified by the tribunal (as they may be), it would ordinarily follow that, on review by the tribunal, the issues arising in relation to the decision under review would be those which the original decision-maker identified as determinative against the applicant. [36] It is also important to recognise that the invitation to an applicant to appear before the tribunal to give evidence and make submissions is an invitation that need not be extended if the tribunal considers that it should decide the review in the applicant's favour. Ordinarily then, as was the case here, the tribunal will begin its interview of an applicant who has accepted the tribunal's invitation to appear, knowing that it is not persuaded by the material already before it to decide the review in the applicant's favour. That lack of persuasion may be based on particular questions the tribunal has about specific aspects of the material already before it; it may be based on nothing more particular than a general unease about the veracity of what is revealed in that material. But unless the tribunal tells the applicant something different, the applicant would be entitled to assume that the reasons given by the delegate for refusing to grant the application will identify the issues that arise in relation to that decision. He was clearly put on notice that the Tribunal had difficulties "with his account of events" and the bases of those difficulties were revealed in his answers to the Tribunal's questions. He was given the opportunity to give further evidence "about claims you don't think we've covered". He was alerted to the possibility that he might be disbelieved. In consequence he suffered '[n]o practical injustice": Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 at [38] ; from the manner in which the review hearing was conducted and his application determined. I do not consider that he can derive any comfort from s 425. 38 Counsel for the appellant stated in submissions that he only became aware of what he perceived to be the natural justice vice in the matter when the learned Federal Magistrate was giving his extempore judgment and was understood to be making references to the Tribunal's having had regard to inconsistent statements. There are two in particular I highlighted earlier in these reasons. It is necessary to refer again to them and to the contexts in which they were made. The first is at [26] of the reasons. Having indicated at [25] that the Tribunal's inconsistencies comment was made with s 424A in mind, his Honour considered that the purpose of the comment was to explain why the Tribunal had not felt it necessary to serve a s 424A notice. The first reason given by the Tribunal for rejecting the applicant's credibility was that he was 'unprepared to be tested on the specific details of his claim and found it difficult to fabricate those details because he had no experience to draw upon to give that specific evidence' . This indicates that the Tribunal drew a general conclusion about the content and manner of the applicant's responses to its questioning upon the contents of his original visa statement. The Tribunal then explained specific elements in his responses to questions which it found detracted from his credibility. Rather, it says no more than that the statement provided the source, inspiration or prompt for the Tribunal's questioning, but that the general conclusion drawn was based on the content and manner of his responses to its questioning which the Tribunal then enlarged upon. 40 I can only say that I agree completely with the Minister's contention. Rather it is an observation to the effect that the lack of knowledge the appellant displayed at the hearing, belied any claim he may ever have made actually to have had an interest in Marxism. Again I agree with this contention. 43 For my own part I do not consider that the reasons of the Federal Magistrate betray in any event the vice alleged in the proposed ground of appeal. Ex tempore judgments have on occasion to be read with some generosity. They should not be read selectively and with a predisposition adverse to its correctness. 44 As I do not consider that the proposed amended ground of appeal has any reasonable prospect of success, I do not consider it to be in the interests of justice to grant leave to amend the notice of appeal. Accordingly, I will order that (i) leave to amend the notice of appeal be refused and (ii) the appeal be dismissed with costs. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. | appeal against decision of federal magistrate dismissing application for review of decision of refugee review tribunal whether federal magistrate found that tribunal had relied on inconsistencies between the visa application statement and the applicant's oral accounts whether for tribunal to rely upon such inconsistencies and not notify the applicant was a denial of procedural fairness or a failure to comply with s 425 of the migration act 1958 (cth) migration |
The warrants were executed on 18 November 2005. In each case the things to be seized, as described in the warrants, were connected with a 'special investigation' by the first respondent. Resolution of that challenge has not progressed as quickly as desirable. It is not necessary to go into the reasons for that. I intended it to require disclosure of the minutes of the second respondent only to the extent to which they record the fact of the making and the time of the Determinations, and the time taken to consider the making of the Determinations. To avoid any misunderstanding, I will vary that order to make that clear. 6 On 14 June 2006 I also directed the exchange of points of claim and points of defence to better define the issues between the parties. 7 The respondents have now applied to vary the discovery order made on 30 May 2006 firstly to confine it explicitly in the way which (as I have indicated) I intended it to be read, and secondly to restrict its operation to the Determinations and not to any other determinations. 10 The attack upon the warrants, as I have indicated, is in essence through an attack upon the validity of the Determinations. The Chair signed this version of the instrument on 15 May 2003. The ACC has received advice that such a misdescription does not affect the validity of the instrument. 12 The remaining issue concerns discovery of the other Determinations and the minutes of the second respondent to the extent to which they record the fact of the making and the time of the making of the other Determinations and the time taken in their consideration. 13 I must decide that issue by reference to the Points of Claim and the Points of Defence. As I have indicated, there is an issue as to whether the 2003 Determination was in fact relevantly considered on 13 May 2003 or at all. There is presently no application to strike out that part of the claim summarily, either because it does not disclose a cause of action, or because there is no real prospect of the claim succeeding (particularly in the light of the affidavit of the Chair of the second respondent Mr Keelty), or because it is an abuse of process. I am not to be taken as indicating whether any such application may be appropriate. The point is simply that issue on the pleadings is a live one. 14 The respondents contend nevertheless that the additional documents sought are not relevant so that they should not be ordered to be discovered. 15 In respect of the contents of the other Determinations, I accept that submission. I do not see how the contents of the other Determinations can advance the contentions of the applicants. 16 However, in my view, the certain parts of the minutes of the second respondent concerning the other Determinations do go to a matter of fact which is presently in issue, namely the extent to which the 2003 Determination and the other Determinations were properly considered by the second respondent on 13 or 15 May 2003. 17 I therefore propose to direct that the respondents discover the minutes of the second respondent which, but only to the extent to which, they record the fact of the making and the time of the making of the other Determinations, and the time taken by the second respondent to consider the making of the other Determinations. The existence of the other Determinations is acknowledged by Mr Keelty in explicit terms in his affidavit, so the applicants have the foundation for the proof of them. If that were in doubt, I would order the discovery of the other Determinations. 19 The claim for public interest immunity protects from disclosure documents of which the disclosure would be prejudicial or injurious to the public interest: Sankey v Whitlam [1978] HCA 43 ; (1978) 142 CLR 1 at 48-9. Consequently, it is necessary to balance two competing aspects of the public interest, namely the effect upon the administration of justice if the evidence is withheld on the one hand, and the effect upon the wider public interest if the documents are made available for inspection: see generally Alister v The Queen [1983] HCA 45 ; (1983) 154 CLR 404 at 412. It is inappropriate, in my view, simply to take the view that because a document relates to an investigation of criminal conduct, its disclosure would necessarily have a significant adverse consequence to that investigation and so should not be disclosed. It is necessary to consider the particular circumstances of the proceedings and of the documents which are sought to be investigated. It is also necessary to bear in mind, in a matter such as the present, that there is no real public interest in not exposing any illegal conduct on the part of the authorities. That is not to suggest that such conduct is or may be established in this matter, but that is the allegation. I have also borne in mind the intention of the Parliament as evidenced in the ACC Act, in particular ss 29 and 30 and 51(3). 20 I have considered the evidence in support of the claim for public interest immunity. The fact of the other Determinations is not in issue. It has been confirmed by Mr Keelty. Consequently, they were resolved upon by the second respondent. I do not see how disclosure of the minutes of the second respondent limited to recording the fact and time of the making of the other Determinations and the time taken to consider the making of the other Determinations could be adverse to the public interest in those circumstances. In reality the only additional information which would thereby be disclosed are the matters of time. On the other hand, the matter of time is very significant to the present allegations of the applicants, but without it they are assertions of illegality in the Points of Claim and could not be made out. 21 I therefore do not propose to make the orders sought in respect of those minutes. The respondents also seek an order that the Determinations and, to the extent to which they are to be produced the minutes of the second respondent, should be similarly restricted in their publication. 23 Given the provisions of the ACC Act to which I have referred, I propose to order pursuant to s 50 of the Federal Court of Australia Act 1976 (Cth) that the publication of the Determinations be restricted to counsel and solicitors for the parties. The applicants are each bound by the ACC Act not to publish those documents. For the same reasons as I have indicated that public interest immunity does not attach to those parts of the minutes of the second respondent which I have directed to be discovered, I do not see any foundation for those minutes being regarded as confidential. I will give liberty to any person properly interested to apply to vary or discharge those orders under s 50. 24 I will make orders to give effect to those reasons. | australian crime commission discovery and production of documents whether documents subject to public interest immunity whether documents relevant public interest immunity |
The Federal Magistrate erred in finding in para 15 of his judgment that the appellant was seeking "impermissible merits review" and should have found that the appellant was seeking to review errors of law. The Federal Magistrate should have found that the AAT had regard to irrelevant circumstances in exercising its discretion for the said claim of "special circumstances. " The Federal Magistrate should have found that the AAT failed to identify and/or consider the relevant circumstances of the exercise of the said discretion in relation to the said claim of "special circumstances. " The Federal Magistrate erred in failing to find that the AAT erred in law in finding that there was evidence of the solicitor for the nominal defendant that there was an economic loss component in the settlement sum that exceeded $35,000, when in fact the said solicitor was not a witness in the proceedings. The Federal Magistrate erred in failing to find that the AAT should have found there was no evidence that the settlement sum of $55,000 included any component or economic loss. The background to the present case is related by the AAT (which was constituted by Mr Karas AO) in the AAT's reasons. That background can only elicit sympathy for the circumstance in which Mr Doelle presently finds himself. To observe that is not though in any way to acknowledge that it is any part of the Court's role on an appeal from the Federal Magistrates Court in a case of this kind to make an evaluative judgment on the factual merits of a controversy which fell for the AAT to resolve. The background then to the present case derived from the summary provided by the AAT is as follows. Mr Doelle had the misfortune to sustain injuries in a motor vehicle accident on 15 November 2001. Aside from the injuries he sustained in the motor vehicle accident, the evidence before the AAT and the subordinate administrative agencies of the Commonwealth establishes that Mr Doelle had (and I infer continues to have) a heart condition which necessarily impacts upon his ability to undertake remunerative employment. Following the car accident he instituted proceedings in the District Court of Queensland for damages against a named defendant and also the Nominal Defendant. Those proceedings culminated in an agreed resolution, the terms of which are recorded in a document entitled "terms of settlement" dated 29 January 2008. Paragraph 1 of those terms of settlement proved to be the focus of a particular submission made by Mr Doelle in the appeal. The following month, on 4 February 2008, an officer at "Centrelink" found that Mr Doelle was subject to a preclusion period in terms of the Social Security Act and that he had to refund to Centrelink, on behalf of the Commonwealth, $7069.28 of disability support pension which had been paid during that preclusion period. That refund was said to be payable from compensation moneys that he had received in respect of the injury which he had sustained in his car accident in November 2001. Thereafter Mr Doelle sought to successively review that original administrative decision as provided for under the Social Security Act . An authorised review officer affirmed the decision. So too did the Social Security Appeals Tribunal (the SSAT) and so too, in due course, did the AAT. The AAT's reasons were given in writing on 6 August 2008, the day on which it decided to affirm the decision under review. The AAT identified, unremarkably in my respectful opinion, the following issues for determination: whether a preclusion period should be applied in relation to compensation moneys received by Mr Doelle for the injuries he sustained on 15 November 2001 and, if so; whether a refund of $7069.28 of disability support pension paid during the time of the preclusion period should be recovered by the respondent, ie, by the Centrelink agency or, more particularly, by the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs. The terms of settlement which were in evidence before the AAT are neutral as to whether or not the settlement moneys included a component in respect of economic loss. On the face of them, it is quite understandable how a layman in Mr Doelle's position would be left in some doubt as to whether or not the settlement sum did, indeed, include a component for economic loss. As Mr Cosgrove - who appeared for the respondent Commonwealth Department - observed in the course of submissions, that particular phenomenon is by no means uncommon. That though was the voice of a practitioner well versed in the conduct of common law litigation. It is important to realise that lay people such as Mr Doelle do not bring to the scrutiny of such documents the same background in terms of legal practice and procedure. I should note in passing that the AAT was constituted by a legal practitioner. The AAT at some length recited the evidence that was placed before it on the subject of whether or not the settlement moneys included a component in respect of economic loss. It is important to appreciate - and the reasons for judgment of the learned Federal Magistrate certainly evidence this - that the resolution of matters of factual controversy was a task consigned under our law in this type of case to the AAT, not to the judicial branch. It is also important to appreciate that, in approaching its task of resolving matters of factual controversy, the AAT was not bound by the formal rules of evidence and was entitled to act on material which might not be regarded as compliant with those rules in a court. The AAT's reasons reveal that it scrutinised carefully not only the evidence that Mr Doelle gave but also that which had been advanced in the proceedings before the subordinate administrative tribunal, the SSAT. One must, in my opinion, read the AAT's reasons in conjunction with the summary of evidence given by the SSAT. That so much was intended by the AAT is apparent from para 11 of the AAT's reasons. There one finds express reference by the AAT to evidence summarised in para 8 of the SSAT's decision concerning economic loss. Further, in the AAT's reference in para 11 to "other material on the file" one also is directed to look to material that was already in existence at the time when the AAT came to conduct its hearing. That material necessarily included the body of evidence which had been presented to the SSAT. When one looks to para 8 of the reasons of the SSAT, as the AAT plainly intended, one sees there a summary of information provided to that tribunal and which was before the AAT. Other material on the file indicates that had the settlement sum exceeded $35,000 then an economic component would have been included as reflected in the correspondence by the parties around the time of the settlement payment. Perhaps he misunderstood or was confused regarding the economic aspect of the settlement. The Tribunal prefers the evidence of the solicitor for the Nominal Defendant that the there was an economic loss component in the settlement sum that exceeded $35,000. The learned Federal Magistrate dealt with this aspect of the challenge to the AAT's decision in para 17 and following of his reasons which were directed to grounds (v) and (vi) of the notice of appeal. His Honour observed, correctly, that the AAT was not bound by the rules of evidence, making reference in that regard to s 33(1)(c) of the Administrative Appeals Tribunal Act 1975 (Cth) (the Administrative Appeals Tribunal Act ). His Honour further observed, again, with respect, correctly, that the AAT ought to be guided by matters of probity, weight and relevance in determining that which it will receive by way of evidentiary materials in any application before it. His Honour observed in respect of that phenomenon that "that fact itself does not appear to be decisive" (para 20 of reasons for judgment). His Honour further concluded that his evidence would not materially add to the matters of which the Appellant and Mr McGhie - Mr McGhie being the Appellant's solicitor - had earlier informed the SSAT. There can be no denying the correctness of his Honour's observation when one has regard to the informality of proof that is permissible in an administrative review forum such as either the SSAT or the AAT. When one looks back through the record of telephonic attendances between officers of the Commonwealth within Centrelink and the solicitor within the Nominal Defendant's solicitors, DLA Phillips Fox, Mr Sullivan, one finds there reference to an account given by Mr Sullivan of the settlement moneys including a component in respect of economic loss. It was unnecessary for either the mediator or, for that matter, the solicitors for the Nominal Defendant to appear in person either before the SSAT or, more materially for present purposes, the AAT. There was, for the purposes of administrative fact finding, evidentiary material from them upon which the AAT was entitled to act in making the findings that it did. So much was, in my respectful opinion, appreciated by the learned Federal Magistrate. It is important to recall that the jurisdiction that the Federal Magistrates Court was exercising arose under s 44 of the Administrative Appeals Tribunal Act upon the remission of the appeal from the AAT by this Court to the Federal Magistrates Court. That jurisdiction is to entertain an appeal on a question of law. It is most certainly not a jurisdiction which entails the conduct of merits review of findings of fact made by the AAT. There is no error of law simply in making a wrong finding of fact. Therefore, an appellant cannot supplement the record by adducing fresh evidence merely in order to demonstrate an error of fact. His Honour there, as others have frequently done since in respect of appeals under s 44 , was demonstrating a principle of restraint in terms of the jurisdiction that is consigned to the court in appeals from the AAT. It seems to me that the learned Federal Magistrate did just that in disposing with this aspect of the challenge which Mr Doelle made to the AAT's decision. Thus, those grounds of appeal which seek to challenge the way in which the Federal Magistrates Court dealt with the findings of fact made by the AAT must fail. It is convenient, having regard to the reference to Waterford's case, to make brief reference to an endeavour which Mr Doelle made to supplement the record of the proceedings by proffering a document which I marked for identification as exhibit A. Mr Doelle did not give sworn evidence that this document comprised part of the record before the AAT, and, in a statement which he made from the bar table, was unable to confirm one way or the other whether it was, indeed, part of the material before the AAT. The Commonwealth's position was that it did not comprise part of the material before the AAT. It certainly did not form part of the material which was transmitted to the Court by the AAT, as required, in respect of an appeal under s 44. Having regard to the decision of the High Court in Minister for Immigration and Multicultural Affairs v Jia [2001] HCA 17 ; (2001) 205 CLR 507 , and subsequent decisions of Full Courts of this Court, there can be no doubt that an appeal to this Court from the Federal Magistrates Court is an appeal by way of rehearing, not an appeal stricto sensu . That said, the nature of the appellate jurisdiction is necessarily influenced by the nature of the proceeding which is the subject of appeal. In this instance, that proceeding was an appeal on a question of law. It seems to me to follow, having regard to the observation made by Brennan J in Waterford's case, that it would be impermissible, on an appeal from the Federal Magistrates Court which had entertained an appeal under s 44 of the Administrative Appeals Tribunal Act , to receive, by way of an endeavour to supplement the record, material which could only go to a challenge to the factual conclusion reached by the AAT. For those reasons, I have not had regard to exhibit A in the disposition of the appeal. I turn, then, to the question which necessarily confronted the learned Federal Magistrate, in light of the conclusion which he had reached concerning the ability, reasonably, of the AAT to make the finding of fact that it did in relation to the composition of the settlement moneys. His Honour correctly apprehended that s 1184K of the Social Security Act makes provision for the exercise of discretion in relation to the imposition of the lump sum preclusion period refund obligations, where "special circumstances" exist. It seems to me, also, that his Honour correctly apprehended the case law, such as it is, as to the meaning of that term "special circumstances. " One finds in para 8 and para 10 of the learned Federal Magistrate's reasons reference to pertinent authorities. His Honour recites, at para 9 of his reasons for judgment, that no issue was taken with the AAT's identification of the appropriate test. Before me, Mr Doelle was concerned that the learned Federal Magistrate had not dealt with the special circumstances test correctly, in that, so he submitted, the court below had failed to appreciate that the ramification of the special circumstances test was that each case is different. In other words, the nature of the challenge seemed to be that the court below and, for that matter, the AAT, had failed to appreciate that it was at the very essence of the special circumstances test that it required the consideration of its application in the circumstances of a particular case. Given the nature of that challenge, it is helpful to reflect upon observations which have been made in earlier judgments as to the nature of a special circumstances test. It is in essence instrumental, a direction to the decision-maker that the discretion it is not likely to be enlivened... If helpful to speak in terms of its meaning almost all of it comes from context. It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify departure in the particular circumstances from the ordinary rule. The phrase, although lacking precision, is sufficiently understood not to require judicial gloss. It seems to me that that which has earlier fallen from courts as to what those words carry with them is more than sufficient. When one reads the reasons of the learned Federal Magistrate insofar as they address the subject of the special circumstances aspect of the controversy which fell to the AAT to resolve one is left, in my opinion, with two impressions. Firstly, that the learned Federal Magistrate correctly apprehended the nature of the special circumstances test which fell for the AAT to apply, and secondly, that the learned Federal Magistrate did appreciate that that test fell for application in the circumstances of Mr Doelle's particular case. The Tribunal correctly informed itself of the relevant test and its determination was open to it on the facts of the case. Ultimately the conclusion drawn by the AAT was one of fact. The power might, perhaps, with respect, have been felicitously described as the determination of a question of law. Nonetheless, the essential point remains that the learned Federal Magistrate correctly appreciated that the AAT had, indeed, dealt with Mr Doelle's individual circumstances in the application of the special circumstances test and further that it was not for the court, on an appeal under s 44 , to revisit the factual wisdom of the conclusions which the AAT had reached in the application of that test. It follows from this that those grounds of appeal would seek to call into question, in one way or another, the way in which the learned Federal Magistrate dealt with the "special circumstances" aspects of the challenge to the AAT's decision must also fail. For these reasons then, in my opinion, the appeal must be dismissed. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. | appeal from federal magistrates court exercising jurisdiction under (cth) administrative appeals tribunal act 1975 s 44 whether fresh evidence receivable on appeal to full court of the federal court of australia decision under appeal on a question of law held appellant not able to adduce fresh evidence merely to demonstrate an error of fact held fresh evidence not receivable disability support pension periodic payments of compensation preclusion period repayment to centrelink of certain moneys subject to preclusion period whether appellant's case involved "special circumstances" (cth) social security act 1991 s 1184k(1) appeal and new trial social security |
Primarily sought in item 1 of the notice of motion is the grant of leave pursuant to s 500(2) of the Corporations Act 2001 (Cth) ('the Act'). The tenth respondent was identified as HVAC Construction Limited ('HVAC') when the proceeding commenced. 2 In item 2 of the notice of motion leave is sought pursuant to O 13, r 2(3) of the Federal Court Rules to change the name of the tenth respondent to 'ACN 009 298 686 Pty Ltd'. Evidence in support in the affidavit of Mr N Gvozdin states that 'HVAC became a proprietary company on 7 July 2005'. 3 Therefore, not only has it changed its name as it did to the present name on 22 September 2005, but also changed its status. Those facts require further examination by the applicant. Item 2 of the notice of motion will therefore be held over to be dealt with in private chambers on receipt of further submissions. 4 Turning to item 1, there are the affidavits of Mr N Gvozdin sworn on 7 February 2006 and 7 March 2006. In addition, there are the written and oral submissions which have been made by the applicant. 5 Reliance is placed on what was said in the Queensland Full Court in Ogilvie-Grant v East [1983] 7 ACLR 669 at 672 by McPherson J with whom Wanstall CJ and Sheahan J agreed, namely, that a section such as s 500(2) of the Act has the purpose for its existence that without the relevant restriction which is constituted by the provision for the grant of leave, a company in liquidation would be subjected to a multiplicity of actions which would be both expensive and time consuming as well, in some cases, unnecessary. That dicta was applied by Wheeler J in Deputy Commissioner of Taxation v Robinswood Pty Ltd [2004] WASC 229 at [8] . 6 In written submissions counsel for the applicant submitted the factors which should move the Court to a grant of leave in this instance. They are, firstly, that there is no prospect that, upon a grant of leave, there would be any risk of an avalanche of litigation. Secondly, the proceeding was commenced approximately 12 months prior to the commencement of the voluntary winding up and are well advanced and numerous interlocutory hearings have been held. Thirdly, the tenth respondent has been instanced in these hearings as likely to attract the highest pecuniary penalty. Fourthly, the claim against the tenth respondent, for contravention of s 45(2) of the Act is a serious claim. Fifthly, the applicant has already expended very substantial time, effort and expense in formulating its claim and progressing the proceeding to the present stage. Sixthly, the proceeding was not lightly instituted. Seventhly, there is a public interest in deterrence, recognised in a number of decisions, involving the applicant. For example, Australian Competition and Consumer Commission v SIP Australia Pty Ltd [2003] FCA 336 at [59] and Australian Competition and Consumer Commission v Leahy Petroleum (No 2) (2005) 215 ALR 281 per Merkel J. Additionally, no prejudice, procedural or substantive can be predicted to the other creditors who have an interest in the winding up of HVAC by virtue of the granting of leave. The other creditors would have priority. Finally, the applicant asserts it has a strong prima facie case against HVAC. 7 The respondent does not consent or defend the motion and does not appear in any event. 8 In my view, given the nature of this litigation and the potential impact which it would have on HVAC, considered in the context of the criteria enunciated by McPherson J in Ogilvie-Grant , the factors relied upon by the applicant are appropriate to move the Court to make a grant of leave. 9 Therefore, for those reasons, I accede to item 1 in the notice of motion. 10 As previously stated, item 2 will be held over for further submissions in private chambers. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | leave to bring proceeding against a respondent purpose of provision for grant of leave criteria satisfied corporations |
The only orders then made were for the filing of submissions and the listing of the proceeding for oral elaboration on those submissions. 2 At [262] of the earlier Reasons, I indicated that the parties should have the opportunity of making further submissions in relation to certain issues there identified. Subsequently, the relevant parties agreed that both the winding up proceeding and the DOCA proceeding (I am using in these Reasons the forms of abbreviation that I used in the earlier Reasons) should be dismissed and that the DCT should pay the defendants' costs in both proceedings. The only issue left outstanding was whether the costs of the Administrators in this, the DOCA proceeding, should be paid on an indemnity basis, or on the ordinary party/party basis. It is to this issue that the present Reasons are directed. 3 The Administrators have made helpful written submissions in support of their application for indemnity costs. There is no dispute in relation to the governing principles. The categories of case in which the discretion to award costs on the indemnity basis may be properly exercised are not closed, and an order is not compelled by the mere fact that the circumstances fit within a literal description that has been given of the features of an earlier case in which indemnity costs were ordered: NMFM Property Pty Ltd v Citibank Ltd (No 2) [2001] FCA 480 ; (2000) 109 FCR 77 at 92 [53] . 4 Ordinarily, costs are ordered on a party/party basis, and it is only if a case is "special" or out of the ordinary that indemnity costs may properly be ordered. In Hamod v New South Wales (2002) 188 ALR 659, Gray J (with whom the other members of the Full Court agreed) stated (at [20]) that indemnity costs served the purpose of compensating a party fully for costs incurred where the Court is of the view that it was "unreasonable for the party against whom the order is made to have subjected the innocent party to the exposure of costs". The Administrators submit that the DCT was put on notice of their contention that the DOCA had so terminated on or about 28 June 2006, yet persisted with the proceedings even though, according to their submission, a winding up application by the DCT was bound to fail because upon the termination of the DOCA the DCT had lost the status of a creditor of Wellnora (see s 459P(1)(b) of the Act). 7 It is true that I held that the operation of the DOCA terminated on 21 June 2006 (at [190]) and that that termination and the release of the debt owed by Wellnora to the DCT were coincident (at [177]). However, that was not the end of the matter because of s 600B and, in particular, s 447A of the Act. 8 Although the Administrators did not press the present submission in oral submissions, I should say a little more about it. 9 In the earlier Reasons at [13]---[29] and [167]---[180] I dealt with the Administrators' different submission that the DCT lacked standing to make the present application. (Therefore any question whether the DCT was a "creditor" was otiose: see earlier Reasons at [23]. ) An order terminating a DOCA. (This remedy was not available: see earlier Reasons at [172], [173]. It was therefore not necessary to consider the effect of s 445H. An order declaring the deed, or a provision of it, to be void or not to be void on grounds relating to whether the entering into of a DOCA, or the DOCA itself, complies with Pt 5.3A. (This section was not relied on: see [24] of the earlier Reasons. It was therefore not necessary to consider s 445H. (Therefore it is not necessary that the DCT be a creditor of Wellnora. ) An order about how Pt 5.3A is to operate in relation to a particular company. (This is a broad remedy which would enable an order to be fashioned so as to ensure that the DCT's standing as a creditor of Wellnora was preserved after 21 June 2006. (Therefore any question whether the DCT was a creditor was otiose: see earlier Reasons at [28]. ) An order setting aside the resolution and making further orders as thought necessary, such as an order setting aside DOCA: see [28], [179], [180] of the earlier Reasons. (Any question of DCT's having ceased to be a creditor of Wellnora would be irrelevant to standing and would be part of the grievance itself. (Section not relied on: see [29] of earlier Reasons. It stated that the application was made under ss 445D and 600B of the Act. It sought, inter alia, an order that Wellnora pay the DCT's costs. On 6 July 2006, shortly after the DCT had been informed that the DOCA had been terminated, the Administrators' solicitors asked the DCT's solicitors to indicate urgently the DCT's intentions in so far as they affected the Administrators. The next day, 7 July 2006, the DCT filed and served an Amended Originating Process adding ss 445G, 447A and 1321 of the Act as sections under which the application was made, and seeking in this way an order that "the Defendants" pay the DCT's costs. The Administrators submit that by seeking an order that they, as well as Wellnora, be liable for costs, the DCT was seeking to exert pressure on the Administrators, who, since 21 June 2006, "had been unfunded". 12 On 20 July 2006, the DCT's solicitors invited the Administrators' solicitors to file a submitting appearance. On 21 July 2006, the Administrators' solicitors replied to the effect that in view of the criticism of Mr Hamilton's conduct inherent in the DCT's application (the DCT's Points of Claim document was dated 27 April 2006 and filed 1 May 2006), the Administrators would not be filing a submitting appearance. No doubt, any application for costs constitutes a form of "pressure" that does not exist in the absence of such an application. It may have been an oversight that the DCT did not apply for costs against the Administrators in the Originating Process that commenced the proceeding on 9 March 2006, or it may be that the formulation of her Points of Claim had caused the DCT to appreciate that her case was that Mr Hamilton had fallen short in the discharge of his responsibilities. 15 In both the original and amended Originating Processes, the DCT indicated that she was applying under, inter alia, s 600B of the Act. Thus, it was clear throughout that the DCT was seeking to have the creditors' resolution, passed on the casting vote of Mr Hamilton, set aside. Both earlier in affidavit form and in the Points of Claim filed on 1 May 2006, the DCT had made it clear that her case was that Mr Hamilton should have investigated far more widely than he had done in the Report and Supplementary Report. 16 For completeness, I note that I do not infer that when the DCT sought costs against the Administrators for the first time on 7 July 2006, she accepted the Administrators' assertion that the DOCA had terminated on 21 June 2006. Indeed, the DCT has contended throughout that it did not terminate then --- a contention that I have rejected. They have referred to his eminence in his profession, to the length of the period during which he has been an official liquidator in New South Wales, and to other matters touching his experience to which I referred at [105]---[109] of the earlier Reasons. 18 It is understandable that Mr Hamilton might be sensitive to claims that he had fallen short of meeting the requirements incumbent upon him as Voluntary Administrator when he carried out his investigations, prepared his Report and Supplementary Report, and exercised his casting vote. An eminent person in any profession may feel "stung" when a challenge is made to the adequacy of his or her professional performance. However, as senior counsel for the Administrators accepted, the law is no respecter of persons: no professional, no matter how senior, respected or experienced, is to be protected or quarantined from having his or her acts and omissions subjected to scrutiny. 19 Mr S Golledge of counsel, who appeared for the DCT on the hearing, in the proper performance of his duty to his client, tested Mr Hamilton's evidence in cross-examination thoroughly and comprehensively, and, I thought, in an appropriate manner. I agree with senior counsel for the Administrators that certain statements made in paras 24 and 25 of Mr Golledge's written submissions on the hearing perhaps went too far (eg, that "he [Mr Hamilton] has blithely accepted the company's obviously untruthful explanation for the accrual and non-payment of that debt", and the reference to Mr Hamilton's "failings and errors"), but I put this down to "advocate's flourish". In fact, and with admirable candour, Mr Hamilton did acknowledge that he had not picked up the discrepancies between the settlement sheets and what Mr Ang had told him (see [242] of the earlier Reasons). The fact is that Mr Hamilton's responses in cross-examination were convincing and, indeed, impressive. If the DCT's case against the Administrators is to be characterised as an "attack on Mr Hamilton", it should be said that his high standing can fairly be regarded as confirmed by his successful repulsion of it. 20 It is true, as senior counsel for the Administrators submits, that with the benefit of hindsight, the appropriate stance for the DCT to have taken was that of accepting that Mr Hamilton had exercised his casting vote appropriately, and seeking to have the DOCA set aside by reference to the wider considerations available to be taken into account by the Court: see [171] and [256] of the earlier Reasons. However, the extraordinary record of the Soong companies (see [95]---[97] of the earlier Reasons) coupled with the comparatively paltry amount ($65,000) of the creditors' fund being offered by Ms Soong, can only have struck the ATO officers as offensive. Although I have held against the DCT's argument that Mr Hamilton was obliged to investigate conduct within the Soong group of companies generally and take into account what he would have discovered in relation to them, I do not think it was "unreasonable" in the relevant sense for the DCT to have brought and pursued a case on that basis. Here the relevant ATO officer remained silent. In substance, through that officer, the DCT sat on her hands, yet she later attacked Mr Hamilton's exercise of the casting vote on the basis that Mr Hamilton had failed to take into account the information that the officer had kept to herself. It may be that the ATO officer assumed that Mr Hamilton was in possession of at least the publicly available information relating to all the Soong companies (in fact, he was not), although it was accepted by Ms Brennan in her evidence that he would not have been in possession of the information relating to the outstanding tax liabilities of all of those companies. 22 With the benefit of hindsight, no doubt the conduct of the ATO officer is properly criticised in the present respect. But to some extent, that is because the Administrators have scrutinised her conduct with the benefit of hindsight --- an approach to which the DCT has subjected Mr Hamilton, and to which the Administrators say he should not have been subjected. 23 Be this as it may, I do not regard the ATO officer's silence followed by the advancing of the present case by the DCT as constituting conduct so unreasonable that an order for indemnity costs is called for. The Administrators reply that the DCT should not be seen as having given up anything by way of compromise in this respect because the cross-claim did not involve any costs over and above the costs involved in the defence of the DCT's claim. 25 As noted at [61] of the earlier Reasons, in their cross-claim the Administrators repeated the positive allegations they made in their Points of Defence relating to the DCT's failure to disclose the Information, and other non-disclosures. 26 There would have been some minor additional costs arising from the bringing of the cross-claim, namely, costs relating to the question whether the DCT had any actionable duty to the Administrators to disclose the Information or her intention in respect of an application to have the DOCA set aside --- an issue which I have not been called upon to resolve. 27 I take into account, but only to the minor extent appropriate, that the DCT has agreed to pay all of the Administrators' costs, including those on the cross-claim. If the present case had turned out differently in other respects, it may have been appropriate to set aside the DOCA. The absence of such an offer loomed large because I found in favour of Mr Hamilton and against the DCT on issues of the kind just referred to. Again, by consent, as between the DCT and Wellnora, the DCT will pay Wellnora's costs as agreed or taxed. 31 Finally, by consent as between the DCT and the Administrators, the DCT will pay the Administrators' costs. However, for the reasons given above, those costs will not be on the indemnity basis but will be on the ordinary party/party basis. By consent, the costs will be as agreed or, subject to a reservation to allow for the possibility of the fixing of an amount under O 62 r 4(2)(c) of the Federal Court Rules , as taxed. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. | indemnity costs whether creditor who failed in application to set aside deed of company arrangement (doca) should be ordered to pay doca administrators' costs on indemnity basis whether it should have been obvious to creditor that it had lost standing as a creditor to apply for winding up, once operation of doca terminated upon exhaustion of doca fund statutory provisions under which order could have been made preserving status of "creditor" even if order had been made setting aside doca. held: indemnity costs not awarded. costs indemnity costs whether creditor who failed in application to set aside deed of company arrangement (doca) should be ordered to pay doca administrators' costs on indemnity basis whether it should have been obvious to creditor that it had lost standing as a creditor to apply for winding up, once operation of doca terminated upon exhaustion of doca fund statutory provisions under which order could have been made preserving status of "creditor" even if order had been made setting aside doca. held: indemnity costs not awarded. costs indemnity costs whether creditor who failed in application to set aside deed of company arrangement (doca) should be ordered to pay doca administrators' costs on indemnity basis whether it should have been obvious to creditor that it had lost standing as a creditor to apply for winding up, once operation of doca terminated upon exhaustion of doca fund statutory provisions under which order could have been made preserving status of "creditor" even if order had been made setting aside doca. held: indemnity costs not awarded. costs practice and procedure corporations |
Mr Watson appeals from a decision of the Deputy Commissioner of Taxation (the Commissioner) made on 7 February 2007. 2 The Commissioner decided in relation to the financial year ended 30 June 2004 that payments Mr Watson received under a personal income protection insurance policy were not assessable income from his business activity as a financial planner. His business activity otherwise operated at a loss for that year of income, but it would not have done so if Mr Watson could have included the income from the personal income protection insurance policy as assessable income of the business. The loss suffered in the operation of the business was then treated as a deferred expense, capable of being carried forward, but not capable of being a deduction against his other assessable income, namely the income from the personal income protection insurance policy. That decision was made under Div 35 of the Income Tax Assessment Act 1997 (Cth) (the ITAA 1997) headed "Deferral of losses from non-commercial business activities". 3 Mr Watson contends that the decision of the Commissioner was wrong. In 1984, he commenced working as a self-employed financial planner. He took out income protection insurance at that time, as he says partially to replace the commission or income which he would lose if he could not continue to work in his business through illness or injury. He has maintained that insurance since that time. He has conducted his business as a sole trader at all material times. It involves advising clients on their life insurance and investment needs, recommending an insurance or investment strategy, assisting and implementing the resulting strategy, and monitoring the performance of that strategy and its continued appropriateness to the client's evolving needs. Those activities generally fall within the description of a financial planning business. Mr Watson received remuneration by those activities both from fees paid to him by his clients and from commissions paid by investment institutions with which he arranged for his clients to make investments. 5 Initially, Mr Watson was an agent of the life insurance company National Mutual, but after some years he became an authorised agent of its subsidiary National Mutual Financial Planning. As a result, he was able to recommend financial products other than those provided by National Mutual. From July 1992 he became a "sub-agent", but nothing turns upon that changed description or the changed structure of his relationship with National Mutual Financial Planning. In 1995, following the de-mutualising of National Mutual, the French insurance company AXA took a controlling interest in National Mutual and from 1999 National Mutual Financial Planning became known as AXA Financial Planners. In July 2002, Mr Watson ceased being an authorised representative of AXA Financial Planners and became an authorised representative of Financial Lifestyle Solutions. 6 From 1995, the policy terms for Mr Watson's income protection insurance were changed. It is common ground that it is the form of policy for income protection cover taken from 3 January 1996 which is the applicable policy. It is a policy of income protection known as "Professional Income Protection" or "PIP". 7 Unfortunately, later in 1996, Mr Watson fell ill. He was diagnosed as having a brain tumour for which he underwent surgery in November 1996. He had a period of total incapacity for work as a result, but then recovered well enough to return to his former business activities, but with somewhat reduced capacity. He had some short term memory difficulty, inability to concentrate and a tendency to confuse words and sporadic quite debilitating seizures. He was diagnosed with a further brain tumour in mid-2004 which was treated by radiotherapy. He nevertheless returned to most of his business activities but at a reduced volume of activity, and he now concentrates on servicing existing clients rather than representing new clients because of his ongoing problems. 8 Mr Watson made a claim under the PIP policy for periodic partial disability payments. It appears to be accepted by the insurer, and not disputed by the Commissioner, that Mr Watson is partially disabled from working. If a person changes their occupation while on claim and earns income, then the income earned does reduce their benefit. The test for this is whether the income has been earned through person exertion. Thirdly, if a client is working in their usual occupation but at a reduced income due to their disability, there is no obligation on the client to seek other work. It is also unclear whether that information, in the event that Mr Watson ceased running his financial planning business, fully and correctly describes the way in which the amount of his entitlements under the PIP policy would be assessed. 9 Ultimately, but not without some difficulty, the claim under the PIP policy was accepted and the amount of Mr Watson's entitlements under it resolved. Partial incapacity payments commenced on 1 October 1996. For the last several years, Mr Watson has continued to receive payments at a rate applicable to his ongoing partial incapacity for work. 10 In the financial years from 1997 to 2004, Mr Watson's gross fee and commission income in his business decreased somewhat, particularly from financial year ended 30 June 2000 and then quite dramatically in the last few years up to 30 June 2004. His business expenses remained more or less constant until the financial years ended 30 June 2003 and 30 June 2004 when they too had dropped quite significantly. He had a shortfall of fee and commission income against business expenses in each of the financial years from 30 June 2001 to 30 June 2004. In each of those years, and indeed for some years previously, he had received benefits under his PIP policy in the order of $25,000 per year. It is not necessary to set out the precise details except for the year of income in dispute. 11 In the financial year ended 30 June 2004, Mr Watson's income from his financial planning business (putting aside his partial disability payments under the PIP policy) was $9896, and his expenses $14,554, producing a net loss of $4938. He sought to include as the income of the business his payments from his income protection policy of $25,719. That would then have meant Mr Watson's taxable income for that year included business income of $35,615 and, after business expenses and other deductions, his taxable income would have been $20,781. The Commissioner excluded the partial disability payments under the PIP policy from his business income and determined for that financial year to defer the business loss of $4938 in accordance with Div 35 of the ITAA 1997. Consequently, the Commissioner assessed Mr Watson's taxable income as including his full PIP policy income of $25,719 (subject to any other appropriate deductions). 12 There are a few other matters of fact to note, as they were referred to in the submissions. Mr Watson gave evidence that his financial planning business activities included what he described as "non-financial planning business activities" but more accurately are incidental and related activities. Those activities included obtaining the appropriate licences and professional and statutory registrations, undertaking training in financial planning, securing premises and equipment and consumables to carry on the business, incidental and necessary travel, securing business finance and banking facilities, and obtaining insurance including for loss to premises or equipment, professional indemnity insurance, and of course his income protection insurance. He said his main purpose in carrying on his business was to be financially self-sufficient by carrying on business as a financial planner. 13 Finally, I note that since payments under PIP policy first commenced on 31 October 1996, under the terms of the policy, Mr Watson has not been obliged to make any further premium payments. In his own accounts, he treated the premiums as an expense of his business and the policy as an asset of his business. In his claims and dealings with the insurer, including extensive reporting activities, he has reported it in that way. He has also in the period before his illness and up to the time when his obligation to pay annual premiums ceased claimed, and been allowed, a deduction against the commission or fee income he derived from carrying on his business in respect of the premiums he has paid. It is described as "an income protection insurance policy" which, according to the schedule, insured Mr Watson to pay him weekly benefits if he suffered total disability through injury or sickness. We will pay you at the end of each fortnight for which you are entitled to be paid. The weekly benefit we pay if the person insured is totally disabled or suffers a specific injury or sickness, is based on a percentage (up to 75%) of his or her average income when you applied for this policy. It is called "the benefit" and is set out in box 5 in the Schedule. It may vary in the ways set out in clauses 10 and 12. As long as the details given about the person insured's income on the Application form were full and accurate, the amount of your benefit won't go down, even if the person insured's actual income goes down. 15 There is then provision for the commencement and termination of payments. Commencement of payments starts at the end of the waiting period of two weeks (specified in the schedule), commencing from when a medical practitioner first examines the person insured and certifies that he or she is totally disabled. The waiting period is adjusted from time to time if there are brief intermittent returns to work. Payments cease when the person insured stops being totally disabled, or when the benefit period or the cause of the disability ends, or of course when the insured person dies. There is also provision for circumstances in which payments may be made following a return to work, depending upon whether the return to work is to be full-time work for at least six months. In that event, a claim for further payments would be treated as a separate claim. 16 There is a separate clause dealing with partial disability. It featured significantly in the submissions. However, you will not be entitled to be paid before the end of the waiting period. (Underlining and emphasis in original. If the person insured is employed, his or her income is the total package, including commissions, regular bonuses and fringe benefits. Income does not include investment or interest income. The assessment was issued on 5 June 2006. It treated the "business loss" of $4938 as deferred non-commercial business loss. Mr Watson objected to that assessment. The objection was disallowed on 7 February 2007. The application to this Court is made pursuant to s 14ZZ(c) and Div 5 of Pt IVC of the Taxation Administration Act 1953 , and in accordance with s 175A of the ITAA 1936. 20 As counsel for Mr Watson said, the heart of this case is whether Mr Watson's income protection insurance income is income from his business activity so that s 35- 10 (2) of the ITAA 1997 does not defer "and effectively deny" deductions for some of his business expenses. The loss is deferred. It sets out a series of tests to determine whether a business activity is treated as being non-commercial. The deferred losses may be offset in later years against profits from the activity or, if one of the tests is satisfied or the Commissioner exercises a discretion, against other income. (2) This Division is not intended to apply to activities that do not constitute carrying on a *business, for example, the receipt of income from passive investments. Compare the definition of partnership in subsection 995-1(1). In general, the "author" of a musical work is its composer and the "author" of an artistic work is the artist, sculptor or photographer who created it. Put shortly, Mr Watson contends that the income by partial disability payments received from his PIP policy should have been included in the assessable income of his business for the financial year ended 30 June 2004 (as it had been in previous years). Then, by the application of one of the tests set out in ss 35-30 or 35-35, the rule in s 35- 10 (2) would not apply to the income year ended 30 June 2004. Each of ss 35-30, 35-35 and 35- 10 (2) relate to the circumstances in which, if the expenses attributable to the business activity exceed the assessable income from the business activity for the year, the loss should be disregarded in determining the taxpayer's taxable income, although the loss may be carried forward. 23 The issue therefore is whether the payments for partial disability under the PIP policy received in that financial year are part of the assessable income "from the business activity" for that year. If they are, then under s 35-30(a) the assessable income from the business activity for that year would be at least $20,000, and would also exceed its expenses. Alternatively, the payments under the PIP policy, if included in each of the five years from 30 June 1999 to 30 June 2004 inclusive, would mean that at least three of those previous five years including that current year (in fact on the evidence it would cover each of the previous five years), the sum of the deductions would be less than the "assessable income" from the activity, that is the business activity, for that year. It would then fall within the exception called the profits test in s 35-35. If either alternative applied, then the rule in s 35- 10 (2) would not apply and the expenses of the business would be fully deductible in that year of income. 24 Consequently, Mr Watson contends that the gateway provided by s 35- 10 (1) through which the assessment must pass before the deferral rule provided for in s 35- 10 (2) activates was simply not entered and the Commissioner erred in treating the deferral rule in s 35- 10 (2) as available at all. It would also follow that the so called deferred excess of $4938 would not be a deferral of losses from a non-commercial business activity because the amounts attributable to the business activity for the year ended 30 June 2004 which could be deducted would not exceed the assessable income from the business activity, as the revenue of the business activity would include the income from the PIP policy. 25 The PIP partial disability payments received by Mr Watson for the year ended 30 June 2004 are clearly part of his assessable income: see Federal Commissioner of Taxation v Smith [1981] HCA 10 ; (1981) 147 CLR 578. That is common ground. So too is the nature of Mr Watson's business activity during that year. It was that of a financial planner, although (as he says) that required administration and regulation compliance activities, each of which did not directly result in the earning of income. That was the activity he engaged in during the financial year ended 30 June 2004, and in earlier years, for the purpose of profit: cf Commissioner of Taxation v Murry [1998] HCA 42 ; (1998) 193 CLR 605 at [54] ( Murry ). 26 The Commissioner contended that the partial disability income is not income from that business activity but is income from the PIP policy, because its source is a contractual entitlement. The contention must be more refined than that. For it is generally possible to ascribe each source of income of a business to a particular document or transaction. In the case of a financial planning business, if fees are earned by commissions from entities with which funds are placed, then those fees will have a contractual foundation; so too will fees earned from clients of the business. Bank interest on deposited surplus funds is income from funds held in a bank under certain contractual terms. 27 The Commissioner also contended that the use of the term "from the business activity" as distinct from the term "from the business" had some special significance. It was said that it was a narrower concept than the expression "from the business". 28 The contrast between the scope of the two expressions was said to be illustrated by BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources (1994) 49 FCR 155 ( BHP Petroleum ) and Watson v Secretary, Department of Family and Community Services [2003] FCA 415 ; (2003) 128 FCR 564 ( Watson ) on the one hand, and cases such as Murry ; Hope v Bathurst City Council [1980] HCA 16 ; (1980) 144 CLR 1 ( Hope ), and Ferguson v Federal Commissioner of Taxation [1979] FCA 29 ; (1979) 26 ALR 307 ( Ferguson ) on the other. 29 In my opinion, the extrinsic materials do not indicate an intention to distinguish between those two expressions. They are discussed by Stone J in Commissioner of Taxation v Eskandari [2004] FCA 8 ; (2004) 134 FCR 569 ( Eskandari ) at [14]-[17]. I respectfully adopt her Honour's observations. I shall not repeat them in these reasons. The relevant legislative intention which appears to have underpinned Div 35 was to distinguish between "activities which are essentially private or lifestyle choices" and those which involve "genuine business activities" (see para 228 of "Review of Business Taxation --- a Tax System Redesigned", 1999). The Division will apply within that environment to those individuals able to claim business deductions under the existing law on the grounds that they are carrying on a business and meet all existing tests of deductibility. 31 The cases referred to by senior counsel for the Commissioner about the nature of a business also do not support the contrast sought to be drawn. Murry at 604; Hope at 8-9; and Ferguson at 311 all describe in generally consistent terms what is involved in carrying on a business. They do not suggest that the activities undertaken in doing so, so that they may be called "business activities" are somehow outside or distinct from the business itself. 32 The decisions of BHP Petroleum and Watson also, in my view, do not support the contrast between the two expressions in s 35. 33 BHP Petroleum concerned the eligibility of certain taxpayers under the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) to have their projects combined so that expenditure on one of the combined projects could be set off against revenue from another. Section 20 empowered the Minister to "... issue a combination certificate" if satisfied, having regard to specified factors, that the projects "are sufficiently related to be treated for the purposes of this Act as a single petroleum project". The application for the "combination certificate" had to be made "from" a person or persons who were together entitled to at least half of the receipts from the sale of marketable petroleum commodities produced in relation to each of the projects. The formal application, by oversight, omitted the name of one intended applicant whose entitlement was necessary to meet the one half eligibility criterion. In the circumstances, the Court (Beaumont, Jenkinson and Heerey JJ) found that the application had in fact been made by all the intended applicants, so that criterion was satisfied. Beaumont J at 170-171 explained that the word "from" had its ordinary meaning as indicating "the starting point, source or origin" of the application. That source had been clearly exposed by other communications. I do not, however, see any observations in the reasons which support the claimed contrast between "business activity" and "business". However, I think the meaning of the word "from" as discussed is equally applicable to that word in the phrase "from the business activity". 34 Watson concerned the claim of Mr Watson and his wife for benefits under the Social Security Act 1991 (Cth). Section 1075(1) provided that "if a person carries on a business, the person's ordinary income from the business is to be reduced by ... losses and outcomings that relate to the business ...". Mr Watson was refused benefits because the payments under the PIP policy were not part of his ordinary income from his financial planning business, so as to allow the reduction for the losses and outgoings of the business. Consequently, the statutory threshold for eligibility for benefits was exceeded. Mr Watson argued, in that case, that the benefits under the PIP policy had the same character as the income they replaced, particularly as (he claimed) he had to continue to work in the business or in some other remunerative employment as a prerequisite to being paid partial disability payments. Finn J at 569 upheld the conclusion that the payments under the PIP policy were not "ordinary income from the business". The contractual income was a surrogate for, and was payable because of, the reduced ordinary income from the business. The distinction drawn by Finn J is helpful in addressing the present appeal. In that regard, Finn J did not appear to place especial weight on the word "ordinary" in his reasoning. However, I do not think his Honour's views support the contrast between "business" and "business activity" which was contended for. 35 Eskandari is the only decision concerning Div 35 of Pt 2 - 5 of Ch 2 of the ITAA 1997 to which my attention was drawn. The taxpayer sought to set-off against his normal salary the losses incurred in his unrelated business activity as a registered migration agent. It was common ground that, unless he could bring himself within the exception to the application of s 35 - 10 provided by s 35 - 55 (1)(b)(i), s 35 - 10 would prevent him from setting off those losses. Section 35 - 55 (1)(b)(i) permitted the Commissioner to decide that the rule in s 35 - 10 does not apply to a business activity for a year or years of income if satisfied that it would be unreasonable to apply it because the business activity, in respect of the relevant income years, "because of its nature" would not satisfy one of the other tests imposed. Hence, the relevant issue was a narrow one: could s 35 - 55 (1)(b)(i) apply because of the nature of the business, namely that it was in its start-up phase and the anticipated revenue stream would not come about for some two years or more. The taxpayer claimed that his new business had that nature because he charged only a modest initial fee, and then incurred significant expense, and would only receive the substantial part of his fee when the visa application was granted, possibly some years later. Stone J decided that the term "because of its nature" referred to an inherent feature of the taxpayer's business activity in common with business activities of that type. Unless the "lead time" before a substantial success fee became payable was a common or inherent feature of migration agent businesses, rather than a consequence of how the taxpayer chose to charge, the exception in s 35 - 55 (1)(b)(i) could not apply and the Commissioner would not have a discretion to exercise. 36 Counsel for Mr Watson, at the other end of the spectrum of submissions, contended that there should be symmetry between the concepts of "taxable income" and "allowable deductions", in particular those deductions falling within the second limb of the income nexus test specified in s 8 - 1 (1)(b) of the ITAA 1997. If the premiums paid on the PIP policy were accepted as deductions by the Commissioner (as they apparently were), on the basis that they were necessarily incurred in carrying on the financial planning business, then payments made under the PIP policy should also be regarded as income received in carrying on the business. 37 Whilst that contention has a superficial attraction, I think it over-simplifies the position. The PIP policy was clearly to diminish the adverse consequences of illness or accident. The benefits under the PIP policy provided protection against income loss from the inability to fully conduct the business, and so to earn income from it. So the benefits under the PIP policy are a partial indemnity for, and as a substitute for, the reduced commission and fee income which Mr Watson suffered by reason of his illness. There is no need for a direct monetary correlation between the amount of the benefits and the foregone or lost commission and fee income: Federal Commissioner of Taxation v Smith [1981] HCA 10 ; (1981) 147 CLR 578 at 583. That does not, however, mean that the benefits under the PIP policy are part of assessable income from the business activity for the year in issue. 38 One submission of Mr Watson acknowledged that. He accepted it was necessary to take the extra step of regarding the business activity as encompassing the "related or incidental activities" which, in turn, include his "insurance activities". 39 Counsel for Mr Watson then submitted that the business activity of Mr Watson included his "insurance activities" as well as the range of other incidental administrative and professional matters referred to in [12] above. Counsel further submitted that the "insurance activities", by which he relevantly meant Mr Watson taking out the PIP policy and regularly paying the premiums on it and --- in the event of an insured risk occurring --- receiving the benefit of it, had the "significant commercial purpose" of securing a stream of income as a substitute for the business income that could be at risk if Mr Watson were injured or became ill. He also said there was a purpose of profit or the prospect of profit, because the potential benefits if an insured event occurred could be up to 75% of Mr Watson's earnings from the business and were much greater than the premiums payable from time to time. Counsel also relied upon the fact that, as the material showed, the PIP policy was taken out by many authorised representatives of National Mutual/AXA and by many other self-employed persons. 40 There may be a mix of reasons for a self-employed person taking out an income protection policy such as the PIP policy. In the event of catastrophic injury or illness, where the insured person would be unable to conduct the business previously operated, total disability payments would be received. It could not be said that such payments were for the purposes of the business; of necessity, if its operation were dependent upon the self-employed person, the business would cease to be operated. Nor could it be said in that circumstance that such payments were income received from the business. If the insured event involves a period of total incapacity and the insured person then resumed running the business, insurance payments may have enabled the insured person both to maintain a personal cash flow during the incapacity and to meet ongoing commitments (e.g. rental, lease and interest obligations) in relation to the business so that it could be maintained during the incapacity. Other facts may inform the understanding of the purpose or utility for the business of the policy: the nature of the business; whether there are other employees; who may be able to keep the business going to some degree despite the temporary or diminished capacity of the principal; whether the temporary or diminished capacity of the principal may be accommodated by the hiring of a temporary or part-time replacement. There will no doubt be other potential combinations of circumstances. 41 Whether particular payments in a particular year of income under an income protection policy are income from the business activity will depend upon the particular facts. In Carapark Holdings Ltd v Commissioner of Taxation [1967] HCA 5 ; (1996) 115 CLR 653 ( Carapark ), the benefits received by a holding company of an employer taken out on the life of an employee of a subsidiary company were part of its assessable income. As that passage indicates, the purpose of the taxpayer entering into the contract of insurance which produced the payment is relevant to identifying the relationship of the payment with the business. See e.g. Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18 ; (1987) 163 CLR 199 at 217; cf Murry at 626 [54]. 42 The potential benefits under the PIP policy ranged from a relatively brief period of payments for total disability to long term payments for total disability. The Commissioner might readily have accepted the premiums paid as deductible expenses of the business of Mr Watson (as he apparently did). That would no doubt have been on the basis that a substantial purpose was to secure the ongoing operations of the business during a period of relatively brief incapacity. It does not follow that all benefits, in whatever circumstances, under the PIP policy are necessarily income received from the business. 43 To say that the PIP policy was to provide a substitute for income lost in the event of an insured event occurring, or that it was to provide for a substitute revenue stream for that which otherwise would have flowed from the business, is not to answer the critical question. Nor, in my view, is it sufficient to show that a substantial purpose of the insurance was to secure a revenue stream so as to enable the business to continue during a period of temporary incapacity. So much may be accepted (or assumed). 44 It is the particular benefits in the particular insured events which are in issue. 45 Mr Watson was not in the business of insuring, or taking insurance, against total permanent disability. Nor was he in the business of insuring, or taking insurance, against partial permanent incapacity, or at least permanent partial incapacity which so impaired him as to be unable to conduct the business otherwise than at a loss. His business was not taking out income protection insurance. 46 To draw that line is not to exclude from the business, or the business activities, related or incidental activities. There may be a range of income sources which qualify as assessable income from a business or from business activities even though they are in a sense incidental to its main activities. In Kidston Goldmines Ltd v Federal Commissioner of Taxation (1991) 30 FCR 77 , the Court held that the investment of surplus funds from sales of gold on the short-term money market was an incident of the taxpayer's goldmining business. That case also decided that the interest received was not, however, exempt from income tax under the then s 23(o) of the ITAA 1936 as it was not income "derived from the working of a mining property". It was not sufficiently proximate to the activities which directly generated income by gold mining. The result turned on the particular statutory provision. Other illustrations are provided by Carapark ; Lees & Leech Pty Ltd v Commissioner of Taxation (1997) 73 FCR 136 ( Lees & Leech ); Warner Music Pty Ltd v Commissioner of Taxation (1996) 70 FCR 197 ; Federal Commissioner of Taxation v Dixon [1952] HCA 65 ; (1952) 86 CLR 540 and G.P. International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1989) 170 CLR 124. To draw that line requires an assessment of the material circumstances at the relevant time or for the relevant period. 47 The purpose of Div 35 is clearly enough to limit the extent to which non-commercial losses from a taxpayer's business activities are used as tax deductions to reduce the tax paid on other income. The extrinsic materials indicate that it was designed to prevent the expenses of leisure activities or hobbies, or of activities ostensibly business-like but which are unlikely ever to make a profit, from generating tax deductible losses to be set off against other income. In that context, Mr Watson's circumstances --- if the appeal is to be allowed --- would fall within the reach of s 35 - 10 (2) even though, in a sense, he would be an incidental object of its application. He has not engineered his present circumstances to get the benefit of a deduction against other income for what is, in essence, non-commercial expenditure. 48 Nevertheless, it is necessary to apply s 35 - 10 (2) if, upon its proper construction and application and that of s 35 - 30 and s 35 - 35 , it applies to him. 49 The relevant distinction which is drawn by s 35 is between assessable income from the business activity in a particular year and assessable income which is not from the business activity in a particular year. Income from a business activity must clearly have a connection with it. Beaumont J (with whom Jenkinson and Heerey JHJ agreed) in BHP Petroleum at 170-171 applied the normal sense of a starting point, source or origin. Finn J in Watson at 569 contrasted income from the business of Mr Watson and income that was a surrogate or replacement for income which might otherwise have been received. As noted above, such income may include income from incidental activities even though they are not, or not likely to be, recurrent (eg the interest on a temporary cash surplus, as in Kidston ; or the proceeds of a life insurance policy, as in Carapark ; or the cash incentive paid to take a long term lease, as in Lees and Leech . In certain circumstances, and in relation to a particular period, the assessable income of a business activity might also include for a time disability payments under a personal income protection policy. I do not need to decide that question. 50 However, in my view, it is clear that in respect of the financial year ended 30 June 1994, Mr Watson's payments under the PIP policy were unrelated to his business as a financial planner. They were to substitute for the income he may have earned in the business but for his partial disability. But there was no element of the business to which they were connected. Their only relationship to the business is that eligibility for the payments depended on the fact of ongoing partial incapacity to conduct the business as Mr Watson had previously done, and that the PIP policy quantified the contractual entitlement by reference to Mr Watson's income from the business, adjusted as agreed in the PIP policy. Those are merely events which the PIP policy was expressed to operate upon. The relevant payments under the PIP policy, however, had no causative connection with the business so that they could be regarded as income from the business or from the business activity. 51 Even if, initially, the benefits under the PIP policy could have been income from his business activity, at least while his capacity to continue to run the business was re-established, that is not the present position in respect of the relevant year of income. The taking out of the PIP policy may have been prompted by a range of sensible considerations, but the considerations for a taxpayer taking out such a policy will be but one piece of information relevant to the determination of whether benefits received under such a policy are part of the assessable income from a business activity in relation to a particular year of income. 52 The evidence is that Mr Watson's business expenses have been more or less constant for the years ending 30 June 2003 and 30 June 2004. In each of those years, his income from running the financial planning business (putting aside his insurance payments) has been significantly less than the expenses. His partial disability is apparently indefinite. He has not employed others, using the payments under the PIP policy, to work in the business to increase its income. No activities by him in the business, including the incidental or ancillary activities (such as record keeping, filing, banking, research, general administration tasks, insuring business assets and the like), have related to him continuing to receive the partial disability payments under the PIP policy. If he ceased running the business, or if he sold the business, his entitlement to partial disability payments under the policy would not change --- although, depending on any other income earning activities he undertook, the quantum of those payments may be adjusted. 53 In his reply, Mr Watson alternatively argued that, because the insurer required Mr Watson to carry on his business so long as he was able, continuing his business became a condition of getting the insurance benefits. For reasons given below, if that were the insurer's position, I do not think it would be warranted under the policy (although of course the insurer has not had the opportunity of putting argument on the issue). I do not accept the premise that continuing the business, at what is now a significant annual loss, is a condition of eligibility for benefits under the PIP policy. 54 Further, Mr Watson argued in his reply as another alternative that the expenses of $14,854 in the income year ended 30 June 2004 were all attributable to the fee and commission income of $9,896. The test for deductibility of expenses is in s 8 - 1 of the ITAA 1997. The approach of the High Court in Ronpibon v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47 to the test for deductibility (in respect of s 51(1) of the ITAA 1936 --- the legislative predecessor) is still applicable. However, the proposition that there should be a pro-rata apportionment of expenses between fee and commission income on the one hand and the payments under the PIP policy on the other is also premised upon the fact that Mr Watson was obliged to continue to operate the business as a condition of eligibility for those payments. In other words, he says he had to incur the expenses to receive the assessable income comprising the insurance payments. For the reasons discussed below, I do not accept the premise. 55 For those reasons, I conclude that, at least for the year of income in issue, the partial disability payments under the PIP policy were not assessable income from Mr Watson's business or his business activities as a financial planner. Accordingly, the appeal should be dismissed. 56 Finally, I wish to make some observations about the terms of the PIP policy. 57 I note the communication referred to at [8] of these reasons. As I there remarked, there was a suggestion in the evidence of Mr Watson that he understood that he must continue to run his financial planning business to be eligible to continue to receive benefits under the PIP policy at their current level. I do not think the PIP information from the insurer says that. 58 The definition of partially disabled is set out in [16] above. The PIP policy says that the insurer will stop paying partial disability payments as soon as the insured person stops being partially disabled. It does not say that the insured person must be working in his or her pre-disability occupation to be "partially disabled". It allows for the fact that he or she may not be doing so. Consequently, if Mr Watson were to cease running his business because he could only do so at a significant loss, he would nevertheless remain partially disabled. It appears to be accepted that he is not able to perform all of the income producing duties of the business. It also appears to be accepted that, because of that disability, he earns less than his pre-disability income. 59 Indeed, under the definition of "total disability" in [14] above, Mr Watson may qualify for benefits under the PIP policy on that basis. There may be no significant difference: see [63] below. Of course, Mr Watson for the reasons set out in [62] below should endeavour to secure or maintain a reasonable occupation or employment. 60 On the assumption that Mr Watson remains at his current level of partial disability, he is entitled to payments calculated in accordance with the PIP policy. It is neither appropriate, nor possible, to decide what his precise entitlement would be if he were to cease running his financial planning business because he could not do so profitably, or to run it in a way that reduced his overheads and other outgoings to more closely relate them to his capacity to earn income from that business. There may also be other reasons why Mr Watson continues to run his business even though he cannot do so at a taxable profit. 61 The policy itself, and the explanatory material sent by the insurer on 2 January 2002, indicate that the formula to determine the benefit level for partial disability is calculated by reference to average weekly income from time to time during the period of partial disability. It does not oblige the insured person to maintain the business being conducted at the time the disability arose. If the insured person returns to work at a reduced capacity, the income protection is replacement income (business related income). If expenses exceed other business income (ie ignoring the Income Protection benefit itself) then to sell off the business is against the intent of the insurance act and the insurance company would cease benefit until other work was obtained. That obligation is one applicable to the measure of damages in all contracts. It does not apply as a term of the policy. Section 13 of the Insurance Contracts Act 1984 (Cth) implies a term that each party to an insurance contract will act towards the other party with the utmost good faith. It could be expected that Mr Watson should therefore act reasonably in relation to the business activities or employment which he chooses to undertake: Dufty v City Mutual General Insurance Ltd [1977] Qld R 94. The element of reasonableness is also explained in cases such as Fidelity and Casualty Co of New York v Mitchell [1917] AC 592 ; Pocock v Century Insurance Co Ltd [1960] 2 Ll Rep 150; and Sergent v GRE (UK) Ltd [2000] Ll Rep 1R 77. That obligation extends to an insurer in determining whether an insured was totally and permanently disabled: see Beverley v Tyndall Life Insurance Co Ltd (1999) 10 ANZ Ins Cas 61-453. Reference may also be made to regs 17 and 18 of the Insurance Contracts Regulations 1985 (Cth) and to the decision in QBE Insurance Ltd v Jande (1995) 8 ANZ Ins Cas 61-270. Ultimately, the wording of the policy is the critical element. 63 The current level of benefits under the PIP policy has apparently been acceptable to Mr Watson. The definition of "income" in the case of a self-employed person is the "money generated by [that person's] business due to the person insured's own activity, after all expenses in earning that income have been deducted". On the evidence, Mr Watson would have no income for the purposes of the policy. He would appear to be entitled to be receiving, and be receiving the maximum weekly benefits payable under the policy. It is not a requirement of the PIP policy that, to continue to be eligible to continue to do so, he must continue to operate his business at a significant annual loss. 64 It is, of course, up to Mr Watson whether he continues to operate his business as at present, or adapts the manner of its operation in some way, or endeavours to pursue some other income earning enterprise. It seems clear enough that he continues to be partially disabled from work, so it is a matter of applying the terms of the policy to calculate the amount of his ongoing entitlement to payments under the policy in the light of his ongoing earning capacity as reflected in his income. 65 In my judgment, for the reasons given, the appeal should be dismissed. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | deferral of losses from non-commercial business activities appellant runs business as financial planner appellant became partially disabled but continued to run business although expenses exceeded commission and fee revenue whether benefits paid under income protection policy in respect of appellant's partial disability are part of the assessable income from the business activity inclusion of insurance payments would result in assessable income from business activity held insurance payments not part of assessable income from business activity, so there were losses from non-commercial business activity properly deferred deferral of losses from non-commercial business activities whether there is a difference between assessable income from business and assessable income from business activity taxation taxation |
Orders given by Justice Jessup on 31 August to stay until the appeal is fully determined. Mr M McKenney and Mr Felix Vitiello to step down from a legal representation in the appeal matter VID 743/07. Appellant's claims of Contempt of the Court by Mr McKenney, Mr Vitiello, the Defendants and their witness Ms Esther Keji Matthew to be determined prior to the appeal hearing & the Contempt of the Court proceeding is deemed to commenced. I adopt the same defined terms in these reasons. 5 Having regard to the reasons for decision of Jessup J and the grounds of appeal, it appears to me to be inevitable that the Appeal Books before the Full Court of the Federal Court will need to include a copy of the transcript of the evidence given by Ms Bahonko and the respondents' witnesses. It would therefore facilitate the conduct of the Appeal if all participants in the Appeal were provided with a copy of the transcript of the evidence before Jessup J. Accordingly, in relation to the transcript of the substantive proceedings, the request for access to the transcript is granted but only in respect of evidence given viva voce before Jessup J. That transcript will be provided by the Court in an electronic form. Whether or not such a stay should be granted depends upon whether the Court or a Judge thinks in all the circumstances that the matter is an appropriate case for the grant of a stay: See, for example, Powerflex Services Pty Ltd v Data Access Co (1996) 137 ALR 498. " That is an issue for the Appeal of the Substantive Orders. 10 The additional matters referred to by Ms Bahonko in her affidavit sworn on 20 September 2007 and in her oral submissions are properly described as scandalous and vexatious. They include allegations of criminal conduct and conduct constituting abuse of office. Those allegations are unsupported and insupportable. None of the matters relied upon by Ms Bahonko provides any basis for the grant of stay of the Costs Orders. 11 Paragraph 2 of the Notice of Motion is dismissed. Ms Bahonko seeks to rely upon her affidavit of 20 September 2007. In that affidavit and in the course of her oral submissions, Ms Bahonko made allegations which are properly described as scandalous. There is no foundation established for the allegations against the respondents' advisers. Paragraph 3 of the Notice of Motion is dismissed. It is without foundation. 14 On 24 May 2007, following the closure of the respondents' evidentiary case on the two applications (see [2007] FCA 1555 at [4] ) before Jessup J, Ms Bahonko attempted to make a range of oral applications including an application to file a statement of charge for contempt of court against the respondent and the respondents' legal representatives, Mr McKenney and Mr Vitiello, and sought to challenge the competency of two of the witnesses called on behalf of the respondents, the fourth respondent and Ms Esther Matthews. Jessup J did not grant leave to file these applications: see [8] at paras (2) and (4) and [9] of Bahonko v Sterjov [2007] FCA 867. 15 On 30 May 2007, Ms Bahonko sought leave to appeal Jessup J's decision not to grant leave to file the statement of charge for contempt of Court. On 9 June 2007, Finkelstein J made a direction to a Registrar under O 46 r 7A of the Federal Court Rules that the notice of motion dated 30 May 2007 be refused for filing. 16 A direction under O 46 r 7A is not a judgment able to be subjected to an appeal by Ms Bahonko: Bizuneh v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 42 ; (2003) 128 FCR 353 at [19] per Lee, Whitlam and Jacobson JJ. See also Paramasivam v Randwick City Council [2005] FCA 369 at [40] and [41] per Sackville J. That application is dismissed. 17 In relation to other purported contempt claims made by Ms Bahonko about the evidence given by witnesses during the course of the trial before Jessup J, there is no basis for those allegations to be made, let alone heard and determined. The fact of the claim is referred to in para [25] of the reasons for decision of Jessup J reported at [2007] FCA 1341. The credibility of the witnesses was addressed by Jessup J in his reasons for decision and are reflected in the Substantive Orders and the Costs Orders which are the subject of the Appeal. The appeal process is the procedure to be adopted by Ms Bahonko if she seeks to challenge the findings made by Jessup J. 18 There is no basis for Ms Bahonko's purported contempt claims to be heard and determined. 20 The notice of motion dated 20 September 2007 is otherwise dismissed. Except for the issue of access to part of the transcript before Jessup J, Ms Bahonko was wholly unsuccessful. Moreover, her submissions and her affidavit were properly described as scandalous and vexatious. Ms Bahonko is to pay the respondents' costs of and incidental to the Notice of Motion filed on 20 September 2007. | where appeal pending in relation to substantive orders and costs orders of a single judge application for access to transcript for purposes of appeal leave limited to viva voce evidence to facilitate preparation of the appeal by all parties application for leave to stay costs orders pending determination of appeal application for removal of respondents' legal representatives from participation in appeal application for leave to initiate contempt proceedings where leave previously denied where nature of requests scandalous and vexatious practice and procedure |
The relief sought is that the respondents, Optus Mobile Pty Limited and Optus Networks Pty Limited ( Optus ), be restrained until further order of the Court from blocking its customers' access to Pivotel's telecommunications network and/or Pivtoel's Australian digital mobile telephone numbers. The first is an affidavit of Robert Sakker sworn 22 December 2009. Mr Sakker is the executive director and company secretary of Pivotel Group Pty Limited ( Pivotel Group ) and its wholly owned subsidiaries, which include the applicant, Pivotel. The second is an affidavit of Caitlin Murray sworn 23 December 2009. Ms Murray is a solicitor employed by the solicitors for Optus. Ms Murray has provided her affidavit largely on the basis of information from Lynette Rieper. Ms Rieper is the corporate counsel for Optus. Insofar as relevant, the two affidavits disclose that Pivotel Group is a licensed telecommunications carrier under the Telecommunications Act 1997 (Cth) and is the nominated carrier for mobile satellite services provided in Australia using a particular satellite. Pivotel Group has held a carrier licence under s 56(1) of the Telecommunications Act since on or about 4 March 2003. According to Mr Sakker there are five telecommunications carriers that operate public mobile telephone networks: Telstra, Optus, Hutchison (or 3), Vodafone Network Pty Limited ( Vodafone ) and Pivotel. Mr Sakker says that because Hutchison and Vodafone have now merged their businesses, effectively, there are four mobile telephone communication carriers in Australia. Pivotel apparently considers that its major competitors at a retail level in the Australian mobile satellite services market are Telstra and Optus. Consistent with the provisions of the Telecommunications Act , Pivotel was allocated a range of digital mobile telephone numbers by the Australian Communications and Media Authority. The allocation of these numbers commenced in about 2004. Mr Sakker explains that each of the carriers has a telecommunications switch used for interconnection with other carriers in each capital city of Australia. "Interconnection" is a link that allows traffic from one carrier to be passed to another carrier. Pivotel has a direct interconnection link for mobile telecommunications traffic with Vodafone, but no other carrier. Pivotel, accordingly, has contractual and other arrangements with Vodafone by which traffic to and from Pivotel numbers is transmitted by an originating carrier, be it Pivotel or another carrier, via Vodafone as the transit carrier. Vodafone itself then has arrangements with other Australian carriers pursuant to which it carries this traffic. The evidence discloses that there is a separate set of proceedings in this Court between entities known as Mediatel Pty Limited ( Mediatel ) (and associated entities, referred to below as the Mediatel interests ) and Optus. Those proceedings were commenced in March 2009. Mr Sakker has had involvement as an expert witness in those proceedings. Documents from the Mediatel proceedings and other documents in respect of this interlocutory application show that from about August 2009 Optus began to block calls from Optus's customers to telephone numbers that Optus considered were associated with the Mediatel interests. Vodafone (being the transit carrier) considers that Optus is obliged to pay nine cents per minute to Vodafone for all traffic to the Pivotel network. Optus, however, considers that calls from its customers to Pivotel phone numbers are being used improperly to obtain access not to a genuine Pivotel handset but through an interactive voice recognition system to overseas destinations. This is referred to in the evidence as a "two stage dialling process". Before 21 December 2009 Mr Sakker was aware that some 94 Pivotel numbers identified by Optus as being associated with the Mediatel interests had been blocked. However, according to Mr Sakker, on 21 December 2009 he first received notice that Optus had taken steps to block all of Optus's customers from making any calls to the Pivotel network. The result is that Pivotel customers could still make calls to Optus customers but Optus customers could not make calls to any Pivotel customers. There seems to be no factual issue that Optus did in fact take steps on or about 20 December 2009 which had the consequence Mr Sakker identified. Optus's decision-making process in this regard is disclosed in Ms Murray's affidavit. Ms Murray records (consistent with Mr Sakker's evidence) that Optus does not have a direct interconnection with Pivotel; indeed, there is no contractual relationship between Optus and Pivotel. The relevant contractual relationships appear to be between Optus and its customers, as well as Optus and Vodafone, and Pivotel and its customers, as well as Pivotel and Vodafone. According to Ms Murray since December 2008 Optus has withheld payments from Vodafone for calls to numbers that it considers to be "non-genuine traffic" numbers --- that is numbers associated with the two stage dialling process referred to above. Ms Murray says that as at the date of her affidavit (23 December 2009) the total amount of payments which Optus has withheld from Vodafone in respect of such calls is some $6.1 million. Further, the dispute about any liability that Optus may have to Vodafone in relation to that amount and, presumably, other disputed liabilities incurred thereafter, is a part of the Mediatel proceedings. Ms Murray also records that Optus has formed a commercial view that it does not wish to carry traffic that does not ordinarily terminate on the handset of an end-user on the Pivotel network. While Optus disputes the claim by Vodafone for payment at the rate of nine cents per minute for this traffic, Optus also does not wish to become potentially liable to Vodafone for any future traffic which it considers to be non-genuine. In para 30 of her affidavit Ms Murray identifies the process by which numbers were blocked by Optus, being those numbers which it considers to be non-genuine traffic. This process apparently increased in frequency and extent from about November 2009. Until the commencement of these proceedings, Optus received no complaint from Pivotel about the blocking of individual numbers. Ms Murray's affidavit records that she is informed by Ms Rieper that as of 20 December 2009, and given Optus's commercial decision about the traffic it did not wish to carry, Optus took steps to block all calls going from the Optus network to numbers associated with the Pivotel network. Optus did so having regard to the fact that, according to it, it could not find any other way to prevent "non-genuine" traffic. Further, Optus is concerned about its existing and potential future liability to Vodafone, which Optus disputes. Optus is also concerned about the potential effect of the dispute with Vodafone and Optus's ongoing commercial relationship with Vodafone which is very valuable and said to be worth many millions of dollars per year. This is in circumstances where, if the raw number of nine cents a minute is taken as a starting point, Ms Murray's affidavit (para 34) identifies a potential liability on the part of Optus to Vodafone ranging from $214,910 to $966,630 per month. It is the blocking by Optus of all calls from its customers to all Pivotel mobile phone numbers that has prompted the application for interlocutory relief on an urgent basis today. Pivotel says that there is a serious question to be tried on a number of bases and that the balance of convenience weighs in its favour, including having regard to the fact that it is willing to proffer an undertaking as to damages in the usual form on behalf of not only Pivotel but also each and every subsidiary of Pivotel Group both individually and jointly. SERIOUS QUESTION TO BE TRIED? Optus is a carrier. Pivotel claims that there is sufficient evidence to be satisfied that, at least on a prima facie basis and assuming all other things remain the same at the final hearing, Optus has a substantial degree of power in two telecommunications markets, being the ordinary mobile phone market and the satellite market. This substantial degree of power is evidenced by Optus's capacity to prevent its customers from accessing Pivotel handsets. Pivotel claims that, on the evidence as it currently stands, Optus has used its market power to withhold or prevent the provision of a service. This use is sufficient for the purposes of s 151AJ to constitute the taking advantage of the power in the mobile telephone or any other market, and has had the relevant effect proscribed by the legislation (namely, a substantial lessening of competition). On Pivotel's case (and as supported by its evidence) there is a national market for ordinary mobile telephony services and a national market for satellite mobile telephony services. The first market has four carriers. The second market has three carriers. These markets have high barriers to entry. Interconnection between all of the carriers, submits Pivotel, is critical to each market. The capacity to prevent interconnection, at least on a prima facie basis, is taking advantage of the power in the market, the effect of which, Pivotel contends, is to substantially lessen competition in both the mobile telephony and satellite markets. Pivotel says it is apparent that if an Optus customer cannot ring a Pivotel mobile or satellite telephone then Pivotel customers will be discouraged from using the Pivotel satellite mobile telephony services. Further, in terms of the market for ordinary mobile telephony services, Optus customers will be discouraged from using Optus's services. Pivotel referred to the decision in Boral Besser Masonry Limited v Australian Competition and Consumer Commission (2003) 215 CLR 374 ; [2003] HCA 5 at [136] and [137] to support its submission that pricing is not the only aspect of market behaviour that manifests power. Other aspects, said Gleeson CJ and Callinan J, may include the capacity to withhold supply and the capacity to act without constraint. Pivotel submits that for the purposes of this interlocutory application it has shown sufficiently that this has occurred. The second question arises from Pivotel's claim for breach of s 46 of the Trade Practices Act (the general misuse of market power provision). Pivotel acknowledges that s 46 requires it to establish that the use of the market power was for the proscribed purposes of either eliminating or substantially damaging a competitor or deterring or preventing a person from engaging in competitive conduct. Pivotel otherwise relies on alleged breaches of ss 51AB and 51AC of the Trade Practices Act , each of which, in relation to either the supply of goods or services to a person or the carrying out of business transactions as nominated, proscribes unconscionable conduct. Pivotel also invokes s 52 of the Trade Practices Act which proscribes misleading or deceptive conduct. First, Optus makes a relatively formal submission that Pivotel is a member of a group of entities with a common holding company (Pivotel Group Pty Limited) in circumstances where it is not clear from the evidence which company has the telephone subscribers. Consequently, according to Optus even if Pivotel made out its causes of action it is not clear that the named applicant is the relevant entity which will suffer loss or damage. It seems to me that this submission can be put to one side relatively easily, given Mr Sakker's evidence. It appears that at least one relevant applicant is the moving party in these proceedings. While it may be that there are other potential applicants, I do not need to resolve that issue now. Accordingly, I am not persuaded that this submission should be accepted. Optus also contends that Pivotel has not identified any legal basis upon which it could be said that Optus must have Pivotel's business foisted upon it in circumstances where Optus has made a commercial decision that it does not wish to carry calls to Pivotel. As noted, there is no contractual relationship between Pivotel and Optus. According to Optus, Pivotel has not identified any regulatory provision, contractual entitlement or other legal basis which would require Optus to carry calls to the Pivotel network. This submission, however, cannot be assessed separately from the potential causes of action upon which Pivotel has commenced these proceedings, being the provisions of the Trade Practices Act to which I have referred. According to Mr Clarke no mobile handset is required to utilise the services in issue. The services may be accessed from a fixed network service. Further, the service is a one-way, incoming-call only service. The difficulty with this proposition is that Mr Clarke's evidence addresses the Mediatel numbers. The evidence in the present case (as it currently stands) is sufficient to show that Pivotel has some 15,000 numbers allocated to it of which 8000 are satellite users. It is not possible to ascertain from the evidence what proportion of those numbers might be Mediatel numbers. Accordingly, there is evidence to support the submissions made on behalf of Pivotel that there are two relevant markets, the satellite mobile market and ordinary mobile market. (2) Secondly, Optus submits that there is no evidence which allows an inference to be drawn that Optus has taken advantage of any market power. Rather, the evidence shows that Optus would have acted in precisely the same way and on a genuine commercial basis even if it did not have the market power that it was alleged to have. Accordingly, on this submission, competitive conditions are entirely irrelevant. The reason Optus blocked access is because it made a business decision that it is commercially disadvantageous for it to allow access by its customers to the Pivotel network. The decision had nothing whatsoever to do with Optus's competitive position. This is supported by evidence from Ms Murray that Optus does not consider Pivotel to be its commercial competitor. Nevertheless, as Pivotel submitted, the requirement that there be a taking advantage of power in a market, according to Miller's Annotated Trade Practices Act . 30 th ed. Thomson Reuters. Sydney (2009) at [1.151AJ.15], does not involve anything more than the use of the market power involved; predatory intent is not required ( Queensland Wire Industries Proprietary Limited v Broken Hill Proprietary Company Limited [1989] HCA 6 ; (1989) 167 CLR 177). On this basis there is evidence capable of supporting an inference that there has been a taking advantage of market power as proscribed by the statute. There is also evidence capable of supporting a conclusion that Optus has a substantial degree of power in the two identified markets. Further, there is evidence capable of supporting a conclusion that the effect of Optus's actions, irrespective of its intention, has or is likely to have been a substantial lessening of competition. On this basis, I am satisfied that Pivotel has established that there is a serious question to be tried in respect of the alleged breach of s 151AJ of the Trade Practices Act . I accept Optus's submission that it is more difficult from the evidence to draw any inference capable of supporting a potential contravention of s 46 of the Trade Practices Act (which requires proof of the proscribed purpose). On balance, I am not satisfied that the evidence has established a prima facie case in respect of a breach of s 46. Similarly, Pivotel's submissions about contraventions of ss 51AB and 51AC, relating to unconscionable conduct, as well as s 52, were by no means as persuasive as its submissions about the existence of a serious question to be tried in respect of s 151AJ. On the evidence, I am not satisfied that there is a serious question to be tried in relation to any of those statutory provisions. However, as I have said, I am satisfied that Pivotel has established a serious question to be tried in respect of anti-competitive conduct proscribed by Pt XIB of the Trade Practices Act (the so-called "competition rule") regulating the telecommunications industry (specifically, ss 151CA, 151AJ and 151AK). Insofar as relevant, s 151CA(1) vests power in the Court to grant to any person an injunction in the event of any breach of the competition rule. More relevantly, s 151CA(3) provides that "[i]f, in the opinion of the Court it is desirable to do so, the Court may grant an interim injunction pending determination of an application under subsection (1)". I thus have power to grant the relief requested but must now consider where the balance of convenience lies. BALANCE OF CONVENIENCE? Optus's submissions in relation to the more general aspects of the balance of convenience also take issue with Pivotel's case based on alleged safety concerns. These are said to arise from the inability of Optus customers to contact Pivotel customers including, for example, contact by various emergency services, there being some evidence that various government and other entities have contracts with both Optus and Pivotel. Optus points out that: - (i) calls can continue to be made to all emergency services, (ii) all outgoing calls can still be made by Pivotel customers, and (iii) all incoming calls can still be received by Pivotel customers other than calls from Optus customers. Further, according to Optus, Pivotel has not adduced cogent evidence that anyone is likely to be disadvantaged. Optus relies also on the fact that its dispute with Vodafone is having a serious impact on its commercial relationship with Vodafone. That relationship is worth many millions of dollars a year. Optus notes that until the events of 20 December 2009, Pivotel made no complaint about Optus blocking individual numbers from August 2009 (albeit accepting that the numbers were blocked at a greater rate from about November 2009). As senior counsel for Pivotel submitted I do not know what proportion of Pivotel numbers has been allocated to the Mediatel interests but I do know that there are 8000 numbers associated with Pivotel satellite phones. I also am prepared to infer on the evidence that while Optus may be exposed to a liability to Vodafone of nine cents a minute on all Pivotel traffic, Optus itself accepts that it would not be providing a services to its customers for free. Accordingly, the actual level of Optus's exposure to Vodafone, while potentially significant, cannot be based on the rate of nine cents a minute. I also accept that the continuation of the blocking will or is likely to cause economic loss to Pivotel. Again, however, I cannot assess the exact nature of that loss. It also seems to me that the potential liability of Pivotel under any undertaking to persons other than Optus involves pure speculation. More importantly than these matters and as Pivotel points out, Optus has been carrying the Pivotel traffic since 2005. The issue about blocking appears to have first arisen, albeit not to Pivotel's knowledge, in August 2009. Before the events of recent days Mr Sakker was aware of some 94 numbers that had been blocked. However, he first became aware of Optus's decision to block all of its customers from accessing the entire Pivotel network on 21 December 2009. There are serious public interest issues in respect of the interconnectivity of the mobile telephone network in Australia. Subject to dealing with the adequacy of the undertaking as to damages, these considerations make it difficult to accept that the balance of convenience is other than one which weighs heavily in favour of Pivotel. Therefore, it seems to me that three factors are of critical importance. First, the traffic in issue has been on the Optus network since some time in 2005. Second, there are serious public interest issues about the interconnectivity of the whole mobile telephony network. By this, I mean the capacity of any person with a mobile phone in Australia to make and receive calls to and from any other number irrespective of the carrier to which that number is allocated. Third, Optus took the action resulting in the blocking of access from its customers to the entire Pivotel network on 20 December 2009 without, apparently, any forewarning or notice to Pivotel that such action was proposed. I should also note that I do not accept Optus's submission that this is a clear case in which damages would be an adequate remedy for Pivotel. This seems to me not to reflect the reality of the situation where no Optus customer, at the moment, can access any Pivotel customer. I accept the evidence of Mr Sakker that the blocking impacts on not only Pivotel customers but also on Optus customers, as well as the overall domestic mobile and national fixed telephony markets for which damages would not be an adequate remedy. I also do not accept that Pivotel is somehow the author of its own misfortune. It is apparent from the evidence that Optus's commercial concern relates to the two stage dialling process. Optus's response of blocking access to the entire Pivotel network, without notice to Pivotel, could not be characterised as Pivotel being the author of its own misfortune. Nor do I accept that Pivotel has delayed in taking action. Mr Sakker's evidence is to the contrary and is sufficient to cause me to reject this allegation. I come then to the undertaking as to damages. There have been forceful submissions put on behalf of Optus that the information available about the financial situation of Pivotel and the other members of Pivotel Group requires me to accept that there are insufficient assets to meet a very potential significant liability on Optus's part (that is, to Vodafone). The difficulty with this submission is that Pivotel has disclosed not only its financial position but the financial position of all of the members of Pivotel Group. I am satisfied on the evidence that Pivotel Group (each member of which is individually and jointly to give the required undertaking) is an ongoing business of substance which has a material excess of assets over liabilities including assets that would seem to be capable of realisation if need be. In these circumstances, having regard to the balance sheets in evidence and given the lack of information about the precise quantity of any exposure under the undertaking, I am satisfied that there are undertakings of genuine worth proffered. Although the order sought is framed in negative terms (namely, that Optus cease blocking numbers), Pivotel properly acknowledges that the consequence of any such order has a positive effect, namely, that Optus will be required to carry traffic when it has made a commercial decision that it does not wish to do so. The difficulty for Optus is that Pivotel has established a prima facie case in relation to a potential contravention of s 151AJ of the Trade Practices Act . This provides a proper basis for the making of an order, the effect of which will be to preserve the status quo . The status quo is that the disputed traffic has been carried by Optus on its network since about 2005. Mr Sakker has given evidence, unchallenged on this application, that mobile phone users in Australia generally have an expectation of being able to access all other numbers, be they mobile or fixed landline services. In these circumstances the fact that the granting of an order to Pivotel would have a positive effect does not seem to me to be a sufficient reason to deny interlocutory relief given that Pivotel has established a serious question to be tried and that the balance of convenience is in its favour. I accept Pivotel's submission that it is unsatisfactory to attempt to carve out from the order any capacity for Optus to continue blocking numbers that Optus believes are Mediatel or similar numbers involving a two stage dialling process. I also accept that, in circumstances where it is proffering an undertaking as to damages, Pivotel should not be required as a price of interlocutory relief to provide to Optus a list of all Mediatel numbers, even assuming that it could do so having regard to the restrictions imposed on the disclosure of such information by s 276 of the Telecommunications Act . There is one further issue which relates to the form of the order. It is whether there should be excluded from that order either all Mediatel numbers, the 94 numbers Mr Sakker knew had been blocked before 20 December 2009 or all numbers that Optus blocked on an individual basis before it blocked access to the entire Pivotel network on 20 December 2009. Pivotel's urgent application for relief today was prompted by the action which Optus took on 20 December 2009 to block access to the entire Pivotel network. The minimum relief required to preserve the status quo pending the final resolution of these proceedings is to frame an order that has the effect of reinstating the position as at the date immediately prior to 20 December 2009, that is, before Optus took the step of blocking access to the entire Pivotel network. It seems to me that it should be possible for an unambiguous order to be framed so to achieve this end. I am satisfied that the balance of convenience favours Pivotel. I am satisfied that damages would not be an adequate remedy in the circumstances. I am thus minded to make an injunction in an appropriate form, pending further order of the Court and on the basis of the giving of an appropriately worded undertaking as to damages. I request the parties confer immediately to that end. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | application for an injunction respondents blocked connectivity between the respondents' network and the applicant's network alleged anti-competitive conduct whether serious question to be tried where balance of convenience lies adequacy of undertaking as to damages trade practices |
The applicant claimed that the respondent's use of the word infringed its registered trade marks, contravened s 52 and/or ss 53(c) and (d) of the Trade Practices Act 1974 (Cth) and constituted passing off. 2 The applicant brought an application for an interlocutory injunction. Upon the respondent giving undertakings that it would not use the name "Oxford" in connection with debt factoring, debt financing or debt collection services or outsourcing services in relation to accounts receivable administration, I dismissed the application and reserved the costs thereof: Oxford Funding Pty Ltd v Oxford Asia Pacific Investments Pty Ltd [2005] FCA 1637. An important element was a consideration of the balance of convenience: see [14]. 3 Following protracted negotiations the parties have now resolved their differences and executed a deed of settlement. However, the question of the costs of the proceeding remains in issue. 4 The applicant submits that the respondent should pay all of its costs, or alternatively all of its costs up to and including the injunction application. The respondent's case is that the applicant should pay its costs of the injunction application or, alternatively, that each party should bear its own costs of the whole proceeding. All costs orders are sought on a party/party basis. 5 The Court has undoubted jurisdiction to make an order for costs notwithstanding that the proceeding has otherwise settled; see for example Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 (Hill J), Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6 ; (1997) 186 CLR 622 at 624-625 (McHugh J), We Two Pty Ltd v Shorrock [2002] FCA 875 (Finkelstein J). While any question of costs always remains a matter of discretion, the approach in the cases is usually that the Court will not try a hypothetical action to decide which party would have won. Rather, the Court will assess the conduct of the parties including, in appropriate cases, the conduct prior to the commencement of proceedings, to see whether that conduct was "reasonable". This rather suggests that an order will only be made where the party seeking costs has acted reasonably and the other party has not. Where both parties have acted reasonably, or unreasonably, the costs should lie where they fall. "Unreasonableness" in this context could include rejecting a reasonable offer or an invitation to engage in discussions which hold out reasonable prospects of a compromise. 6 In the present case, each party asserts the reasonableness of its own conduct and the unreasonableness of its opponent's. 7 My judgment on the injunction application includes a brief summary of the evidence in relation to the respective business activities of the parties. I will treat it as incorporated in the present reasons and turn to the correspondence that passed between the parties, commencing with the applicant's letter of demand. 8 On 27 September 2005 the applicant's solicitors Middletons wrote to the respondent asserting their client's goodwill as a company that "provides funding for business' accounts receivable, collection services, credit monitoring and checks and factoring services". The letter stated that the applicant was the registered owner of three trade marks. This website refers to the services offered by OAPI in Australia. Amongst other services offered by OAPI is 'factoring, invoice discounting and inventory financing divisions of bank/non-bank organisations' (the OAPI services). The OAPI Services are services of the same description as that of the services in respect of which (the applicant's) trade marks are registered. 10 The respondent replied by a letter from its solicitors Phillips Fox dated 3 October 2005. As to the OAPI website, the letter stated that the reference to "factoring, invoice discounting and inventory financing of bank/non bank organisations" was not to the services provided by their client, as asserted in the applicant's letter; rather the website described the industry and client base for which their client provided consultancy services. Our client does not perform factoring services and because of this recently referred a factoring opportunity to your client, for which our client received written acknowledgement and thanks. The letter disputed "absolutely" the assertion that consumers would be likely to be misled or deceived into believing that the companies were connected in any way. It said that the respondent had established its own reputation in the name Oxford Asia Pacific Investments and its services targeted a completely different client base. Confusion in the market place was "highly improbable". However, our client will not hesitate in taking any counter action against your client that may be available to it, including under section 53(g) of the Trade Practices Act and section 129 of the Trade Marks Act if your client persists with any of these allegations. The application included an application for interlocutory relief returnable on 2 November. 13 Phillips Fox responded to the commencement of the proceeding by a letter of 26 October. We reiterate that Oxford Asia Pacific Investments Pty Ltd does not (and we are instructed will not) offer any kind of debt financing services, factoring, invoice discounting or other forms of business financing to the market. Rather, its business comprises the facilitation of private equity investment together with management, business and financial consulting services to, amongst other industry sectors, debt financing providers. The provision of services to an industry sector of itself does not render those services as being of the same description or closely related to the services provided by persons conducting business in that industry sector. To argue this would logically require that the publisher of a recipe book provides the same services as a restaurant. We were particularly surprised to be served with proceedings that addressed issues that had not been raised in your letter of demand (such as the appearance of our client's logo), in the absence of any notification or enquiry. Had you wished for further clarification of matters that raised in your letter of demand, or wished to raise additional concerns, we would have raised in your letter of demand, or wished to raise additional concerns, we would have expected a commercial approach seeking to resolve your concerns. However, given that proceedings have been issued, we will defend them fully. No person has contacted our client seeking your client's services. The provision of any finance to related companies is itself exceptional and will probably not happen in the future. Our client's website explains that consulting services are provided to the factoring industry. To emphasise the nature of our client's limited business activities, it is prepared to expressly state on its website that it does not itself provide finance facilities (including factoring and invoice discounting facilities) or finance broking services. Our client would be happy to consider wording provided by your client to achieve this. The arrangement with Display Bay Pty Ltd is a private equity investment arranged by Oxford Asia Pacific Investments Pty Ltd. The interim financing measures that are referred to represent an entirely internal transaction between related companies. Oxford Asia Pacific Investments Pty Ltd only provided a facility itself as an interim measure, as external funding could not be obtained prior to settlement. Our client is still endeavouring to procure the refinancing of Display Bay Pty Ltd by an arm's length financier. In fact, discussions have been held with your client in relation to the provision of such services. However, our client is (and has at all times been) willing to discuss this matter with your client so that the commercial realities can be understood clearly. Whilst our client does not, and will not, provide finance or finance broking services, it will continue to consider your client as a potential arm's length provider of financial services, and continue to refer appropriate business opportunities to your client as it has done in the past. 17 Following extensive correspondence, the details of which it is not necessary to examine, the parties entered into a deed of settlement dated 3 July 2006. 18 By cl 3 the respondent undertakes to make it clear on its website that it does not provide the services specified in cl 2(a), (b), (c), (d), (e), (f) and (i) and to make certain and other amendments to the website. 19 Counsel for the applicant submitted that the respondent has been unreasonable because it resisted agreeing to relief and only yielded when the applicant pressed. In particular, he said that by the ultimate settlement the applicant obtained restrictions on the respondent's activities in the fields referred to in cl 2 (d), (f), (g), (h) and (i) of the deed of settlement, being fields not conceded in the Phillips Fox letter of 26 October or the undertakings given on the interlocutory injunction application. 20 The applicant's approach involves simply comparing what the respondent initially conceded against what the applicant ultimately obtained in the settlement. As I will subsequently explain, I do not consider that is necessarily conclusive in the present case. Even so, in some respects the applicant's argument is not soundly based as a matter of fact. For example, the subject matter of cl 2(d) would seem to be essentially the same as "debt financing services, factoring, invoice discounting" (letter of 26 October) and "debt factoring and debt financing services" (interlocutory undertaking). 21 This case is one which, objectively considered, was always a likely candidate for a negotiated settlement. 22 At an early stage a serious issue emerged as to the actual extent of the respective businesses. The attendant possibility was that further investigation and verification might achieve a mutually satisfactory demarcation. Further, the applicant was going to have some difficulty in establishing an exclusive reputation in connection with the familiar proper noun "Oxford". There was evidence that Australian capital city telephone directories included, in relation to finance-related activities, entries for Oxford Insurance Brokers Pty Ltd, Oxford Securities Pty Ltd, Oxford Financial Services Pty Ltd and Oxford Accounting Group. Moreover, there was the commercial incentive of possible mutually beneficial business dealings in the future. 23 If either or both of the parties had acted more reasonably, could accommodation have been reached at an earlier time, with consequent savings in litigation costs? 24 I would not be critical of the applicant's initial letter of demand. When a client alleges an infringement of intellectual property, it is important for its solicitors to act promptly and firmly, otherwise questions of acquiescence may arise. The respondent's solicitors' response of 3 October was combative. It adopted the style common in this field of discourse. Proceedings will never just be defended, they will be "strenuously" or "vigorously" defended. Still, the 3 October letter did raise the essence of the respondent's case. It went beyond a bare denial. It was not unreasonable. Nevertheless, in the light of that letter it was not unreasonable for the applicant to commence proceedings without further notice. Even if negotiations were contemplated, there is some truth in the old adage that it is often better to talk from behind a writ. 25 However, things rather went off the rails when the applicant failed to respond positively to the Phillips Fox letter of 26 October. That letter evinced a marked change of tone. It explicitly offered negotiations, and indeed went to the length of inviting the applicant to propose changes to the respondent's website. I think in the light of that it was unreasonable for the applicant to proceed with its injunction application. 26 I do not place a great deal of weight on the precise dimensions of the restraints the respondent volunteered, which may have increased in some respects at the various stages up until the deed of settlement. What is more important is that the ultimate result shows that these restraints could, and should, have been reached by negotiation without the costs of an interlocutory injunction application. The circumstances did not disclose any particular urgency warranting the injunction application. There was no evidence of actual confusion in the marketplace. 27 The applicant achieved a negotiated settlement which was presumably satisfactory to it, notwithstanding that its application for an interlocutory injunction was dismissed. One might think that the same result would have occurred if the injunction application had not been made. In both instances the applicant would have been negotiating without the benefit of an interlocutory injunction in its favour. 28 In my opinion, a fair resolution would be for the applicant to pay the respondent's costs of the interlocutory injunction application, that is to say the affidavits and the hearing itself, although not the initial statement of claim and associated costs such as filing fees. The costs should otherwise lie where they fall, except that since the respondent has been substantially successful on the present application in relation to costs, the applicant should also pay the costs of that hearing. | dispute over use of name "oxford" application for interlocutory injunction dismissed subsequent settlement, except for costs costs |
2 A delegate of the Minister refused the application on 13 May 2003 and an application for review was lodged with the Refugee Review Tribunal. That Tribunal affirmed the decision on 11 February 2004, but on 19 July 2006 the Federal Magistrates Court made orders by consent setting aside the decision. 3 On 31 October 2006 a differently constituted Tribunal again affirmed the decision refusing to grant the visa. The Federal Magistrates Court has dismissed an application seeking to challenge the decision of the Tribunal: SZDFZ v Minister for Immigration & Citizenship [2007] FMCA 1529. 4 The Appellant now appeals to this Court. The Grounds of Appeal , in summary form, contend that there has been a breach of s 425 of the Migration Act 1958 (Cth) and that the Tribunal as reconstituted impermissibly made a finding for which there was no evidence. 5 Both of these submissions, it is considered, should be accepted and the appeal allowed. 7 Section 425 is but one of the provisions found within Part 7 , Division 4 of the Migration Act 1958 (Cth). That Division deals with the conduct of review to be undertaken. (3) If any of the paragraphs in subsection (2) of this section apply, the applicant is not entitled to appear before the Tribunal. 9 That obligation, it is considered, is not confined to an obligation to advise an applicant " of any adverse conclusion which has been arrived at ". That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question. Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ there referred to the argument then being advanced seeking to advance such a dichotomy and then applying that dichotomy to the facts before the Court. There are two reasons to exercise considerable care in approaching the problem in that way. First, it is far from clear that the two categories that are identified (conclusions not obviously open on the known material, and mental processes of decision-making) encompass all possible kinds of case that may fall for consideration. Secondly, there is a very real risk that focusing upon these two categories will distract attention from the fundamental principles that are engaged. The applicant is to be invited "to give evidence and present arguments relating to the issues arising in relation to the decision under review" (s 425(1) (emphasis added)). The reference to "the issues arising in relation to the decision under review" is important. [34] Those issues will not be sufficiently identified in every case by describing them simply as whether the applicant is entitled to a protection visa. The statutory language "arising in relation to the decision under review" is more particular. The issues arising in relation to a decision under review are to be identified having regard not only to the fact that the Tribunal may exercise (s 415) all the powers and discretions conferred by the Act on the original decision-maker (here, the Minister's delegate), but also to the fact that the Tribunal is to review that particular decision, for which the decision-maker will have given reasons. [35] The Tribunal is not confined to whatever may have been the issues that the delegate considered. The issues that arise in relation to the decision are to be identified by the Tribunal. But if the Tribunal takes no step to identify some issue other than those that the delegate considered dispositive, and does not tell the applicant what that other issue is, the applicant is entitled to assume that the issues the delegate considered dispositive are "the issues arising in relation to the decision under review". That is why the point at which to begin the identification of issues arising in relation to the decision under review will usually be the reasons given for that decision. And unless some other additional issues are identified by the Tribunal (as they may be), it would ordinarily follow that, on review by the Tribunal, the issues arising in relation to the decision under review would be those which the original decision-maker identified as determinative against the applicant. The information above indicates that merely belonging to an opposition party does not attract persecution in Bangladesh. These findings inevitably led the Tribunal as reconstituted to affirm the decision under review declining to grant the protection visa. 15 Such discrepancy as there is between the findings of the delegate and the two Tribunals lies at the core of the submissions now advanced on behalf of the Appellant. He seeks to define, and confine, the " issues " to be addressed for the purposes of s 425(1) as those defined by the delegate's decision initially refusing to grant the protection visa and thereafter to rely on the adverse findings of credit as made by the reconstituted Tribunal. That Tribunal, it is submitted by the Minister, made its own findings of fact which were open to it and, if there be any error, such errors it is submitted are errors of fact which normally do not give rise to jurisdictional error: SZINP v Minister for Immigration & Citizenship [2007] FCA 1747 at [26] , [29]; VWFP and VWFQ v Minister for Immigration & Multicultural & Indigenous Affairs [2006] FCA 231 at [77] . See also: Waterford v Commonwealth [1987] HCA 25 ; (1987) 163 CLR 54 at 77 per Brennan J; Re Minister for Immigration & Multicultural Affairs; Ex parte Cohen [2001] HCA 10 at [36] , [2001] HCA 10 ; 177 ALR 473 per McHugh J. 18 The Respondent Minister's submissions, with respect, are to be rejected for a number of reasons. 19 First, it is not considered that " the issues arising in relation to the decision under review " are to be defined in all cases by the decision of the delegate. But the object of s 425 is to ensure that an applicant is given an opportunity " to give evidence and present arguments ", being evidence and argument " relating to the issues arising in relation to the decision under review ". And that is an obligation imposed upon the tribunal hearing the application before it, whether it be the tribunal initially hearing the application or any subsequent tribunal. 20 To confine that opportunity to those issues identified by the delegate and the tribunal that ultimately may consider the appeal is to ignore the phrase " relating to the issues arising in relation to the decision under review ". Issues may arise out of the initial decision of a delegate; they may also arise out of a decision of an intervening tribunal that has been set aside by the Federal Magistrates Court with the consequence that a reconstituted tribunal is thereafter called upon to resolve afresh the claims made. A decision of any such intervening tribunal may resolve some factual issues adversely to an applicant but nevertheless proceed to uphold his claim. Just as those adverse factual findings of the intervening tribunal would need to be addressed before any subsequent tribunal, as " issues arising in relation to the decision under review ", so too would favourable findings made by the intervening tribunal be issues arising in a like manner. 21 In proceedings before any second (or subsequent) tribunal, it could not be contended that that tribunal was bound by findings made by a prior tribunal. The members constituting the second tribunal would be free to form their own conclusions on all relevant issues of fact, including those factual findings previously made in favour of an applicant. But in doing so, it is considered that they would be bound to make apparent to an applicant that these were findings or issues which should be addressed. 22 In the context of the present appeal, there may be many ways in which the " issues " could be described. An inflexible attempt to define those " issues " in a particular way may tend to divert attention from the principal concern of s 425, namely to ensure that an applicant is given a meaningful opportunity to be heard. How those issues were to be resolved -- and what conclusions were to be reached -- were all matters entrusted to the Tribunal as reconstituted to resolve. If the reconstituted Tribunal proposed or envisaged revisiting one or other of the issues previously resolved in favour of the Appellant such a course would attract the obligation imposed by s 425(1). That phrase, it is considered, is not to be confined once and for all to only those " issues " identified by the delegate to the disregard of the first Tribunal's decision. The tentative manner in which the first Tribunal may have expressed its views does not deny to such views the description of nevertheless being " issues ". 23 Second, the Respondent Minister sought to characterise the finding of the Tribunal as reconstituted that the Appellant had " lost interest in politics years ago " as " not an issue but a conclusion ". The " real issue " was said to be " whether the Appellant would throw himself into politics if he returned to Bangladesh ". But attempts to draw distinctions between, for example, a " conclusion " as opposed to an " issue ", it is considered, are not particularly helpful. Such attempts may tend to divert attention away from properly construing and applying the language in fact employed in s 425(1), namely " the issues arising in relation to the decision under review ". That phrase is not to be narrowly construed. The term " issues " is a term of wide import. Furthermore, the intent of s 425(1) to not narrowly confine the invitation that must be extended is only further reinforced by the use of the phrases " relating to " and " in relation to ". The width of the terminology of " relating to " and " in relation to " is well recognised. 24 To give the terms of s 425(1) the width of operation that naturally follows from the terminology employed by the Parliamentary draftsman does not transgress the qualifications recognised by their Honours in SZBEL , supra , namely that there are many ways in which a tribunal may indicate to an applicant that it questions the account being given and that there is no requirement upon a tribunal to give a " running account " of the evidence. That indication may be given in many ways. It is not necessary (and often would be inappropriate) for the Tribunal to put to an applicant, in so many words, that he or she is lying, that he or she may not be accepted as a witness of truth, or that he or she may be thought to be embellishing the account that is given of certain events. The proceedings are not adversarial and the Tribunal is not, and is not to adopt the position of, a contradictor. But where, as here, there are specific aspects of an applicant's account, that the Tribunal considers may be important to the decision and may be open to doubt, the Tribunal must at least ask the applicant to expand upon those aspects of the account and ask the applicant to explain why the account should be accepted. 27 Third, reliance by the Respondent Minister in the current appeal upon the adverse findings made by the reconstituted Tribunal is also not considered persuasive. The obligation imposed by s 425 upon a Tribunal is to extend the invitation there set forth. If that invitation has not been extended, and it should have been, it matters not that the Tribunal has thereafter proceeded in a manner which necessarily involves it in making factual findings. Indeed, the importance of s 425 is to ensure that the process of making those findings of fact is a process informed by, or at least assisted by, the evidence and arguments presented by an applicant. WAS THE APPELLANT TOLD WHAT THE ISSUES WERE? It remains to consider whether the reconstituted Tribunal did in fact extend to the Appellant a meaningful opportunity " to give evidence and present arguments " in respect to those " specific " issues. 29 It is considered that the reconstituted Tribunal did not give the Appellant such an opportunity. The manner in which the Tribunal as reconstituted discharged its task of giving the Appellant such an opportunity was a matter for it. But the failure of the Tribunal to extend the opportunity emerges because nowhere in the transcript of the proceedings is there any indication given to the Appellant that he could not proceed upon the basis that he was, in summary, a person with a long record of political activities and a person who remained politically active. 30 A review of the transcript of the proceedings before the reconstituted Tribunal reveals but passing reference to issues previously resolved in favour of the now Appellant before the first Tribunal. The Tribunal accepts the applicant's long record of activities with the Bangladesh freedom movement prior to independence and since then, as a senior member of the Awami League's Youth Wing ... The Tribunal does not accept on the evidence before it that the Applicant would throw himself into politics in the event of return to Bangladesh, as claimed as recently as in his 30 October 2006 submission. On the evidence before it, the Tribunal is not satisfied that the Applicant's lack of involvement in politics in Bangladesh would be due to any modification of behaviour on his part in order to avoid persecution. The Tribunal finds on the evidence before it that the Applicant simply lost interest in politics years ago. [Appellant] Senior executive member of the central committee of Awami Jubo League. In your own words, what does Jubo mean? league? I'm still a member. I used to hold different positions. At this moment, I'm the working committee member, senior executive member. He was asserting that he was " still a member ". Irrespective of the findings of the first Tribunal, the Appellant would not have understood from that exchange that an " issue " needing to be further addressed was his current status as a member; that understanding would only have been reinforced by the earlier findings of the first Tribunal. The issue as to whether he had " lost interest in politics " was not an issue in respect to which he had been given any opportunity to address. No questions were put to him on that matter. 35 Each of these findings cannot be considered in isolation. Each of them presumably was part of the Tribunal's reasoning process which led it to reject the claim made by the now Appellant. To impose upon the Tribunal an obligation to alert the Appellant to those matters which it considered may be relevant to an assessment of his claims is not to impermissibly expose the reasoning process of the Tribunal to scrutiny. Rather it is to impose upon the Tribunal an obligation to extend an opportunity to a party " to give evidence and present arguments ". Stripped of that opportunity, any process of reasoning thereafter undertaken by the Tribunal was a matter for its own internal deliberations -- but it was a process of reasoning devoid of input by the now Appellant. This finding was not based upon any evidence before the Tribunal. The Tribunal notes that the Applicant's three-year term in the Jubo League's Central Committee began in February 2003. No evidence before the Tribunal suggests that the 2006 national conference has yet to be convened. When the Tribunal asked the Applicant about the timing of the conference at which his position would be re-opened to vote, he provided no detail beyond "2006". Member: When was the last conference? [Appellant]: January 2003 and the committee was declared in 2003 February. Now that you're absent, is there someone acting? It is also a further instance of non-compliance with s 425(1). 40 In reaching the conclusion that there is jurisdictional error, it is recognised that an error of fact does not of itself normally constitute error of law, let alone jurisdictional error: Attorney-General (NSW) v Quin [1990] HCA 21 ; (1990) 170 CLR 1 at 35---6 per Brennan J. In a context where there are competing facts, the weight to be ascribed to particular pieces of evidence is a matter entrusted by the legislature to the Tribunal for resolution. Mere disagreement with the ultimate finding of fact made does not expose error of law. And what may be described as " illogical or irrational " inferences drawn from the facts before the Tribunal may often be an unhelpful characterisation of the reasoning process and may amount to no more than a conclusion that a Court may have reached a different factual conclusion: cf Re Minister for Immigration & Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 at [8] ---[9] per Gleeson CJ; [2003] HCA 30 ; 198 ALR 59. See also: NACB v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 235 at [22] ---[30] per Tamberlin, Emmett and Weinberg JJ. 41 The present finding of the Tribunal, however, involves no resolution of competing facts and no process of reasoning, be it logical or illogical. More importantly, it is a finding which positively misstates what had occurred. This Court, as is the Federal Magistrates Court, is heavily dependent upon the findings and reasons of the Tribunal being accurately set forth in the decision of the Tribunal. Where an error does occur, it may not usually matter how it occurred. No submission is advanced in the present appeal that the finding of the Tribunal evidences a reasonable apprehension of bias -- as may have been expected if reliance was to be placed upon a submission, for example, that the Tribunal was committed to reaching a particular conclusion regardless of the evidence given. 42 But what does matter is whether such an error, when it does occur, can be characterised as a jurisdictional error. In the present circumstances it is considered that it can. [32] A determination of the Tribunal as to a state of satisfaction or otherwise, of the relevant criteria or criterion in question, that is based upon a finding of fact or inferences drawn from facts, not based on logical or rational grounds, will give rise to an error of jurisdiction if there is no evidence to support the finding or no proper basis for drawing the inference; or, if there be some evidence, although inadequate, reliance by the Tribunal upon that inadequate evidence gives rise to an inference that the Tribunal has misconceived the test or is not, in reality, satisfied of the requisite matters, as a result of which there has been only a purported, rather than a real, exercise of the power conferred upon the Tribunal. Such a finding should not be made in the present appeal. The reconstituted Tribunal was clearly unimpressed with the Appellant's credibility -- but it remains unknown which of a series of particular findings ultimately persuaded it that the Appellant's evidence was not to be accepted. The finding that the Appellant " was asked " as to the when the national conference was to be held, when he clearly was not asked, could not be regarded as irrelevant to the ultimate adverse findings as to credit. 44 This ground of appeal, it is considered, is also made out. Appeal allowed. 2. The orders of Cameron FM in the Federal Magistrates Court of Australia on 13 September 2007 be set aside. 3. An order in the nature of a writ of certiorari quashing the decision of the Second Respondent. 4. An order in the nature of a writ of prohibition prohibiting the First Respondent from acting upon, or giving effect to, or proceeding further on the basis of the decision of the Second Respondent. 5. The matter be remitted to the Second Respondent to be determined according to law. 6. The First Respondent pay the Appellant's costs of the proceeding before Cameron FM and of this appeal. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | migration act 1958 (cth), s 425 " the issues arising in relation to the decision under review" " issues " not to be narrowly confined reasoning process of tribunal devoid of input from appellant no evidence migration |
By that earlier decision, the RRT affirmed a decision of a delegate of the respondent Minister, made in 1997, refusing to grant the appellant a protection visa. 2 This matter has had an unfortunate history. The appellant is a Bangladeshi national. He arrived in this country in 1997 and first applied for a protection visa in October of that year. That application was refused. On 9 December 1997 the appellant filed an application for review with the RRT. For reasons that are not immediately apparent, the RRT appears to have taken no steps to finalise the matter until 2000. On 24 January 2000 it wrote to the appellant seeking his response to various concerns that it had with matters that went to his credibility. Finally, on or about 24 February 2000 the RRT affirmed the delegate's decision. 3 Again for reasons that are not apparent, it was not until May 2005 that the RRT's decision was, by consent, set aside by a Full Court of this Court. The matter was remitted to the RRT. On 25 July 2005 the RRT conducted a hearing at which the appellant gave evidence. On 30 August 2005 the RRT affirmed the original 1997 decision of the delegate to refuse the appellant a protection visa. It was the RRT's second decision, in 2005, that was the subject of the application for review before Federal Magistrate Cameron. It is also that second decision that is the subject ultimately of the appeal to this Court. 4 The appellant claimed to fear persecution by reason of his political opinion. Among his many claims, he said that he had been a member of the Chatra Sibir, the student wing of the Jamat-e-Islami party. He said that he had been persecuted by members of the rival Bangladesh National Party, and of the Awami League. He said that he had been detained in 1993. He said that supporters of the Awami League and the police had attacked him in 1997. He said that in 1997 a warrant for his arrest on fabricated charges had been issued. He said that he had been tried in his absence, and sentenced to a term of ten years' imprisonment. He said that he had managed to escape from Bangladesh because it was relatively easy to do so at the time. At the hearing before the RRT, in 2005, he claimed that he was still fearful of the Awami League and the police despite the fact that the Jamat-e-Islami party was, by then, in power as a junior partner, in coalition with the Bangladesh National Party. 5 The RRT found that the appellant was not a credible witness. It found that he had embellished his claims in order to enhance his prospects of gaining a protection visa. It was not satisfied that he was, or had been, a leading member of the Chatra Sibir, as he claimed, or that he had ever been subjected to harm for that reason. 6 Importantly, the RRT also found that a number of documents submitted to it by the appellant were fraudulent, primarily on the basis that the Document Evaluation Unit of the Minister's Department had concluded that they had all been typed on the same typewriter. That was a devastating finding, since the documents in question all purported to emanate from entirely different sources, and to have been created years apart. Interestingly, one of those documents happened to be the charge sheet and warrant, ostensibly dated 10 August 1997. That document was supposedly typed on the same typewriter as documents emanating from the Jamat-e-Islami party, and another civilian source. 7 While the RRT accepted that the appellant had been attacked by Awami League supporters in 1997, it was not satisfied that this was for a convention reason. 8 In substance therefore the RRT concluded that the appellant was not credible, and that the great majority of his claims of past harm were untrue. It also concluded that it was reasonable for the appellant to relocate within Dhaka, or elsewhere in Bangladesh. 9 Before the Federal Magistrate, the appellant relied upon a further amended application which, in substance, contained three grounds. He first claimed that the RRT had relied upon country information that was outdated. He next claimed that the RRT had breached s 424A of the Migration Act 1958 (Cth) by failing to provide particulars of information that the RRT considered would be the reason, or a part of the reason for affirming the decision under review. The particulars in question related to the RRT's finding that the various documents upon which the appellant relied had all been written on the same typewriter. The final ground challenged the RRT's finding regarding relocation. 10 The Federal Magistrate rejected each of these grounds. They are repeated in the notice of appeal before me. 11 The Federal Magistrate held that the choice of country information was a matter for the RRT, and could not give rise to jurisdictional error. The question of the accuracy of the 'country information' is one for the Tribunal, not for the Court. If the Court were to make its own assessment of the truth of 'country information', it would be engaging in merits review. The Court does not have power to do that. The Tribunal was not required by law to accept more recent information even if it had been supplied. Such information might for example have come from a less reliable source than the old information. There was in the circumstances no obligation on the Tribunal to make enquiries: see VAO v Minister for Immigration and Multicultural Affairs [2002] FCA 161 at [25] . The country information in question related to the position in 2004, while the earlier information went back to 1998 and 2001. His Honour concluded that the appropriate inference was simply that the RRT preferred the earlier country information to the later information. In his Honour's opinion, that was a matter for the RRT. The Court could not substitute its own view of the weight that should be accorded to this material for that of the RRT. 14 In relation to the ground regarding s 424A , the Federal Magistrate noted that a letter which he regarded as having satisfied the requirements of that section had been sent to the appellant by the RRT on 24 January 2000. He concluded that the fact that the s 424A letter had been sent by the RRT at the time of the first hearing, rather than at the time of the second hearing, was of no consequence. He observed that the letter had been sent to the appellant as part of the process leading up to the RRT's earlier decision, which was subsequently set aside, but that this did not affect its significance. He referred to SZEPZ v Minister for Immigration and Multicultural Affairs [2006] FCAFC 107 at [37] ---[44]; and SZJBE v Minister for Immigration and Citizenship [2007] FCA 190 at [16] ---[17]. 15 Finally, the Federal Magistrate concluded that although the RRT may have erred when considering the question whether the appellant could relocate elsewhere in Dhaka or Bangladesh because it had not considered the reasonableness of his doing so, the error was of no consequence. The reason was simple. The RRT's findings regarding this issue were provided essentially as an alternative to its primary conclusion that the appellant did not have a well founded fear of persecution for a Convention reason. That finding, if correct, disposed of the application. It was unnecessary to delve into the separate issue of relocation. 16 The appellant was unrepresented on the appeal before me. He said nothing that provided any basis for doubting the correctness of the Federal Magistrate's decision. The authorities make it plain, as the Minister contended that the question of what weight to accord country information was a matter for the RRT, and for it alone. 17 The authorities also make it plain that where the RRT has provided particulars of information in compliance with s 424A at an earlier hearing the provision of those particulars will continue to meet the requirements of the section in the event of a rehearing. 18 Finally, the relocation ground leads nowhere. If either of the first two grounds were to succeed, the RRT's decision would inevitably be set aside. If both of those grounds fail, there is no possible utility in considering the third of the appellant's grounds. 19 It follows that the appeal must be dismissed 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 Weinberg. | appeal from decision of federal magistrate dismissing application for review of refugee review tribunal decision whether tribunal erred in relying on certain country information whether tribunal breached obligations under migration act 1958 (cth) s 424a challenge to tribunal's findings regarding relocation no appealable error migration law |
2 The first is a notice of motion filed 14 February 2006 by the respondents, seeking an order that the applicants give sufficient security as the Court thinks fit for the costs of the respondents up to and including the first day of the trial, including the costs of and incidental to the notice of motion. The respondents have stated that, in view of the undertaking as to costs in the affidavit sworn by one of the applicants, Paul Robert Wellard, filed on 17 March 2006, they do not intend to pursue the application for security for costs. However, the respondents do press for costs incurred in relation to the notice of motion. I propose to deal with this issue at the end of this judgment. 3 The second is a notice of motion filed 10 March 2006 by the applicants to vacate the trial date pursuant to O 30 r 7 Federal Court Rules . This matter is currently listed for trial between 3 April 2006 and 7 April 2006. As the trial is currently scheduled to commence two weeks from today's date, a prompt decision in respect of this matter is clearly necessary. Last Friday I caused the hearing of this matter to be adjourned to this afternoon, in order for me to deliver judgment. 4 The grounds supporting the notice of motion are essentially contained in the affidavit of Mr Farshad Amirbeaggi, a partner in the firm Yates Beaggi Lawyers which is currently acting on behalf of the applicants. This affidavit was affirmed by Mr Amirbeaggi and filed with the Queensland District Registry of the Federal Court of Australia on 17 March 2006. Mr Amirbeaggi refers therein to his earlier affidavit affirmed 3 March 2006, wherein he said that he received initial instructions from the applicants on or about 17 January 2006 to act on their behalf. 5 Correspondence from the previous solicitors for the applicants, Aubrey F Crawley & Co, (for the purposes of brevity I shall call them 'AFC') indicated that AFC was exercising a lien over their file relating to conduct of litigation on behalf of the applicants in this matter, for unpaid costs. This correspondence is in the form of letters dated 1 February 2006 and 8 February 2006 from AFC to Mr Amirbeaggi, attached to Mr Amirbeaggi's affidavit of 10 March 2006. In his affidavit of 17 March 2006, Mr Amirbeaggi affirmed that, on behalf of the applicants, since 13 March 2006 he has had access to the file of this matter in the possession of AFC. Further, Mr Amirbeaggi affirmed in his 17 March 2006 affidavit that he had believed there were 28 lever arch folders of material relevant to this matter, in the possession of AFC, however he had more recently formed the view that there were in excess of 60 folders relevant to this matter to review. Mr Amirbeaggi affirmed that he was not readily able, on initial review of the file, to distinguish material relevant to the proceedings currently before this Court from other proceedings in which the applicants were involved. Indeed, Mr Amirbeaggi' s 17 March 2006 affidavit indicates that it is unlikely the applicants, through their new solicitors, will be in a position to do so for several months. 7 Relying on the decision of the High Court of Australia in The State of Queensland v JL Holdings Pty Ltd [1997] HCA 1 ; (1996) 189 CLR 146, the applicants submit that there are three factors which the court should take into account in reaching a decision on the issue of vacating a trial date --- the impact on the court and the need to avoid disruptions in the court's lists with consequential inconvenience to the court, the prejudice to the applicants if the trial proceeds on the listed dates, and the prejudice to the respondents waiting to be heard if the trial date is vacated. This prejudice is that, in view of the short time period during which the applicant's current solicitors have been engaged, and the even shorter time period during which the firm has had access to the litigation file, their solicitors would be required to conduct the case with detrimentally limited familiarity, or alternatively the applicants would need to seek leave to discontinue the proceedings (pursuant to O 22 r 2 Federal Court Rules ) with associated cost implications and recommence at a later date. The applicants also strongly dispute the proposition advanced by the respondents during argument before me that their case as pleaded in the Statement of Claim is defective, and have pointed out that no notice to strike out any part of the claim has been lodged by the respondents. 9 The respondents vigorously oppose this application. In that case, the applicants had instituted a number of actions against the respondents in the Federal Court of Australia, all of which claims the respondents denied. The respondents to the action sought to amend their defence in a number of respects. The trial judge accepted the explanation for the delay in making application for leave to amend the defence, however refused the application to amend the defence on the basis, inter alia, that the amendments would jeopardise the hearing dates, and would have the result that the matter would be unlikely to be relisted until the following year. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. This means that, to date, the respondent has been in the position of answering this litigation in the court environment for eight months. Rescheduling the trial date for a matter which the parties estimate requires five days, to a date in the immediate future will prove challenging for this Court in view of current court lists and the availability of counsel, and may also mean that the respondents are in the unsatisfactory situation of being parties to this litigation for some time. 13 From the respondents' viewpoint, the reasons behind the engagement of new solicitors by the applicants and any consequent impediments to the applicants pursuing their claims, are the problems of the applicants. However engaging new solicitors is also not an event for which either blame or an accusation of unreasonableness has been levelled at the applicants. Realistically, it does appear to mean that the applicants' solicitors will not in a position to adequately prepare for trial of this matter if the trial proceeds in two weeks time. 14 Counsel for the respondents has pointed to the financial services business operated by the second respondent, and has raised the spectre of potential harm to the legitimate business activities of the second respondent if the current litigation is not resolved without undue delay. As Kirby J said in J & L Holdings at 170, there is a natural desire of most litigants to be freed, as quickly as possible, from the anxiety, distraction and disruption which litigation causes. However, the potential prejudice to the second respondent as described by counsel in the case before me appears to be no more than hypothetical at this stage. No evidence has been produced to me which would indicate, other than in broad theoretical terms, possible damage which the second respondent may suffer if the trial date were to be vacated, and no evidence has been produced to me which would indicate any loss the other respondents could or would suffer if the trial date were to be vacated. 15 In contrast in my view, the prejudice likely to be suffered by the applicant in the event that the trial date is not vacated is present, identifiable, serious and bona fide. They have recently engaged new solicitors after what appears to have been, for various reasons, a period of inactivity by their previous legal advisers in prosecuting this matter on their behalf. Those new solicitors have only recently managed to gain access to the case file held by the applicants' previous legal advisers. It will clearly take some time for Messrs Yates and Amirbeaggi to come to grips with their clients' case. To the extent that there is a need to balance the competing potential prejudices of the applicant and the respondent in this case, in my view the weight of prejudice clearly falls on the applicant. 16 In my view such prejudice as the respondents have suffered can be appropriately addressed by an award of the costs wasted by the vacation of the trial date. 17 Accordingly in accordance with O 30 r 7 Federal Court Rules , I order that the trial dates set for the hearing of this matter, currently from 3 April 2006 until 7 April 2006, be vacated. I order that the matter be relisted for trial before me 5 February 2007 until 9 February 2007. Accordingly, I order that any costs thrown away by the respondents as a result of the vacation of the trial date be borne by the applicants, with one exception. 19 That exception relates to costs incurred by the applicants as a result of their solicitors, Mr Yates and Mr Amirbeaggi, being required to travel to Brisbane from Sydney for the hearing in this Court last Friday, at the insistence of the respondents. The necessity, or otherwise, of the presence of Messrs Yates and Amirbeaggi for cross-examination during the hearing, was the subject of faxed correspondence from each party, primarily addressed to my Associate but copied to the other party, during the week preceding the hearing. In my view the presence of Messrs Yates and Amirbeaggi was not necessary, and indeed the demand for their presence tends towards oppressive. (2) That, when the reason for the request was finally provided in this Court, the explanation was that the respondents wished to cross-examine the applicants' solicitors on their preparedness to be ready for trial in two weeks in the context of the affidavits filed by Messrs Yates and Amirbeaggi. Counsel for the applicants objected to this cross-examination on the basis that it would add nothing to the material already contained in the affidavits. After hearing submissions from counsel on this point, I upheld this objection. (3) That in my view a viable alternative to requiring the physical presence in Brisbane of the solicitors was cross-examination by video-conference or telephone. Notwithstanding that this can be a difficult medium to conduct cross-examination, the witnesses in question were solicitors, familiar to some degree with the case in question, and familiar with court documentation and process. Further, counsel for the respondent volunteered the view early in the hearing on Friday that he would require the solicitors as witnesses for cross-examination for approximately only fifteen minutes, although there was some re-estimation of this time period later in the day. Despite some discussion with my Associate last week of limited video-conferencing facilities being available in this Court, the respondents pressed for the appearance in person of the solicitors without explanation. The word 'clients' as used in the paragraph in the letter to my mind means the applicants, not their solicitors. Award of costs is at the discretion of the Court of Judge (s 43(2)). Ordering costs to be assessed and paid forthwith notwithstanding that the proceeding is not concluded is unusual, however it is permitted by the rules (O 62 r 3(2)). In my view, the respondents have acted unreasonably in relation to their demand that the solicitors for the applicants travel from Sydney and be present for the hearing last Friday. I order that costs associated with the solicitors for the applicants travelling to and from Sydney and spending the hearing day in Brisbane should be borne by the respondent, to be taxed if not otherwise agreed, and to be paid forthwith. 22 This notice of motion came before me on 13 February 2006. At this hearing I indicated to the respondents my preliminary view that the material then before the court did not provide any grounds for making of an order for security for costs, and I adjourned the hearing of this matter until last Friday 17 March 2006. 23 On 15 March 2006, an affidavit was sworn by one of the applicants, Paul Robert Wellard. This affidavit was filed on 17 March 2006. 25 At the hearing last Friday, the applicants sought leave to withdraw para 3 of the affidavit, offering no reason. I refused leave. Upon the undertaking of the applicant Paul Robert Wellard, as provided in para 3 of his affidavit filed 17 March 2006: (a) the application filed 13 February 2006 be dismissed (b) judgment reserved in relation to costs. 2. Judgment reserved in relation to the Notice of Motion to vacate the trial date filed 10 March 2006. 3. The matter be listed for judgment in relation 1(b) and 2 above on 20 March 2006 at 4.00 pm. 28 Section 56(1) Federal Court of Australia Act 1976 (Cth) provides that the Court may order an applicant in a proceeding in the Court to give security for the payment of costs that may be awarded against him. 30 The only material before the Court in support of this notice of motion appears to be affidavits filed by solicitors for the respondents. I refer specifically to the affidavit of Michael James Hayne sworn and filed 13 February 2006, to which is annexed correspondence relevant to the litigation between the parties in general, and the affidavit of Troy Ronald Hawthorn sworn and filed 2 March 2006, which notes, inter alia, the current indebtedness of the applicants to third parties, and the nature of costs currently extant in this matter. 31 The reason I outline this material is to indicate that, had this notice of motion been pursued by the respondents, it is unlikely on the basis of the material before me that I would have made the order requested by the respondents. Clearly, this is now in the realm of hypothesis, as the undertaking by the applicant Mr Wellard has had the result that the respondents are no longer pressing for judgment in this matter. However, this is an issue I take into consideration in relation to costs which have been incurred. 32 In my view, the most appropriate order is that I make no order as to costs in relation to this notice of motion. Accordingly, I order that the parties attend mediation pursuant to O 72 r 1 at a date to be fixed no later than 30 May 2006. I give the parties liberty to apply to the Court on seven clear working days. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. | relevant principles costs assessed and paid forthwith costs in security for costs application vacation of trial date |
The circumstances of the current proceeding echo that lament. It is regrettable that the family dispute the subject of the application and cross-claim currently before the Court ever had to be litigated. 2 The primary issue for determination by the Court is the entitlement or otherwise of the plaintiff, Mrs Rosalind Winspear (Rosalind) to shares in the third and fourth defendants, Rocklands Pty Ltd and Dalness Pty Ltd. Rosalind seeks orders requiring those companies to correct their register of members to record her as a member and beneficial owner of one A Class share and 25 B Class shares in Rocklands Pty Ltd; and the beneficial owner of 22,625 ordinary shares and the joint beneficial owner with the first defendant of one ordinary share in Dalness Pty Ltd. Rosalind also seeks orders that the companies be wound up and be required to sell properties owned by them. 3 By their cross-claim the defendants seek declarations giving effect to what they allege were agreements entered into by Rosalind on 18 January 2001 and 8 December 2001, which they say had the effect of her relinquishing all rights to shares in the companies. The defendants also seek a declaration that the plaintiff be estopped from denying the 2001 agreements on the basis that it would be unjust and unconscionable for her to do so. The crucial issue arising on the cross-claim is whether Rosalind entered into a binding agreement, in 2001, to give up her entitlement to shares or engaged in any other relevant disentitling conduct. The property is situated about five kilometres east of Evandale, near Launceston airport in Northern Tasmania. In its current, form the property consists of four main blocks comprising some 1,623 hectares. They are called "Rocklands", "Dalness", "Woodmount" and "Vinegar Hill". I refer to the properties collectively below as "Dalness". 5 Mr Allan Edgar Donald Mackinnon (AEDM) farmed Dalness until his death on 8 June 1962. Thereafter his son, Mr Allan Donald Lindsay Mackinnon (Donald), became primarily responsible for the farming business conducted on Dalness. Donald died on 7 February 2004. He is survived by his wife, Mrs Deidre Mackinnon (Deidre), who is the second defendant. The plaintiff, Rosalind, is their daughter. The first defendant, Mr Neil Giblin Mackinnon (Neil), is their son. They have another son called Mr Donald Michael Mackinnon (Michael). 6 Dalness Pty Ltd came into being in November 1961. On its incorporation two ordinary shares were issued; one to Donald and one to AEDM. A week later 45,250 shares were allocated in the company; 15,250 to AEDM and 30,000 jointly to Donald and a solicitor, Mr Alfred John Green. 11 For some time prior to October 1988, the farming business on Dalness was conducted by a partnership under the business name "D L and D Mackinnon". The partnership was divided into nine shares. On incorporation it had subscribed 2 A Class shares, being the voting shares in the company. Those shares were originally held by Mr Green and by an accountant, Mr Barry Henry. On 21 February 1975, the company allotted 50 B Class shares to Neil, Mr Green and Mr Henry jointly as the trustees of the Michael Mackinnon Trust. On his death, Donald bequeathed his interest in the partnership to his trustees for Deidre's lifetime and, on her death, to Neil. Probate in respect of Donald's will was granted on 21 June 2004, with Neil and an accountant, Mr Rodney Lester as executors. The chief idea was to make provision for Michael to enable him to realise his move. The discussions that led to the 1988 agreement commenced in 1984. Donald intended to provide funds for Michael to live elsewhere and compensate him for foregoing his inheritance to Dalness. Donald also wanted to preserve Dalness for the family. He intended to achieve these ambitions without the sale of land or heavy borrowing. 17 By a separate agreement also made on 7 October 1988, Rosalind was to pay Michael forthwith $48,200 for the two shares in the partnership. Donald was to lend Rosalind the sum of $28,200. This left her with $20,000 to pay in respect of that transaction. Rosalind was to pay Donald $24,100 for his partnership share by an unspecified time in 1990 (presumably no later than 31 December 1990) and repay the $28,200 by the same time. Interest was to accrue at 14% per annum calculated from 7 October 1988 to the date of payment. Rosalind made some interest payments up until 1991. During that year, according to oral evidence given by her, which I accept, Donald told Rosalind that he did not require her to make any further payments by way of interest. Earlier, in February 1989, Mr Green advised Rosalind that Donald did not require payment of interest in respect of the loan for $28,200 in connection with the purchase of shares in the partnership. At that time, according to Mr Green, Donald sought interest at 14% per annum on the $68,500 owing to the Michael Mackinnon Trust, in respect to the purchase of B Class shares in Rocklands Pty Ltd by Rosalind. 19 In September 1991, Mr Green's law firm, Ritchie & Parker Alfred Green & Co wrote to Rosalind seeking interest payable on the sum of $68,500. On 30 September 1991, Mr Hugh McKenzie, Donald's accountant, rang Rosalind and said there was no need to pay the interest demanded. 20 By letter dated 18 October 1991, Mr Green told Rosalind that although an interest notice had been sent to her, Donald had suggested that "while conditions were difficult" the Trustees of the Michael Mackinnon Trust should "appoint" to her as a book entry an amount to cover the interest owing. According to the letter, the amount would be "credited to you [Rosalind] in the books of the Trust and this would be set off against the half years interest payable by you. " Whatever that meant, it was consistent with a requirement not to pay interest on the $68,500, as Donald informed Rosalind that year. The "difficult conditions" was a reference to the financial difficulties which the Winspears were experiencing, but there was no indication of any measurement by which those conditions could be adjudged to be no longer difficult. In any event, no subsequent demand was made for interest on the $68,500 by the Michael Mackinnon Trust. That is consistent with the interest amount being written off. Although Donald was not a trustee of the Michael Mackinnon Trust, the trustees gave effect to his wishes, as is evidenced by the letter of 18 October 1991. Mr Winspear gave oral evidence, which I accept, that Donald spoke on behalf of the trustees when he told him in 1991 that he did not require Rosalind to pay interest on the sum of $68,500. That is consistent with the evidence of Neil, in his affidavit, that the actions of the trustees were very much guided by Donald's wishes. 21 Mr McKenzie gave evidence that between 1991 and 6 May 1997, while he was a trustee of the Michael Mackinnon Trust, Rosalind was not pressed for payment of interest. He also said that he left Donald to advise the trustees on when circumstances might have changed such that interest was to become payable. He received no such advice. He also acknowledged that on 6 May 1997 the trustees of the Michael McKinnon Trust resolved under the heading: "Interest bearing loan --- R Winspear" as follows: "It was resolved that interest on Mrs Winspear's previously interest accruing load be suspended until further notice. " No such further notice was ever given to Rosalind by the trustees or anyone else. 22 By 1 July 2005, Rosalind had completed the payments for the full price of her B Class shares in Rocklands Pty Ltd. She was always entitled to have the A Class share transferred to her as at 7 October 1988. She was entitled to shares in Dalness Pty Ltd upon the grant of probate in relation to Donald's estate in June 2004. 23 The only way Rosalind could be seen not to be entitled to the shares, as set out in the preceding paragraph, is if the Court agrees with the submission made by the defendants that, in 2001, Rosalind agreed not to have the shares transferred to her or purchased by her, or otherwise engaged in disentitling conduct. The first of these matters is the matter to which the Court now directs its attention. The meeting followed a letter which Mr McKenzie had sent to Rosalind, dated 10 November 2000. The letter referred to Donald's desire "to tie up other loose ends as soon as possible. " The letter also referred to "significant sums of money due" from Rosalind and Neil and noted that Donald and Deidre had asked Mr McKenzie "to prepare an up-to-date summary of the amounts due", with the object of "determin[ing] whether the obligations assumed by the purchasers in 1987 (sic) are still appropriate and will be met, and, if not, what new arrangements should be made. These credits arose from income distribution from the trust. " That statement was potentially misleading. It neglected the resolution of the trustees (one of which was Mr McKenzie) of the Michael Mackinnon Trust of 6 May 1997, referred to at [21] above. The letter also referred to interest owed by Rosalind on money owing by her to Donald on all but $28,200 of monies loaned to her by Donald. The letter raised two options for consideration. The second of them was the subject of further consideration. Selling partners in D L and D M partnership would have to agree revised arrangements with buying partners. Decisions would also have to be made about future ownership of shares in Dalness Pty Ltd (subject to the irrevocable appointment above). The notes of the meeting, signed by all participants, recorded that renegotiation was agreed because Rosalind had advised that she was unable to meet her obligation under the October 1988 agreements in the foreseeable future. 27 On 10 June 2001, Rosalind was present at her parent's home in Launceston in the company of her parents, Michael and Mr McKenzie. Rosalind gave evidence that general discussion occurred about a readjustment of family assets and that Mr McKenzie addressed that topic, possibly in the context of his letter of 10 November 2000. Rosalind said that she expected her payment of $20,000 made in 1988 would be refunded if a reorganisation occurred. You understood that to be the situation didn't you? He added that: "[f]ollowing that meeting I prepared a paper called 'D L and D Mackinnon Family Rearrangement October 2001'". DMM was also in agreement with this proposal. It was understood that NGM would be effectively taking control of the farming assets as "custodian" for the future generations of the Mackinnon family. (emphasis added). 32 Under cross-examination, when challenged on the accuracy of the preamble to the paper as evidence of what was actually said on 10 June 2001, Mr McKenzie said it was his interpretation and that he had not taken notes of the meeting. When asked whether Rosalind said very little at the 10 June 2001 meeting, Mr McKenzie answered in a non-responsive way, saying that he stood by what he had written in the paper. No one agreed to give her the money back and she did not agree to give up any of her shareholdings. She merely agreed to renegotiate the October 1988 agreements. This was consistent with the position she took on 18 January 2001. 34 On 8 December 2001, Rosalind was at her parents' home. On the previous evening, Mr McKenzie faxed to her, at her parents' home, a copy of a letter he had written to her dated 3 December 2001. It contained a proposed rearrangement dealing with, amongst other things, a reversal of the sale of shares in Rocklands Pty Ltd and a transfer of Rosalind's shares in Dalness Pty Ltd to Neil. 36 Rosalind gave evidence, in her affidavit sworn 27 February 2007, which I accept, to the effect that she did not tell Mr McKenzie that she agreed with the proposed rearrangement in the paper or that she agreed that he could seek to draw any agreements binding her to its contents. She said she was prepared to consider a rearrangement and to consider what had been set out in the paper. 37 In her oral evidence, Rosalind said the meeting occurred late in the morning on 8 December 2001 and she had not had time to read the paper prepared by Mr McKenzie before the meeting. She said she considered it later and expressed disagreement with it. She said she had nothing to say at the meeting and did not speak up in front of her father, as was her custom. She said the meeting was very short and no minutes were taken of it. In fact, in his oral evidence, Mr McKenzie recalled that he called in briefly to the Mackinnon's home on 8 December 2001 and did not remember talking to Rosalind about his paper. 39 By letter dated 10 December 2001, Mr McKenzie wrote to Mr Sproal, a solicitor of the firm "Douglas and Collins" in Launceston. The letter was headed: "D L and D Mackinnon family rearrangement". No proposed rearrangement had been agreed to by Rosalind on the previous weekend. The draft document forwarded to the solicitor was sent on a false basis. 41 Rosalind gave evidence, under cross-examination, that Mr McKenzie was not wrong when he made the above statement about agreement. That evidence is inconsistent with the rest of the evidence and must have been given in error or flowed from her misunderstanding of what she was being asked. This hadn't been agreed to. " Rosalind's evidence, taken as a whole, demonstrates that she never agreed to more than a re-negotiation of the family arrangements put in place in 1988. 42 In his affidavit evidence, Mr Sproal referred to being contacted by telephone by Mr McKenzie on 10 December 2001 and being asked to consider preparation of wills for Donald and Deirdre "in anticipation of settlement". After receiving Mr McKenzie's letter of 10 December 2001 he prepared those wills. Between June 2002 and August 2002 Mr Sproal worked on several amended drafts of a deed. 44 On 19 August 2002, a meeting occurred at Mr Sproal's office between himself, Mr McKenzie, Neil and Rosalind. Discussion occurred about the terms of the deed. At the conclusion of the meeting, Rosalind asked Mr Sproal if she needed to obtain legal advice about the deed and he replied that she should do so. Mr Sproal subsequently prepared an amended deed. Rosalind sought advice about it and was not prepared to sign it. 45 It is unnecessary to traverse the details of what occurred thereafter. The defendants contest Rosalind's entitlement to shares in the two companies based on what they contend was her agreement to give them up. According to the cross-claim, that agreement was constituted by the 18 January 2001 and 8 December 2001 agreements. The 18 January 2001 agreement was no more than an agreement to negotiate. So much was conceded from the bar table by the defendants' senior counsel in his final submissions. In closing, it was submitted by counsel for the defendants that the outcome of the 8 December 2001 meeting constituted a binding agreement on the authority of Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. What is critical, in the current circumstances, is to establish the intentions of the parties viewed objectively to be bound immediately at the 8 December 2001 meeting. No such evidence of any probative value was advanced in that regard. The evidence of Rosalind and the actions of both Neil and Mr McKenzie demonstrate a contrary intention. There was no agreement on 8 December 2001 other than to consider the proposals contained in Mr McKenzie's paper. Rosalind did not commit herself to those proposals at that meeting. She had not ever had the opportunity to fully consider them before it occurred. Mr McKenzie's letter to Mr Sproal on 10 December 2001 was based on a false premise that Rosalind had agreed to the terms of his proposal on the previous Saturday. The better view of the evidence, considered as a whole, is that she had not done so. In fact, in 1990, the relevant register of shares showed Rosalind registered as the owner of one A Class share in Rocklands Pty Ltd. The evidence offered no explanation for this change or for its subsequent removal. Neil, under cross-examination, agreed that in 1990, Rosalind was beneficially entitled to have the A Class share registered in her name. 48 The question of alleged debts to Donald's estate or to the partnership is irrelevant to Rosalind's entitlement to be registered as the holder of the shares in Dalness Pty Ltd and Rocklands Pty Ltd to which she is entitled in accordance with these reasons for judgment. Disentitling conduct? That is not a proper basis to deny her relief. It was only shortly before the institution of her application that she obtained competent legal advice about her correct entitlements. 50 Furthermore, the defendants' cross-claim contends that because of Rosalind's conduct since at least 1986 it would be unjust and unconscionable for Rosalind to deny the existence of an agreement and that she should be estopped from doing so. Those equitable arguments were not developed at trial and, while formally relied on, have no merit on the evidence, for the reasons set out above. Without hearing from Michael and Mr Lester the defendants say that no order should be made. Counsel for the defendants made no submission and proffered no evidence why the absence of Michael and Mr Lester from the proceeding could lead to any injustice. Even so, as counsel for Rosalind pointed out, the amendment to the share register to add Michael and Mr Lester occurred after the commencement of Rosalind's application in this Court. That occurred without any explanation that the evidence in this case could provide. In those circumstances it was not necessary to give Michael or Mr Lester notice of this proceeding, before making any orders. There is no other reason why Michael should be heard before making final orders, as Rosalind has made final payment for her Rocklands shares to the Michael Mackinnon Trust. 52 Counsel for Rosalind seek an order under s 175(1) of the Corporations Act 2001 (Cth) correcting the share register of the relevant companies to reflect her entitlement to shareholdings in them. Rosalind has standing to apply for such an order as "a person aggrieved", given that her interests are not correctly stated in the current share register. It is appropriate and just in this case to order a correction of the register. Rosalind has established an equity to be recorded on the Dalness Pty Ltd share register by virtue of the Deeds of Appointment made by Donald on 3 December 1986: see, Grant v John Grant [1950] HCA 54 ; (1950) 82 CLR 1. In relation to Rocklands Pty Ltd, the Family Rearrangement entered into in 1988 gave Rosalind a right to be registered as the owner of one A class share immediately and the B class share upon payment. Payment was eventually made by July 2005. Under s 175(3) the notice of correction must be lodged with ASIC and it is appropriate to so order. 53 Rosalind's application is also made under s 233 of the Act. Section 233 is found in Pt 2F.1 of the Act and entitled "oppressive conduct of affairs". Section 232 allows the Court to make an order under s 233 if the conduct of the company's affairs or an omission by the company is "oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members....". The failure of the other shareholders in the companies to recognise Rosalind's stake in them has denied her the opportunity to play a part in the functioning of those companies and is in that sense "oppressive": see, Wayde v NSW Rugby League Ltd [1985] HCA 68 ; (1985) 180 CLR 459; Morgan v 45 Flers Avenue Pty Ltd (1986) 5 ACLC 222. Further, it is evident that the conduct of Neil as a director of both companies has been oppressive where he unfairly used that position to deny Rosalind her right to be registered on account of purported debts owed to his father's estate and the partnership. 54 Under s 234 of the Act, a person can apply for an order under s 233 if that person is a member of the company. Counsel for the defendants submit that Rosalind lacks such standing but concede that if the Court makes an order nunc pro tunc , finding her to be entitled retrospectively to be a member of the companies at a time prior to 10 October 2005, when the application was filed, the standing issue disappears. It is appropriate in this case to make an order nunc pro tunc as equity so requires. There has been unnecessary delay in registering Rosalind as a member of the companies and there is no apparent injustice to third parties if such an order were made: see, In re Sussex Brick Company [1904] 1 Ch 598. Rosalind was entitled to be recognised as a member of Rocklands Pty Ltd from at least 1 July 2005 on the payment of the price of those B Class shares and of shares in Dalness Pty Ltd from the time of the grant of probate on her father's estate on 21 June 2004. She was entitled to her A Class share in Rocklands Pty Ltd as from 7 October 1988. 55 Under s 233 of the Act, having regard to the facts and circumstances of this matter discussed above, it may be appropriate that the companies are wound up given the unlikelihood that Neil and Rosalind are capable of working together in the best interest of the companies. However, counsel do not oppose the Court deferring the question of winding up until after the parties (primarily Rosalind and Neil) can attempt to resolve outstanding issues concerning the companies between them, before the Court is required to consider the appointment of liquidators. An order under s 233 will be made, if necessary, because the failure of the other shareholders in the companies to recognise Rosalind's stake in them has denied her the opportunity to play a part in the functioning of those companies and is in that sense "oppressive". That request is a reasonable one. • Rocklands Pty Ltd should correct its register of members to record the plaintiff as a member and the beneficial owner of 1 A Class share and the beneficial owner of 25 B Class shares, and requiring Neil and Deidre to lodge notices of correction with ASIC. • Otherwise the application under s 233 of the Corporations Act seeking winding up of the companies and other orders as set out in paragraph 5 of the application should be adjourned to a date to be fixed by the Court, in consultation with the parties. • The defendants' cross-claim should be dismissed as no such agreements as alleged were entered into by Rosalind. • As the plaintiff has wholly succeeded on the issues dealt with to date, the defendants should pay her costs of the application. This must be done by 21 January 2008. A brief telephone directions hearing will be programmed for 9.30 am on 1 February 2008. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | member's remedies correction of company register oppressive conduct of affairs whether plaintiff entitled to be registered as member of company whether plaintiff a member of company for purposes of oppression suit nunc pro tunc order plaintiff claim to shares in company pursuant to agreements whether plaintiff engaged in disentitling conduct or agreed to relinquish interest in shares held : plaintiff entitled to be registered corporations |
1 Branch of the Health Services Union has become progressively more dysfunctional. At its root, the cause of this dysfunction has been antagonism between two groups formed by members of the Branch's Committee of Management and their supporters within the Branch membership. One group coalesces around the Branch President Ms Pauline Fegan. Ms Fegan is also a paid employee of the Branch. The other is led by the Branch Secretary Mr Jeff Jackson. Disputes between the two groups have given rise to a series of events which have severely undermined the functioning of the Branch. The result has been that Branch officers have been deflected and distracted from the pursuit of the industrial interests of the members. It is unnecessary to record all of the disruptive events which have occurred over the past year. Some examples will suffice: Attempts by federal officials of the Union to mediate in the dispute have not succeeded. Various inquiries have not led to decisive remedial action. An attempt to bring matters to a head at a specially convened general meeting of the Branch was frustrated when the meeting dissolved into disorder and had to be abandoned without dealing with all of the business which it had been convened to consider. Various applications, made to this Court, have not had any impact on the underlying issues. Large sums have been spent on legal fees and inquiries with the result that the Branch is in a parlous financial state. In these circumstances the Union, on 20 May 2009, made application under s 323 of Schedule 1 of the Workplace Relations Act 1996 (Cth) ("the WR Act") for a declaration that the Branch had ceased to function effectively and orders that a scheme should be put in place which would remedy the impasse. On 22 May 2009 directions were given that notices be placed in the press advising that the application had been made and inviting any members of the union who wished to be heard in relation to the application to advise the Registry of the Court of their interest. The notices were published. A number of members responded and indicated a desire to be heard. The proceeding came on for hearing this morning. The Union, Ms Fegan and Mr Jackson were all represented by counsel. The individual members who had indicated a desire to be heard were separately represented, also by counsel. Senior counsel for the union advised the Court that broad agreement had been reached by all of the represented parties as to the terms of a declaration and orders which they submitted the Court should make. They were agreed that a declaration should be made that the Branch had ceased to function effectively and that there existed no effective means under the Rules of the Union by which this malaise could be overcome. A remedial scheme was proposed. Its essential elements involved all Branch offices being declared vacant and the appointment of an Administrator to manage the affairs of the Branch pending the outcome of fresh elections for all positions on the Branch Committee of Management. I was advised that an Administrator who was acceptable to all the represented parties was available and had expressed a willingness to commence duties on 17 August 2009. In my view the interests of the members of the Union attached to the Branch will best be served by urgent action. I have, therefore, determined to make the declaration sought and also to make remedial orders today. Given the urgency of the matter my reasons for so doing will, necessarily, be relatively brief. The Union's application was made under s 323 of Schedule 1 to the WR Act. On 1 July 2009 Schedule 1 of the WR Act was superseded by the Fair Work (Registered Organisations) Act 2009 . Section 323 of that Act is in the same terms as s 323 of Schedule 1 of the former Act. Sections 338 and 339 of both instruments confer jurisdiction on this Court in relation to actions brought under s 323. Although counsel were unable to refer me to any specific transitional provision which dealt expressly with the disposition of proceedings which had been commenced under s 323 of Schedule 1 but which had not been determined on 1 July 2009, it is clear enough that the legislature intended that one or other of the identical provisions would be applied in the determination of any application made under the former s 323. No party submitted that the Court lacked jurisdiction to entertain the application. An application under s 323 may be made by an organisation such as the Union. The application may be for a declaration that a Branch of the organisation "has ceased to ... function effectively and there are no effective means under the Rules of the organisation or branch by which it can be ... enabled to function effectively ..." The forerunner of s 323 is to be found in s 171D of the Conciliation and Arbitration Act 1904 (Cth). This provision was declared to be constitutionally valid by the High Court in Re Joske; Ex parte Shop Distributive and Allied Employees Association [1976] HCA 48 ; (1976) 135 CLR 194 at 218, notwithstanding the broad powers which it conferred on the Court. Section 171D was considered by a Full Court of this Court in Re Application of Gallagher; Re Federated Cold Storage & Meat Preserving Employees Union of Australia (1983) 6 IR 78. Its provisions should therefore be liberally construed. By reason of the events which I have earlier summarised I am satisfied that the Branch has ceased to function effectively. Over the past year it has limped from one internal crisis to the next and the underlying causes of the Branch's dysfunction remain unresolved. The making of a declaration under s 323(1)(a) is also conditioned on it being established that there are no effective means under the Rules by which the Branch may be enabled to function effectively. The Rules provide for a large number of Branches. Whilst those Branches, may, as a matter of history, have federated to form the Union, the Rules reflect their desire to maintain a large measure of independence. This Rule can never be altered except by a ballot of all financial members of the Union. Such alteration to be carried must receive a majority of two-thirds of the financial members of the Union. " By Rule 45 provision is made for a national plebiscite. The circumstances in which such a plebiscite may be conducted are heavily circumscribed by procedural requirements and would take a good deal of time to implement. By Rule 49 Branch management is under the control of Branch Committees of Management. This power is only qualified by reference to any contradictory Rules or "any proper direction of the National Council or the National Executive. " The scope for curial dispute as to the propriety of a direction purportedly given under this Rule is readily apparent. Rule 71 provides for an involved process whereby Rules may be altered. I was not referred to any other Rules which might have facilitated the effective resolution of the difficulties presently confronting the Branch. Part of the problem derives from the Rules themselves because of the powers which they confer on the Branch President and Branch Secretary which enable them to each take action which is prejudicial to the interests of the other and create separate power centres in respect of different aspects of the Branch's operation. Although it may, theoretically, be possible over a prolonged period for steps to be taken which might ultimately have the desired outcome, I am persuaded that there are no effective means under the Rules of the Union which might be employed for the purpose of ensuring a timely restoration of the effective functioning of the Branch. In the absence of remedial action under s 323 there is no scope for resolution until October 2010 when the successful candidates in the next Branch elections, scheduled under the Rules, are due to take office. I will, therefore, make the declaration sought in the Union's application. Section 323(2) provides that, if a declaration is made under subsection (1) the Court may, by order, approve a Scheme for the taking of action by a collective body of the organisation, inter alia, for the purpose of enabling the dysfunctional Branch to function effectively. The role of Court is, then, to approve a Scheme. The Court is not required to devise the Scheme but may examine and, if it considers it appropriate to do so, approve the Scheme proposed by an applicant or other interested person. Ancillary or consequential directions may also be made: see s 323(3). By s 323(6) any order or direction of the Court and any action taken in accordance with the order or direction "has effect in spite of anything in the rules of the organisation or a branch of the organisation". I have examined the Scheme proposed by the represented parties. I have suggested certain variations with which the parties agreed. The Scheme ultimately proposed, therefore, enjoys the universal endorsement of the represented parties. Although this consideration is not determinative it carries considerable weight in determining how I should exercise the discretion conferred on the Court by s 323(2). In my view the proposed Scheme is conducive to the end of enabling the Branch to function effectively. At the elections, for which provision is made, the membership of the Branch will have the opportunity to choose those candidates whom they consider will best pursue the interests of the membership. No doubt the members will have regard to the conduct of individual candidates who are present office holders should those persons decide to nominate for re-election. It will be a matter for the members to pass judgment on that conduct. That is not the role of the Court. Mr John Vines has indicated a willingness to undertake the role of Administrator pending the conduct of elections. His appointment is supported by the Union, Ms Fegan, Mr Jackson and four of the eight individual members who appeared. The other four members did not oppose his appointment. Mr Vines has a long history in the Union movement. He also has administrative and board level experience in other organisations. He is entirely independent of the Union and those involved in the Branch's affairs. As I have already noted, he is willing and able to commence his duties within two weeks. I consider him to be an appropriate person to act as Administrator. I should add for the sake of completeness that, in determining to make the orders and approve the Scheme I have had regard to the stipulations in ss 323(4) and (7). I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tracey. | unions/registered organisations applications under s 323 of the fair work (registered organisations) act 2009 (cth) whether an organisation has ceased to function effectively whether there are effective means under the rules of the organisation by which the organisation can be enabled to function effectively whether the federal court has jurisdiction to determine applications under s 323 in light of legislative amendments industrial law |
He is married and has one child. He arrived in Australia on 25 April 1999. His family remained in China, although they came to Australia between about April 2002 and May 2004. Some time later, on 18 February 2005, the applicant applied for a Protection (Class XA) visa under the Migration Act 1958 (Cth) (the Act). On 6 March 2005 a delegate of the first respondent determined to refuse to grant the applicant a protection visa. That decision was affirmed by a decision of the Refugee Review Tribunal (the Tribunal) on 27 April 2005. 2 The applicant now seeks to quash the decision of the Tribunal on the ground of jurisdictional error. I make an order joining the Tribunal as the second respondent so that the relief sought, if to be granted, may be effective. 3 In essence, the applicant claimed to be entitled to a protection visa because he satisfied the definition of refugee in Art 1A(2) of the Convention Relating to the Status of Refugees done at Geneva on 28 July 1951 as amended by the Protocol Relating to the Status of Refugees done at New York on 31 January 1967 (the Convention). That is, in his particular circumstances, he claimed to have a well-founded fear of being persecuted for reasons of his religion or his membership of a particular social group, and owing to such fear to be unwilling to avail himself of the protection of China. It is unnecessary to determine whether his fear related to his membership of a particular social group or to his religious beliefs. The essence of the claim was the same. He claimed that he feared persecution if he were to return to China because he is an active member of the Falun Gong movement, and has been since 2002. The applicant's claim failed before the Tribunal simply because it did not accept that he has been a Falun Gong practitioner since mid-2002. He was likewise vague about the circumstances of his wife's travel to and stay in Australia for a period of more than two years. He claims that his wife came to Australia in April 2002. He said that after two months he noticed that his wife was "different" and she attributed the change to Falun Gong. He accepted her invitation to join her in practising Falun Gong. His wife taught him the exercises and they practised at their residence either indoors or in the attached courtyard. According to his evidence he continued his practice of Falun Gong after he was detained in Villawood and later at Baxter Detention Centre. The applicant in his evidence said that he did not attend a practice site regularly as he was too busy with his work. He practised at home and listened to tapes. He did not undertake any other Falun Gong related activities such as meetings or discussion groups and did not otherwise mix with Falun Gong practitioners. He said that there was one man at the Campsie practice site who might recall seeing him there. The Tribunal accepts that the applicant knows the five sets of exercises and can do them fluidly. The Tribunal sought to explore the applicant's knowledge of Falun Gong at another level. The Tribunal asked about the teachings of Master Li particularly in relation to concepts such as the Falun, the Celestial Eye, and the highest level of cultivation as this is described by Master Li. The applicant was able with some assistance to speak generally of the Falun and demonstrated where it is located and how it rotates. He was not able to recall for the Tribunal how it is described in the Master's words's [sic] . He knew nothing of the concept of the Celestial Eye, or the term for the highest level of cultivation which is described in Master Li's teachings as "the cultivation of the Budha's (sic) body" saying only that when one cultivates at a very high level one can fly from here to the United States. Finally the applicant was able to name the particular exercise which the Tribunal asked him about but he was unable to explain the significance or purpose of the particular exercise and he could not tell the Tribunal what instructions the Master gives the practitioner as he or she prepares to do this exercise. The problems outlined above with the applicant's evidence cumulatively lead the Tribunal to have serious doubts about the applicant's credibility and the truthfulness of his claim that he has been a Falun Gong practitioner since mid 2002. In addition to the applicant's limited knowledge about the teachings of Master Li, the nature of his practise and the depth of his study in 2002 up until the time of his detention in 2004 could only be described as off-hand and casual. This does not suggest a serious and dedicated practitioner and cultivator. Based on his knowledge of some aspects of Falun Gong the Tribunal accepts that he has more recently commenced the practice of the Falun Gong exercises whilst in detention in Villawood and Baxter. However, because he fabricated his claims about being a Falun Gong practitioner from 2002 and given that his knowledge of Falun Gong is even at this stage quite superficial the Tribunal is not satisfied that the applicant engaged in those activities otherwise than for the purpose of strengthening his refugee claim. It must thus disregard those activities pursuant to s.91R(3) of the Act. The first was an alleged constructive failure to exercise jurisdiction on the part of the Tribunal. The second was a breach of the rules of natural justice by reason of apprehended bias on the part of the Tribunal. And the third was that the adverse finding on credibility was not based on logical grounds. I shall deal with those matters in that sequence. It was contended that there was no evidence before the Tribunal that those matters were part of the doctrine or beliefs of Falun Gong. It was alternatively contended that the Tribunal erred by implicitly finding or assuming that every believer and follower of Falun Gong must have a knowledge and understanding of those matters so as to be able to answer questions about them, when there was no evidence that every believer and follower of the Falun Gong would have such knowledge or would respond to the Tribunal's questions in the way it expected. Consequently, the contention was that the Tribunal's decision was based upon no evidence and was therefore infected with jurisdictional error. 8 It is important to note that the Tribunal accepted that, at least for some time after being taken into immigration detention in May 2004, the applicant had taken to practising Falun Gong. What it did not accept was that he had done so from about mid 2002, a short time after his wife came to Australia and (as he claimed) following or learning from her. It was the timing of the applicant's claimed commencement of Falun Gong practice which was significant. 9 The Tribunal noted that the applicant's wife left Australia in about May 2004, and that the applicant was taken into immigration detention at about that time but did not then apply for a protection visa. He did not do so for some months, nor indeed for a few months after November 2004 when he learnt his wife had been detained in China. 10 It also made clear that its rejection of his evidence about when he began to practise Falun Gong was not based simply on the level of the applicant's knowledge of the teachings of Master Li. As the passage from the Tribunal's reasons set out above indicates, the Tribunal did not regard the applicant as a credible witness for a number of reasons. Firstly, it regarded his evidence as vague and evasive about the circumstances of his own travel to Australia, about the loss of his Chinese passport, and about his inability or failure to obtain a new one. It also regarded his evidence about the circumstances of his wife's travel to and stay in Australia for a period of more than two years as vague and evasive. The Tribunal's recital of the applicant's evidence on those matters could reasonably have led to those comments. It is not necessary to refer to that evidence. The Tribunal also had regard to the applicant's failure to mix with other Falun Gong practitioners between mid 2002 and mid 2004, although it accepted (and the applicant appears to have accepted) that the practice of Falun Gong involves generally communal Falun Gong exercises and practice. The Tribunal pointed that out to the applicant in the course of the hearing, but he did not take up the opportunity of presenting any independent witness to confirm that he had (as he claimed) on a few occasions engaged in communal Falun Gong exercises. The Tribunal described his knowledge and practice of Falun Gong exercises up to May 2004 as 'off-hand and casual', based upon his own evidence. 11 The finding of the Tribunal that the applicant had invented the claim to have been a Falun Gong practitioner since mid 2002 was based on all those matters (which are not said to involve any jurisdictional error) and on his 'limited knowledge about the teachings of Master Li'. As to the latter feature, the Tribunal accepted the applicant knows something about the basic principles of Falun Gong and is able to complete the Falun Gong exercise regime fluidly. But the Tribunal did not use the level of understanding by the applicant of Master Li's teachings as the only basis for determining that he was not 'a serious and dedicated practitioner'. It had regard to his own evidence about his practice and depth of study until mid 2004. 12 I do not consider that the Tribunal's reasons leading to its finding that the applicant fabricated his claim to have been a Falun Gong practitioner from mid 2002 disclose jurisdictional error on its part in the way asserted. It was entitled to test the applicant's knowledge of Master Li's teachings, as relevant to that issue. It does not flow from its reasons, either explicitly or implicitly, that it was prescribing a specific level of doctrinal knowledge as a precondition to the applicant (or anyone) being accepted as a Falun Gong practitioner (cf Wang v Minister for Immigration & Multicultural Affairs [2000] FCA 1599 ; (2000) 105 FCR 548 at 551-552). I do not therefore need to determine whether such a prescription, especially if based upon the Tribunal's understanding of the particular religion which is not accepted by an applicant or not supported by identified material, might involve jurisdictional error. The applicant did not claim in the course of the hearing that the Tribunal's questions did not relate to Master Li's teachings, and accepted that he did not have a deep level of knowledge of those teachings. His explanation for that was that he had not been practising for a long time. 13 In my view, the Tribunal's finding of fact that the applicant had been untruthful, in particular about his claim to have been a Falun Gong practitioner since mid 2002 was reached without jurisdictional error. It was based upon the way the applicant responded to the Tribunal's questions on a number of matters, and upon his own evidence as to the nature of what he claimed to have done as a Falun Gong practitioner until mid 2004 and that he had a 'quite superficial' knowledge of Falun Gong. The foundations for its finding of fact were reasonably open to it. No jurisdictional error is demonstrated by the Tribunal making a finding on credibility reasonably available on the material available: Mashayekhi v Minister for Immigration & Multicultural Affairs [2000] FCA 321 ; (2000) 97 FCR 381 at 385. 14 The fact of that fabrication of his early involvement with Falun Gong, together with his limited knowledge of Falun Gong (as the applicant himself acknowledged), then lead the Tribunal not to be satisfied that the applicant's involvement in Falun Gong more recently was otherwise than for the purpose of strengthening his claim to be a refugee. Section 91R(3) of the Act directed the Tribunal, in those circumstances, to disregard the applicant's more recent Falun Gong involvement. It followed that the Tribunal was not satisfied of his grounds for seeking a protection visa. It was therefore required by s 65 to affirm the delegate's decision and to refuse the protection visa sought. It was initially argued that the Tribunal must reasonably be apprehended to have pre-judged the applicant's claim by assuming that each follower and believer of the Falun Gong would know and understand that level of doctrinal knowledge which the Tribunal expected. Counsel for the applicant in the course of submissions accepted that the contention limited in that way did not really advance the applicant's claim, as, if he did not succeed on the first ground, he could not succeed on the alternative ground. However, the contention was then developed by during to the course of the hearing. 16 The transcript of the Tribunal hearing reveals that the applicant arrived in Australia in April 1999 on a tourist visa, but did little touring. He said he lost his passport, so could not leave Australia. He did not seek another passport as he did not know how. He worked variously in and around Sydney, using other persons' tax file numbers. 17 He described his wife's practice of Falun Gong between February and April 1999, when the applicant came to Australia. His wife's visit to Australia from April 2002 was for 'research and observation', but the applicant did not know the nature of the visa or visas she held. She left Australia in about May 2004. From about June 2002, he said he commenced practising Falun Gong with her. He responded to questions about his knowledge of Master Li. His wife went regularly to communal exercises, but the applicant did so only a few times. He was asked to secure independent confirmation of his attendances at communal exercises. 18 The applicant then spoke of learning through his parents in November 2004 that his wife had been arrested. He contacted a friend of his wife and was told she was arrested because she was a Falun Gong practitioner. She was released in about early April 2005, on the condition she not practise Falun Gong. He had no documentation confirming any of that information. 19 The Tribunal then turned to the applicant's practise of Falun Gong. The applicant was asked why he would practise Falun Gong openly in China when he had not done so in Australia where he could do so in an uninhibited or open way. He said he worked long hours in Australia, but did not then respond to the proposition that a dedicated practitioner would make the time to practise properly. 20 The applicant was also asked why he did not apply for a protection visa in 2002, or in November 2004 when his wife was detained. He said only that he did not know the reason why his wife was detained. So then my wife, you know, was arrested and so this why I lodged the application for a protection visa and before ... my wife was released a few days after her arrest and I wouldn't have lodged, I wouldn't have lodged, you know, application form for the protection visa. The applicant acknowledged that confirmatory evidence should be available. He had not produced any, and no request for time to do so was made. The applicant was also invited to comment upon the fact that the ability to complete the exercise routine fluidly is relatively easy to learn, and that the intimate knowledge of the writings and teachings of the Master is more indicative of a committed and zealous Falun Gong practitioner and cultivator, and is knowledge committed practitioners read regularly. He did not disagree with any of those propositions, save to assert that remembering the writings and teachings takes a long time. 22 In my judgment, the transcript does not indicate circumstances such that a fair-minded and informed person might reasonably apprehend that the Tribunal might not have brought an impartial mind to the consideration of the application: Webb v The Queen [1994] HCA 30 ; (1994) 181 CLR 41 at 70-71; Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425. The Tribunal's role required it to question the applicant, and entitled it to express doubts about aspects of the applicant's evidence or claims and to invite his comments upon those matters: NADH of 2001 v Minister for Immigration & Multicultural & Indigenous Affairs (2005) 214 ALR 264 at 269 ( NADH ). The Tribunal went no further than that. It put its concerns to the applicant. It gave him an opportunity to respond. It did not prevent him from responding, or cut off his answers. Its concerns were rational. It does not appear that its manner of questioning was inappropriate. Where fact-finding has been conducted in a manner which can be described, as here, as in substantial respects unreasoned, and mere assertion lacking rational or reasoned foundation, at times as plainly and ex facie wrong and as selective of material going one way, these considerations may found a conclusion that the posited fair-minded observer might, or indeed would, reasonably apprehend that the conclusions had been reached with a mind not open to persuasion and unable or unwilling to evaluate all the material fairly. If that were the case it would itself support a conclusion of jurisdictional error. The answer might also be the lack of an ability or willingness to deal with the material before it with a mind open to persuasion fairly evaluating all the material. 25 The particular passages of the transcript to which counsel for the applicant referred concern its testing of the applicant's knowledge of the Falun Gong exercises and cultivation. The applicant gave some quite general answers. He was asked what Master Li says at the beginning of the first chapter of 'Juan Falun', and about other aspects of the exercises (apparently based upon that text). And the first of those is that a true and dedicated practitioner and cultivator would not be limited to practice at home or in the courtyard at, at a time and place that is suitable to them. I know that Master Li does not prescribe the ways in which a cultivator should practice but I would expect a, a dedicated and serious practitioner to make an effort to attend discussion groups, to have uh the advice and guidance of, of more learned people to assist them to, to develop and learn more themselves. And it would also be reasonable to expect in a country like Australia where a person can practice and cultivate in, freely, at will, in public as they wish it would be reasonable to expect that a serious and dedicated practitioner and cultivator would avail themselves of the opportunity to do that, regularly. Do you have any response to those concerns of mine? Reference was also made to that part of the reasons for decision of the Tribunal in which it recites that part of the evidence and makes the findings quoted in [5] above. 26 Counsel submitted that material indicated a closed mind on the part of the Tribunal, or (as it was put) a closed mind to the question of whether the applicant has a well-founded fear of persecution for a Convention reason. He contended that material showed the focus of the Tribunal was upon whether the applicant 'comes up to scratch on whatever scale of religious zealotry the Tribunal sees fit', and so showed the Tribunal's purpose was apparently to reject the applicant's claimed commitment as a practitioner of Falun Gong. 27 I do not consider the Tribunal's questioning of the applicant on his knowledge of the exercises and cultivation of Falun Gong is capable of indicating a closed mind on its part. It had to address his claim to have been a Falun Gong practitioner since mid 2002. It had reasons to doubt its accuracy, based upon other aspects of the applicant's evidence. Its questions then were directed to testing his knowledge of Falun Gong exercises and practice. It did so using material which it identified, and which the applicant acknowledged he was aware of. Members of the Tribunal in many instances develop a relatively detailed knowledge of the political or religious situation or of the political or religious beliefs of certain groups in many countries. So long as it acts consistently with the requirements of procedural fairness, the Tribunal informs itself as it thinks fit: s 420(2) and Pt 7 Div 4 of the Act; see also SFGB v Minister for Immigration & Multicultural & Indigenous Affairs (2004) 77 ALD 402 at 408 ( SFGB ). This is not a case where the Tribunal did not disclose the source of its information: cf Collector of Customs, Tasmania v Flinders Island Community Association (1985) 7 FCR 205 at 210-211. Its questioning was not unreasoned or unreasonable. Its conclusions about the applicant's level of knowledge was not shown to be based on selective material, nor to lack a foundation in the material referred to. Indeed the applicant accepted at the conclusion of that sequence of questions that what the Tribunal had put to him was based on what committed practitioners of Falun Gong 'read again and again and again on a daily basis'. 28 Because the Tribunal's focus was on the reliability of the applicant's claim to have been a Falun Gong practitioner since mid-2002, it was entitled to test his knowledge of those matters. His level of knowledge was material which, together with the other material the Tribunal had regard to, the Tribunal could use to determine his reliability on that issue. It was a matter for the Tribunal as to what weight it placed on the applicant's level of knowledge of Falun Gong exercises and cultivation, and his evidence about why he had attained that particular level of knowledge in the context of his acceptance about what level of knowledge a committed practitioner would have. It can therefore be addressed quite shortly. 30 If the Tribunal makes a finding which is a critical step in its ultimate conclusion, and there is no evidence to support the finding, there may well be jurisdictional error: SFGB at 407-408, and the cases there cited at [19]-[20]. If the reasons for decision lead to the inference that the Tribunal applied the wrong test, or was not in reality satisfied about the correct text, that too may constitute jurisdictional error: Re Minister for Immigration & Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59. Such an inference might be drawn if there was no information before the Tribunal from which it could realistically or logically draw the conclusions which it did. 31 However, for the reasons given earlier, I am not persuaded that the Tribunal's reasoning is flawed in any of those ways. It identified the material it relied upon. Except in the case of its consideration of the material about the applicant's level of knowledge of Falun Gong exercises and cultivation, no particular criticism is made of its reasoning. That material was capable of supporting the Tribunal's assessment of the reliability of the applicant generally, including whether the Tribunal should be satisfied that he commenced to practise Falun Gong in mid 2002. For the reasons discussed when considering the other grounds of appeal, I am also not persuaded that the Tribunal's conclusion about the level of knowledge of Falun Gong demonstrated by the applicant, or the weight the Tribunal attached to that level of knowledge in its assessment of his reliability on that issue, was unreasonable or illogical. Nor am I persuaded that it supports any inference that the Tribunal erred in any other way which affects the jurisdictional foundation for its decision. If the primary attacks upon the Tribunal's reasons were not made out, there was no contention that the Tribunal erred in that conclusion, at least not in a way that could demonstrate jurisdictional error. Consequently, the Tribunal was required to disregard that later commitment to Falun Gong on the part of the applicant. It accordingly affirmed the delegate's decision. 33 For the reasons given, in my judgment, the Tribunal did not commit jurisdictional error in reaching its conclusion. The application is dismissed. The applicant should pay to the first respondent her costs of the application. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mansfield. | application for protection (class xa) visa decision to refuse application affirmed by refugee review tribunal where applicant a citizen of the people's republic of china and a member of the falun gong movement where applicant had limited knowledge of doctrine and beliefs of falun gong whether tribunal failed to exercise its jurisdiction whether apprehended bias on part of tribunal whether tribunal's adverse finding on credibility based on logical grounds migration |
Subsequently, by s 22 the Financial Sector (Transfers of Business) Act 1999 (Cth), the Bank succeeded in law to all of the assets and liabilities of the State Bank of New South Wales Limited. In these reasons I will refer to the two banks compendiously as 'the Bank'. 3 There are related proceedings in which ASS is the applicant ('the ASS proceedings'). There, ASS claims that the Bank engaged in misleading and deceptive conduct causing damage ASS in relation to its business dealings concerning the provision by ASS of services for the Bank's EFTPOS network. The Bank has cross claimed for the amount alleged to be due by ASS to the Bank as customer. As at 13 September 2000, ASS was alleged to be indebted to the Bank pursuant to advances made under a facility agreement entered into on about 24 June 1997 ('the facility agreement') between ASS and the Bank in the sum of $1,451,348.22. The Bank alleges that it made a written demand on ASS for that sum on or about 13 September 2000 and that that demand was not met in whole or in part. 4 The ASS proceedings commenced on 1 February 2001. The Bank proceedings were commenced on 11 January 2002. This application by the Bank, in that context, comes very late in the day. 5 I was informed by counsel that ASS has discovered some 54 lever arch folders of documents and that, although no precise amount has been identified, the Bank has discovered in the order of about 10 such volumes. Expert evidence identifying the quantum of the loss for which it claims is yet to be filed by ASS, despite its non-compliance with a number of directions in the past that it should do so. It is not necessary to recount any further detail of that aspect of the litigation. 6 The argument before me proceeded on the basis that the amount which ASS may be claiming could well exceed the indebtedness claimed by the Bank against ASS in its cross-claim in the ASS proceedings. That indebtedness is also the subject of the Bank's claim against the guarantors in the Bank proceedings. Each of the guarantors has pleaded that he or she is entitled to an equitable set off of what ASS is found entitled to set off against the Bank. The liability of ASS to the Bank depends upon what, at the relevant time, was owing by ASS to the Bank and the amount by which that indebtedness may be reduced or extinguished or, indeed, turned it into an indebtedness by the Bank, by reason of any success in the claim brought by ASS against the Bank. If the amount for which the Bank was sued is found to have exceeded the amount claimed by the Bank against ASS, then there will be no indebtedness due by ASS to the Bank, and accordingly, no default under any of the guarantees or mortgages. The Bank relies upon a guarantee dated 10 June 1997 from each of Marie and Josephine Saklaoui and mortgages of the same date by each of them over land at Barrack Point and Greenacre respectively in New South Wales. 8 Ms Nader on or about 10 June 1997 executed solicitor's certificates addressed to the Bank in respect of an explanation of the guarantees and mortgages which she gave to Marie and Josephine Saklaoui in the terms certificated ('the certificates'). 11 One possible outcome of the present state of the pleadings is that the Bank may fail in its claims under the guarantees and mortgages given by Marie and Josephine Saklaoui on the basis of their defences, which raise claims under the Contracts Review Act 1980 (NSW) and s 52 of the Trade Practices Act 1974 (Cth) together with an equitable defence of unconscionable (scil: unconscientious) conduct. They allege that the Bank, having procured the execution of the documents, sought to utilize them without having ensured that each of them, as a guarantor and mortgagor, received an adequate explanation of the nature and effect of what she was signing. 12 In late 2004 each of Marie and Josephine Saklaoui swore an affidavit setting out her version of the circumstances in which she executed the respective guarantee and mortgage dated 10 June 1997. Those affidavits, which were tendered in evidence before me so as to establish the assertions made by Marie and Josephine Saklaoui, support their defences that neither of them received any, or any adequate, explanation. 13 On 28 October 2005 the Bank filed notices of motion to amend its cross claim in the ASS proceeding and to amend its statement of claim in the Bank's proceedings. The amendments in the Bank proceedings seek to raise causes of action which plead, positively, an estoppel, a contravention of s 42 of the Fair Trading Act 1987 (NSW) a claim in deceit, a claim in negligence and a claim of a breach of a warranty in cl 7 of each of the guarantees. Relevantly, those claims were made against each of Marie and Josephine Saklaoui. After discussion and refinement during the hearing of the motion, those amendments are no longer opposed by the guarantors. That leaves outstanding only the issue of whether Ms Nader ought be joined as a respondent to the Bank proceedings. 14 The Bank seeks to join Ms Nader as a precaution in the event that the evidence called by Marie and Josephine Saklaoui were to establish their entitlement to the relief they seek so as to make the guarantees and mortgages unenforceable against each of them. The particulars advanced by the Bank in support of its claim against Ms Nader are the contents of affidavits filed by Marie and Josephine Saklaoui. 15 Each of these new claims was based on the proposition that the execution respectively, by Marie and Josephine Saklaoui and Ms Nader of the respective parts of each solicitor's certificate created a representation on which the Bank relied that the certificate had been duly executed in accordance with the law and its terms. 16 The Bank asserts that it was entitled to recover from Ms Nader the amount of any unrecovered indebtedness of the principal debtor, ASS, under the ASS facility together with the value of what it would have been able to recover under the guarantees and mortgages given by Marie and Josephine Saklaoui, if they are found to be entitled to have those instruments avoided. This is on the basis that the Bank asserts that had Ms Nader not made the misrepresentations in her certificate, namely that she had given a proper and full explanation of the guarantees and mortgages as certified by her, the Bank would not have entered into any transaction with ASS. The Bank says this exposed it to the losses caused by, first, the failure of ASS to repay its indebtedness and, secondly, the pursuit of the business relationship in consequence of which ASS would have established in the ASS proceedings that it is entitled to damages against the Bank for misleading or deceptive conduct engaged in by the Bank in those dealings. 17 Ms Anderson, the solicitor with the carriage of the matter on behalf of the Bank, does not appear to have appreciated the clear wording of the defences filed in March 2003 until after she had received the affidavits sworn by Marie and Josephine Saklaoui in November 2004. Unfortunately, Ms Anderson through no fault or choice on her part was away from work following an operation from late 2004 and had no active involvement in the management of the proceedings until about the middle of 2005. The Bank's internal organization, in which she is employed as a solicitor, did not cause the proceedings to be actively managed by any other solicitor until Ms Anderson's return to work. The Bank was not aware of the matters which have resulted in these amendments until it was served with the respondents' affidavits. Each of these five respondents acknowledges having signed the relevant certificate and describes certain circumstances surrounding that signing, and each attests to not having received the advice that the certificate states was provided. These details had not been given to the Bank before, and it is these details which have resulted in the Bank seeking to amend its pleadings and to join Ms Nader as a respondent in [the Bank proceeding]. That affidavit reflects that Ms Nader did the things which she certified she had done in 1997 when she executed the certificate. Indeed, the certificate itself evidences, from the signatures by Marie and Josephine Saklaoui, that the solicitor's certificate signed by Ms Nader was true and that they, each, had received a proper explanation. What may be made of these matters is, quintessentially, an issue for a trial. 20 Ms Nader is an individual. She was an employed solicitor at the time of the events in June 1997. She asserts that she provided her services on a gratuitous basis to Marie and Josephine Saklaoui, who are her cousin and aunt respectively. Ms Nader now works for another employer. 21 The Bank submitted that it is anxious not to be put into a situation in which it is forced, at a later time to sue Ms Nader. That, the Bank says, is a distinct possibility having regard to the fact that each of Ms Nader, Marie and Josephine Saklaoui has deposed to radically different versions of the meeting at which an explanation is said to have been given. It was put by counsel for the Bank that one or other side, in that competition of versions, was not telling the truth. Of course, it may be that there is a difference in recollection, which does not amount to one or other of the parties being found to be a fraudster or a liar. 22 Each of the guarantors has put that he or she is anxious to have the proceedings concluded against him or her. 23 The Bank points to the possibility of conflicting judgments being given in which it ultimately fails against Marie and Josephine Saklaoui on the basis that they are able to establish that no or no adequate explanation was given by Ms Nader, contrary to her certificate and sworn evidence, and then the Bank in later proceedings, were I to refuse her joinder, could be found to fail in proving what had been found in the first proceedings. 24 The Bank and Ms Nader accept that the proceedings against her should be treated as having, for limitation periods being brought no earlier than 28 October 2005 (see O 6 r 11(3)). Counsel for Ms Nader said that in the event that the Court refuses to join her, if the Bank were later to sue her she would accept that the limitation period should be calculated as if the proceedings had started on 28 October 2005. However, Ms Nader does not accept that she should be bound by the result of any litigation to which she was not a party, even though she may be a witness. Order 6 rr.2 and 8 of the Federal Court Rules , permit the addition of parties. It is submitted with regard to the proposed causes of action against Ms Nader that there are clearly common questions of fact and law under O.6 r.2 which will arise in the proceedings and also relate to the proposed case against her. Under O.6 r.8 joinder is permitted where it is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon. Order 6 r.8 should be liberally construed so that all parties to disputes relating to the one subject matter may be dealt with at the one time: Montgomery v Foy, Morgan & Co. [1895] 2 QB 321 at 324; John Cooke & Co. Ltd v Commonwealth [1922] HCA 60 ; (1922) 31 CLR 394 at 411. In order to obtain a joinder order under the rule, a party must only show an arguable case against the proposed respondent at least to the standard of being able to resist an application for summary judgment by the proposed respondent to have the proposed party being sued in separate proceedings: Review Australia Pty Ltd v Redberry Enterprise Pty Ltd [2003] FCA 1009. The phrase "all matters in dispute in the proceedings" should not be construed as limited to matters arising on the existing pleadings: it may also properly include those disputed issues of fact which are subjacent to the existing pleadings: Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34. Disputed issues of fact which underlie proceedings are subjacent to the pleadings: Fried v National Australian Bank Ltd [1999] FCA 737. As the joinder of Ms Nader is based upon affidavit evidence served in support of the existing pleadings, the case against Ms Nader is a matter currently in dispute in the proceedings. It is necessary to understand the purpose of and interrelation between the various relevant rules in Order 6. This has been explained in some detail by the High Court in Richardson v Trautwein [1942] HCA 5 ; (1942) 65 CLR 585 at 590, 593-594, 598, 601-602, and Mahoney JA in Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 at 44C-56D in considering analogues, not wholly identical, of Order 6 in Judicature system court rules. More recently Branson J, in Warner Music Australia Limited v Swiftel Communications Pty Limited [2005] FCA 1127 at [14] - [18] followed Sheppard J in Trade Practices Commission v Westco Motors (Distributors) Pty Ltd (1981) 58 FLR 384 at 388. Her Honour observed that the extent to which causes of action against different persons legitimately may be prosecuted is governed by O 6 r 2 of the Federal Court Rules . The parties did not make submissions on this question or refer to Branson J's judgment or the authorities on which it was based at the hearing. When I found her Honour's judgment after judgment was reserved, accordingly, I asked for further submissions which the Bank, the first to fifth respondents in the Bank proceedings and Ms Nader provided on 19 April 2006. 28 The Bank relied on what Glass JA with the agreement of Samuels JA had said in Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 at 37G-38B, 43D-E. Glass JA noted that the analogue of s 22 was also directed to avoid multiplicity of proceedings. He said that the fact that the constitution of the proceedings prior to the joinder of the new party by a plaintiff (or applicant) could not yield an order which directly affected that new party was no answer to the application. This was because r 2(a) and the analogue of s 22 sanctioned and encouraged the addition of a further defendant (or respondent) to avoid multiplicity of proceedings. He continued by construing r 2(a) as not being limited, on a plaintiff's (or applicant's) motion to join a new party, to the matters arising on the existing pleadings ([1981] 2 NSWLR at 38C-E) but he did not decide the case under r 2 ([1981] 2 NSWLR at 39A, E). 29 In the case before the Court of Appeal there was an issue on the existing pleadings as to whose default had caused a building to be unstable. Glass JA there said that where a plaintiff (or applicant) asserted on tenable grounds that such a matter of dispute could not be determined without the joinder of the builder as a party, the power to join that person as a party under r 8 was enlivened ([1981] 2 NSWLR at 38D-E). In Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34, the nomination of the builder as the person whose alleged default occasioned the building's instability, was to be seen as a joint or several tortfeasor along with the current defendants who were the architects and engineers. A claim in contract was also made ([1981] 2 NSWLR at 36A-G). 30 The Bank contended that this showed that Branson J's approach to O 6 r 8 was wrong and, moreover, it submitted that the approach of Glass and Samuels JJA had been approved by the Full Court in News Ltd v Australian Rugby Football League (1996) 64 FCR 410 at 523G-524B. But there, the Full Court referred simply to the decision in Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34 in the context of considering a different situation; viz , one in which the trial judge had made orders that affected the substantive rights of persons who had not been joined to the proceedings (see 64 FCR at 524E-F). These provisions reflect an intention, which now receives more emphasis than in the past, to avoid where reasonably practicable a multiplicity of proceedings: Montgomery v Foy, Morgan & Co [1895] 2 QB 321; but see Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357 at 378 per Devlin J. I agree with that approach and consider that it demonstrates that each of O 6 rr 2 and 8 has its own work to do. In my opinion, the authorities relied on by the Bank do not expose any error in the approach of Branson J to which I have referred, and which I regard as correct. 32 The structure of Order 6 is such that it gives primacy to O 6 r 2 over rules such as O 6 r 8, although cognately they have been held to give the Court very wide powers: John Cooke & Co Pty Ltd v The Commonwealth [1922] HCA 60 ; (1922) 31 CLR 394 at 411 per Knox CJ, Gavan, Duffy and Starke JJ. The only issue in that case was whether the vendors of skin wool, who were parties, were entitled to share equally with the vendors of shorn wool, who were not parties, in a wool fund held by the Central Wool Committee (31 CLR at 410). But they are discretionary in their nature. (See Wilson, Sons & Co. v. Balcarres Brook Steamship Co. and Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd. . ) Thus there is no doubt that the Court may "permit an action to go on, so that the rights of the parties before the Court may be determined even though all parties to the action are not before it" (see Robinson v. Geisel , at p. 689). The Rules, too, enable the Court to add parties who ought to have been joined or whose presence before the Court is necessary to enable it to effectually and completely adjudicate upon and settle all the questions involved in the cause or matter. The causes of action upon which this right to relief could be founded have already been specified. The rule is therefore silent as to causes of action, because rule 1 has already dealt with those which can be combined in the one action. Rule 4 marks the arrival of the stage at which it becomes necessary to define the defendants who can be joined in such action. 34 And, this construction is reinforced by O 6 r 11(1)(b) which permits orders for amendment, in effect, consequent upon the joinder of a new party under O 6 r 8: see also Richardson v Trautwein (1942) 64 CLR at 601 per Williams J and Australian Coastal Shipping Commission v Curtis Cruising Pty Ltd (1989) 17 NSWLR 734 at 745E-746C per Mahoney JA, see too at 749F-751C per Priestley JA. So, O 6 r 8 has to do, primarily, with ensuring that the rules of natural justice, entitling a person whose rights may be affected by a decision to be heard before the decision is made, and ensuring that any proper contradictor can be joined so as to assist in the court's discharge of its statutory obligation under s 22 of the Federal Court of Australia Act 1976 (Cth). The claim against her is freestanding and depends on the Bank's other independent claims against the guarantors with whom it had relationships based in contract and the law of (real) property (cp Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14 ; (1985) 157 CLR 17 at 33-34 per Mason J). Of course, the Bank also now claims against the guarantors in tort and pursuant to statute. It is because these latter claims are made and the Bank also seeks to sue Ms Nader on a quite distinct, alternate, basis for like causes of action, that it applied to join her. 37 I am of opinion that O 6 r 8, on its proper construction, does not authorize the joinder of Ms Nader as sought. Her joinder would require, as is sought, substantive amendment of the Bank's statement of claim. Save for the assertion of her liability if the Bank's remedies against the guarantors in contract, pursuant to its interest in land the subject of its mortgages and its tortuous and statutory claims fail, Ms Nader has no interest in the subject matter of the Bank proceedings or the ASS proceedings. She is a discrete third party quite unlike the wool growers, for example, in John Cooke & Co Pty Ltd v The Commonwealth [1922] HCA 60 ; (1922) 31 CLR 394 or the builder in Qantas Airways Ltd v AF Little Pty Ltd [1981] 2 NSWLR 34. 38 The court could hear and decide the two matters as presently constituted without affecting any rights or liabilities of Ms Nader. Order 6 r 8(a) speaks of a person who ' ought to have been joined', not of one who 'might conveniently have been joined'. It is a common situation, in cases involving guarantees taken by financiers, that there is a dispute as to the adequacy of an explanation at the time of the guarantor executing the instrument. That does not mean that in such cases the lawyer or other professional adviser who gives the explanation must be made a party. Oftentimes, tactical decisions will be made by one or other side as to whether to call as a witness the person who gave the explanation. Frequently, experience has shown, such persons are called without the need to join them as defendants or respondents to claims such as those sought to be made here. There was no more necessity to join Ms Nader than to join a professional who gave an explanation in any other like case. 39 The Bank's alternative basis under O 6 r 8 is to resort to r 8(1)(b). But, again, for the reasons I have given, there is no 'necessity' to join Ms Nader. The relevant matter in dispute in the Bank proceedings is the enforceability, as against each guarantor, of the guarantees and mortgages given by him or her. The explanation given by Ms Nader is a factor which may be relevant to the determination of that matter in dispute but, by itself, it is neither, necessarily, essential nor decisive though it may be held to be so. 40 It is not alleged that Ms Nader acted as an agent for the Bank, so the question will be, after a finding is made about what explanation, if any, was given, how that affects the Bank's entitlement in all the circumstances to enforce the guarantees and mortgages against Marie and Josephine Saklaoui. A myriad of other discretionary factors will fall to be considered. Indeed, even if Ms Nader gave no explanation, there may be circumstances in which the Bank could succeed in its claim to enforce its contractual and real property rights, such as if Marie and or Josephine Saklaoui from past experience knew what a guarantee or mortgage was and that she was executing such an instrument fully cognizant of the potential consequences for her in doing so. The enforceability of the guarantees and mortgages can be determined once for all, subject to any appeal, without the need to join, or the joinder of, Ms Nader. 42 Indeed, the significant amendments required if Ms Nader was joined, demonstrate that her addition as a party would expand the matters in dispute, albeit that this would occur because the claim against her is in the alternative to the principal claims against some of the guarantors. It provides two bases, each again discretionary ( John Cooke & Co Pty Ltd v The Commonwealth [1922] HCA 60 ; (1922) 31 CLR 394 at 411), for joinder. The second basis, in r 2(b), is emphatic of this discretion which falls to be considered having regard to the subject matter, scope and purpose of O 6 as whole and as part of the Federal Court Rules : The Queen v Australian Broadcasting Tribunal: Ex Parte 2HD Pty Ltd [1979] HCA 62 ; (1979) 144 CLR 45 at 49. The first basis, in r 2(a) involves considerations which have been the subject of over a century of judicial decisions. It requires not just the existence of a common question of fact or law in each proceeding which might be brought separately against two or more persons, but also that ' all rights to relief claimed' are in respect of or arise out of the same transaction or series of transactions (cf: Stroud v Lawson [1898] 2 QB 44 at 52). 44 The claims arising in the ASS proceedings are, of course, distinct from those in the Bank proceedings. Each of the guarantors, in the Bank proceedings, has pleaded a set off the quantification of which requires a decision in the ASS proceedings. So, in this way, there is a common question of fact in the two proceedings as presently constituted, namely what is the quantum, if any, due by ASS to the Bank both under the facility agreement and in light of the determination of ASS's claim for damages (see e.g. Wood v Cross Television Centre Pty Ltd [1962] NSWR 528 at 532 per Walsh J). 45 In Payne v Young [1979] HCA 39 ; (1980) 145 CLR 609 the High Court considered its analogical rule which, as Barwick CJ emphasized (145 CLR at 614) spoke of ' ... plaintiffs in whom any right to relief is alleged to exist'. The operation of O 6 r 2(a)(ii) is different and less liberal for it requires ' all the rights to relief ' to be in respect of or to arise out of the same transaction or series of transactions. 46 Here the rights to relief claimed by the Bank against Ms Nader are legally and factually independent of the claims by the Bank against the guarantors other than Marie and Josephine Saklaoui for the purposes of O 6 r 2(a) because none of the other guarantors participated in the transactions between each of Marie and Josephine Saklaoui, Ms Nader and the Bank. Subject to the two limitations expressed in pars. (a) and (b) of the rule, it permits the joinder of separate causes of action which have accrued to different plaintiffs. The effect of the rule was, in my opinion, correctly stated by Vaughan Williams L.J. I think that, if there was a transaction or series of transactions in respect of which one plaintiff was interested up to a certain point, and other plaintiffs were interested, not only up to that point, but in respect of the entire transaction or series of transactions from beginning to end, under this rule they might joint their separate causes of action in one action, because there would be one transaction or series of transactions in respect of which the various plaintiffs all claimed a right to relief. Their remedies or damages might be different, but they would be claiming relief in respect of the same transaction or series of transactions. (a) of the rule joinder of separate causes of action accruing to different plaintiffs is authorized when the relief claimed is in respect of, or arises out of, the same or a particular series of transactions. Joinder is not authorized when the relief claimed is in respect of, or arises out of, two or more different series of transactions, when the participation of each individual plaintiff is limited to participation in one series of transactions, the other plaintiffs not participating in that series. Two causes of action were pleaded; first that the three individuals had by deceit induced the plaintiff to become a member of the company. Secondly, the plaintiff sued all four defendants, not in his personal capacity but on behalf of himself and all other shareholders in the company, seeking to have the payment of a dividend declared ultra vires as being paid out of capital, not profits, and claiming that the individual defendants should pay the money back to the company. Chitty LJ observed that in substance there were two plaintiffs claiming on two separate and distinct causes of action ([1898] 2 QB at 51, 52) even though the payment of the impugned dividend was one of the fraudulent devices which were said to have induced the plaintiff to become a shareholder. The distinctness of capacities is now addressed by O 6 r 1 but the reasoning is still relevant for present purposes. 48 As AL Smith LJ said ([1898] 2 QB at 50-51), according to the terms of the analogical predecessor of O 6 r 2 the plaintiff could not join the two causes of action which he put in different capacities unless they both arose out of the same transaction. The two causes of action and the nature of the relief claimed are wholly distinct and separate. It seems to me that they arise out of different transactions, though they have that one feature in common. 51 But here, the Bank's claim against each guarantor and, in particular, against each of Marie and Josephine Saklaoui, depended on its having entered into relationships based in contract and in interests in land ( viz : its mortgages). That is, the Bank relies on the reality and validity of those dealings as its primary case. Next, the Bank has now been given leave to amend to allege against, inter alios , Marie and Josephine Saklaoui, that each was guilty of fraud in proffering her guarantee, mortgage and signature of the certificate when, on this alternative, there will be no real or valid guarantee or mortgage. 52 Obviously, the two above ways of the Bank putting its case against the guarantors are distinct and involve different transactions or series of transactions. This not just because of the legal distinction between a claim under a valid and binding guarantee and or mortgage, and a claim that the Bank was the victim of a fraud because those instruments have been avoided or were void ab initio . It is also because there are six different guarantors, each with his or her own circumstances and, in substance, cases within the overall context of the Bank proceedings. 53 At first blush, the proposed claim against Ms Nader might have the requisite commonality under O 6 r 2(a) only with the Bank's cases against Marie and Josephine Saklaoui. But that argument does not stand examination, for the Bank's 'transactions' with Marie and Josephine Saklaoui are quite different from its transactions with the other guarantors, if for no other reason than the involvement of Ms Nader. But there are also other reasons for the distinctiveness of the transactions so as to entail that they do not satisfy O 6 r 2(a)(ii). The proposed claim against Ms Nader is framed against her as an individual who is alleged to be solely liable for her own alleged fraud and other tortuous and statutory liabilities, all of which depend on a finding that each of the transaction or transactions on the face of the guarantees, mortgages and certificates was not as it appeared, viz : valid, correct and enforceable (see too Richardson v Trautwein [1942] HCA 5 ; (1942) 65 CLR 585 at 590 per Rich J, 593 per Starke J, 598 per McTiernan J, 601-602 per Williams J). 54 Of course, it is possible, and indeed a commonplace to allege inconsistent matters in different counts against different parties based on a cause of action arising out of the one transaction. Indeed, s 2(1) of the Law Reform (Miscellaneous Provision) Act 1946 (NSW) specifically envisages that this may occur where it is uncertain which of two or more persons, if not all of them, is responsible for the relief for which the plaintiff or applicant claims ( Chadwick v Bridge [1951] HCA 11 ; (1951) 83 CLR 314 at 319 per Dixon J, Williams, Webb, Fullagar and Kitto JJ agreeing in separate reasons at 320-321). As Dixon J observed (83 CLR at 318) the words of the statutory right to bring an action in tort are similar to O 6 r 2(a). But the issue there was uncertainty as to what the identity of the vehicle which allegedly injured the plaintiff was (see: 83 CLR at 319-320). And there is no analogue to O 6 r 2(b) in that legislative provision which explicitly creates a general discretion in the court to grant leave (see the discussion concerning the relatively recent introduction of the analogues of O 6 r 2(b) in Newman v Hold Pty Ltd [2001] VSC 282 at [2] - [4] and the cases there cited by Mandie J). 55 Here it can be said that the Bank is uncertain as to who has caused it the loss or damage claimed. The purpose of the paragraphs is to make plain how the general policy of the provision operates and to ensure as far as language may do that plaintiffs are not to be defeated because of their uncertainty at the commencement of the action as to the correct party against whom they ought to claim. That is certainly the case, and in instances involving the related, but distinct, discretion to permit amendment, the court takes a liberal and facultative approach to ensuring that the real issues are litigated. There, an amendment will be allowed in the ordinary case, no matter what kind of error or mistake occurred unless it was fraudulent or intentionally exaggerated: Queensland v JL Holdings Pty Ltd [1997] HCA 1 ; (1997) 189 CLR 146 at 152-153; Cropper v Smith (1884) 26 Ch D 700 at 710. 59 So, if here, the only parties to the Bank proceedings had been Marie and Josephine Saklaoui the Bank's position may have brought it within the words of O 6 r 2(a)(ii). But because the Bank proceedings involve four other existing respondents this is not the case here because the 'transaction' or 'transactions' in which Marie and Josephine Saklaoui are involved is not related to and does not arise from the cases of the other guarantors (see too Marino v Esanda Ltd [1986] VR 735 at 740 per Tadgell J; Re The Thai Silk Company Ltd and Arkitex Fabrics Pty Ltd (31 May 1989 unreported, Federal Court of Australia) per Hill J at [22]-[23]; Dean-Willcocks v Air Transit International Pty Ltd [2002] NSWSC 525 ; (2002) 55 NSWLR 64 at 7-72 [21] - [27] ). 60 For these reasons I am of opinion that the Bank's application to join Ms Nader does not satisfy O 6 r 2(a). As already noted the discretion is very wide ( John Cooke & Co Pty Ltd v The Commonwealth [1922] HCA 60 ; (1922) 31 CLR 394 at 411; Caboolture Park Shopping Centre Pty Ltd v White Industries (Qld) Pty Ltd (25 May 1988, unreported, Federal Court of Australia) per Ryan J at 3; Re The Thai Silk Company Ltd and Arkitex Fabrics Pty Ltd (31 May 1989, unreported, Federal Court of Australia) per Hill J at [21]). 62 In Bishop v Bridges (1990) 25 FCR 311 at 314, Wilcox J said that as the discretion in r 2(b) is in terms unconfined it would be inappropriate to specify circumstances in which it might be applied. He said, and I agree, that ' [e]verything must depend upon the facts of the particular case '. The basic principle, as it seems to me, is that the Court should take whatever course seems to be most conducive to a just resolution of the disputes between the parties, but having regard to the desirability of limiting, so far as practicable, the costs and delay of the litigation. Considerations of costs and delay may often support the grant of leave under subr (b); but, in my opinion, leave ought not be granted unless the Court is affirmatively satisfied that joinder is unlikely to result in unfairness to any party. Secondly, regard must be had to practical matters. For example, it would normally be inappropriate to grant leave for the joinder of applicants who were represented by different solicitors. There must be a single solicitor, or firm of solicitors, who is accountable for the conduct of the proceeding on the applicants' side of the case. Similarly, although all applicants might propose to rely upon some common, or similar facts, there may be such differences between the evidence intended to be relied upon in support of the claims of particular applicants as to make it inexpedient to join the claims. The discrete material may overbear that which is common to all the claims. Again, there may be cases in which the sheer number of the claims, if joinder is permitted, will impose an undue burden on the respondent; although it seems to me unlikely that this will be so except in cases where separate evidence is proposed to be adduced in support of individual claims. In adopting the principles identified by each of Wilcox J and Goldberg J, Austin J ( Dean-Willcocks v Air Transit International Pty Ltd [2002] NSWSC 525 ; (2002) 55 NSWLR 64 at 73 [31] ) said that '[t]his leads to a practical calculation of advantages and disadvantages'. Of course, one relevant consideration to which regard may be had in the exercise of the discretion under O 6 r 2(b) is that r 2(a) would have no work to do if r 2(b) were to be construed without regard to the fact that it is an alternative to r 2(a). Ordinarily, the exercise of the discretion under r 2(b) should be seen to be in the interests of justice having regard to the features of the case which have meant that the conditions in r 2(a) cannot be met. 64 Ms Nader is to be the subject of grave allegations against her, including allegations of fraud which are pleaded by the Bank solely on the basis that if the allegations made by Marie and Josephine Saklaoui are found to be accepted, then her certificate will have been falsified. All of that is being done nearly 9 years after she gave the certificate. 65 The factors of cost and delay together with complexity and stress to Ms Nader weigh heavily in the present matter. The claim against Ms Nader, if permitted to be made, will be heard together with the ASS proceedings. That would have the consequence that Ms Nader and her lawyers will need to analyze and investigate the complex and voluminous materials in the ASS proceedings. ASS and the guarantors in the Bank proceedings wish to establish that the indebtedness claimed by the Bank has been reduced or extinguished by a liability owed by the Bank to ASS. If they do so, the responsibility of each of the guarantors and, if she is joined, Ms Nader likewise could be expected to be diminished or extinguished. 66 The proceedings have reached, albeit at a somewhat leisurely pace, an advanced stage. It was anticipated that within about 10 weeks of 22 March 2006, when I heard argument, expert and lay evidence between the Bank and ASS will be complete. If joined now, Ms Nader would have to grapple with a case which had been pursued by a well resourced Bank and ASS over the previous 5 years together with the case pursued by the Bank against the other guarantors and mortgagors, including Marie and Josephine Saklaoui for over 4 years. 67 The Bank contended that it would be possible for Ms Nader to catch up to the state of preparedness of the other parties, were she joined now. Any prejudice to her by such joinder could be overcome by the grant of further time to enable preparation and investigations for the conduct of the defence to occur. The Bank argued that in any event one matter that should affect the exercise of any discretion to permit joinder was that it could proceed by commencing separate proceedings. 68 If Ms Nader were joined now that could expose her to considerable stress, not merely personally as an individual litigant sued by a large Bank in heavy commercial litigation, but also in circumstances where the other parties to that litigation have been involved in it for a considerable number of years before the present application for joinder was made and are well advanced in the analysis and investigation of their claims and defences. 69 The advanced state and complexity of the two proceedings and the later amendments into which the Bank now wishes to draw Ms Nader are such as would create very substantial practical problems for her lawyers adequately to prepare the matter in the time in which I anticipate it would in the ordinary course be ready for hearing. 70 I am of opinion that in the circumstances of the present case, the failure of the Bank to join Ms Nader once it received the defences in March 2003, has now created the situation in which there would be a substantial risk of injustice to Ms Nader or the guarantors in bringing her into the case 3 years later. Each of the current parties has had the benefit, to the extent that they have chosen to accept it, of participating in the discovery process and the preparation, over a considerable period of time, of evidence to meet respective cases. 71 It cannot be said that the Bank's claim sought to be articulated against Ms Nader is at a sufficiently low threshold of success that in the exercise of the Court's summary jurisdiction it would be struck out. As has been noted, it will be open to the Bank to protect its position by commencing its own proceedings against Ms Nader, should it choose to do so. Counsel for the Bank submitted that the Bank could make an application for those proceedings to be heard together with the other proceedings. I am conscious of that possibility, but that is not a sufficient reason to do what I am of opinion is not in the interests of justice, namely, to join Ms Nader in the circumstances of the proceedings as they are presently constituted and in their present state of readiness, complexity and preparation. 72 Prior to serving Ms Nader with the current motion, it does not appear that the Bank ever sought to ascertain from Ms Nader her version of events after receiving the defences. Ms Anderson's explanation for that state of affairs was not the subject of cross-examination, but it is hardly satisfactory. At best, it indicates a lack of any analysis by the Bank's lawyers of defences which clearly raised this issue as long ago as March 2003. While I accept the honesty of Ms Anderson's affidavit, I do not see that it adequately explains a basis for the Court to exercise its discretion in favour of the Bank notwithstanding its inactivity. 73 The real thrust of the defences was overlooked by Ms Anderson and those acting for the Bank, for about 21/2 years in this litigation, while all the other parties, including the Bank, proceeded with the forensic steps needed to get what appears to be highly complex litigation to the stage at which it is at present. It is now said by the Bank that notwithstanding that it and the other parties have had the advantage of that time in which to consider and formulate their cases, including the consideration of a substantial amount of documentation the subject of discovery in the ASS proceedings, Ms Nader should be forced, many years after the events in question, to investigate the same facts and formulate her defence in a far more contracted time frame and in circumstances in which the proceedings against her are very much in the nature of a protective action taken by the Bank in what is perceived to be a very much alternative scenario in the event that it might fail in its principal contention. I do not accept that argument. 74 Ms Nader criticized the Bank for its failure to allocate its own resources, while Ms Anderson was indisposed, as being an unjustified delay in dealing with what was, obviously, an issue of considerable significance having regard to the new claims which the Bank now seeks to make against Ms Nader. There is validity in this criticism. 75 The delay of the Bank here in bringing any claim against Ms Nader is not sufficiently justified on the evidence to warrant the exercise of my discretion to permit her now to be joined. Not only did the Bank not act after it received amended defences in March 2003, but it did nothing until late October 2003 after receiving the affidavits of Marie and Josephine Saklaoui in November 2004. That is a sufficient reason to refuse the relief sought (cp: Review Australia Pty Ltd v Redberry Enterprise Pty Ltd (2003) 58 IPR 366 at 372 [33] per Heerey J). 76 A delay of 21/2 years has occurred in a case where the basal events had happened in June 1997. This means that, even though Ms Nader now has sworn an affidavit, every witnesses' memory is likely to have been affected and that, in turn, may affect her position adversely. As Lord Hailsham of St Marylebone LC said, albeit in the context of a criminal trial but none less apposite to a civil trial, in Reg. But it is not merely the anxiety and uncertainty in the life of the accused, whether on bail or remand, which are affected. Where there is delay the whole quality of justice deteriorates. Our system depends on the recollection of witnesses, conveyed to a jury by oral testimony. As the months pass, this recollection necessarily dims, and juries who are correctly directed not to convict unless they are assured of the reliability of the evidence for the prosecution, necessarily tend to acquit as this becomes less precise, and sometimes less reliable. This may also affect defence witnesses on the opposite side. The risk of injustice being done to the Bank, has to be balanced against the risk of injustice being done to Ms Nader in the context of this particular litigation and the way it has been conducted to the present time. The joinder of Ms Nader, if she is to have adequate time in which to prepare and investigate the case which she may or may not wish to pursue involving the ASS proceedings, does not appear to be one which can be regarded as a simple task. The whole history of the litigation has indicated that it is not. For Ms Nader to prepare fully in that respect will cause delay in the prosecution of the case against all of the other parties. It may cause her injustice by being hurried on. The Bank has only itself to blame for its inability to appreciate from March 2003 until October 2005 what appears to be plain in the defence of Marie and Josephine Saklaoui. 78 The fact that her affidavit evidence is available to be used, if the Bank so chooses, in the Bank proceedings reduces but does not entirely eliminate the potential prejudice to the Bank flowing from a decision to refuse the present application. Doing the best that I can on the evidence before me, the interests of justice will be better served by exposing the Bank to this prejudice rather than exposing Ms Nader to what I consider to be far more substantive prejudice to her. I certify that the preceding seventy nine (79) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | application for joinder of additional respondent in proceedings seeking judgment on guarantees and mortgages against multiple guarantors application under o 6 r 2 and r 8 of federal court rules consideration of s 22 of federal court of australia act 1976 (cth) where proposed respondent provided solicitor's certificate to two of six guarantors consideration of legislative purpose behind o 6 r 2 and o 6 r 8 o 6 r 8 held not to authorize joinder in the circumstances whether same transaction or series of transactions o 6 r 2 held not to be satisfied whether discretion to grant leave under o 6 r 2(b) should be exercised application made in advanced stage of proceedings whether prejudice or unfairness to proposed respondent if joinder application granted application refused practice and procedure |
At that time I gave short oral reasons but indicated that I would provide more extensive written reasons in due course. These are those reasons. 2 The application concerns industrial action by 209 employees of the applicant at the North West Shelf LNG Phase V Expansion Project (Phase V Project). Those employees are the respondents to the application (the respondents). 3 The notice of motion seeks interlocutory relief against 85 of the respondents named in a schedule to the motion, being those respondents upon whom the applicant has been able to serve copies of the application, notice of motion and supporting material up to and including Sunday 26 October 2008. None of those served has entered an appearance. I have also had the benefit of detailed written and oral submissions which I generally accept and adopt for the purpose of these reasons. The Intervener made submissions broadly in line with those of the applicant. Each of the collective agreements contain in it issue resolution procedures. 9 On 23 November 2007 Contract 6421 was varied to include the construction of a sixth stabilizer unit (S6 package). On 19 August 2008 Contract 6421 was varied to include the construction of a second vapour return line (VRL package). 10 The respondents were initially part of a larger workforce of 1200 engaged by the applicant to perform other work on the Phase V Project and elected to stay on when the other work finished to work on the S6 and VRL packages. They are variously engaged in the classifications of mechanical fitter, boiler makers, structural riggers, scaffolders, crane operators and storepersons. 11 The respondents were initially engaged on the Phase V Project pursuant to standard contracts of employment which referred to the conditions of the applicable collective agreement. Prior to their agreeing to stay on to work on the S6 and VRL packages the respondents were informed that the work was a continuation of the Phase V Project and that their conditions of employment would continue uninterrupted. 12 The vast majority of respondents are likely to be members of the Australian Manufacturing Workers Union (AMWU) or Construction, Forestry, Mining and Energy Union (CFMEU). Since at least 1 October 2008 the respondents, through their union representatives, have demanded that the applicant terminate their employment, pay out their redundancy entitlements taxed at concessional rates and then immediately reemploy them to continue to work on the S6 and VRL packages (the Demand). The respondents, through their union representatives, say this should occur because, in their opinion, the S6 and VRL work does not form part of the Phase V Project. 15 On 13 October 2008, following a mass meeting of employees, Upton, accompanied by an AMWU and a CFMEU delegate, met with the applicant's representatives and repeated the Demand. Later that day, Deputy President McCarthy of the Australian Industrial Relations Commission (AIRC) ordered those employees of the applicant who were members of the AMWU or CFMEU and engaged to work on S6 and the VRL packages to return to work and not engage in industrial action (AIRC Order). The AIRC Order came into effect at 4.00 pm on Tuesday 14 October 2008 and has a term of one month. The AIRC Order stated that it would be sufficient service on the employees if a copy of the order was faxed to the 2 unions and a copy was placed on the notice board(s) usually used for communicating with the employees. The applicant served the AIRC Order personally on 155 of the respondents and in the manner described in the AIRC Order that same day. 17 On 15 and 16 October 2008 the respondents performed work as normal. 18 From 17 to 24 October 2008 the respondents engaged in industrial action by failing to attend work without authorisation. However 42 respondents still failed to attend work without authorisation. 20 The respondents are required to work 10 hours each day. On that basis since 14 October, approximately 12,720 hours have been lost. . . . . 25 The expressions "building industrial action", "industrially-motivated", "constitutionally-connected action", and "excluded action" are defined in s 36(1) of the BCII Act. . . (d) disrupting the performance of work. It therefore falls within paragraphs (a) and (d) of the definition. . . 31 The action is not protected action for the purposes of the WR Act. There is no bargaining period in place. See also s 41 BCII Act. 33 The respondents in this case have failed or refused to attend for work. . . 36 The work which the respondents have been engaged to perform on the S6 and VRL Packages is within paragraphs (a) and (d) of the definition of "building work". 37 Section 5(1)(a) refers to "the construction of . . . structures or works that form, or are to form part of land, whether or not the . . . structures or works are permanent". 38 Subsection 5(5) indicates that "land includes land beneath water". 39 The terms "structures" and "works" are not defined. The definition relevantly included the carrying out of the construction of "structures, fixtures or works". The essence of the word is related to the verb to build. The Oxford Dictionary which sets out various senses in which it may be used states inter alia:-- "that which is built or constructed, a building edifice of any kind". It also states "more widely: a fabric or framework of material parts put together. " In Cardiff Rating Authority v Guest Keen Baldwin Iron & Steel Co Ltd [1949] 1 KB 385 at 396 Denning, LJ, as he then was said: "A structure is something which is constructed but not everything which is constructed is a structure. A structure is something of substantial size which is built up from component parts and intended to remain permanently on a permanent foundation . . . 44 Further, each is arguably also capable of being regarded as "works" for the purpose of the definition. The Macquarie Dictionary defines the word "work" as inter alia "an engineering structure, as a building, bridge, dock, or the like". 45 The next question for the purpose of s 5(1)(a) of the definition is whether the S6 and VRL packages can be described as structures or works "that form, or are to form, part of land" (including land beneath water). 46 Whether something which is annexed to the land forms part of land is a question which commonly arises in determining the rights of the owner of land to things affixed to or embedded in the soil. When an object is said to become part of the land it will be subjected to the same rights of property as the land itself. The answer will generally depend on the degree and object of annexation. 47 The degree of annexation test looks to the manner in which the object is attached to the land. If the object is attached to the land, other than by its own weight, there is a rebuttable presumption that it forms part of the land. The greater the degree of annexation, the stronger the presumption. If on the other hand, the object is attached only by its own weight, there is a rebuttable presumption that it is not part of the land, even if it has become embedded in the soil. In such a case the onus lies upon the person claiming that the object forms part of the land to prove that it was erected with the intention that it should become part of the land: Reid v Smith [1905] HCA 54 ; (1905) 3 CLR 656 at 668, 673-4, 675-6; Belgrave Nominees Pty Ltd & Ors v Barlin-Scott Airconditioning (Aust) Pty Ltd [1984] VR 947 at 950-1. The courts will infer the degree of annexation from the surrounding circumstances including the nature of the object and the nature of the interest held in the land by the owner of the object. The test is objective, namely, what a reasonable person would consider to be the reason for attaching the object to the land. 48 That test is modified in the case of the statutory definition of "building work" in the BCII Act by the proviso that while the structures or works must form part of land, they need not be permanent. 49 On the evidence before me the S6 and VRL packages are arguably structures or works which will form part of land. 50 It follows from the above that the respondents have arguably engaged in unlawful industrial action in contravention of s 38 of the BCII Act. The applicant has demonstrated that there is a serious question to be tried in this respect. . . any . . . 52 In the present case the applicant submits that further unlawful industrial action is threatened, impending and probable. As Lord Reid observed in delivering the judgement of the Board in The Wagon Mound (No. Sometimes it appears to mean more probable than not, sometimes it appears to include events likely but not very likely to occur, sometimes it has a still wider meaning and refers to events the chance of which is anything more than a bare possibility. . . In Johns v. R [1980] HCA 3 ; (1980) 143 CLR 108 , Stephen J seemed to accept at 121 that "probable" might sometimes be satisfied by "anything more than a bare possibility"; while, as will be seen below, sometimes the degree of probability required must be "overwhelming"; however, the more usual debate is whether "probable" requires more than a "real or substantial possibility" . . . . To complete the circle, just as the meaning of "likely" is sometimes expressed by reference to what is "probable", the meaning of "probable" is sometimes related to whether an event or consequence is "more likely than not" . . . Sometimes "probable" and "likely" are treated as synonymous; sometimes "probable" is regarded as a stronger word than "likely"; and sometimes "likely" is regarded as a stronger word than "probable". Yet these are the traditional requirements for equitable injunctive relief. . . . In my opinion subss (4) and (5) are designed to ensure that once the condition precedent to the exercise of injunctive relief has been satisfied (ie contraventions or proposed contraventions of Pts IV or V of the Act), the court should be given the widest possible injunctive powers, devoid of traditional constraints, though the power must be exercised judicially and sensibly. . . . This does not mean that the traditional equitable doctrines are irrelevant. For example, it must be relevant to consider questions of repetition of conduct or whether it has ever occurred before or whether imminent substantial damage is likely: but the absence of any one or more of these elements is not fatal to the grant of an injunction under s 80. That is the effect of subss (4) and (5) (subs (4) in relation to the prevention of conduct and subs (5) in relation to a mandatory injunction). Their presence is not an indication of a new statutory house, rather an old house with some modern extensions. Gummow J at 267 came to essentially the same conclusion. Subsection 49(6) defines an eligible person to make an application under s 49(1) and (3) to include a person affected by the contravention. The applicant is a person affected by the alleged contraventions. Section 38 is a civil penalty provision as defined in s 4. Thus, s 49(1) and s 49(3)(a) empower this Court on the present application, to make an interim injunction in relation to a person who has contravened s 38. 62 Section 49(3) confers power to grant an interim injunction without reaching a final decision that a contravention has occurred: Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 149 IR 299 at [7], [8]; Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union (2006) 149 IR 306 at [52]. 63 The power to grant an injunction, including an interim injunction, under s 49 is additional to the Court's power under s 39 and, unlike the power in s 39, is not predicated on the Court's satisfaction that unlawful industrial action is occurring or is threatened, impending or probable. Rather, the Court may make any order "that it considers appropriate". 66 While the power to grant an interim injunction under s 49(3) should be exercised having regard to the principles applied by a court of equity, the main object of the BCII Act is also relevant consideration in applying its provisions: United Group Infrastructure Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2005) 148 IR 399 at [23]-[25]. 67 In my view, the applicant has a strong prima facie case and the balance of convenience is all one way. 68 The effect on the applicant if there is further industrial action will be significant. The estimated wasted costs alone exceed $600,000 a week. There are further potential consequences of industrial action such as damage to the applicant's reputation and loss of production. 69 The impact on third parties, in this case Woodside, is a relevant consideration: Patrick Stevedores Operations Pty Ltd v Maritime Union of Australia (1998) 82 IR 87 at 99-100. 70 Further the proper formulation of the test is not whether damages are an adequate remedy but whether it is just in all the circumstances that the plaintiff should be confined to his remedy in damages. The courts have recognised there may be cases in which it is unjust to confine a plaintiff to its remedy in damages because of, for example, the difficulty in estimating damages and damages which cannot be taken into monetary account such as loss of goodwill and trade reputation: Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning Pty Ltd [1984] VR 947 at 954-5, citing Evans Marshall & Co Ltd v Bertola SA and Sherry Imports Ltd [1973] 1 WLR 349. 71 In this case it may well be difficult for the applicant to quantify its damage to reputation and for Woodside to quantify any loss of production attributable to the industrial action engaged in by the respondents. Further, it is unlikely the respondents would have the capacity to pay any substantial damages caused by delays or production losses. It is estimated that the S6 package, once completed, will produce 23,000 barrels per day of condensate with a value of $75 per barrel. This translates to $1.725 million of product a day. 72 On the other hand, if the respondents are restrained from engaging in further industrial action they will be paid in accordance with their collective agreements, which is not a detriment. 75 The fact that the respondents have presently returned to work is not in this case a reason not to grant the injunction sought. First, on the last occasion on which employees returned to work, they did so for 2 days and then commenced a further 7 day strike. Second, the threat made by Upton on 13 October 2008 was of a one week strike followed by a return to work and then a further one week strike if the Demand was not met. Third, the applicant has not been given any assurances by the AMWU, the CFMEU or any of the respondents as to the basis of the return to work or for how long they are returning to work. What is to be aimed at is justice between the parties, having regard to all the relevant circumstances: Hooper v Rogers at 50 per Russell LJ followed by the Full Federal Court in Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd at 269-270. Provided that there is a real risk of wrongful conduct which would cause injury which is more than trivial, there may be no good reason to refuse quia timet relief . . . 78 Similarly in United Group Infrastructure the Court granted interim injunctions notwithstanding that the employees had returned to work. Nicholson J said at [44] that he was particularly influenced by the judgment in Kestrel Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] 1 Qd R 634 at [22]---[30] particularly at [22], [28] and [30]. The defendants have in the past acted unlawfully in violation of the plaintiffs' rights. This factor makes the case different from those in which an injunction is sought because of conduct which is only apprehended. The principles applicable to quia timet injunctions are not entirely applicable. The fact that unlawful conduct has occurred makes the court more disposed towards ordering relief. See Dean and Chapter of Chester v Smelting Corporation Limited (1901) 85 LT 67 at 69 and Attorney-General v Beck [1980] 2 NSWLR 77 at 94---95. 80 This also is not a case of idle threats. The respondents have made good their threat to engage in a week of industrial action and, on 13 October, threatened further industrial action if the Demand is not met. Further, the respondents have shown a preparedness to engage in industrial action in contravention of the AIRC Order. In all the circumstances, and having regard to the main object of the BCII Act, it is just that the respondents should be restrained from engaging in further industrial action until the application can be heard or further order. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. | interlocutory injunction respondents engaged in industrial action by failing to attend work without authorisation continued to do so contrary to an order made by the australian industrial relation commission threats made to continue to strike consideration of terms used in the building construction industry improvement act 2005 (cth) source of courts power to grant injunctions serious issue to be tried effect on applicant of further industrial action significant respondents returning to work is not a reason not to grant an injunction other relevant considerations balance of convenience strongly in favour of grant of injunction injunction granted. industrial law |
The Tribunal decided that it did not have jurisdiction because the application for review was received by the Tribunal outside the prescribed period of 21 days from the date the Tribunal found that the appellant was properly notified of the delegate's decision. The primary facts are not in dispute and I gratefully adopt those that are relevant to the issues raised on the appeal. The appellant employed a firm of solicitors to lodge, in an electronic form, an application for a Skilled - Independent Overseas Student (Class DD, subclass 880) onshore visa. The application was lodged on 15 September 2006 by someone at the firm, Tan & Tan Lawyers & Consultants. There then ensued a series of exchanges between various employees and partners of the firm and officers of the Department of Immigration by way of email, facsimile, courier and post. A particular difficulty facing the visa application emerged in the correspondence because the appellant could not present the requisite evidence of his English language proficiency. After further time was allowed, and no satisfactory evidence was forthcoming, a delegate made a decision on 17 January 2008 refusing the application. The decision and the decision record were sent by email to an identified person, Mr Yat Tan, at Tan & Tan, by email sent to the email address nominated for the receipt of such correspondence in the original visa application. It was not disputed that the email was received by the firm at that address on 17 January 2008. Nor was it disputed that, if Mr Yat Tan had been properly appointed and was still acting as the appellant's authorised recipient under s 494D of the Act, the decision was deemed to have been duly received on that day by Mr Tan on behalf of the appellant pursuant to s 494D(2) (see also s 494B(5) , and SZFOH v Minister for Immigration & Citizenship (2007) 159 FCR 199 , and Lee v Minister for Immigration & Citizenship (2007) 159 FCR 181). No issue was taken by the appellant with the contents of the notification of the delegate's decision, nor that under relevant provisions of the Act and Regulations a mandatory time limit for seeking review by the Tribunal expired on 7 February 2008 after the expiry of 21 days (see s 347(1)(b)(i) and reg 4.10(1)(a)). It was conceded that no application for review was lodged within that period. The appellant lodged an application for a review of the delegate's decision on 15 February 2008. Having regard to the appellant's evidence to the Court, his Honour found that it was not a matter of particular concern to the appellant to know which of the persons he dealt with, or indeed, which other person within the firm of Tan & Tan, held registration as the migration agent responsible under the Act for the provision of the immigration services given to the appellant: [20]. Having regard to documents tendered by the appellant to the Court being communications with various people at Tan & Tan, and communications between Tan & Tan and officers of the Department of Immigration after the lodgement of the application and before the decision of the delegate: His Honour did not accept that the appellant ever thought that Ms Kwan, a legal assistant to partners in the firm of Tan & Tan, was holding herself out as the responsible migration agent in the matter: [24]; his Honour was of the opinion that none of these communications should be read as altering, or calling into doubt, the original nomination of Mr Yat Tan as the appellant's authorised recipient for correspondence from the Department: [25]. Considering all the evidence before him, his Honour refused to draw the inference that Mr Yat Tan did not take responsibility under the Act and within the firm of Tan & Tan for the appellant's migration work. Indeed, his Honour found that the contrary was strongly suggested by the correspondence from Tan & Tan to the appellant's solicitor: [27]. Further, considering all the evidence, his Honour was not prepared to find that, in fact, Mr Yat Tan was in any way derelict in his responsibilities as a registered migration agent under the relevant provisions of the Act, in particular s 280(1): [28]. Having regard to the skimpy evidence before him as to the internal management of migration matters within Tan & Tan, his Honour said that this would not cause him to find that appropriate supervision and responsibility was absent on the part of Mr Yat Tan in relation to the performance of the work for which the appellant engaged Tan & Tan: [29]. The appellant expressly disclaimed reliance upon grounds 2, 3, 6, 7 and 8. However, this does not prevent the Minister giving the first person a copy of the document. His Honour reiterated his finding that the internet application was completed by somebody unknown at Tan & Tan at the request, and with the full authority, of the appellant. His Honour also repeated his indication that, in its very terms the form included provision for a notification of a person appointed as authorised recipient, and this was completed so as to give notice of an appointment of Mr Yat Tan. His Honour could see no reason for construing s 494D as preventing the adoption by the Minister of a form of internet application which included provision for the notification of the name of an authorised recipient in the same form. His Honour rejected the submission that s 494D must be read as requiring a written signature from the visa applicant appointing the authorised recipient. He observed that it may often be administratively appropriate for a written and signed notice to be required by the Department, before being satisfied as to a due appointment. However, he could can find nothing in the terms or objects of s 494D which confined the Minister as to the manner in which he was to be satisfied that notice of an authorised recipient has been duly given. Nor could he find in s 494D any intention to exclude the normal presumption that Parliament intends to allow a person to act for the purposes of a statutory provision through an agent (cf. Christie v Permewan, Wright & Co Ltd [1904] HCA 35 ; (1904) 1 CLR 693 at 700, McRae v Coulton (1986) 7 NSWLR 644 at 663, and AB v LB (Mental Health Patient) [1980] 1 WLR 116 at 121, cited in Bennion FAR, Statutory Interpretation --- A Code (2nd ed, Butterworths, 1992), at 799 --- 800). Considerations of convenience all pointed towards the section being intended to allow this. His Honour was referred to Le v Minister for Immigration and Citizenship [2007] FCAFC 20 ; (2007) 157 FCR 321 , where the Full Court referred to s 494D at [24] --- [27], however, his Honour could not find anything in these paragraphs to the contrary of his Honour's construction suggested in [18] above. Nor was his Honour persuaded that anything in the High Court's decision in WACB v Minister for Immigration & Multicultural & Indigenous Affairs [2004] HCA 50 ; (2004) 210 ALR 190 required him to construe s 494D as being confined in the manner of a notification as was submitted. His Honour therefore agreed with the Tribunal's conclusion that there was an expiry of the time limit on an appeal to the Tribunal, which commenced from the date when Mr Yat Tan received the delegate's decision. Ground 4 of the further amended application made a similar argument, but by reference to events subsequent to the lodging of the visa application and appointment of Mr Yat Tan as authorised recipient. DIAC was on constructive notice that Mr. Yat Tan was not the migration agent or the authorised recipient acting for the applicant. His Honour could not find anything in the correspondence which, as a matter of law, deprived that appointment of its effect for the purposes of s 494D. His Honour, therefore, did not accept this ground, or its arguments, as a basis for finding that the Tribunal had jurisdiction in the matter. In fact the work was carried out by other people under his name for benefit of Tan & Tan. A non-migration agent was not supposed to represent the applicant with the DIAC. The correspondence from Tan & Tan was carried out by people other than Yat Tan who should have acted for the applicant. Communication to the applicant was also carried out by people other than Yat Tan. There appears to be fraudulent effort by staff at Tan & Tan to give the impression that Yat Tan was to be and indeed was the migration agent. [Alt]hough the applicant believed that he was represented by a licensed and qualified migration agent that was not the case in reality. In his Honour's opinion, the suggested fraudulent activities or statements by any partner or employee of Tan & Tan were not identified with sufficient precision in the appellant's evidence and submissions. His Honour understood the broad contention to be that there were knowingly false communications by unspecified partners or employees to the appellant and/or the Department of Immigration, which incorrectly suggested that his visa application was being presented and pursued by a person at Tan & Tan who was a registered migration agent, when in fact that was not the case. However, his Honour concluded that this contention failed at several points. Essentially, it failed upon his Honour's findings of fact that he was not satisfied that Mr Yat Tan was not the partner at Tan & Tan who undertook all the responsibilities, for the purposes of the Act, for the immigration assistance given to the appellant by the partners and employees of that firm. The appellant did not himself identify any particular express communication which was false in the manner described, whether knowingly or unknowingly. The documentation from Tan & Tan which was in evidence suggested to his Honour that it was a firm which was more probably performing its obligations under the contract with the appellant and the Act, both as a firm of legal practitioners and in the performance of migration work on behalf of its clients. His Honour, therefore, was not satisfied as to any of the factual foundations for the allegations of fraud. His Honour observed that there were other difficulties facing this ground also. He identified a factual issue as to the causative effects of any fraudulent conduct by a person at Tan & Tan as alleged. On the evidence before him, there was a substantial dispute between the appellant and Tan & Tan whether, in fact, the appellant actually received from them the delegate's decision on the day it was delivered, and well within the time for appealing which was clearly stated in the delegate's notification. If he was sent it as claimed by Tan & Tan, then any preceding fraudulent conduct in relation to the registration under the Act of any person or persons at Tan & Tan was immaterial to the applicant losing his right of appeal. His Honour's short opinion was that he was not satisfied on the evidence before him that Tan & Tan did fail to communicate the delegate's decision speedily, and in the manner that they claim in their correspondence with the appellant. Such a finding in a context where the appellant had not presented evidence which might appear to be available to settle the matter from documents in the possession of Tan & Tan, or from witnesses who could have been produced to the Court from that firm under subpoena, was fatal. As with the allegation of fraud, his Honour also took into account the seriousness of the implication of professional negligence by a non-party, which underlay the appellant's allegations about this matter. Another difficulty was his Honour's acceptance of the submission of the Minister's counsel, that if he accepted all the evidence led by the appellant, it would support, at most, a conclusion only that there was a failure by Tan & Tan speedily to convey the delegate's decision to the applicant. At most, in his Honour's opinion, the appellant's evidence might support a finding of negligence in communicating with a client of the firm on a significant matter. However, on the above authorities this was not enough (reference was made to SZFDE at [53]). An amended notice of appeal raising six grounds was filed under cover of a supplementary notice on 23 October 2008. The appellant relies on the six grounds in the amended notice of appeal and the respondent took no objection to that course on the understanding that it was not to be taken as, or seen to be, consent to the appellant reformulating any allegation of fraud. The appellant also read an affidavit sworn 8 December 2008, without objection on the part of the respondent, which had been filed on 11 December 2008 annexing the transcript of the proceedings in the Federal Magistrates Court. This ground seeks to challenge his Honour's findings (under ground 1 below) that s 494D does not require that a signature from the appellant be part of the notice to the Minister envisaged by that section. His Honour's findings in this regard are set out at [40] and [41] of his reasons and summarised in [17] and [18] above. There is no requirement in s 494D (or elsewhere) for the notice appointing the authorised recipient to be in any particular form; any notice in writing meeting the elements of subs 494D(1) will suffice. There is no requirement for the notice under subs 494D(1) to be signed at all --- but even if there was a requirement that it be signed by the appellant, there would still be room for application of the presumption that the appellant could meet that requirement through an agent: McRae at 663D. In addition, there are a number of factual findings in the way of the appellant succeeding on this ground. His Honour found that the interactive form was completed by someone (unknown) at Tan & Tan with the full authority of the appellant: [17] and [40] of his reasons. His Honour also found that it was not a matter of concern for the appellant to know which person within the firm he dealt with or who within the firm was registered as a migration agent: [19] and [20] of his reasons. His Honour also found that the contract between the appellant and the firm envisaged it making electronic visa applications on his behalf and sending/receiving on his behalf communications with the Department: [22] of his reasons; and finally his Honour's rejection of the appellant's submissions that Mr Yat Tan (a registered migration agent) had not appropriately supervised and taken responsibility for his matter: his Honour's reasons at [27] and [28]. His Honour thus wrongly failed to hold that DIAC was on constructive notice that Mr Yat Tan was not the migration agent or the authorised recipient acting for the appellant. This ground seeks to re-agitate his Honour's findings under ground 4 below. It is not suggested that his Honour's findings at [48] and [49] of his reasons were not open on the evidence before him. That being so, his Honour's conclusion at [50] --- his refusal to accept that at any time between the lodging of the visa application with its notice of authorised recipient, and the emailing of the delegate's decision to Mr Yat Tan, there was anything which occurred which could or should have caused the Department of Immigration to doubt that currency of the appointment of the notified authorised recipient --- should not be disturbed. His Honour erred by (i) referring to legal services in [49] where there was only migration services performed and no legal services performed (ii) failed to understand that there can not be a contract of engagement for migration network between an applicant and an entity as only a person can be a migration agent and an entity can not be licensed as migration agent. This misunderstanding led to his Honour to find that Mr Yat Tan did not fail to perform his duties as a migration agent. This ground has no foundation. His Honour did not misconstrue s 280 of the Act in the ways contended; rather, the appellant and his legal representatives have totally misconstrued his Honour's reasoning. His Honour showed no error as to his understanding of the role of a registered migration agent. To the extent that he referred to the agreement between the appellant and the firm, his Honour was doing so only to examine whether the authority given by the appellant to partners and employees of Tan & Tan was wide enough to give the notice of the kind contemplated by subs 494D(1). He was not suggesting that 'the firm', as opposed to Mr Yat Tan, had the responsibilities of a registered migration agent. This ground also has no foundation. The finding complained of was one of fact, well open to his Honour and no appellable error is shown. Plainly, SZFDE required not only that there be fraud in the sense of dishonesty, but also that there be a causative connection between that and the Tribunal being 'disabled ... from the true discharge of its imperative statutory functions with respect to the conduct of the review': SZFDE at [51]; such that its decision was, in law, no decision at all: ( SZLIX at [18]; also [20]). If the appellant would in any event have been out of time, any dishonesty (assuming, contrary to his Honour's finding, that there was some dishonesty by anyone at Tan & Tan) would not have made any difference. There would be no link between the suggested 'fraud' and the Tribunal's decision-making process: SZFNX v Minister for Immigration & Citizenship [2007] FCA 1980 at [32] and [34] also speaks of this requirement. The onus was on the appellant to make out his case of fraud. There was no concession of the point. It was, however, one point that was not necessary to decide and his Honour's judgment did not depend upon it. This was only one of a number of alternative bases for rejecting the appellant's attempt to make out fraud. First, it should be noted that the finding in question (at [58]) was: 'I am, therefore, not satisfied as to any of the factual foundations for the present allegations'. The appellant carried the onus of proof (as indicated by his Honour in the balance of [58]) and plainly did not satisfy his Honour as to underlying facts. The matters which led his Honour to that conclusion were each of those referred to by his Honour at [56] and [57]: the failure of the appellant to satisfy his Honour that Mr Yat Tan was not the partner at Tan & Tan who undertook all the responsibilities, for the purposes of the Migration Act , for the immigration assistance given to the appellant by the partners and employees of that firm ([56]) and the failure of the appellant himself to identify any express communication which was false in the manner described [(57)]. It was open to his Honour to find as he did in these respects and no appellable error is shown. In any event, once again, his Honour gave multiple alternative reasons for not being satisfied as to the appellant's ground 5 and, even if (contrary to the Minister's submissions) the conclusion at [58] was flawed, the judgment did not depend upon that conclusion and the alternative bases would also need to be vitiated for the appellant to succeed. That finding was open to his Honour and no appellable error is shown. It attracts what was said in SZFDE at [53] as to there being no jurisdictional error in mere bad or negligent advice or other mishap. In any event, the appellant has not shown the combination of elements required to make out jurisdictional error of the kind discussed in SZFDE and the other cases to which reference was made. The appeal must be dismissed, with costs. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. | appointment of an 'authorised recipient' under s 494d of the migration act 1958 (cth) whether s 494d requires the written signature of the visa applicant judicial review fraud requirement of causative connection between the fraud and the tribunal being unable to discharge its functions no link between the suggested fraud and the tribunal's decision-making process no jurisdictional error in mere bad or negligent advice or other mishap. migration |
2 As the orders were made on the basis of all of the material relied upon by the applicant, it is appropriate to treat them as final orders with the consequence that any appeal was to be filed within 21 days: see O 52 r 15(1) of the Federal Court Rules . 3 The applicant, who was self represented, did not file a notice of appeal within the required time. Rather, on 28 November 2005 he applied for leave to appeal out of time. Under O 52 r 15(2) the Court or a Judge 'for special reasons' may give leave to file and serve a notice of appeal out of time. 4 In Gallo v Dawson [1990] HCA 30 ; (1990) 93 ALR 479 at 480, McHugh J, citing Hughes v National Trustees Executors & Agency Co of Australia Ltd [1978] VR 257 at 262 observed that the discretion to extend time for an appeal was for 'the sole purpose of enabling the court [or a judge] to do justice between the parties' and stated, in that context, it is always necessary to consider the prospects of success. In that case, his Honour decided that the proposed appeal in the matter before him had no prospect of success with the consequence that leave to appeal out of time was refused. The Court has not allow the applicant an adjournment to obtain further evidence required. The Court has ignored in principal the affidavit sworn by the applicant. The appeal is of public importance. To allow this appeal to go ahead. Costs. And any other remedy the Court will allow. It is well established that the Court will not initiate an inquiry under s 179 unless it is satisfied that a proper case for an inquiry has been demonstrated; see Wilson v Commonwealth of Australia [1999] FCA 219 at [44] and the cases cited therein. See also Turner v Official Trustee in Bankruptcy , unreported Full Court, 27 November 1998 as cited in Macchia v Nilant [2001] FCA 7 ; (2001) 110 FCR 101 at 120. In this matter, I have no reasonable cause to believe (on the evidence before me) that the trustee may have failed to act in relation to Mr Vasiliou's bankruptcy in a manner required by law. 8 The first proposed ground of appeal claims that the primary judge ought to have allowed the applicant more time to obtain evidence. I am satisfied that there is no proper basis for that ground. The hearing of the matter came on after directions were given for the filing of evidence and the applicant had the opportunity to file, and did file, four affidavits between 11 May and 20 October 2005 when his application was heard by the primary judge. The remaining grounds in the draft notice do not raise proper grounds of appeal. 9 However, as the applicant is self-represented, it is appropriate to consider whether there is any arguable ground that the judgment of the primary judge was attended with appellable error. 10 The basis on which the application was dismissed by the primary judge was that the material filed by the applicant contained allegations and assertions, rather than relevant and admissible evidence upon which it was appropriate for the Court to act. It was in that context that his Honour concluded that 'there is no evidence before the Court which would justify it inquiring into the conduct of the trustee with a view to considering his removal'. 11 I have considered the material before the primary judge and am satisfied that it was open to his Honour to arrive at the conclusion set out earlier in these reasons and that no arguable error was made by his Honour in doing so. In those circumstances I have concluded that there is no realistic prospect of success on any appeal and that leave to appeal out of time should be refused as to do so will not work any injustice between the parties. 12 In any event, having considered all the relevant circumstances, including the inadequacy of the explanation provided by the applicant for not having filed a notice of appeal within time, I am also not satisfied that a 'special reason' has been shown in order to attract the power under O 52 r 15(2) to extend the time for an appeal. 13 The application of the applicant for leave to appeal out of time is to be dismissed with costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel. | application to extend time for filing appeal where no realistic prospect of success appeal |
The Tribunal found that the appellant was not entitled to a protection visa. In his application for a protection visa, the appellant claimed to have been involved since his student days with the Pakistan People's Party (PPP) and to have some affiliations with a Sunni extremist group known as the SSP, based upon its economic rather than religious policy. The appellant told the Tribunal that he participated in campaigning for general elections in 1993 and 1997, and stood for local elections at some time in the late 1990s. The appellant said he had been threatened with death and with harassment by the Pakistan Muslim League (PML) after it came to power in 1997. 3 The appellant also claimed that he fled Pakistan because he feared persecution by members of an extremist Shia Muslim group, the TNFJ. He said that members of the TNFJ had threatened to kill him, as they considered him to be a member of the SSP because he had college friends who were involved with that party. 4 The Tribunal accepted the applicant's account of his involvement with the PPP and that he would continue to be involved in the PPP if he returned to Pakistan. However, the Tribunal said that the fact that he did not leave Pakistan until ' the late 1990s ' did not suggest that he had been persecuted by the PML after they came to power in 1997. Further, the Tribunal noted that the PML had been ousted in a coup in October 1999 and was no longer in power. 5 In view of the appellant's family's ' longstanding affiliation ' with the PPP and his own prominent role in the party, the Tribunal did not accept that the appellant would be perceived as belonging to the SSP because some of his college friends were members of that group. It therefore did not accept that the appellant was at risk of persecution by the TNFJ or Shia Muslims. 6 Accordingly, the Tribunal considered that there was no real chance that the appellant would be persecuted if he returned to Pakistan now or in the reasonably foreseeable future. The respondent opposes leave being granted. 8 The issues raised by the amended notice of appeal are first, whether the Tribunal breached s 424A of the Migration Act 1958 (Cth) by relying upon information which had not been given to it by the appellant; and second, whether the Tribunal, in finding that there was not a real chance that the applicant would be persecuted if he returned to Pakistan, failed to consider the possibility that the PML government would win elections scheduled for October 2002. 11 During the hearing, I reserved the question of leave for determination after hearing argument on the merits of the appeal, since the merits are a relevant factor in determining whether leave should be granted. The first of these arises from the use of the word ' longstanding ' by the Tribunal member in the reasons for decision. The appellant's application for a protection visa was not provided to the Tribunal by the applicant and accordingly, s 424A(1) applied to that statement: Minister for Immigration and Multicultural Affairs v Al Shamry [2001] FCA 919 ; (2001) 110 FCR 27 . He said that he had campaigned for the PPP in the general election which the PPP had won (in 1993, although the Applicant could not remember the year) and in the general election in 1997 which the PPP lost to the PML. He said that his local MNA had been from the PPP between 1993 and 1996 but that at the election in 1997 the PML candidate had been elected. The Applicant said that he himself had stood in the election for local bodies in the late 19990s, which he said had been held on a non-party basis. He said, however, that he had not been elected because the PML was in power. 17 The appellant told the Tribunal that ' all his family had been involved in the PPP ', and that he himself had been involved since his college years. Since I do not have a copy of the transcript, I am unaware of the precise details which were provided orally to the Tribunal. However, the words ' had been ' in the Tribunal's reasons suggest the appellant stated that his family's involvement in the PPP had been of some duration. Although the visa application contains slightly more detail than the Tribunal's reasons about the family members who had been involved, it does not provide any information concerning the duration of their involvement. Some information on this matter was clearly provided orally by the appellant to the Tribunal, and accordingly I am unable to conclude that the Tribunal's finding was not based upon information which was provided during the hearing. In the absence of the transcript, I am not satisfied that the Tribunal relied upon the information in the visa application form regarding his family's involvement in the PPP. The Applicant claimed in his original application that when the PML had been in power after February 1997 he had received threats that he would be involved in false cases or that he would be killed. However the Applicant did not leave Pakistan until the late 1990s, which does not suggest that he was being persecuted by reason of his involvement in the PPP in the intervening period. 20 I consider that the timing of the appellant's departure from Pakistan was a significant factor in the Tribunal's conclusion that the appellant had not been persecuted after the PML came to power in 1997. That conclusion constituted one of the Tribunal's reasons for affirming the decision under review. Accordingly, s 424A(1) and (2) apply to this information, unless it falls into an exception contained in s 424A(3). 21 Prima facie, the reasons of the Tribunal indicate that the departure date of the appellant was sourced from the application form. The Tribunal specifically stated that the appellant was unable to recall when he had left Pakistan and specifically referred to the application form as the source of an accurate date of departure. 22 The respondent does not suggest that the appellant provided direct oral evidence of the date of his departure to the Tribunal. The Applicant said that he himself had stood in the election for local bodies in the late 1990s, which he said had been held on a non-party basis. The respondent submits that it is therefore not open to the Court to draw the inference that this information was derived from the application. 24 In view of the direct reference to the appellant's inability to recall the information concerning his departure date and the reference to the information contained in the application form, I cannot accept the submission that the Tribunal's reasons suggest that the information might have been gleaned from the appellant's oral testimony. Whilst I cannot, without the transcript, entirely exclude the possibility that this was the case, prima facie the Tribunal's reasons indicate that its information concerning the appellant's date of departure was sourced from the application form for a protection visa. It is immaterial that the Tribunal used the words ' the late 1990s ' to describe the appellant's departure date in its finding. It is obvious that the Tribunal throughout its reasons was conscious of omitting reference to any specific dates lest the appellant's identity be traced. It is also clear that the Tribunal could not have made the finding that it did unless it was confident that it had at least an accurate approximation of the appellant's departure date. It had, earlier in its reasons, expressly sourced this information from the appellant's application to the Department, and upon the reasons for decision alone I am satisfied that it relied upon this information in its finding. 25 This raises the question whether, in these circumstances, the appellant was required to prove conclusively, by tendering the transcript, that he did not provide information orally to the Tribunal from which it could have gleaned his approximate departure date. The respondent says that, in the absence of a transcript, the Court cannot conclude that such information was not provided by the appellant to the Tribunal at the hearing. The respondent says that the onus lies upon the appellant to provide the transcript as proof that the information was not provided to the Tribunal orally, and in the absence of the transcript, it is not open to the Court to infer that the information was not provided: see NAOA v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 241 at [21] per Beaumont, Merkel and Hely JJ. 26 The Full Court in NAOA was dealing with a claim of procedural unfairness, based upon the fact that certain matters had not been put to the appellant at the Tribunal hearing. However, his Honour did not make a finding in relation to this matter. Driver FM observed that this "appeared" to be the case "from the record of the [Tribunal] decision". On the evidence before his Honour, it was not open to him to have made a finding that this issue had not been canvassed. His Honour had no transcript. (As mentioned, the tape is before us and we refer to it below. ) The appellant had not given any evidence (in affidavit form or orally) to the effect that this issue had not been raised. There was simply no basis upon which his Honour could properly have made this finding. His reasons should not be read as if he did so. In the absence of evidence about what occurred at the hearing, the appellant has no sufficient evidential basis for the grounds he seeks to raise, thus he has not, in our opinion, established that the Tribunal did not comply with the rules of natural justice. In NAOA , the Court found that there was no evidence which indicated whether the matter had been raised with the appellant by the Tribunal. In the present case, however, the Tribunal's reasons for decision clearly record that the appellant was questioned with respect to his departure date but was unable to provide that information to the Tribunal orally. The reasons specifically refer to information contained in the application form. The Tribunal's reasons themselves are evidence which suggests that the Tribunal did not receive the evidence orally from the appellant, but instead relied upon a document to which obligations under s 424A(1) and (2) applied. 28 I consider that the appellant was entitled to rely upon the reasons as evidence that the information had not been provided under s 424A(3)(b). The reasons directly touched upon the subject under dispute. If the transcript indicated a different position, then it was open to the respondent to tender it. However, in the absence of the transcript, the reasons of the Tribunal themselves provide, in my opinion, sufficient evidence for me to arrive at a conclusion that the information had not been provided to the Tribunal by the appellant as contemplated by s 424A(3)(b). 29 This is not to say that in all, or even most cases, it will be sufficient for the appellant to rely upon the reasons for the Tribunal alone. It is not the obligation of the Tribunal to refer in its reasons to the source of each part of the information upon which it relies. The present appeal is a rare case in which the Tribunal has specifically referred in its reasons to the very source of the information under consideration. Where the Court is unable directly to draw a conclusion from a Tribunal's reasons as to the source of the Tribunal's information, it is ultimately the responsibility of an appellant to ensure the transcript is provided if he or she wishes to argue that the information could only have been sourced from documents to which obligations under s 424A(1) and (2) applied. 30 Nonetheless, the Tribunal's reasons for decision themselves should not be ignored as evidence of the source of the Tribunal's information. The Full Court in NAOA , in noting that the appellant had not provided oral or affidavit evidence on the issue, explicitly recognised that there were forms of evidence other than the transcript which might enable a conclusion to be drawn about the oral evidence given at the Tribunal hearing. Since it may not always be clear when a conclusion can be reached upon the reasons alone, I consider it would be prudent to tender the transcript in all cases where a breach of s 424A is relied upon, or to incorporate the transcript into the appeal book where such a ground is raised. 31 In this case, however, the reasons themselves directly point to the conclusion that the Tribunal relied upon information from the application form, in circumstances where that information had not been provided by the appellant orally at the hearing. The Tribunal did not provide this information to the appellant in writing as required by s 424A(2)(a) and s 441A of the Migration Act . It follows that, in accordance with the decision in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 , the Tribunal did not comply with the requirements of s 424A. The appellant submits that the word 'suggest' in Tribunal's statement that ' the Applicant did not leave Pakistan until the late 1990s, which does not suggest that he was being persecuted by reason of his involvement in the intervening period ' is indicative of a tentative finding by the Tribunal. 34 The respondent says that the appellant did not argue before the Tribunal that the result of the election might lead to a greater risk of persecution in the future and that it would be an unreasonable standard to require the Tribunal to consider this claim in the absence of argument. The respondent refers to NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 219 ALR 27 at [58] - [63] which sets out the extent of the obligation upon a Tribunal to consider unarticulated claims. The use of the adverb "squarely" does not convey any precise standard but it indicates that a claim not expressly advanced will attract the review obligation of the tribunal when it is apparent on the face of the material before the tribunal. Such a claim will not depend for its exposure on constructive or creative activity by the tribunal. 35 I do not consider that the word ' suggest ', in its context, shows that the Tribunal was ambivalent in its conclusion that the appellant had been persecuted between 1997 and the time when he left Pakistan by reason of his involvement in the PPP. I am satisfied that its finding was not attended by any significant doubt. Accordingly, I reject the submission of the appellant that the Tribunal should have adopted the approach referred to in Rajalingam . However, the appellant argues that the effect of s 424A of the Migration Act was uncertain at the time of the hearing before the Federal Magistrates Court. The appellant says when the Federal Magistrates Court hearing took place, no decision of the Federal Court had been given which upheld a challenge under s 424A based upon the combined effects of the decision in SAAP and Anor v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 and the decision in Al-Shamry . Further, the appellant says that leave was granted in a similar situation in each of the five appeals under consideration in SZEEU. Al-Shamry was handed down in July 2001 and SAAP was handed down in May 2005, well before the hearing in the Federal Magistrates Court in August 2005. He submits that the Court is limited under s 24 of the Federal Court of Australia Act 1976 (Cth) to hear appeals on the ground of errors in a judgment of the Federal Magistrates Court. 38 I am satisfied that the law relating to s 424A of the Migration Act had not been settled when the hearing in the Federal Magistrates Court took place. Since the hearing, the law has been clarified by the decision in SZEEU . The first issue relied upon by the appellant in the amended notice of appeal relies specifically upon the law as decided in SZEEU . I accept there would be some prejudice to the respondent by reason of the continuation of the proceedings if leave were granted. However if leave were not granted, the prejudice to the appellant, who would face removal to Pakistan without having had his application for asylum determined according to correct legal principles, would be greater. 39 For the reasons given above, I consider that one aspect of the appellant's claim under s 424A would succeed if leave were granted. Accordingly, I consider that leave with respect to the first ground of appeal in the amended notice of appeal should be granted. 40 With respect to the second ground (the Rajalingam argument), I am not satisfied that leave should be granted. The law relating to this ground was not uncertain at the time of the hearing before the Federal Magistrates Court, and the appellant was represented at that hearing. This point should have been taken before the Federal Magistrates Court if the appellant wished to challenge the Tribunal's finding on this ground. Further, for the reasons expressed above, I do not consider there is any merit in this ground of appeal. Accordingly, I refuse leave to rely upon the second ground in the amended notice of appeal. Accordingly I will remit the matter to the Tribunal for reconsideration, and award costs to the appellant in these proceedings. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. | protection visa decision by tribunal to refuse protection visa whether tribunal relied upon information to which s 424a(1) of the migration act 1958 (cth) applied whether appellant provided information to the tribunal in accordance with s 424a(3) whether the court can draw an inference that information not provided from the reasons of tribunal whether appellant obliged to tender transcript to prove information was not provided whether the tribunal failed to consider the probable result if its findings were wrong whether leave to rely upon amended notice of appeal should be granted. migration |
The application makes claims in respect of alleged discriminatory acts during the period from 2000 to 2004 for mental anguish, for defamation, for loss of opportunity for advancement, for distress and for costs. 2 The matter has had a long history and in the light of this history the respondents seek an order dismissing the applicant's claim. The respondents' application is brought pursuant to O 35A r 3(1) of the Federal Court Rules which empowers the Court to dismiss proceedings where the applicant is in default of Court orders, and also under O 20 r 2 on the ground that the proceedings are an abuse of process or frivolous or vexatious. On the hearing to dismiss the proceeding the applicant was represented by counsel. 3 Since the commencement of the proceedings in May 2005, there have been eleven directions and interlocutory hearings and repeated failures by the applicant to cooperate in bringing the matter to a hearing. The applicant has also made several applications to the Court devoid of merit or substance. On 23 September 2005, the applicant was ordered to provide particulars of her claim by 14 October 2005. On 17 October 2005, the applicant refused to provide the particulars requested and filed an affidavit contending that the letter of request was not "a legal document. " In particular, she refused to give details of compensation sought, to provide an expert report, to specify alleged defamatory statements, to identify work done since October 2004, or to identify acts of discrimination alleged. There was no justification for, nor substance in, the applicant's grounds for refusal. The applicant was again requested to provide particulars after this refusal but failed to do so. In order to progress the matter, the first respondent then decided to file a Defence without first obtaining particulars. There was no satisfactory explanation advanced by the applicant for refusing to provide the particulars requested. 4 On 25 November 2005, the parties were ordered to provide limited categories of discovery by 16 December 2005. The applicant did not do so. The second respondent, the University of New South Wales, filed a Defence on 4 January 2006. 5 On 16 December 2005, the applicant filed an affidavit which claimed that she did not possess, and had never had possessed, any document required to be discovered. This assertion has since been demonstrated to be clearly untrue, as the applicant has now produced over 10,000 pages of documentation. The applicant submitted that she believed the documents to be in possession of the respondents and that she therefore did not have to discover them. Again, this is clearly not tenable. It appears from material subsequently produced on subpoena that in fact there were many documents which come within the classes called for in the discovery categories that should have been discovered and were not discovered. 6 On 16 February 2006, the Court granted leave to the respondents to issue a subpoena since the applicant had refused to give discovery. The Court dismissed an application by the applicant to strike out the respondents' discovery request. 7 On 24 February 2006, the applicant refused to produce the documents that were the subject of the subpoena. On 10 March 2006, I dismissed the applicant's Motion alleging that there was no proper discovery by the respondents and ordered her to pay costs. As mentioned earlier, the applicant finally produced in response to the subpoena a CD-Rom which I am informed contained in the order of 10,000 pages of material. 8 The documents on the CD-Rom were produced in response to the same categories as set out in the original discovery order, in respect of which the applicant had earlier made a false affidavit. The PDF file saved on the CD-Rom was produced was "locked," meaning that the some 10,000 pages of documentation included in this file were available only in a "Read Only" format and could not be printed from a computer. Moreover, the CD-Rom was accompanied by a letter from the applicant asserting that the CD-Rom produced only on the condition that its contents were not uplifted. On 3 April 2006, leave was granted to the respondents to uplift the documents on the CD-Rom so they could be examined. The documents were not classified or selected in any systematic way. From the evidence available, it appears that a significant proportion of the documents were not responsive to the subpoena. This was pointed out in a letter from the respondent's solicitors to the applicant dated 11 April 2006. 9 On 21 April 2006, I made orders striking out the applicant's Notice to Admit Facts dated 12 April 2006, which was made on a totally untenable basis. I rejected the applicant's application for leave to serve a subpoena and ordered that the applicant not be permitted to take further interlocutory steps without leave of the Court. I also confirmed my previous order of 10 March 2006 that the applicant file and serve all her evidence by 28 April 2006. On that date, the applicant swore an affidavit in response to this order that simply listed several paragraphs each referring to a bundle of documents relevant to a particular year. Annexed and marked "A" is the Applicant's evidence pertaining to material generated in 1995. No annexures were attached to the affidavit. 11 On 1 May 2006, the applicant enclosed by way of service the annexures to the affidavit of 28 April 2006 which were presented in the form of four lever arch volumes of material. The annexures comprised simply bundles of documents for each year. 12 It is obviously not possible for the respondent to prepare a case in response to this material in any meaningful way. Within this material there is no reference to any conversation or factual context which identifies a specific instance of discrimination on any proscribed ground. Nor does the affidavit refer to the verification of any of the material or indicate of the relevance of any particular documents or records. In other words, there is no indication as to what the mass of material provided with the affidavit relates to. This "affidavit" and its annexures are vexatious on their face and clearly do not comply with the Order given by the Court to file evidence. Despite the fact that the applicant had the benefit of twelve months to formulate and prepare her case, the Court was presented with a mass of unlinked material and no factual exposition of the applicant's position. On 18 May 2006, the applicant filed an affidavit which stated that to the best of her knowledge, ability and belief the applicant had complied on time and in accordance with the Federal Court Rules with all Court Orders made in the matter and with all directions given by me. This is not correct. 14 In relation to the subpoena, referred to above, the respondents note that it was returnable on 24 February 2006 when the applicant appeared and argued that she had not been provided with adequate conduct money to produce the documents. On this occasion, the applicant also stated before the Registrar that she had "lots of documents" to produce. The respondents also point to the fact that when the return of subpoena was stood over until 10 March 2006, the applicant again failed to produce any documents. The respondents further noted that the CD-Rom finally produced contained some 10,000 pages in a PDF file that had been "locked" so that none of the pages could be printed and examined before leave was granted to the respondents to uplift the documents. Among these documents only one medical certificate was produced, and there were no medical reports or specialist reports as referred to in the application filed on 17 May 2005. Furthermore, no pay slips or other records showing income received since November 2004 were provided, and nor were any tax returns or Business Activity Statements (BAS) produced. On the hearing before me concerning the respondents' application to dismiss, the applicant stated from the witness box that she did not think bank statements were records of income. 15 I agree with the respondents that approach taken by the applicant in relation to the subpoena evidences an attitude of deliberate non-cooperation which amounts to oppressive conduct. The way in which this litigation has been conducted by the applicant has rendered it impossible for the respondents to meaningfully address any case against them. The applicant's allegations of discrimination and related claims concern a period of some four years, yet there has been a persistent failure to identify any specific incident which has any connection to discrimination. The respondents' evidence is that they have incurred large costs in the order of $50,000 to date, leaving aside the stress, inconvenience and other factors which attend involvement in litigation. A significant proportion of this is directly attributable to the way in which the applicant has run this matter. 16 This is a case in which the principle stated in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 is applicable. As it is impossible to foresee all of the circumstances under which the rule may be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to cooperate with the court and the other party or parties in having the matter ready for trial within an acceptable period and cases --- whatever the applicant's state of mind or resources --- in which the non-compliance is continuing and occasioning unnecessary delay, expenses or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. This conclusion would not readily be reached, but where it is reached, fairness to the respondents can require the summary dismissal of the proceedings. This principle has also been applied in later cases: see for example Wu v Avin Operations Pty Ltd [2006] FCA 36 ; Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2004] FCA 1718 ; Brown v Zomba Music Publishers Australia Pty Ltd [2004] FCA 324. In my view, having regard to the way in which the matter has been conducted by the applicant and the detailed submissions and evidence adduced by the respondents, these principles must apply in the present case. 18 I am also satisfied that the way in which these proceedings have been conducted amounts to an abuse of process under O 20 r 2 which gives the Court power to control its own processes and to prevent their misuse. Of course, this is a power which ought to be sparingly exercised. However, in my view, an exceptionally strong and clear case has been made here for application of these principles. As noted by the High Court in Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378 at 392 - 393, it is important that the Court administers justice with fairness and impartiality to both parties, and does not allow its process to be converted into instruments of injustice or unfairness. 19 In this case, notwithstanding the submissions of Mr Seymour of Counsel, who appeared for the applicant on this application, I am satisfied that the circumstances are sufficiently special to justify granting the application to dismiss the proceedings. 20 I am also satisfied that this is a case in which indemnity costs ought to be awarded so as to ensure that the respondents are not out of pocket in relation to the great expense and inconvenience to which they have been subjected as a consequence of the applicant's conduct in this matter. I therefore dismiss the proceedings, and order that the applicant in the main proceedings pay the costs of the respondents on a solicitor-client basis. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. | application to dismiss applicant's claim power of the court to control its proceedings to prevent abuse of process applicant in default of court orders applicant's response to subpoena oppressive no specifics of claim provided indemnity costs practice and procedure |
2 The appellant is a national of India. According to his protection visa application, he received 16 years of education in India and qualified as a medical practitioner. Before his departure for Australia, he resided in Bangalore, Karnataka, and operated medical clinics in Bangalore and Coimbatore. He arrived in Australia on 8 November 2003 on a visitor visa granted to him in Mumbai on 28 October 2003. 3 The appellant lodged an application for a protection visa on 11 December 2003. He claims to have a well-founded fear of persecution in India because he belonged to a low level caste ("the scheduled tribe") and his community was harassed and physically, mentally and verbally abused. In addition, the appellant claims to fear harm as a consequence of a relationship with a girl from an upper level caste. He claims to have been beaten and his medical clinics destroyed by associates of the girl's father who disapproved of the relationship. 4 A delegate of the Minister for Immigration and Multicultural and Indigenous Affairs refused the appellant's protection visa application on 15 March 2004. An application for review of that decision was lodged on 29 March 2004 with the Tribunal. The Tribunal invited the appellant to give oral evidence and present arguments at a hearing on 10 August 2004. On 5 August 2004, the appellant advised the Tribunal in writing that he would not attend the hearing. On the same day, he made a written submission to the Tribunal which included certain information about the position of the lowest caste, Dalits, in Indian society. The Tribunal proceeded to determine the matter on the evidence before it. It affirmed the delegate's decision by its decision dated 13 August 2004. The decision and supporting reasons were handed down on 3 September 2004. 5 The Tribunal accepted that, while the practice of untouchability was outlawed by the Indian Constitution and the Civil Rights Act 1955 (India), there are instances of discrimination and harassment against persons from the scheduled tribe. However, the Tribunal found that the appellant's high level of education was inconsistent with the general experience of Dalits and other lower caste people, as portrayed in the information provided by the appellant. The appellant gave no details regarding any discrimination, harassment or abuse that he was personally subjected to because of his membership of the scheduled tribe. The Tribunal was unable to find that he was subjected to any mistreatment because of his membership of the scheduled tribe. Further, on the vague and limited information provided to it, the Tribunal was not satisfied that the appellant belonged to the scheduled tribe at all. Nor was the Tribunal satisfied that the appellant's claimed relationship with the girl from the upper level caste existed, or that he had experienced any problems as a result of it. The Tribunal noted that it was unable to question the appellant on various matters relevant to these claims because he had not attended the hearing. On the whole of the evidence before it, the Tribunal was not satisfied that the appellant had a well-founded fear of persecution for a Convention reason. 6 The appellant filed an application for review of the Tribunal's decision with the Federal Magistrates Court on 7 September 2004. On 17 August 2005, that application was dismissed by Riethmuller FM. 7 The appellant did not attend the hearing before Riethmuller FM. Instead, he sent a brief letter to the Federal Magistrates Court stating that he was unable to attend the hearing due to ill health as he was suffering gastric and stomach pain. He enclosed a medical certificate which simply certified that he was "suffering from a medical condition gastroenteritis and was/is unfit for work from 15 August 2005. " Riethmuller FM noted that the medical certificate did not provide any details as to the severity and likely duration of the condition, or the reasons why the condition prevented the appellant attending Court. Riethmuller FM also noted that the claim of such a condition had previously been relied upon by the appellant to seek an adjournment before the Tribunal. During the course of the hearing, Riethmuller FM contacted the appellant by telephone and spoke with him. In all the circumstances, his Honour refused the appellant's application for an adjournment on the grounds that it was not in the interests of justice for the matter to be adjourned. 8 Riethmuller FM then proceeded to consider the appellant's claim that there had been jurisdictional error in that the Tribunal had not given him sufficient time to present his case. His Honour recounted the exchanges that had taken place between the appellant and the Tribunal prior to the Tribunal hearing. His Honour noted that there was correspondence from the Tribunal which put the appellant on notice that the Tribunal was not able to make a favourable decision upon the evidence he had provided in support of his application and that he had been given ample opportunity to provide more information. His Honour rejected the contention that the Tribunal had not given the appellant sufficient time or opportunity to present his case. On the basis of that material I do not accept that there has been procedural unfairness by the Tribunal in the way in which it dealt with the applicant. It clearly gave him appropriate opportunity to attend and appear before the Tribunal to press his case. He chose not to do so. The result would have been entirely expected, particularly given the terms of the letters that the Tribunal had sent to the applicant. To the extent that the applicant relies upon a claim of procedural unfairness in this regard, I refuse his application. His Honour rejected the claim that the Tribunal had failed to take into account the particular facts and circumstances upon which the appellant relied. He pointed out that the Tribunal's reasons for decision made it clear that it had in fact taken all relevant facts and circumstances into account. The Tribunal's decision recounts the claims and evidence of the appellant over three pages and sets out the Tribunal's reasons for rejecting those claims. As to the allegation that the Tribunal was not acting in good faith, his Honour rightly pointed out that there was nothing whatsoever to support that allegation. The final claim was that the Tribunal's decision was unreasonable. His Honour pointed out that there was nothing unreasonable about the decision of the Tribunal. The Tribunal only had limited written material before it. Some of that material related to the position of Dalits generally in Indian society rather than the particular circumstances of the appellant. It was also relevant that the Tribunal had given the appellant notice on at least two occasions that it was not able to make a favourable decision without additional information, but the appellant had not taken up the opportunity to provide further information, or to attend the Tribunal hearing on 10 August 2004. 10 The appellant filed a notice of appeal dated 22 August 2005 contending that the adjournment application should not have been refused by Riethmuller FM because he was ill on the day of the hearing and he was not given sufficient time to plead his case in detail. Subsequently, the appellant filed an outline of submissions dated 19 December 2005 which largely sets out the appellant's factual background and repeats his substantive claims before Riethmuller FM, namely that the Tribunal failed to take his particular facts and circumstances into account, did not act in good faith and acted unreasonably. The appellant asserts that the Tribunal failed to look at the general material which he filed that shows that people from the scheduled tribe suffer persecution and discrimination in Indian society. 11 When the appeal came on for hearing before me, I asked the appellant whether he wanted to make any further submissions, or to say anything further, in support of the appeal. The appellant said that he only wanted to point out that, in addition to the general material about the position of Dalits in Indian society which he filed before the Tribunal, he was awaiting further material of the same general kind. However, that material had not yet been received by him. Aside from this matter, the appellant said that he did not wish to add anything to the submissions which he had filed. 12 The first respondent submitted that no grounds of appeal had been made out and that the appeal should be dismissed with costs. In an outline of submissions filed on 2 December 2005, the first respondent submitted that it was open to Riethmuller FM to refuse the appellant's application for an adjournment of the hearing in the Federal Magistrates Court for the reasons given by his Honour. I agree. Riethmuller FM was entitled to take the view that the most appropriate order in the interests of justice, bearing in mind the matters relied on by the appellant, the previous history of the proceedings, and the needs of other litigants and the Court, was to decline to adjourn the hearing: see SZBFL v Refugee Review Tribunal [2005] FCA 869 at [8] - [10] ; Applicant MZQAF v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1801 at [5] ; and NALM v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 17 at [22] - [26] . As to the substantive contentions which the appellant advanced in his written contentions, Riethmuller FM was also entitled to find that there had been no failure by the Tribunal to take relevant facts into consideration, and that the Tribunal had not erred by taking irrelevant facts into consideration. Further, his Honour was entitled to find that there was nothing to support the contentions that the decision was made in bad faith or that the Tribunal's decision was unreasonable: see Minister for Immigration and Multicultural and Indigenous Affairs v VSAF of 2003 [2005] FCAFC 73 at [11] - [13] , [16]-[19]. 13 As his Honour pointed out, the Tribunal was required to determine whether the appellant had a well-founded fear of persecution for a Convention reason, based upon the appellant's particular claims. It was not required to make a determination based on the overall economic and social situation of the lower level castes in India in general: see Applicant NABD of 2002 v Minister for Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 29 at [158] - [160] . On the evidence before it, the Tribunal was not satisfied that the appellant belonged to the scheduled tribe. More particularly, it was not satisfied that the appellant had a well-founded fear of persecution for a Convention reason. Both these findings were open to the Tribunal: see NAVX v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 287 at [5] ; and NAST v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 208 at [4] - [5] . 14 In this Court, the appellant made an additional submission to the effect that he was awaiting further general material concerning the position of Dalits in Indian society. It was not suggested by the appellant that the information in question related to his particular circumstances or any persecution suffered by him personally. The appellant did not proffer any explanation as to why the material in question had not been presented to the Tribunal or at the hearing before Riethmuller FM, other than to say it was not yet available to him. In the circumstances, the unavailability of the suggested material ought not to effect the disposition of the appeal. 15 In my opinion, the notice of appeal and the appellant's submissions, both written and oral, do not disclose any error of fact or law in the decision of Riethmuller FM, or for that matter in the decision of the Tribunal. 16 Riethmuller FM held that no jurisdictional error had been established on the basis of the material placed before him and dismissed the appellant's application for review. I agree with his Honour's conclusions and the reasons which he furnished in support thereof. I dismiss the appeal and order that the appellant pay the respondents' costs. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Young. | appeal from decision of federal magistrate protection visa procedural unfairness whether appellant had sufficient time to plead case or obtain additional country information no error established migration |
2 Although the Federal Court Rules contemplate that an application might be made on pronouncement of the judgment before the primary judge or on Notice of Motion, my own practice is that I direct any application for leave to appeal from an interlocutory judgment pronounced by me to another judge of the Court for determination. In this case, the solicitors for the applicants on the motion advised the Court on 21 December 2007 when the matter was re-listed for directions consequent upon an apparent failure by the parties to reach agreement as to consent orders for the future conduct of the matter, that that morning they had received instructions to seek leave to appeal from the interlocutory judgment. 3 Since Order 52, rule 10(2A)(b) requires an application for leave to appeal from an interlocutory judgment of the Court to be made within seven days after the date on which the interlocutory judgment was pronounced, no application having been made orally upon the pronouncement of the judgment, I made an order that the respondents in the proceeding file and serve any application for leave to extend time for leave to appeal from the interlocutory judgment and interlocutory orders made on 6 December 2007, by 2 January 2008. Other directions orders were made on 21 December 2007 for the future conduct of the matter including the filing and serving of a Defence by 18 January 2008, the filing of an application to strike out all or any part of the Statement of Claim by 18 January 2008 and other matters. The Notice of Motion was filed on 2 January 2008. Since the Rules provide for seven days for filing an application for leave to appeal and 15 days had elapsed by 21 December 2007, some urgency attached to ensuring that any foreshadowed application would be filed and served promptly and accordingly, the respondents were ordered to file and serve any proposed application by 2 January 2008. Having regard to the early January period, the District Registrar requested the parties to indicate whether they were content to have the matter determined by the primary judge as the duty judge arrangements would enable the application to be dealt with during January. The parties consented to those arrangements and the matter was listed for hearing on Monday, 21 January 2008 at 10.15am before me as the duty judge. 4 The Notice of Motion is supported by the applicants by reliance upon two affidavits by Mr Neil John Abercrombie sworn 2 January 2008 and 16 January 2008. The first affidavit simply recites Mr Abercrombie's position as an employee of Lynch & Company, the solicitors for the applicants on the motion, the pronouncement of judgment on 6 December 2007, the wish of the applicants on the motion to appeal the interlocutory judgment and the direction order made on 21 December 2007 that the application be filed and served by 2 January 2008. Notably, there is no matter deposed to by Mr Abercrombie on information and belief or directly, as to the circumstances which might explain the delay in failing to file an application for leave to appeal within seven days after 6 December 2007. 5 The period of delay beyond the seven day period represents a period from 13 December 2007 to 21 December 2007 which is eight days. Further working days elapsed on 24, 27, 30 and 31 December 2007. Mr Lynch in the course of argument said he understood that the order of 21 December 2007 enabled him to file the application for an extension of time and leave to appeal, between 21 December 2007 and 2 January 2008 without any prejudice by reason of the effluxion of that time. The aim of the order on 21 December 2007 was to set an outer boundary by which the application had to be filed and served as no earlier indication had been made nor any application filed for leave to appeal or for an extension of time within which to seek leave. The first occasion on which this question arose was on the directions hearing on 21 December 2007 which was listed at the initiative of the Court. 6 In any event, I proceed on the footing that the applicants on the motion have sufficiently explained delay between 21 December 2007 and 2 January 2008 on the footing that Mr Lynch advised the Court that he misunderstood the effect of the order. 7 Nevertheless, it is important that the material demonstrate an explanation for the delay between 13 December 2007 and 21 December 2007. 8 The second affidavit of Mr Abercrombie deposes to the provision of a copy of an exhibit described as 'NJA-1' to each applicant on the motion on 7 December 2007 by email sent at 11.50am on that date. The affidavit does not exhibit any document. The exhibit is said by Mr Lynch to be an email which sets out, in part, certain legal advice and Mr Lynch does not wish to disclose that email and waive privilege in relation to that matter. Whilst that may be so (and there is no need for present purposes to determine whether privilege has been waived by exhibiting the document) the second affidavit of Mr Abercrombie does not take the matter any further and is of no assistance in explaining any reason for the delay in filing the application within the time limited by the Rules. The application for leave to appeal must have such prospects of success as not to render the extending of time and exercise in futility. Since the test for the granting of leave to appeal from an interlocutory judgment is that the decision must be attended with sufficient doubt to warrant its being reconsidered by an appellate court, and that substantial injustice would result if leave were to be refused, supposing the decision to have been wrong ( Décor Corporation Pty Ltd v Dart Industries Inc. (1991) 33 FCR 397 at 398 --- 400) , in principle the question on an application for an extension of time is whether this test has sufficient prospects of being satisfied, to warrant granting the extension. In practice, the debate and treatment of the 'arguable error' question on an application for an extension of time, will be no different from what the debate and treatment of it would be on the application for leave to appeal itself. Since an applicant for extension of time within which to appeal as of right must show 'special reasons' (O 52 r 15(2)), nothing less should be required of an applicant for an extension of time within which to apply for leave to appeal ( Deighton v Telstra Corporation Ltd , above) . There is simply no explanation at all for the delay either by the solicitors for the applicants on the motion by information and belief or by either Mr Richard Waters or his wife, Mrs Margaret Waters, who are the individuals at the centre (together with related entities) of the transactions the subject of the proceeding. In Sharman , Lindgren J also noted that the application for leave made before his Honour was 'marked by the lack of testimony of all those who could have given a full and frank explanation: Ms Hemming, Mr Herron, and Mr Grieve'. Similarly, Mansfield J observed in Garrett v Universal Holdings Pty Ltd [2007] FCA 526 that to be granted an extension of time 'the applicant must provide a satisfactory explanation for the delay in making the application' [11] and 'the applicant has provided no, far less any satisfactory, explanation for his delay in seeking leave to appeal from the decision. On that basis alone, I would be disposed to reject the application. However, I shall consider additional factors' [12] (that is, whether the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court and whether substantial injustice would result if leave were refused). 11 Although the applicants on the motion characterise the delay as seven days between 13 December 2007 and 21 December 2007, the applicants have had a period of 14 days (leaving aside the period from 21 December 2007 to 2 January 2008) to prepare and file an application supported by proper affidavit material properly identifying the contended grounds of appeal. 12 No notice of appeal has been formulated and served with the application which would identify in a properly formulated way, a contended ground of appeal. 13 Although the affidavit material does not explain the reasons for the delay, Mr Lynch made submissions that consideration should be given to the complexity of the issues dealt with in the judgment, the reservation of the primary application and subsequent pronouncement of judgment which required the applicants on the motion and their advisers to become familiar with the content of the issues again and the consideration that the judgment was given at 2.15pm on Thursday, 6 December 2007. Notwithstanding those matters, the applicants have not filed any affidavit material that provides any explanation for the delay. 14 That circumstance seems to me to weigh heavily in the balance. However, like Mansfield J, I propose to consider the merits of the contention of 'arguable error'. 15 The contended error can be put quite succinctly. 16 I put the contention in the course of argument in these terms and Mr Lynch agrees that it correctly states the contention and represents the only contention upon which the applicants rely. On this footing, Mr Lynch says a formulated Notice of Appeal is not necessary. The well accepted practice, however, is to exhibit a proposed Notice of Appeal to an affidavit and file and serve that affidavit upon the respondent to the application. The contention is this. Mr Lynch says that the applicants in the proceeding assert that Mr and Mrs Waters entered into transactions in 1996 which were part of a scheme orchestrated by them with an intent to defraud their creditors by making a disposition of property at 46 Victoria Terrace, Caloundra, Queensland, held by them as joint tenants, for no consideration in favour of an entity which did not act in good faith. The applicants in the proceeding also rely on transactions in 1997 and a further transaction in 1999. The precise content of the alleged orchestrated scheme is set out in the primary judgment and I do not propose to repeat all of those matters in these reasons. Mr Lynch says that the applicant trustees of the bankrupt estates of Mr and Mrs Waters contend in the proceeding that Mr and Mrs Waters entered into the scheme with the intention of defrauding their present and future creditors but the pleading fails to properly particularise and therefore identify the future creditors (in the post-transaction environment), the amounts owing to either future creditors or an identified class of future creditors, or the effect of subtracting the property from the assets available to meet the claims of creditors by reason of the scheme put in place with the intention of defrauding creditors, as, one cannot tell whether a relevant diminution would occur as the future creditors are undefined and the amount of their claims are unidentified. 17 Mr Lynch says that it is not sufficient to simply plead a reduction in the assets available to future creditors or an intention to defraud simply by reference to future creditors. The trustees must show a relationship between the scheme, the relevant intention, the creditors to be defrauded, the amounts and the diminution in the pool of assets available to meet the claims of creditors. Mr Lynch accepts that it is proper to plead foundation facts from which inferences might be drawn about intention but the foundation facts must be pleaded with sufficient particularity to enable inferences to be drawn about each of the above matters especially since the allegation is one of fraud. As to para 1(c) of the Request which seeks particulars of each and every one of the creditors the applicants contend Waters intended to defraud, the applicants say the reference to 'creditors' in para 22.1 is a reference to 'all of [Waters] then present creditors and all future creditors ... including Jefferson and Stevenson and BSA'. The applicants say these particulars are sufficient and adequate as the response identifies all the then present creditors and, by class, all of the future creditors with a specific reference to two identified future creditors. The respondents say the particulars are inadequate and too broad as they capture all future creditors and adopt the 'inclusive' reference that does nothing to limit the field of inquiry the subject of the alleged intention. Paragraph 22.1 asserts money transfers as part of a scheme put in place by Waters with an intent to defraud creditors. There must be a relation between the steps taken in the scheme and an intention to defraud identified creditors. Those creditors might be existing creditors with provable debts or future creditors ( Barton v Deputy Federal Commissioner of Taxation [1974] HCA 43 ; (1974) 131 CLR 370 at 374; PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 525-526; DM Cannane & Anor v J Cannane Pty Ltd [1998] HCA 26 ; (1998) 192 CLR 557 at 566 and 593; Ebner v Official Trustee in Bankruptcy [1999] FCA 110 ; (1999) 91 FCR 353 at 370-371) or any present or future creditor. In this case, the applicants contend Waters held the relevant intent at the time of orchestrating the scheme, in relation to present creditors and those who, like Jefferson and Stevenson and BSA, might become creditors. A trustee at pleading stage, seeking to recover assets on behalf of the beneficiaries of a bankrupt estate is not likely to know whether a scheme has been implemented with an intent to defraud each present creditor or a group of present creditors (perhaps those agitating the most); or future creditors or a group of future or anticipated creditors perceived by the former bankrupt to be those who might pursue claims or causes of action arising out of the conduct of the bankrupt; or both classes of claimant. What is important is the identification of the contention within the limits of what might reasonably be put having regard to all the circumstances pleaded. In this case, the applicants plead a sequence of steps including a set of inherently odd transactions by which Waters borrowed money from a trust established by them in which they were formerly principals and substituted almost immediately after formation, their own children as principals, and immediately made gifts of the borrowing back to the trust. The applicants say all the scheme steps were made with an intent to defraud all creditors (that is, to remove the assets from the reach of those who ultimately might call upon them should payment not occur) whether present creditors or future creditors. The function of particulars is to put Waters on notice of what is contended against them, enable them to plead and to isolate those documents relevant to the issues. Waters would understand from this pleading as particularised that the trustees say Waters took scheme steps with an intention of removing assets from anyone who was at the time a creditor or anyone who might be a creditor, emblematic of which are the nominated future creditors. The pleading as particularised enables each of Waters to ask, 'Did I take the contended steps (if any) with the intention of defrauding my present creditors or future creditors? '; and although the answer might be 'no', 'Am I aware, after reasonable enquiry, of any document relevant to a contention that I put in place the contended steps with an intention to defraud present creditors or future creditors? ' being a document falling within Order 15, r 2(3). By para 3 of the request, the respondents seek particulars of the 'large sums of money' referred to in para 23 of the SoC. Paragraph 23 asserts the inference previously discussed that the liquidators of Freedom Homes and the BSA were either creditors, contingent creditors or anticipated creditors for large sums of money and inevitably these creditors would press Waters for payment and they would not be able to pay. In response, the applicants gave particulars that the large sums of money are said to 'include debts claimed in the proofs of debt lodged in the bankruptcies of Mr and Mrs Waters by Jefferson and Stevenson and the BSA. The applicants say that the proofs of debt have been identified and copies of the proofs of debt lodged in the bankruptcies of Waters have been provided to the respondents and those proofs identify the precise amount claimed. Nevertheless, the applicants ought to provide the respondents with a statement based on the proofs of the amount of the debt and to whom it is owed. By para 4 of the request, the respondents seek particulars of the monies Waters would not be able to pay as contended in para 23 of the SoC. The applicants say the monies unable to be paid include the debts claimed in the proofs of debt previously mentioned. The provision of the particulars extracted from proofs of debt will provide particulars for the purposes of para 4 of the request. By para 9 of the request, the respondents seek particulars of the monies the applicants allege by para 31 of the SoC that Waters would not be able to pay. By para 31 the applicants say that in the circumstances of the particulars pleaded in paras 22 and 30 of the SoC an inference arises that Jefferson and Stevenson, the Deputy Commissioner of Taxation, the BSA and the liquidator of Delvine were creditors for large sums of money; a time would come for payment of those monies by Waters; and Waters would not be able to pay. The applicants provided particulars of para 9 that the monies include 'the debts claimed in the proofs of debt lodged in the bankruptcies of Mr and Mrs Waters by Jefferson and Stevenson, the DCT and the BSA and the judgment debt owed by Mr Waters to the liquidator of Delvine'. The respondents say that those particulars do not identify the monies. The applicants say the respondents have been provided with copies of the proofs of debt. However, a statement extracted from the proofs of debt of the amounts claimed and by whom ought to be provided to the respondents. Mr Lynch says that the identification as a matter of pleading of that sequence of contentions based on what is 'reasonable' is not the test. Mr Lynch says that the elements of that sequence must be put with great precision. However, [29] of the primary judgment makes it clear that the contentions must be identified within the limits of what might reasonably be put 'having regard to all the circumstances pleaded' recognising that the trustees must necessarily rely upon facts from which inferences might be drawn. The pleading by the trustees is not simply a pleading of a disposition that reduced assets available to creditors as the basis for an inference. In Cannane (DM) & Anor v J Cannane Pty Ltd (in Liq) ; [1998] HCA 26 ; (1998) 192 CLR 557 at 565-568 [10] --- [15] Brennan CJ and McHugh J recognised a number of principles including these. The party seeking to avoid a disposition of property bears the onus of proving an actual intent at the time of the disposition to defraud creditors ( Barton v DCT [1974] HCA 43 ; (1974) 131 CLR 370 at 374; PT Garuda Indonesia Ltd v Grellman (1992) 35 FCR 515 at 525-6). The creditors whom the fraudulent disponor of property might intend to defeat need not be existing creditors; they may be future creditors and the intent is an intent to defraud any present or future creditor. The intent must accompany the disposition. It must relate to the effect of disposing of property then existing. Although a party impugning a disposition of property must show actual intent to defraud creditors at the time of the disposition, the intent may be inferred from the making of a disposition which subtracts from the property which is the proper fund for the payment of debts, an amount without which the debts cannot be paid. Therefore, a subtraction of assets which, but for the impugned disposition, would be available to meet the claims of present and future creditors is material from which an inference of intent to defraud those creditors might be drawn. Whether that inference should be drawn depends upon all the circumstances of the case. A mere disposition which reduces assets is not sufficient to establish an intent to defraud present or future creditors of the company or 'cheat' creditors of their rights if the intention is effected ( Hardie v Hanson [1960] HCA 8 ; (1960) 105 CLR 451 at 456). 22 In this case, the trustees rely upon (and [29] of the primary judgment reflects) a sequence of transactions which are inherently odd, involve the establishment of companies and trusts where the children of Mr and Mrs Waters are interposed in relevant roles in relation to the trusts and the transactions consist of a series of 'round robin' payments. All of those facts as particularised are relied upon to support an inference (which may or may not be drawn) of an intention to defraud particular and identified creditors and future creditors as a class within which there will or may be individual creditors who cannot, at the moment in time when the transactions made with an intention to defraud creditors arose, be identified. However, the trustees have identified a number of entities who are said to be future creditors likely, on all the evidence, to make claims for 'large sums of money'. For the sake of completeness in these reasons, the particulars in support of the proposition that the 1996 transactions were part of a scheme orchestrated with the intent to defraud their creditors, are set out below as they appeared in the primary judgment at [11]. For example, consequent upon a seven day public examination conducted in the voluntary administration of Freedom Homes (Qld) Pty Ltd by Mr Jefferson and Mr Stevenson, and the liquidator of Delvine Pty Ltd (Mr Clout) during which Mr Waters was the primary examinee, Messrs Jefferson and Stevenson issued a report to creditors which advised creditors that as a result of the public examination and counsel's advice, the administrators believed that a claim could be made against Mr and Mrs Waters for an amount up to $2,647,255.00 being the balance of unsecured creditors claims outstanding at February 1996 of $1,531,596.00 and debts due to the Commissioner of Taxation of $1,115,659.00. In addition, the particulars identify steps undertaken by Mr and Mrs Waters to take advice concerning possible insolvent trading claims and other claims against them personally. The particulars also identify a demand made by the Building Services Authority for a relatively small amount of $4,460.00 but the foreshadowing by the BSA of further claims of $77,000.44. The trustees contend that these claims represent either claims by creditors or contingent or future creditors for large sums of money and prior to the implementation of the 1996 transactions it would have been obvious to Mr and Mrs Waters that those parties identified in the particulars would be likely to bring those claims and that Mr and Mrs Waters would not be able to pay those claims, if pursued. The trustees rely upon the same particulars and other letters of demand to support the contention that the 1997 and 1999 transactions were entered into for the main purpose of preventing the property from becoming divisible among their creditors or to hinder or delay the process of making the property available for division among the creditors. 24 Accordingly, the pleading as particularised seeks to establish a set of facts going to a series of inherently old transactions which involved a round robin of payments which, in turn, call for an explanation and are capable of supporting an inference (whether drawn or not) that Mr and Mrs Waters entered into transactions in and in connection with the relevant entities and trusts with an intention to defraud then present creditors and future creditors which in the circumstances pleaded and particularised, comprehend identified likely future claimants and extends to a contention that the intention was one of defrauding identified future creditors and future creditors as a 'class'. It is not necessary to precisely identify each and every future creditor and the value of each and every future creditor's claim. The contention cannot simply be put at a high level of abstraction. That is not this pleading. A pleading of particularised facts which identifies examples of the conduct and its connection with particular present or future creditors as emblematic of the conduct, is perfectly proper even though the identified claimants are included in a broader class of future creditors. The trustees plead that the effect of the arrangements was to remove a one half legal and beneficial interest in the Caloundra property from the estate of Mr Waters and a one half legal and beneficial interest in the Caloundra property from the estate of Mrs Waters which would have been available to meet the claims of present and future creditors of Mr and Mrs Waters but for the conduct. The effect properly asserted is a diminution in the pool of assets available for payment of then present creditors and future creditors. 25 Having regard to all of these matters, I am not satisfied that the applicants on the motion have demonstrated a failure on the part of the pleader (by failing to provide further particulars) to establish a relationship between the transactions, the intention to be drawn from those transactions, the giving effect to the scheme in relation to properly identified present or future creditors, and the diminution in the pool of assets available to satisfy those claims. 26 Accordingly, I am not satisfied that the primary decision is attended with sufficient doubt to warrant reconsideration by the Full Court. Nor am I satisfied that substantial injustice would result if leave is refused. Moreover, the applicant has failed to provide any explanation for the delay. In addition, the question is one which goes to a matter of practice and procedure (the adequacy of particulars) in which event leave ought not to be given as finality in such interlocutory matters is an important consideration. Unless there is clear and demonstrated error requiring consideration by a Full Court with a view to avoiding substantial injustice which would arise should leave not be given, leave is inappropriate in an interlocutory judgment dealing with matters of practice and procedure. However, on the merits, there is no basis upon which leave ought to be given. 27 Accordingly, the application for an extension of time for leave to appeal the interlocutory judgment of 6 December 2007 is refused and the application for leave to appeal is refused. The Notice of Motion is to be dismissed with costs. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of an application for an extension of time for the filing of an application for leave to appeal an interlocutory judgment practice and procedure |
I did so on the basis that the application disclosed no reasonable cause of action. The Bank now seeks an order that its costs be paid by the applicants on an indemnity basis. That application is made on the basis that the proceeding was commenced and continued in circumstances where the applicants, properly advised, ought to have known that they had no chance of success. 2 The applicants accept that they must pay the Bank's costs. However, they submit that those costs should be assessed in the ordinary way, on a party and party basis. They resist the Bank's contention that this is a proper case for costs to be ordered on an indemnity basis. 3 The power to award costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth). The principles which govern the award of costs are well settled. It is open to the Court to make an order for indemnity costs where some special or unusual feature in the case justifies a departure from the ordinary practice: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J. Such circumstances include where a party is aware, having been appropriately advised, that it has little or no chance of success but nonetheless persists with its claim. This is subsumed under what his Honour described (at 233) as the commencement or continuation of proceedings "in wilful disregard of known facts or clearly established law". 4 The Bank submits that in this case the applicants were informed well before they commenced this proceeding that any claim they had against it in respect of the investments the subject of the proceeding was misconceived by reason of the fact that they had previously provided the Bank with a Deed of Release dated 25 March 2002 in respect of those investments. The Bank points out that in June 2003 it sent a letter to the applicants' former solicitors enclosing a copy of the Deed of Release executed by the applicants. The letter stated, in substance, that the applicants had released the Bank from any claims, and thus their claim for compensation was misconceived. 5 Notwithstanding this letter, and the information regarding the Deed of Release, the applicants elected to commence proceedings against the Bank in August 2004. Once the proceedings were commenced, the Bank again raised the Deed of Release, this time in the context of seeking security for costs. In October 2004 the Bank's solicitors wrote to the applicants' former solicitors reiterating that the applicants' claim against the Bank was hopeless as the applicants had executed a Deed of Release in 2002. 6 The Bank expressly pleaded the Deed of Release in its defence filed on 1 November 2004. There was then a period during which the matter was dealt with in the Federal Magistrates Court before it was transferred to this Court. In January 2007 the Bank filed a motion seeking summary dismissal on the basis that the latest of a number of statements of claim, as filed, still disclosed no cause of action. It was that motion that, ultimately, succeeded when I indicated, at the close of argument, on 18 October 2007, that I would order that the claim against the Bank be dismissed because the Deed of Release provided a complete defence. I published my reasons for judgment several weeks later. 7 The Bank submits that this is not a case where fine judgment needed to be exercised as to whether the evidence available in support of the applicants' claim warranted the institution of proceedings. It submits that, in wilful disregard of the Deed of Release, the applicants issued this proceeding and pursued it for over three years. During that time the case was listed for the hearing of various applications and directions on a number of occasions. The Bank argues that it actively attempted, throughout, to dissuade the applicants from pursuing their misconceived claim. It adds that it repeatedly pointed out the many procedural failings, on the part of the applicants, which made this proceeding almost unmanageable. 8 The Bank submits, in the alternative, that if I am not minded to order that its costs be taxed on an indemnity basis, they should nonetheless be taxed on a solicitor and own client basis. 9 Finally, the Bank submits that if I decline to order costs on either an indemnity or solicitor and own client basis, I should nonetheless make an immediately enforceable order for costs to be taxed on a party and party basis and reserve to the Bank the right to apply for a "top up" indemnity costs order once the proceeding between the applicants and the second and third respondents is determined. It seeks the reservation of its rights because, as it submits, it is currently, and will be until the final determination of the proceeding, embarrassed in making submissions relating to a further ground on which it would otherwise rely in seeking an order for indemnity costs. 10 Irrespective of the outcome of the Bank's application for indemnity costs, it also seeks an order in respect of monies held in a joint trust account operated by its solicitors. In May 2005, it was ordered, relevantly, that the applicants provide security for the Bank's costs in the sum of $15,000. That sum was duly paid into the trust account and as at 19 November 2007 that account held $16,797.71. The applicants acknowledge that this money should now be paid to the Bank. 11 On behalf of the applicants it is submitted that, notwithstanding the summary dismissal of their claim, this is not a case which warrants indemnity costs. The applicants say that although their claim may have been problematic, it could not be described as hopeless, or as having no chance of success. They say that the fact that the Bank's defence, based on the Deed of Release, was ultimately upheld does not mean that, properly advised, they should have known that they had no chance of success. 12 The applicants submit that the Deed of Release fell to be construed. They say that it was not so clearly drafted as it might have been. They say that it was fairly open to them to argue (though the argument was not accepted) that the Deed of Release bore a more limited meaning than that for which the Bank contended. 13 The applicants note that the second and third respondents (who were the solicitors representing the applicants at the time the Deed of Release was executed) are parties to this proceeding. By their defence to the applicants' claim, filed in November 2004, those respondents specifically asserted that the Deed of Release did not have the effect for which the Bank successfully argued. They also raised, in their defence, a contention that the Bank was estopped from relying upon the Deed of Release as a release from the claims made in this proceeding, and an alternative contention that the Deed of Release should be rectified . The applicants claim that, having regard to the matters pleaded by the second and third respondents, namely estoppel and rectification, they were entitled to regard their claims against the Bank as viable, or at least arguable. 14 It should be noted in that regard that the applicants themselves have not at any stage raised any question of estoppel against the Bank. Nor have they ever sought rectification of the Deed of Release. That is hardly surprising. It is difficult to see how any such claims could be maintained. 15 Finally, the applicants refer to the letters dated June 2003 and October 2004 upon which the Bank relies in its submission that indemnity costs are appropriate. They say that neither letter indicated that the Bank regarded the existence of the Deed of Release as a complete answer to the applicants' case. Nor did the Bank indicate, in those letters, that it would ultimately seek indemnity costs if proceedings against it were commenced or continued. 16 With regard to the applicants' own procedural failings, they say that they have already been punished by having been ordered to pay costs in respect of them. They say that there should be no "double counting" of those failings. 17 The applicants do not challenge the Bank's contention that if indemnity costs are not presently awarded, there should be reserved to the Bank the right to seek such costs at a later time, after proceedings against the second and third respondents have been concluded. They argue, however, that there should not be an immediately enforceable order for party and party costs followed by the possibility of a "top up" order because that could involve two taxations, with attendant duplication of effort and cost. 18 I should say something briefly about the Bank's submission that this Court can order either indemnity costs or solicitor and own client costs as alternatives to party and party costs. The distinction between indemnity costs and solicitor and own client costs has been recognised in England for many years. See EMI Records Ltd v Ian Cameron Wallace Ltd [1983] 1 Ch 59 at 64---65 per Megarry VC where his Lordship referred to a number of relevant authorities including, in particular, Giles v Randall [1915] 1 KB 290. 19 In Colgate-Palmolive Sheppard J alluded briefly (at 233) to the distinction between indemnity costs and solicitor and own client costs. This power will not, as that case illustrates, be exercised in every case where fraud is alleged and not proved; usually some further factor must be present such as dishonesty or the irrelevance of the allegations to the issues between the parties. No doubt in an appropriate case costs may even be awarded on an indemnity basis: Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354. The Full Court assumed, without discussion, that both types of costs orders were available in this Court. 21 In G E Dal Pont, Law of Costs (Butterworths, 2003) the learned author notes that there is conflicting authority in Australia as to whether indemnity costs differ from solicitor and own client costs. He observes that New South Wales, the Northern Territory, and Queensland have specifically removed any power there may once have been to order costs on a solicitor and own client basis, retaining only the power to order costs on either a party and party or an indemnity basis. However, the question whether solicitor and own client costs can be ordered as an alternative to indemnity costs remains live in all other jurisdictions. 22 In this Court, some judges have spoken of indemnity costs and solicitor and own client costs interchangeably: see, for example, Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 per Woodward J at 400---401 and connect.com.au Pty Ltd v GoConnect Australia Pty Ltd (2000) 178 ALR 348 per Emmett J at 360---361. 23 Professor Dal Pont argues that this approach is incorrect. He notes that prima facie, a solicitor and own client taxation allows all costs reasonably incurred and of reasonable amount, whereas taxation on an indemnity basis allows all costs incurred except those unreasonably incurred or unreasonable in amount. The difference is that on a solicitor and own client basis the taxing officer will include nothing unless satisfied that it is reasonably incurred and of a reasonable amount. On an indemnity basis everything is included unless it is driven out by being unreasonable. The distinction is essentially a matter of onus. 24 I am prepared to proceed upon the basis that it is open to this Court to order either indemnity costs or solicitor and own client costs. I note, however, that the principles upon which such costs may be ordered (as distinct from party and party costs) appear to be indistinguishable. In either case there must be some special or unusual feature which justifies the Court departing from an award of costs on a party and party basis. There may once have been sound reasons for distinguishing between indemnity costs and solicitor and own client costs. However, in the absence of any viable criteria for choosing one, rather than the other, there seems little point in maintaining the distinction between them. 25 In my view, the Bank has a compelling case for the award of indemnity costs. The fact that the second and third respondents have, in their defence, put in issue the proper construction of the Deed of Release does not persuade me that it was ever seriously arguable, still less reasonable, for the applicants to institute proceedings against the Bank. I gave judgment for the Bank on the basis that the Deed of Release provided a complete defence to the applicants' claim. It is significant that counsel for the applicants could point to no sensible interpretation of the Deed of Release which might have justified the applicants' decision to pursue the Bank, as they have. The applicants' case against the Bank was always clearly foredoomed to fail. In my view, properly advised they ought to have known this to be so. To pursue their claims in the way that they have, in the face of an unanswerable defence, amounts to special or unusual circumstances which warrant a departure from the normal rule as to costs. 26 For that reason I propose to order that the applicants pay the Bank's costs, including reserved costs, such costs to be taxed in default of agreement, and on an indemnity basis. I will also order that the monies presently held by the Bank's solicitors be released to the Bank as part of the costs recoverable against the applicants. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. | application for costs pursuant to federal court of australia act 1976 (cth) s 43 following summary dismissal application for indemnity costs and alternatively for costs on solicitor and own client basis distinction between indemnity costs and solicitor and own client costs relevant principles when ordering costs on basis other than party and party costs |
The cause of action was in negligence and in contract. Mr Lovell has now abandoned the contract claim. 2 After the proceedings in the Supreme Court were issued, Mr Penkin became bankrupt. On application by the solicitors for the professional indemnity insurer for Mr Penkin, the Supreme Court proceedings were stayed in light of the bankruptcy. Mr Lovell has therefore brought proceedings in this Court seeking leave to take a fresh step against Mr Penkin in the Supreme Court action. Alternatively, by an amended motion he seeks in effect, a declaration that no such leave is required on the basis that the cause of action in the Supreme Court proceedings is now a cause of action for unliquidated damages in negligence rather than for breach of retainer. 3 For reasons appearing below, I am satisfied that leave should be given. I have confined the relief to the granting of leave and have imposed conditions. Some years ago he engaged Mr Penkin in connection with a prospective claim against the State of Western Australia. His uncontested evidence is that such claim was not pursued. He contends that the claim became statute barred or precluded due to the fact that the required notice under the Crown Suits Act 1947 (WA) had not been served by Mr Penkin. In the Supreme Court proceedings, Mr Lovell contends that Mr Penkin was negligent in failing to serve the Crown Suits Act notice within the relevant time period. The proceedings against Mr Penkin in the Supreme Court were originally cast in terms of a breach of the implied duty of care contained within the solicitor/client retainer and also in the alternative, for breach of the duty of care owed to Mr Lovell by Mr Penkin. 9 Recently, Mr Lovell has amended or sought to amend the pleading with a view to focussing only on the claim in negligence and not on the claim for the breach of retainer. It is common ground, however, that there was a written retainer executed by Mr Lovell in the form of a costs agreement. Mr Lovell accepts that a contractual claim is open but says that he has elected to pursue the claim by way of negligence only rather than for breach of contract. 10 As all legal practitioners are required to do, Mr Penkin held compulsory professional indemnity insurance in respect of claims such as that brought by Mr Lovell. The solicitors for the insurer successfully argued in the Supreme Court that the damages sought by Mr Lovell were a provable debt pursuant to s 82(2) of the Act despite being an unliquidated sum and the claim should therefore be stayed pursuant to s 58(3) of the Act. Reliance was placed on Chittick v Maxwell (1993) 118 ALR 728 in support of the proposition that a claim in tort against a solicitor for professional negligence is a claim that arises out of a contract (that is, a retainer) and accordingly is provable in bankruptcy. 11 Mr Lovell argues that as the public interest requires that solicitors should maintain indemnity insurance for the benefit of their clients, that such a statutory requirement in favour of the public should be taken into account in the proper disposition of this matter. He says that if leave to proceed is necessary it should be granted as, if it is not granted, he will lose his entitlement to proceed with and the benefits from a claim which he contends is straightforward. 12 Notwithstanding the stay in the Supreme Court, the Official Trustee in Bankruptcy contends that the claim made by Mr Lovell is not a 'provable debt' for the purposes of s 82 of the Act and therefore is not a debt to which s 58(3) of the Act applies. The Official Trustee also contends that leave is not needed and that it is not appropriate to grant leave without first determining the question of whether the claim by Mr Lovell is provable. That leave can be granted without determining the merits of the application on the basis that leave is necessary because the issues raised in the application are able to be resolved more thoroughly and expeditiously in proceedings in the Supreme Court of Western Australia. 14 It appears to me that this would be an appropriate case for granting leave. It is unnecessary for present purposes to go into detail as to the nature of the claim in the Supreme Court but suffice it to say that negligence actions against legal practitioners in the State of Western Australia especially pertaining to failure to serve a particular form of notice under a State Act would more customarily be heard in that court. Allowing matters to take their usual course would be more efficient than the alternative procedure of requiring Mr Lovell to lodge a proof of debt in respect of his claim against Mr Penkin and then having to appeal from a decision of the trustee, if any, to reject that claim. Such an appeal would require determination of issues in a 'less satisfactory way than the Supreme Court proceeding and it is possible that questions between Mr Penkin and Mr Lovell would not be resolved'. That is, whether the court, if it has jurisdiction, should grant leave in the present case. Franki J, while indicating that as then advised he would not have answered this question in the affirmative, never reached the stage where it was necessary to decide it. The facts are complex. The claim of Midland Credit is not only against Mr Allanson, but against other defendants who, in some respects, may be jointly and severally liable with him. There is also the question of the defences, some of which form the basis of the cross-claim. It would seem that all of these issues would be better and more comprehensively dealt with by a contested trial of the action in the Supreme Court than could possibly be the case if Midland credit were required to lodge a proof of debt in respect of its claim against Mr Allanson alone. Such a proof of debt would be in the form of an affidavit and determined by the official receiver at such time as the stay ceased to operate. If the official receiver disallowed the claim in whole or in part, an appeal on this isolated issue could be brought to the Bankruptcy Court. But in these circumstances, the issues would have been determined in a less satisfactory way and questions between Mr Allanson and the other parties to the action would not be resolved. It is not suggested that if leave be granted, the bankrupt estate will suffer financially in any way. In the circumstances, we have formed the view that, if s 58(3) applies, the court has jurisdiction to grant leave to proceed and such leave should be granted. 15 The Supreme Court proceedings have been on foot for some time (albeit that a defence has not yet been filed). As to this, see the analysis in Allanson 30 FLR 108 and in Midland Credit Ltd v Official Trustee in Bankruptcy (1982) 68 FLR 53. While that consideration may be of greater significance in circumstances where a substantial amount of time, effort and cost has been allocated to bringing the proceedings close to trial and the facts are complex, it appears to me that the facts in this case are sufficiently complex having regard to an extensive history of other litigation with which Mr Lovell has been involved in the Supreme Court and the complexities surrounding the law concerning service of a notice under the Crown Suits Act . Then again, there are the highly complex facts and law concerning Mr Lovell's likely prospects of having succeeded in a claim against the State of Western Australia, had it been brought. These are all issues best dealt with by the Supreme Court where this action and others concerning Mr Lovell, have been running. IS LEAVE REQUIRED? There could be little doubt in a claim such as this, that the damages in respect of which the claim is pursued are very much unliquidated. There is a debate about whether an unliquidated damages claim that can arise both in contract and in tort is a provable debt or whether it comes under the exception in s 82(2) of the Act. 17 In relation to claims against solicitors, one argument is that it is proper to characterise such claims as arising 'by reason of' contract, namely, of the express or implied retainer. As such, the claim would be provable despite being for unliquidated damages. This is on the basis that the claim would not have arisen but for the contract of retainer between the professional and the client. In the present circumstances there is a costs agreement constituting the retainer so that clearly the relationship was established at least in part by virtue of the contractual retainer. This approach stems from cases such as Chittick 118 ALR 728 at 736 and 739; and Re Sharp, Peter Lyle & Ex Parte: Tietyens Investments Pty Ltd (in liq) & Anor v Official Trustee [1998] FCA 1367. He puts that in considering whether the claim is one for unliquidated damages arising by reason of a contract, promise or breach of trust one looks to the underlying transaction rather than to the form of action. He puts that the claim in negligence in this case clearly arises out of a contract or promise in the relevant sense. There was a promise even though made without consideration by Mr Maxwell that he would protect the plaintiffs by the use of appropriate legal skill. Counsel claims that the claim for equitable compensation rises out of a contract or out of a promise or out of a breach of trust. He puts that the words "arose out of" in s 82(2) should be widely construed. Mr Hely QC, on the other hand, puts that s 82 is not concerned with making unliquidated damages for a personal fault provable in the bankruptcy. He points out that s 82 does not talk about breach of fiduciary duty, and that there is a very real distinction between a breach of trust and a breach of fiduciary duty; in particular the solicitor who commits a breach of fiduciary duty does not have property vested in him. Again, equitable compensation can under no stretch of the imagination be classed as unliquidated damages but, even if it could be so classed, then the claim did not arise by reason of contract, promise or breach of trust. Then came the Act of parliament, which -- dealing in express terms with almost every one of the cases which had ever previously occurred, and excluding nothing but demands for damages for personal torts -- provided that there should be nothing whatever for which a right of proof should not be given. Every possible demand, every possible claim, every possible liability, except for personal torts, is to be the subject of proof in bankruptcy ... The broad purview of this Act is that the bankrupt is to be a freed man -- freed not only from debts, but from contracts, liabilities, engagements and contingencies of every kind. In that case the Full Court held that the wrongful receipt by a director of a building society of moneys of the society by way of commission constituted a debt provable in insolvency. We think that upon the verbiage of the statute the section is one which, though confused and indefinite, is exceedingly comprehensive, and that this obligation is a debt provable in insolvency. This opinion is confirmed by the case of Emma Silver Mining Co v Grant (1880) 17 Ch D 122 , wherein it is declared that the obligation of a director who is in a fiduciary position may be considered that of a contractor, so that he must observe the principles of his trust and not contravene them, and that a breach of his obligation not to make such a payment as this would be a breach of trust. We think the relationship of a director to his company is on this principle contractual. It is therefore within s 114. " However, the Emma Silver Mining Co case is also authority for the proposition that a secret commission is a fraud from which a bankrupt is not released under s 153(2)(b). At least if there is a breach of trust in the strict sense, these principles have never been departed from: see, for more recent examples, Cutten and Harvey v Mount (1988) 14 ACLR 662 at 667 and Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 527. (emphasis added) The width of the section is further illustrated by the cases discussed by the High Court in Gye v McIntyre [1991] HCA 60 ; (1991) 98 ALR 393 ; 171 CLR 609 at 632 and following. It seems to me that Dr Bennett QC's submissions on this point have to be accepted. The case in tortious negligence is one that arises out of a contract or promise in the sense that it was failure to fulfil the promise to protect. It does not seem to me that it matters that there was no cause of action in contract because there was no promise for consideration. It is sufficient that there is a claim at law or in equity and that that claim is for damages which arises out of a contract or promise. Likewise, the cases to which I have referred show that it does not matter that the claim should properly be classified as equitable compensation. 19 However, the approach taken subsequently by the Victorian Court of Appeal was that regardless of the contract of retainer between a solicitor and a client, a claim in negligence could still be characterised as an unliquidated claim for damages in negligence because the contract was not an essential element of the claim. It seems to me rather that the correct test to apply for the purpose of deciding whether a demand is within the exclusion provided by s 82(2), leaving breach of trust to one side, is whether a contract or promise constitutes an essential element of the cause of action. In a claim for unliquidated damages for professional negligence against a solicitor, the pleading of the retainer will often, if not usually, be necessary, but only for the purposes of delineating and defining the scope of the professional's duty of care. For reasons such as those given by Lord Wright in Grant's case the pleading of the contract or retainer, however, is not an essential element in the cause of action. [47] Mr Stuckey also relied on Emma Silver Mining Co v Grant; Jack v Kipping and Britter v Sprigg in support of his submissions that the language of s 82(2) is not directed at causes of action, but rather at the cause or basis of the demand and that the proper approach is to examine whether the demand arises by reason of a contract, even though the cause of action giving rise to liability is not for breach of contract. [48] In each of these cases the claim was regarded as provable, but, in my view, each is distinguishable. In Emma Silver Mining the claim was "in the nature of an ordinary debt due by an agent in respect of money had and received by way of secret profit" and was so treated by Sir George Jessel. The claim was not for unliquidated damages and was regarded as arising under a contract. Jack v Kipping was a claim for unliquidated damages for a fraudulent misrepresentation which induced the claimant to contract to purchase shares. However, the real thrust of the decision seems to have been that to deny a set-off in the circumstances of that case "would be inequitable", which suggests that the decision should properly be treated as illustrating the availability in those circumstances of an equitable set-off, making reliance on the "mutual dealings" provision and the question of whether the claim was provable in the bankruptcy, otiose. In Britter v Sprigg it was held, following Emma Silver Mining, that the wrongful receipt by the director of a building society of moneys of the society by way of commission, being both a breach of trust and contractual, constituted a debt provable in insolvency within the meaning of s 114 of the Insolvency Act 1890. [49] I should add that in In the Estate of Fitzhardinge (dec'd); Ex parte Hely, Manning J held that a right of action against a bankrupt solicitor for not duly prosecuting an action for his client was in substance for negligence, and damages for such negligence were not capable of proof under s 45(1) of the Bankruptcy Act 1887 (NSW). [50] In the judgment now under appeal, the learned judge preferred the decision of Young J in Chittick to that of Manning J in Fitzhardinge. That is clear from the pleadings. The duty and the terms of the retainer are the same. It is clear, therefore, that the plaintiff's claim is a demand which arises by reason of a contract. But I do not accept that the plaintiff's claim in negligence is therefore a demand which arises by reason of a contract. In my view the contract does not constitute an essential element in the plaintiff's cause of action in negligence, and her tortious claim is "a demand in the nature of unliquidated damages arising otherwise than by reason of a contract promise or breach of trust" within the meaning of s 82(2) of the Bankruptcy Act. It was therefore not provable in the defendant's bankruptcy and the plaintiff was not required to obtain leave from the Federal Court of Australia before pursuing it. If it is not a debt provable in the bankruptcy, discharge from bankruptcy does not operate to release the bankrupt from the claim and, subject to any question of limitation of actions, the claim can be pursued against the former bankrupt after discharge. Moreover, s 58(3) of the Bankruptcy Act 1966 (Cth) does not prevent the claimant, during the bankruptcy, from commencing a legal proceeding in respect of the claim or enforcing any remedy against the person or the property of the bankrupt in respect of that claim. The sub section denies such competency to a creditor only in respect of "a provable debt". 5 The central question in the appeal hinges on the meaning of s 82(2) of the Bankruptcy Act 1966 and, in particular, what is meant by a demand in the nature of unliquidated damages arising otherwise than by reason of a contract or promise. That expression, used to identify an exception to the definition of debts provable in bankruptcy, has been held not to include a claim for unliquidated damages for fraudulent misrepresentation which induced the party misled to make a contract with the bankrupt (a "bilateral" case). That is, such a claim for damages has been held to be a debt provable in the bankruptcy, and a claim that was to be set off against a claim by the bankrupt estate. But a claim for unliquidated damages for fraudulent misrepresentations where the representations induced the claimant to make a contract with another (a "tripartite" case) has been held not to be a claim provable in the bankruptcy. The bankrupt having made no contract with the party who claims damages from the bankrupt, the claim for damages for fraudulent misrepresentation has been held to be a demand arising otherwise than by reason of a contract or promise. 6 These reasons demonstrate that a statutory claim for unliquidated damages for misleading or deceptive conduct which induced the claimant to make a contract not with the bankrupt but with a third party is not a debt provable in bankruptcy. 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 contract with the bankrupt, would be a debt provable in bankruptcy. It concerned a claim, pleaded in both contract and tort, by a client against a solicitor alleging negligent performance of a retainer. The solicitor entered a deed of arrangement under Pt X of the Bankruptcy Act but the client (the plaintiff in the action) did not participate in the arrangement. Was the client's claim a debt provable in bankruptcy? [65] The Court of Appeal of Victoria held that the claim was one arising otherwise than by reason of a contract and thus not a claim provable in the solicitor's bankruptcy. The court held that a claim arises by reason of a contract or promise only if a contract or promise is an "element" or "essential element" of the cause of action. Charles JA, with whose reasons the other members of the court agreed, held that the pleading of the contract of retainer was not an essential element of the cause of action in negligence. [66] Two points must be made about this conclusion and the reasoning underpinning it. First, the decision appears to proceed from an assumption that, despite the way the case was pleaded, the claim actually pursued was framed only as a claim in tort. It is not necessary to examine whether, in the particular circumstances of that case, the assumption was well founded. Even if the assumption was well founded, Jack v Kipping reveals that framing a claim as a claim in tort does not conclude the question whether the demand arises by reason of a contract or promise. [67] The second and more important point is that the test stated in Aliferis, and applied by the Court of Appeal in the present matter, to decide whether a demand arises by reason of a contract or promise does not satisfactorily reflect the meaning to be given to s 82(2). It should not be adopted or applied. [68] The test stated in Aliferis does not give any weight to the need to read s 82(2) in the light provided by the set-off provisions of s 86. It is a test which does not distinguish between bilateral and tripartite cases. It treats as the critical question whether the claimant must plead the existence of a contract, any contract. It treats as irrelevant whether the bankrupt was a party to the contract. [69] Further, to express the relevant test in the way it was in Aliferis places heavy emphasis upon the way in which the particular claim is or could be pleaded. That may serve only to mask what is to be understood by the reference to "element" or "essential element". Thus, in the present case, this formulation of the test provoked debate about whether the manner in which Charter Pacific alleged that it had suffered damage (by performance of contractually stipulated obligations) was an "essential element" of the claim for damages for misleading or deceptive conduct. Approaching the problem in that way shifts attention away from the statutory test to subsidiary questions about proper pleading practice. [70] What is revealed by the analysis of decided cases recorded in the preceding pages of these reasons is that s 82(2) and its legislative predecessors stopped short of providing that "the bankrupt is to be a freed man -- freed not only from debts, but from contracts, liabilities, engagements, and contingencies of every kind" (emphasis added). Some claims stand outside the reach of the statute. Although consideration of the application of the set-off provision required the inclusion, within the class of debts provable in bankruptcy, of those claims for unliquidated damages for fraudulent misrepresentation which had induced the making of a contract between the bankrupt and the claimant, the words of the section were not and are not to be stretched to encompass every other kind of claim which a person may have against the bankrupt. 22 Prior to dealing with Aliferis [2000] VSCA 123 ; 179 ALR 477 , in its analysis in Coventry [2005] HCA 67 ; 227 CLR 234 , the High Court also supported its reasoning by reference to the set-off provisions in the Act. For a very long time, the right of set off in bankruptcy has not rested on the same principles as the right of set off between solvent parties. The latter right was given by the Statutes of Set off of 1729 and 1735 (2 Geo II c 22 s 13 and 8 Geo II c 24 s 4) to prevent cross action. Separate provision was made for set off in bankruptcy, first in 1705 (4 & 5 Ann c 17), continued in 1732 (5 Geo II c 30), and re enacted in 1825 (6 Geo IV c 16). 31 In Forster v Wilson, Parke B remarked that the right of set off given by the Georgian statutes of set off was to prevent cross actions between solvent parties in respect of legal debts due to each in his own right. His Lordship contrasted the statutory set off in bankruptcy as given "not to avoid cross actions, for none would lie against assignees [in bankruptcy], and one against the bankrupt would be unavailing, but to do substantial justice between the parties, where a debt is really due from the bankrupt to the debtor to his estate". The 1825 statute (6 Geo IV c 16) was a consolidating statute which replaced the various statutes which until then had set out the law of bankruptcy. Section 50 was confined to mutual credits and mutual debts but went on to say that "every Debt or Demand hereby made proveable against the Estate of the Bankrupt, may also be set off in manner aforesaid". A provision to like effect appeared as s 171 of the Bankruptcy Law Consolidation Act 1849. There are instances in which the courts instead had regard to the definition of mutual credit adopted in Rose v Hart as a means of rejecting an argument for a set off. 33 In the 1869 English Act the reach of the set off provision was extended to "other mutual dealings". The set off cases therefore cast light upon what debts are provable in bankruptcy. And what an examination of the nineteenth century cases will reveal is that the set off provisions were used to extend the reach of debts provable in bankruptcy by giving to the expression "demand in the nature of unliquidated damages arising ... by reason of a contract or promise" a more ample operation than the words might at first have been thought to suggest. ... 50 Why should this understanding of s 31 of the 1869 English Act be carried over to the construction of s 82(2) of the Bankruptcy Act 1966 ? Again, there are two related reasons. First, the text of s 82 , like its legislative ancestors, shows that not all claims are provable in bankruptcy. Some content must therefore be given to s 82(2) and its reference to demands "arising otherwise than by reason of a contract, promise or breach of trust". Secondly, any amplification or extension of the content to be given to s 82(2) , beyond the immediate operation conveyed by reference to demands arising by reason of a contract or promise, is to be fixed by reference to the operation of other provisions of the statute, and particularly the set off provisions of s 86. A claim which may be made in answer to a claim which the bankrupt estate makes for damages for breach of a contract between bankrupt and claimant may be provable. That answering claim may be provable because it arises out of the mutual dealing or bilateral relationship of contract between bankrupt and claimant. By contrast, a claim which comes from a tripartite transaction, in which the bankrupt's misrepresentation induced the claimant to make a contract with a third party, does not arise from a mutual dealing and it arises otherwise than by reason of a contract or promise. 51 It is against the background provided by these nineteenth century English cases that the Australian cases must be considered. Not only is the drafting of the relevant provisions of the Bankruptcy Act 1966 for all practical purposes identical to the statutory language considered in those cases, there is the same need to work out the relationship between the provision for what debts are provable in bankruptcy (s 82) and the provision for set off (s 86). 24 From this, does it follow in the present circumstances that Chittick 118 ALR 728 and Re Sharp [1998] FCA 1367 are to be taken as establishing that although Mr Lovell pursues his claim in tort, it is nevertheless a claim which arises by reason of the contract (the retainer) or even a promise (express or implied)? The High Court in Coventry [2005] HCA 67 ; 227 CLR 234 rejected the process of reasoning which examines whether or not reliance on a claim in contract is an essential element of the claim. Does it follow that the law reverts to that as stated in Chittick 118 ALR 728 , namely, that although the claim is pleaded in tort, it is also a claim rising by reason of the contract of retainer? If so, then it would a provable debt and leave would be required under s 58(3)(b) of the Act. 25 In short, I take Coventry [2005] HCA 67 ; 227 CLR 234 to emphasise that the historical development of the Act and its predecessors is such that the class of claims that are provable will be very wide and conversely, the exceptions under s 82(2) of the Act cover a class of claims that is narrow. While Coventry was not dealing with a claim like the present which is in negligence alone against a solicitor, the rationale developed in the decision would appear to me to support a conclusion that such a claim is provable. 26 The Official Trustee's submission to the effect that a claim in tort would not be provable carries some weight. But this is a claim which has a contractual nexus by virtue of the retainer. It also involves mutuality of dealings and a set-off (by virtue of the contest between Mr Lovell and Mr Penkin having originated in Mr Penkin suing for outstanding unpaid fees) and finally, arises from a one-on-one or bilateral rather than tripartite relationship. All those elements, in light of the High Court's rejection of the 'essential element' test, would cause me to have doubts as to the submission by the Official Trustee that no leave is required. 28 Section 117 of the Act now provides that where a bankrupt has incurred a liability against which he or she was insured, the right of indemnity vests in the trustee and the amount received from the insurer should be paid forthwith to the party to whom the liability has been incurred. The Official Trustee contends that this is not a proper basis on which to determine the issues arising in this application as there is nothing before the Court about the extent of the insurance held by Mr Penkin. Indeed, it is argued that there is nothing to say that the insurer has agreed to indemnify Mr Penkin on the basis of the terms in the policy of insurance. In that case, the burden would fall on the bankrupt estate to meet the claim by Mr Lovell against Mr Penkin. Secondly, the Official Trustee contends that if a claim for negligence against a legal practitioner were found to be provable in all cases, it is conceivable that an insurer may review its position in relation to bankrupt practitioners, knowing that a claim of negligence may be met from the proceeds of the practitioner's estate and/or discharged by the bankruptcy. 29 Both of these outcomes, it is submitted, would be contrary to a broader consideration of public policy if the practical benefit of the claim of negligence against a practitioner by a member of the public could be defeated by the practitioner declaring himself or herself bankrupt. 30 In light of the conclusion I have reached, it is unnecessary to resolve these issues. I have some reservations about some aspects of this argument but to the extent that I may have reservations, I think the situation is best dealt with by the granting of leave on conditional terms. I also note that the insurer has not been heard on any of these matters, although it was aware of these proceedings. There is precedent for such a course, for example, Kattirtzis v Zaravinos [2001] FCA 1158. That outcome may be 'anomalous' as the High Court accepted its conclusion was as to the proper construction of s 82(2) in Coventry [2005] HCA 67 ; 227 CLR 234. But the emphasis in Coventry on the narrow basis of exceptions to provable claims may well support the conclusion that such a claim is provable. Further, if there is insurance cover --- and there has been no suggestion to the contrary - then the effect of s 117 of the Act is now that the benefit of that cover would still be received by the claimant rather than the estate as a whole. 32 For these reasons, I consider leave is required and certainly should be given so that the claim can be resolved if possible in the Supreme Court. That said, there may come a time when these matters require further consideration and possibly further input from the Official Trustee and possibly other parties. That input may be required even in the course of the proceedings in the Supreme Court and, if so, I consider that Mr Lovell as the claimant should not preclude that intervention by the statutory officer. I consider that an undertaking to that effect should be required to be given by Mr Lovell to the Court in conjunction with the granting of leave for the further steps in the claim to proceed. By the time the matter ultimately returns to this Court for further consideration (if it does) hopefully the law on this contentious issue may have been clarified and with the benefit of more comprehensive argument, there may be greater clarity as to the appropriate route to take. Where a court is given power to grant leave to perform a particular act or pursue a particular course of action and the question whether the need for such leave has arisen involves difficult and complicated questions of law or fact, it is permissible, in an appropriate case, to proceed on the basis that such leave is necessary rather than involve the parties in the futile exercise of determining, possibly after a series of appeals, whether the need for such leave has arisen. In all the circumstances including the urgency of the matter, we consider that that is the appropriate course to adopt in this case and that we should, to the extent necessary, grant leave to Midland Credit to continue and take fresh steps in the proceedings in the Supreme Court of New South Wales. This approach would, it seems to us, be consistent with that adopted by the High Court in Talga Ltd. v. M. B. C. International Ltd. [1976] HCA 22 ; (1976) 133 CLR 622. It is an approach which was raised before us in the course of argument but not before the learned judge below. To the extent such leave is necessary by reason of the provisions of s 58(3) of the Bankruptcy Act 1966 (Cth), that Avon Francis Lovell have leave to continue and take fresh steps in proceedings instituted by him in the Supreme Court of Western Australia against Kevin Michael Penkin in action CIV 2355 of 2005 (the Action). 2. Such leave does not extend to the taking of any step to enforce any judgment obtained in the Action without leave first being obtained from this Court. 4. There be no order as to costs, subject to the following order. 5. If any party wishes to make submissions which differ from the costs order made in the previous paragraph, written submissions should be filed and served within 14 days. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. | stay of claim in supreme court in negligence alone against a solicitor application for leave to take a fresh step in the proceeding granting of leave imposing of conditions whether leave is required in a claim in negligence alone against a solicitor whether such a claim is provable in the bankruptcy other considerations such as set-off bilateral relationship s 117 of the bankruptcy act 1966 (cth) and the availability of insurance bankruptcy and insolvency |
On that day, a federal magistrate made an order that the appellant's application be dismissed and that he pay the first respondent's costs as agreed or taxed under O 62 of the Federal Court Rules . The appellant's application to the Federal Magistrates Court was an application for constitutional writs in relation to a decision of the Migration Review Tribunal ("the Tribunal") made on 13 September 2007. On 26 March 1998, the appellant applied for a Resolution of Status (Residence) (Class BL) visa. On 22 May 1999, a delegate of the Minister for Immigration and Multicultural Affairs refused the application. The appellant subsequently appealed to the Administrative Appeals Tribunal and brought judicial review proceedings in this Court. Those proceedings were unsuccessful. There were defects in the notice of the delegate's decision given to the appellant and he was given further notice of the delegate's decision with respect to his visa application by letters dated 4 September 2006 and 19 September 2006 respectively. The appellant then applied to the Tribunal for a review of the delegate's decision. The Tribunal found that the appellant had been refused a subclass 815 visa on 25 October 1996 and that the refusal was based on the ground that the appellant was not able to meet the requirements of s 501 of the Migration Act 1958 (Cth) ("the Act"). Section 501 dealt with the refusal or cancellation of a visa on character grounds. The Tribunal identified the legislative provisions as they were at the relevant time. (2) An applicant meets the requirements of this subclause if, after appropriate enquiries, the Minister has decided that there is no evidence of anything that might justify refusal, under section 501 of the Act, to grant the visa. (3) An applicant meets the requirements of this subclause if, after appropriate enquiries, and consideration of all available evidence of anything that might justify refusal, under section 501 of the Act, to grant the visa, the Minister has decided that the evidence is insufficient to satisfy the Minister of any of the matters referred to in paragraph (1)(b) and subsection (2) of that section. (4) An applicant meets the requirements of this subclause if, despite being satisfied that refusal, under section 501 of the Act, to grant the visa is justified, the Minister has decided not to exercise the power under that section to refuse to grant the visa. The Tribunal found that the appellant was unable to meet the requirements of cl 850.211(b) because he had been the subject of a visa "cancellation" under s 501 of the Act. The Tribunal concluded that, as the appellant was unable to meet "time of application criteria relevant to the grant of the visa", the correct decision was to affirm the decision of the delegate. The federal magistrate found that the Tribunal's reference to a visa "cancellation" was no more than a slip, and that it had earlier referred to a visa refusal. He found that this reference was of no consequence, and that conclusion is not in issue on the appeal. He also contended before the federal magistrate that the Tribunal took into account a cancellation of a visa under s 501 of the Act and that it erred in doing so because the appellant had not been the subject of a visa cancellation. He had been the subject of a visa refusal. As I have said, that contention was not pressed on the appeal. The appellant submitted that cl 850.211 was invalid because it was inconsistent with the Act. The regulation-making power was s 504 and that section expressly provided that regulations made in the exercise of the power were not to be inconsistent with the Act. Clause 850.211 was said to be inconsistent with the Act because, to use the words of the federal magistrate in summarising the appellant's submission, "it purported to take away what s 48 gave". The federal magistrate rejected that submission. He referred to the fact that the appellant's right to apply for a visa of a prescribed class was expressed in s 48 of the Act to be "subject to the regulations," and he said that the use of those words led to the conclusion that s 48 expressly provided that such rights as it granted could be limited by the regulations. As I understand the federal magistrate's reasons, he said that s 48 envisaged that prescribed classes would be identified and that would be done by reference to classes of visas which had their own eligibility criteria. In addition, or in the alternative, the appellant submitted that the operation of cl 850.211 produced an absurd result and was invalid on that ground. The appellant referred the federal magistrate to the decision of the Full Court of this Court in Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd [1993] FCA 45 ; (1993) 40 FCR 381 (" Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd "). The federal magistrate rejected the appellant's submission, saying that cl 850.211 was not inconsistent with s 48 of the Act. He said that the fact that the rights provided by s 48 were subject to the standard visa criteria was neither unreasonable nor absurd. The federal magistrate concluded that cl 850.211 was not invalid and that the appellant had not established that the Tribunal had fallen into jurisdictional error. The application was not opposed by the first respondent and I granted leave to amend. The thrust of the amended grounds of appeal is that cl 850.211 was invalid and that the Tribunal erred in taking it into account. In the circumstances, it was an irrelevant consideration. Clause 850.211 was said to be invalid because it was not authorised by s 504(1) of the Act or any other lawful authority, or because in its terms it sought to limit the operation of s 48 of the Act, or because its promulgation was an unreasonable exercise of any regulation-making power, or for any one or more of these reasons. Three points should be noted at this stage. First, at the relevant time, there were seven primary criteria to be satisfied at the time of application for the relevant visa. The Tribunal did not consider whether the appellant satisfied any of the criteria other than those contained in cl 850.211. In other words, once the Tribunal decided that the appellant did not satisfy cl 850.211, it decided to affirm the decision of the delegate. Secondly, the first respondent did not suggest that a collateral attack on the validity on cl 850.211 was impermissible. The appeal was conducted on the footing that if I determined that cl 850.211 was invalid then the appeal should be allowed and constitutional writs directed to the Tribunal should issue. Thirdly, at the relevant time, Parliament had the power under s 48 of the Acts Interpretation Act 1901 (Cth) to disallow regulations made under the Act. I have been able to decide the issues on this appeal without having to consider whether the power of disallowance is relevant to the unreasonableness ground of review. The appellant's submissions can be dealt with under two headings. The first is that cl 850.211 was invalid because it was beyond power or was inconsistent with the Act and, more particularly, s 48, and therefore is not within the regulation-making power. The second heading is that cl 850.211 was invalid because it was an unreasonable exercise of the regulation-making power. As the submissions were developed, the appellant made it clear that, under the second heading, he also submitted that cl 850.211 was invalid because it was not reasonably proportionate to the regulation-making power. The appellant submitted that the regulation-making power was contained in s 504 and that section alone. At the relevant time, that section empowered the Governor-General to make regulations, "not inconsistent with this Act, prescribing all matters which by this Act are required or permitted to be prescribed or which are necessary or convenient to be prescribed for carrying out or giving effect to this Act". There then followed a list of particular subjects. The first respondent accepted that s 504 was a regulation-making power but submitted that s 31 and s 40 of the Act also contained regulation-making powers. (2) As well as the prescribed classes, there are the classes provided for by sections 32, 33, 34, 35, 36, 37 and 38. (3) The regulations may prescribe criteria for a visa or visas of a specified class (which, without limiting the generality of this subsection, may be a class provided for by section 32, 36 or 37 but not by section 33, 34, 35 or 38). (4) The regulations may prescribe whether visas of a class are visas to travel to and enter Australia, or to remain in Australia, or both. (5) A visa is a visa of a particular class if this Act or the regulations specify that it is a visa of that class. I think that this dispute raises a false issue for the purposes of this case. I have taken that view for two reasons. First, I think s 31 and s 40, and other sections in the Act which refer to matters being prescribed by regulations, are at least part of the regulation-making power because they identify expressly a subject matter about which regulations may be made. Secondly, even if s 31 and s 40 were stand-alone regulation-making powers, they would not authorise regulations which were inconsistent with the Act. The steps in the appellant's argument under the first heading are first to characterise cl 850.211 as a provision which prevented a person who had a visa application refused under s 501 of the Act (" a s 501 refusal") or a visa cancelled under s 501 ("a s 501 cancellation") from applying for the relevant visa because the criterion in cl 850.211 was to be satisfied at the time of the application. The second step is to characterise s 48 as conferring a right or entitlement to apply for a visa prescribed for the purposes of the section, and then to refer to the fact that, by virtue of reg 2.12, the relevant visa is a visa prescribed for the purposes of the section. The third step is to characterise cl 850.211 as derogating from this right or entitlement and therefore as an exercise of power not authorised by s 504 of the Act. Alternatively, the appellant submitted that cl 850.211 denied the right or entitlement and was inconsistent with the Act and therefore outside the regulation-making power in s 504. In my opinion, the appellant's submissions must be rejected. Section 48 identifies a group of persons. They are non-citizens in a migration zone who do not hold a substantive visa and who, after last entering Australia, have had a visa (other than a bridging visa), for which they have applied, refused or who have had a visa they held cancelled under one of four nominated sections in the Act. The group consists of various sub-groups identified by the section under which the visas of the members of the sub-groups were cancelled or, at a factual level, by reference to the reason their visa application was refused. Section 48 only creates a right when it is combined with a regulation made in accordance with its terms. Insofar as a class of visa is not prescribed, the section provides that an application may not be made. The regulations must be read as a whole. It is not permissible to take s 48 and only reg 2.12 and conclude that those legislative provisions create a right from which cl 850.211 cannot derogate, or operate in such a way that is inconsistent with the right. Put another way, it is not s 48 which creates the relevant right, but that section and regulations made as envisaged by the section. The combined operation of reg 2.12 and cl 850.211 means that the group identified in s 48 of the Act, other than those persons who have been the subject of a s 501 refusal or a s 501 cancellation, may apply for the relevant visa. In my opinion, there is no inconsistency between s 48 and cl 850.211. A variation of the inconsistency argument is an argument which raises more directly the issue of whether cl 850.211 is authorised by the regulation-making power or, as it is sometimes called, an issue of simple ultra vires. The argument is that it is not open to the regulation-maker to prescribe a class of visa for the purposes of s 48 of the Act if a criterion for that class of visa immediately disentitles a sub-group of the group identified in s 48 from applying for that class of visa. Alternatively, the regulation-maker may prescribe the class of visa but must remove the disqualifying criterion. In my opinion, such an argument must also be rejected. There is nothing in the terms of s 48 and s 504 which suggests that it is not open to the regulation-maker to prescribe a class of visa for the purposes of s 48 which will have the effect of conferring a right only on a sub-group of the group identified in s 48 of the Act. The cases before The State of South Australia v Tanner [1989] HCA 3 ; (1989) 166 CLR 161 (" Tanner ") deal principally, if not exclusively, with the unreasonableness ground of review. In Widgee Shire Council v Bonney [1907] HCA 11 ; (1907) 4 CLR 977 , a local government by-law was challenged on the ground, among others, that it was unreasonable. The challenge was rejected by the High Court. Griffith CJ referred (at 982) to the English decisions of Slattery v Naylor (1888) 13 App Cas 446 (" Slattery v Naylor ") and Kruse v Johnson [1898] 2 QB 91 and formulated (at 983) the test of unreasonableness for delegated legislation in terms of "no reasonable man, exercising in good faith the powers conferred by the Statute, could under any circumstances pass such a by-law". Isaacs J referred with approval (at 986) to two statements in the advice of the Privy Council in Slattery v Naylor (at 452-453), namely, a by-law may be struck down as unreasonable where it is "a merely fantastic and capricious bye-law, such as reasonable men could not make in good faith" and a by-law will not "be treated as unreasonable merely because it does not contain qualifications which commend themselves to the minds of judges". In Williams v The Mayor, Aldermen, Councillors and Citizens of the City of Melbourne [1933] HCA 56 ; (1933) 49 CLR 142 (" Williams v Melbourne Corporation "), a local government by-law dealing with the driving of cattle through public streets was challenged on the ground that it was unreasonable. The true nature and purpose of the power must be determined, and it must often be necessary to examine the operation of the by-law in the local circumstances to which it is intended to apply. Notwithstanding that ex facie there seemed a sufficient connection between the subject of the power and that of the by-law, the true character of the by-law may then appear to be such that it could not reasonably have been adopted as a means of attaining the ends of the power. In such a case the by-law will be invalid, not because it is inexpedient or misguided, but because it is not a real exercise of the power. (Compare Widgee Shire Council v. Bonney . In The Mayor, Councillors and the Citizens of the City of Brunswick v Stewart [1941] HCA 7 ; (1941) 65 CLR 88 (" Brunswick Corporation v Stewart "), a local government by-law dealing with the erection and construction of buildings was challenged on the ground, among others, that it was unreasonable. The challenge was rejected by the High Court. Williams J referred (at 99) to unreasonableness as involving "oppressive or gratuitous interference with the rights of those who are subject to it as could find no justification in the minds of reasonable men". In Clements v Bull [1953] HCA 61 ; (1953) 88 CLR 572 , a regulation made under the Melbourne Harbour Trust Act 1928 (Vic) was challenged, and one of the matters discussed by the High Court was the doctrine of unreasonableness. Williams ACJ and Kitto J made the point that a regulation may produce unreasonable results in certain circumstances and yet still be valid, providing it is really legislation for the purposes authorised. Their Honours also made the point that to say delegated legislation is invalid on the ground that no reasonable mind could justify it by reference to the purposes of the power is only another way of stating the conclusion that there is no real connection with the purposes of the power. Thus, the kind of unreasonableness which invalidates a by-law is not the antonym of 'reasonableness' in the sense of which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a court would say: 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires'. Tanner is the leading High Court case on the doctrine of reasonable proportionality in relation to delegated legislation. In that case it was held that delegated legislation will not be valid where it is not capable of being considered to be reasonably proportionate to the end to be achieved. It is not enough that the Court thinks the delegated legislation inexpedient or misguided. It must be so lacking in reasonable proportionality as not to be a real exercise of the power. The Court found support for the ground of review in the judgment of Dixon J in Williams v Melbourne Corporation . In Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd , a management plan under s 7B of the Fisheries Act 1952 (Cth) was challenged on the ground that it was a form of delegated legislation which was capricious and irrational. The plan contained a statistical fallacy which led to unfair catch allocations. The trial judge accepted the applicant's arguments and declared that the plan was void. His decision was upheld on appeal. In the course of his reasons on the appeal, Lockhart J considered the scope of the unreasonableness ground of review. Unreasonableness in this branch of the law means unreasonable in the sense that 'a merely fantastic and capricious by-law, such as reasonable men could not make in good faith' is bad, because delegated legislation of this kind could not be regarded as an exercise of the power conferred upon the subordinate legislative body making the delegated legislation: Slattery v Naylor (1888) 13 App Cas 446 at 452. In Minister of State for Resources v Dover Fisheries Pty Ltd [1993] FCA 366 ; (1993) 43 FCR 565 , Gummow J discussed the reasonable proportionality ground of review in relation to delegated legislation and the operation of the doctrine of reasonable proportionality in the area of federal constitutional law. In summary, delegated legislation may be held invalid because it is an unreasonable exercise of the empowering provision or because the delegated legislation is not reasonably proportionate to the purposes of the empowering provision. There is considerable overlap between the two grounds of review (see De Silva v Minister for Immigration and Multicultural Affairs (1998) 89 FCR 502 at 510) (" De Silva v Minister for Immigration and Multicultural Affairs "). As the Court does not have authority to conduct merits review, the test in the case of each ground of review is a very demanding one and, in the final analysis, involves a question of whether the delegated legislation represents a real exercise of the power in the empowering section. Cases in which delegated legislation has been held invalid on either ground of review are rare. Examples of cases in which regulations under the Act have been held invalid on the unreasonableness ground are Minister for Immigration and Multicultural Affairs v Singh [2000] FCA 377 ; (2000) 98 FCR 77 and Li v Minister for Immigration and Multicultural Affairs [1999] FCA 1147 ; (1999) 94 FCR 219. Examples of cases in which delegated legislation has been held invalid on the reasonable proportionality ground of review are Re Gold Coast City Council By-laws [1994] 1 Qd R 130 , Paradise Projects Pty Ltd v Gold Coast City Council [1994] 1 Qd R 314 , Re Gold Coast City (Touting and Distribution of Printed Matter) Law 1994 (1995) 86 LGREA 288 and House v Forestry Tasmania [1995] TASSC 95 ; (1995) 5 Tas R 169. Before leaving this brief review of the cases, I refer to the illuminating discussions of the relevant principles in De Silva v Minister for Immigration and Multicultural Affairs and Vanstone v Clark [2005] FCAFC 189 ; (2005) 147 FCR 299 at 331-343 [99] - [160] per Weinberg J. See also Pearce D and Argument S, Delegated Legislation in Australia (3 rd ed, LexisNexis Butterworths, 2005) at 253-267 [21.1]-[21.19]; Aronson M, Dyer B and Groves M, Judicial Review of Administrative Action (4 th ed, Lawbook Co, 2009) at 378. The appellant put his submission that cl 850.211 was invalid by reason of unreasonableness or a lack of reasonable proportionality on two grounds. Both grounds were put on the assumption (which I have found to be correct) that cl 850.211 is not inconsistent with the Act. The first ground advanced by the appellant is that cl 850.211 is illogical or irrational because it contradicts s 48 and reg 2.12. This submission must be rejected. The regulations must be read as a whole. There is nothing irrational or illogical in the regulations providing that a sub-group of the group identified in s 48 be excluded from the group able to apply for the relevant visa. The second ground invited the Court to consider the merits of the criteria in cl 850.211. (3) The power under this section to refuse to grant a visa to a person, or to cancel a visa that has been granted to a person, is in addition to any other power under this Act, as in force from time to time, to refuse to grant a visa to a person, or to cancel a visa that has been granted to a person. An applicant's circumstances may have changed and there may be grounds to allow him or her to make an application despite a s 501 refusal or a s 501 cancellation. It was submitted that an appropriate criterion was one which gave the decision-maker a discretion to consider all the circumstances including, if appropriate, any change of circumstances. The appellant referred to cl 850.221 and public interest criteria 4001. It is fair to assume that the purpose of s 48 of the Act was to prevent successive applications for a visa where there had been a refusal, or where a visa had been cancelled. There were, no doubt, cogent policy reasons for such an approach, including a desire to maintain and preserve administrative resources, just as there were, no doubt, cogent policy reasons to allow an application to be made in certain circumstances. In my opinion, the exclusion of those persons who have been the subject of a s 501 refusal or a s 501 cancellation from those able to apply for the relevant visa cannot be said to produce an oppressive or capricious result, or that the decision to exclude them is one that no reasonable man, acting in good faith, could reach. Clause 850.211 is not an unreasonable exercise of the empowering provision. Nor, in my opinion, can it be said that it was not reasonably proportionate to the purposes of the empowering provision. No doubt, arguments can be put for and against the result achieved by reg 2.12 and cl 850.211, but it cannot be said that the result is so lacking in reasonable proportionality as not to be a real exercise of the empowering provision. I will hear the parties on the question of costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | regulations validity where appellant's previous visa had been cancelled on character grounds where appellant unable to apply for relevant visa under legislative scheme whether tribunal erred in taking into account particular clause of regulations because clause invalid whether clause beyond power or inconsistent with act whether clause constituted unreasonable exercise of power or exercise of power lacking reasonable proportionality migration |
However, neither word is to be understood in its biblical or religious sense. Rather, the case requires a meaning to be given to these words as used in an 'HIH NZ CONVERTING NOTES 1998 TRUST DEED' made 26 October 1998 ('the Trust Deed'), which provided for the creation and issue of 'Notes' by the directors of the second defendant/first cross-defendant, HIH Holdings (N.Z.) Limited (In Liquidation) ARBN 084 759 866 ('NZ'). 3 By an order made 8 February 2008 NZ was added as a second defendant. That condition is sought so that the proceedings remain limited to the interpretation of documents governed by the law of New South Wales. Matters pertaining to the liquidation of HIH NZ, including the entitlement of any party to prove in the estate of HIH NZ, is a matter for the supervision of the Courts of New Zealand and any orders made by this Court in these proceedings do not seek to affect or limit in any way the discretion of the liquidators of HIH NZ in adjudicating upon any proofs of debt lodged in future in the liquidation of that company by the other parties to these proceedings. A declaration that the Converting Notes (as that term is defined in the HIH NZ Converting Notes 1998 Trust Deed dated 26 October 1998), issued by the Second Defendant [NZ] ... have converted into Ordinary Shares in HIH [Insurance] . A direction that, in the circumstances, the liquidator of HIH [Insurance] [the first plaintiffs] is justified in allotting shares in HIH [Insurance] , in respect of the Converting Notes, in accordance with the Conditions of Issue. A declaration that the liquidator of HIH [Insurance] [the first plaintiffs] is entitled to allot shares in HIH [Insurance] , in respect of the Converting Notes, in accordance with the Conditions of Issue. A declaration that all of the Notes Contracts were validly terminated as and from the notice by Perpetual to [NZ] ... dated 15 November 2007. A declaration that, as a result of the termination of the Notes Contracts on 15 November 2007, the direction given by LM Nominees by virtue of clause 6.5(b) of the Conditions of Issue, that LM Nominees directs [NZ] ... to apply the money which it is entitled to receive from [NZ] ... on the redemption of the Notes in subscribing for a number of ordinary shares in HIH [Insurance] , was also terminated. A declaration that, as a result of the termination of the Notes Contracts on 15 November 2007, [NZ] ... is not now entitled to redeem the Notes, either in whole or in part, or apply the moneys payable on redemption of the notes in subscribing for ordinary shares in HIH [Insurance] . 8 Mr Coffey did not seek to address the Court in relation to the issues raised by the Second Further Amended Originating Process or the Cross-Claim. However, he did not, on behalf of his client, submit to any of the orders that were sought and indicated that, in relation to any orders that are ultimately made, he would wish to be heard on the formulation of such orders so as to ensure that they are consistent with NZ's statement of its position as noted when the order was made adding NZ as a second defendant on 8 February 2008. 9 In relation to appropriate orders, there was apparent agreement between Mr Fabian Gleeson SC, Mr Sackar QC and Mr Coffey that the formulation thereof should be the subject of Short Minutes to be brought in after consideration by the parties of these reasons. With perhaps the exception of the declaration sought by the first plaintiffs and the second plaintiff as set out in paragraph 3 of the Second Further Amended Originating Process, I must say that I would have some difficulty in accepting the formulation of any of the proposed orders as sought in the Second Further Amended Originating Process filed 12 March 2008 or the Interlocutory Process (Cross Claim) filed 17 March 2008. 11 Another problem with the Trust Deed is that it uses the word 'redeem' but does not define that word or the word 'redemption'. to buy or pay off; clear by payment: to redeem a mortgage. 2. to buy back, as after a tax sale or a mortgage foreclosure. 3. to recover (something pledged or mortgaged) by payment or other satisfaction: to redeem a pawned watch. 4. to convert (paper money) into specie. 7. to make up for; make amends for: a redeeming feature. 8. to obtain the release or restoration of, as from captivity, by paying a ransom. the act of redeeming. 2. the state of being redeemed. 3. deliverance; rescue. ... 5. repurchase, as of something sold. 6. paying off, as of a mortgage, bond, or note. 7. recovery by payment, as of something pledged. 8. convertibility of paper money into specie. To buy back (a thing formerly possessed); to make payment for (a thing held or claimed by another). ... b. To regain, recover (an immaterial thing). ... c. To regain or recover by force. ... ... 2. a. To free (mortgaged property), to recover (a person or thing put in pledge), by payment of the amount due, or by fulfilling some obligation. ... b. To buy off, compound for (a charge or obligation) by payment or some other way. ... c. To fulfil, perform (a pledge, promise, etc.). ... 3. To ransom, liberate, free (a person) from bondage, captivity, or punishment; to save (one's life) by paying a ransom. ... 4. To rescue, save, deliver. ... ... c. To reclaim (land). ... ... 5. To free from a charge or claim. ... 7. To obtain by purchase, to buy. ... ... b. To go in exchange for. ... ... 8. To save (time) from being lost. ... 9. Of persons: To make amends or atonement for, to compensate (an error, fault, etc.). ... b. To make up to oneself for (some wrong sustained); to repay. ... ... c. To make good (a loss). ... ... 10. Of qualities, actions, etc.: To make up for, compensate for, counterbalance (some defect or fault). ... b. To save (a person or thing) from some defect or blot. ... ... 11. a. To restore or bring into a condition or state. ... ... b. To restore, set right again. ... ... 12. To gain, reach (a place). The action of freeing a prisoner, captive, or slave by payment; ransom. ... 3. a. The action of freeing, delivering, or restoring in some way. ... ... b. Improving (of time); reclaiming (of land). ... c. That which redeems; a redeeming feature. ... 4. a. The action of redeeming oneself from punishment; way or means of doing this; atonement made for a crime or offence. ... b. A recompense. ... ... 5. The fact of obtaining a privileged status, or admission to a society, by means of purchase. ... 6. The action of clearing off a recurring liability or charge by payment of a single sum. ... 7. The action of redeeming or buying back from another, in various applications. In that case Tricontinental Corporation Ltd had been the holder of 3,604,974 ordinary shares in Arrowfield Group Limited representing 16.17 per cent of its issued capital. Tricontinental Corporation Ltd agreed to one quarter of those shares being cancelled and to the conversion of the balance of its shares to converting preference shares. The matter which came before Cohen J was an application by Arrowfield Group Limited for confirmation of resolutions for reduction of capital and the issue of converting preference shares. An issue raised by an objector was to the effect that s 198 of the Corporations Law, which allowed a company to vary rights in its shares, including dividing shares into classes on the passing of a special resolution, did not apply to redeemable preference shares. It is said by those authors that redeemable preference shares are a form of temporary shareholding, which is like debt finance, because the amount invested may have to be repaid before liquidation. The definition of redeemable preference shares in s 9 of the Corporations Law is that a redeemable preference share is a preference share liable to be redeemed. This is hardly of much assistance. The ordinary meaning of redemption in these circumstances, that is to say other than a theological one, is "to buy back, or to pay off". See Jowett, The Dictionary of English Law. The Macquarie Dictionary also refers to "recover (something pledged or mortgaged) by payment or other satisfaction". It might be thought that other satisfaction is the issue of ordinary shares. The general meaning however, in respect of the redemption of matters such as shares in this case, is to pay them off. In the light of s 192(3) , I consider a right to repayment is an essential element of a redeemable preference share. The intention is to allow capital represented by those shares to be repaid, as long as the capital in the company is maintained. Thus, any payment out of moneys available for dividend, requires the establishment under s 192(5) of a capital redemption reserve, which for the purpose of reduction of capital is to be treated as paid up capital. In the proposed scheme, there is no right for the converting preference shares to be paid out at all. The only right is to receive, in lieu of those shares, ordinary shares in the company. Although the capital is maintained, this is not brought about by the issue of shares producing cash, which then becomes available to pay out the holders of the preference shares. There is merely the substitution of one type of share for another, and in my opinion, this could not be treated as a right of redemption. An action for redemption is one brought to compel the mortgagee to reconvey the property on payment of the debt and interest. The chose in action may (but need not) include a charge over property of the body to secure repayment of the money. Where used in relation to debentures it should, in my opinion, bear a meaning which is consistent with that which is applicable when speaking of the redemption of mortgages or of redeemable preference shares. I do not gain any assistance from considering the use of the word redemption in the context of Workers' Compensation legislation where an obligation to effect weekly payments may be 'redeemed' by the payment of a capital sum on a once and for all basis. Similarly, I do not find it helpful to consider the use of the word redemption in the context of (say) an airline's loyalty programme where 'frequent flyer points' may be redeemed in exchange for airline tickets, goods or services. 22 I agree with Cohen J that in respect of the redemption of matters such as shares the general meaning of 'redemption' is 'to pay them off'. Similarly, the general meaning, in respect of the redemption of matters such as debentures is to pay them off. 23 Plainly, when law dictionaries speak of 'buying back' they are addressing situations where legal title has passed from an owner of property which has been provided as security for a loan and the borrower is left with an equity of redemption. Recovery of an unencumbered title is achieved by payment of the moneys secured. Paying off the money lent brings about a redemption. 24 Where a debenture takes the form of an unsecured note, redemption may be effected by the clearing of the debt by payment. 25 At the end of the day the question which arises in this case is whether or not NZ could redeem the so called 'converting notes' issued under the Trust Deed otherwise than by the payment of cash. It is common ground between the parties that the relevant date was 12 June 2003 and that, on that date, NZ was unable to clear the debt owing in respect of the Notes by the payment of cash. Mr Fabian Gleeson SC acknowledged that at the relevant time NZ had become insolvent and clearly did not have cash funds. If it was required, on the proper construction of the Trust Deed, to pay cash to the noteholders and then effectively forward that cash on to HIH Insurance, it could not have done so. 26 Mr Fabian Gleeson SC submitted that by agreeing to clause 12.3 in Schedule 1 to the Trust Deed the noteholders were taken to have directed that moneys due by NZ to the respective noteholders on 12 June 2003 be paid to HIH Insurance and that such a direction constituted consideration for the allotment by HIH Insurance of shares in HIH Insurance to the noteholders. If [NZ] paid in cash moneys to [HIH Insurance] before the allotment, that payment would only be a conditional payment, because [HIH Insurance] hasn't performed its side of the bargain. It follows that when [HIH Insurance] performs its side of the bargain and allots the shares, the direction to pay given by the noteholder to [NZ] then operates as an irrevocable and unconditional assignment of that fund of money to [HIH Insurance]. So the noteholder gets what it bargains for, it gets shares in [HIH Insurance]. [HIH Insurance] gets what it's bargained for, it has a claim against [NZ] in debt for that fund of money. 28 Mr Fabian Gleeson SC conceded that clause 12.3 in Schedule 1 to the Trust Deed did not of itself effect the conversion of Notes issued by NZ into shares of HIH Insurance. 29 He submitted that by virtue of clause 12.3 noteholders were denied an opportunity to complain that cash did not actually flow from NZ to HIH Insurance. 30 Mr Sackar QC puts the contrary case that, if cash does not flow, then there cannot be a conversion, as sought by the liquidators and HIH Insurance, even though it may be assumed that any shares that would now be allotted in HIH Insurance to noteholders would be worthless. Mr Sackar submitted that in the context of the facts in this case redemption required payment and not simply assignment of a promise to pay. 33 It may be observed that the converting notes issued under the Trust Deed were not converting notes within the traditional meaning of those words. Upon conversion, the Notes issued by NZ did not become shares in NZ. Rather, 'conversion' when effected involved NZ applying the principal under each note by way of subscription for fully paid ordinary shares and/or X Class Convertible Notes in HIH Insurance, which it was then for HIH Insurance to deal with. 34 Mr Fabian Gleeson SC did not submit that the Notes converted into shares at midnight on 12 June 2003. He acknowledged that his clients could not say that, because HIH Insurance still had to allot the relevant shares to the noteholders. The fact that there was not an automatic conversion of Notes in NZ into shares in HIH Insurance is confirmed by condition 6.2 of Schedule 1 to the Trust Deed which provided for 'Conditions of Issue of the 1998 Notes'. Whilst HIH Insurance was a party to the Trust Deed, its only covenants, somewhat curiously recorded as 'Covenants by Guarantor" (see clause 5B), related to the manner in which it would carry on its own business). Each form nominated 'Martin Unit A/C' as the designated account. Each application form generally accorded with the prescribed application form in the prospectus. The Terms and Conditions of Issue and the Terms of Conversion, Guarantee and Subordination of Guarantee are incorporated in and form part of this Certificate. The said Notes had a face value of $A213,100,000. (b) HIH NZ is in liquidation and insolvent. (c) HIH NZ did not, and cannot, redeem each note for an amount equal to its face value and then apply the redemption monies payable to the noteholder to subscribe for ordinary shares in HIH. (d) By its continuing failure to redeem each note for an amount equal to its face value and then apply the redemption monies payable to the noteholder to subscribe for ordinary shares in HIH, HIH NZ has repudiated each of the contracts between HIH NZ and the individual noteholders (Contracts). (e) Perpetual and the noteholders are entitled to elect to terminate the Contracts. 2 Perpetual as a party to the Trust Deed and in its capacity as trustee on behalf of each of the noteholders under the Trust Deed, hereby terminates each of the Contracts. 39 However, before leaving the point, I should observe that Ezishop.Net Ltd (in liq) v Veremu Pty Ltd (2003) 45 ACSR 199 at [33] deals with a quite different situation from the present one. In that case the question was whether or not a company in liquidation could enforce a subscription agreement to which it was a party and which required subscribers to pay in full for shares in it. Condition 1.2 of Schedule 1 itself added a number of other definitions. These included 'Commencement of the Conversion Period', 'Conversion Date', 'Conversion Event', 'Conversion Period' and 'End of the Conversion Period'. On the expiry of the 20 Business Day period, the Company must redeem all Notes that have not been the subject of a Conversion Notice under Condition 9.1(g) for cash at their Face Value plus 5% of such value by way of additional interest payable on those Notes. At the End of the Conversion Period, the Company must redeem all Notes for cash at their Face Value plus 5% of such value by way of additional interest payable on those Notes. By clause 6 of the Deed Poll, HIH Insurance covenanted to issue Ordinary Shares as required by the Conditions of Issue of the Notes. Whilst there is considerable correspondence between the definitions in the Trust Deed and the definitions in the Deed Poll, they are not identical. In addition the Trust Deed referred to NZ applying "at the irrevocable direction of the Noteholder". 50 To the extent to which background facts may be discerned from the prospectus and used in the interpretation of the Trust Deed and, in particular, the conditions of issue of the Notes, it may be observed that paragraph 1.2 of the prospectus contained a ' Summary of Terms of the Notes '. Against the marginal heading ' Conversion Events ' the prospectus stated amongst other things 'Conversion for any notes unconverted on 12 June 2003 will be mandatory'. In no circumstances will the Conversion Price be less than $A0.25 per Ordinary Share. The words or expressions which were defined included 'Conversion Date', 'Conversion Event', 'Conversion Period', 'Conversion Price' and 'Conversion' or 'Convert'. Once again there was no definition of 'Redemption' or 'Redeem'. 52 The definition of 'Conversion' or 'Convert' departed from that contained in the Trust Deed and that contained in the Deed Poll. However, the Company [NZ] will have a right to redeem the Notes for cash upon: (i) expiry of the Conversion Period [12 June 2003]; or (ii) ... On redemption, the Company will repay to the Noteholders in respect of each unconverted Note the Face Value of A$5.00 plus an additional amount of interest equal to 5% of the Face Value. So far as NZ was concerned step 1 required 'redemption' of the relevant Notes and step 2 required NZ to apply the principal amount of the relevant Notes (but not any attendant interest obligation that may have to be satisfied) in subscription for shares in HIH Insurance. When that occurred, conversion, within the artificial meaning of that word, was complete. So long as the covenants contained in the Deed Poll remained in force, HIH Insurance 'agreed to issue' to the former noteholders Ordinary Shares and/or X Class Convertible Notes in accordance with clause 6 thereof. 55 Whilst it might be thought that condition 6.5 of the Conditions of Issue of the Notes was only concerned with the determination of the number of ordinary shares which could be allotted following 'conversion' of the Notes, it seems to me that condition 6.5 clearly casts light on what the process of conversion required, as well. Clause 6.5 highlighted, as Mr Sackar QC submitted, that conversion involved a two step process, as indicated above. That there was to be such a two step process is supported by the definitions of 'convert' and 'conversion' in clause 1.1 of the Trust Deed to which reference has already been made, the definitions of 'convert' and 'conversion' in the Deed Poll, the definition of 'Guaranteed Obligations' in the Deed Poll, when taken with clause 2.1 thereof, and the definition of 'Conversion' or 'Convert' in the prospectus. 56 Whilst noteholders may not have had the right to call for the redemption of their Notes for cash, nevertheless, in the context of the present case, redemption of the Notes, even as part of NZ's implementation of a mandatory conversion, required the Notes to be paid off. It was not open to NZ to discharge its conversion obligations otherwise than by applying the amount paid off, being an amount equal to the principal amount paid on the issue of the Notes, in subscription for ordinary shares in HIH Insurance on behalf of the noteholders. 58 In my opinion conversion required, as condition 6.5 made clear, redemption of each note for an amount equal to its Face Value and an application of the whole of the monies so payable to each noteholder on redemption in subscription for fully paid ordinary shares in HIH Insurance. The Conditions of Issue did not contemplate a mere assignment of a promise to pay the face value of the Notes from the noteholders to HIH Insurance. Apart from other considerations there is no evidence of any absolute assignment by writing under the hand of the noteholders of any debt or other legal chose in action to HIH Insurance of which express notice in writing has been given to NZ and there is no evidence to support a finding of an equitable assignment of any such debt or chose in action. Whilst HIH Insurance was a party to the Trust Deed it was not, in my opinion, a party to any contract referable to the issue of the Notes by NZ to the noteholders to which the Conditions of Issue set out in Schedule 1 to the Trust Deed applied (see generally s 12 of the Conveyancing Act 1919 (NSW) and the observations of Windeyer J on the assignment of choses in action in Norman v Federal Commissioner of Taxation [1963] HCA 21 ; (1963) 109 CLR 9 at 26-29). 59 The plaintiffs' submission that mandatory conversion 'telescoped' the two steps required for conversion of Notes into one should be rejected. The words 'must be automatically converted' as used in condition 12.3 of the Conditions of Issue of the Notes did not warrant any departure from the requirements for a valid 'conversion' in accordance with the process indicated in Condition 6.5 of the Conditions of Issue. The law in relation to frustration of contracts is conveniently summarised in the judgments of Mason J, as he then was, and Aickin J in Codelfa Construction Pty Limited v State Rail Authority of New South Wales [1982] HCA 24 ; (1982) 149 CLR 337 at 356-367 and 375-383. It may be noted that Wilson J agreed with the reasons of Mason and Aickin JJ in respect of the application of the doctrine of frustration. 61 Given the findings which I have already made it is unnecessary to decide whether the contracts in relation to the Notes between NZ and the noteholders were frustrated by virtue of the fact that HIH Insurance had been removed from the official list of the Australian Stock Exchange on 4 July 2001 with the consequence that no shares in HIH Insurance were sold on the ASX during the five Business Days prior to 12 June 2003. Whilst it was not possible to establish a denominator, as contemplated by condition 6.5(b)(i) of the Conditions of Issue of the Notes, my present inclination is to the view that, in the circumstances, the minimum price of 25 cents per ordinary share became the relevant denominator, by virtue of condition 6.5(b)(ii) of the Conditions of Issue. In any event, it must be recalled that NZ was under no obligation to allot any shares in its capital to the noteholders nor was it required to cause HIH Insurance to issue any ordinary shares in that company. All that was required of NZ was that it apply the monies payable to the noteholders on redemption of the Notes by way of subscription for a particular number of ordinary shares in HIH Insurance. It was then a matter for HIH Insurance to address the issue of shares to the noteholders in accordance with its Deed Poll made 26 October 1998. Accordingly, it was open to the noteholders and Perpetual to terminate each of the contracts on 15 November 2007, notwithstanding that the notice of termination was not given until after the commencement of the proceedings. 63 In the light of the findings which I have made and my observations in respect of relief, I propose to stand the matter over to enable appropriate orders to be made. I will direct the parties to bring in draft short minutes of appropriate orders for which they contend or upon which they are agreed. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. | frustration termination following repudiation 'redemption' and 'conversion' whether notes redeemable otherwise than by payment in full of the face value thereof contract words and phrases |
Federal jurisdiction is attracted by a claim by the applicant that one or both of the respondents has engaged in unconscionable conduct within s 51AA of the Trade Practices Act 1974 (Cth) ("TPA") and a consequential claim for relief pursuant to ss 80 and 87 of that Act. 2 Hasbeen and Gunabee are related companies. Hasbeen owns all the shares in Gunabee and three of the four directors of Hasbeen are the directors of Gunabee. At all material times, Mr Peter Thomas Thompson was a director of both companies and was authorised to represent them. 3 The parties asked me to exercise the power in O 29 of the Federal Court Rules to order the decision of certain questions separately from other questions in the proceeding. It was put to me that it was "very probable", to use the expression of the respondents' counsel, that the proceedings would be resolved if the questions were answered in a manner adverse to the respondents. Does the applicant have an equitable interest in the property (defined in paragraph 12.1 of the Statement of Claim) pursuant to the Option to Purchase contained in Clause 2(d) of the Extension of Lease dated 22 March 2006 (defined in paragraph 12.6 of the Statement of Claim) (which clause 2(d) created clause 3.18 in the Lease dated 28 November 2002 (defined in paragraph 12.6 of the Statement of Claim)) which is a prior equitable interest to the New Gunabee Lease dated 28 September 2007 (defined in paragraph 29 of the Statement of Claim)? Is the first respondent required pursuant to the Option to Purchase to provide to the applicant a contract for the sale and purchase of the property free of any other interests, including the New Gunabee Lease? The property is the whole of the land comprised and described in Certificate of Title Register Book Volume 5103 Folio 566 and Volume 5104 Folio 189 and commonly known as 43-45 Melrose St, Mount Pleasant South Australia ("the property"). Upon the sale and purchase of the business, the second respondent transferred to the applicant its leasehold interest in the property. The lease was a registered lease ("the lease"). The first respondent is the lessor and registered proprietor of the property. By Memorandum of Extension of Lease between the first respondent and the applicant and registered on 13 April 2006 ("the Extension of Lease"), the term of the existing lease was extended by one day, such that the lease was to expire on 2 December 2007. The lease contained rights of renewal and an option to purchase and the Memorandum of Extension of Lease, among other things, included another option to purchase. When I refer to the lease in the discussion below I will be referring to the lease as varied by the Memorandum of Extension of Lease. 6 Under the terms of the lease, the right of renewal was exercisable "not more than six and not less than three months prior to the end of the relevant period. " The right of renewal expired, therefore, on 2 September 2007. The applicant did not exercise the right on or before this date. On 28 September 2007, the applicant gave to the first respondent a notice purporting to renew the lease but the first respondent declined the request for renewal. In these proceedings the applicant claims relief against forfeiture in relation to its failure to serve the notice exercising the right of renewal within time. That claim is not in any way the subject of the separate questions. 7 On 28 September 2007, the first respondent and the second respondent executed a Memorandum of Lease for the Premises ("the Gunabee Lease"). On the same day, the second respondent lodged a caveat on the titles for the property claiming an equitable lease over the property. The Gunabee Lease was to commence at the expiration of the lease on 2 December 2007 for an initial term of five years with seven rights of renewal, each of five years. The applicant's solicitors were advised of the Gunabee Lease by letter dated 28 September 2007. The Gunabee Lease has not been registered. B A deposit equal to 10% of the purchase price shall be paid on the signing of the Contract to the Solicitors for the Lessor who shall immediately pay the same into its Trust Account and such deposit shall not be withdrawn except for the purpose of completing the transaction. (Original emphasis. On 2 November 2007, solicitors for the first respondent delivered to the applicant a proposed Agreement for Sale and Purchase of the property, which provided for the sale to be subject to the Gunabee Lease. The applicant did not execute the proposed agreement. On 6 December 2007 the applicant lodged a caveat over the property to protect its interest under the option to purchase. The applicant claims that it is entitled to a transfer of property free of the Gunabee Lease and the respondents dispute that claim. For the purposes of the separate questions that, in essence, is the issue between the parties. 10 Injunctions on the usual terms have been put in place to preserve the status quo. 11 I should mention the other issues raised by the applicant in its Statement of Claim and which are not the subject of the separate questions. I have already referred to the claim for relief against forfeiture (see [6] above). The applicant also claims that the respondents or one of them has engaged in unconscionable conduct within s 51AA of the TPA and that orders should be made under s 80 and s 87 of the TPA. It also claims that the Gunabee Lease is a sham. There is no doubt that an option to purchase gives the optionee an equitable interest in the property. In fact the respondents concede that it is a prior equitable interest and that the answer to the first question is yes. There are many authorities on the point. It is sufficient for me to refer to the following: London and South Western Railway Co v Gomm (1882) 20 Ch D 562 at 580-581 per Jessel MR; Carter v Hyde [1923] HCA 36 ; (1923) 33 CLR 115; Commissioner of Taxes (Qld) v Camphin [1937] HCA 30 ; (1937) 57 CLR 127 at 132-134 per Latham CJ. Although Gibbs J (as he then was) in Laybutt v Amoco Australia Pty Ltd (1974) 132 CLR 59 (" Laybutt ") at 75-76 identified the fact that an option to purchase gave rise to an equitable interest as a strong reason for characterising such an option as a conditional contract, rather than as an irrevocable offer, that 'standing controversy' as Sir Owen Dixon referred to it in Braham v Walker [1961] HCA 7 ; (1961) 104 CLR 366 at 376 has not been resolved and it is not necessary for me to take one view or the other for the purposes of answering the separate questions. It is to be noted that Gibbs J in Laybutt favoured the view that an option to purchase was a conditional contract to sell land which created a contingent equitable interest in the land. 13 The option to purchase in this case not only gives rise to a prior equitable interest in the property. It is contained in a registered lease and it is necessary to note the effect of s 117 of the Real Property Act 1886 (SA) ("RPA"). That case concerned an option to renew a lease but in the course of their reasons each Justice of the High Court referred to options to purchase in registered leases and the effect of s 117 of the RPA. The covenant created an interest in land and obtained the priority conferred by s 56 and the indefeasibility conferred by s 69. Section 56 of the RPA accords priority to registered instruments according to the time at which they are registered, and s 69 is the standard indefeasibility section. 18 Barwick CJ said that s 119 , although not applicable on the facts, was confirmatory of the conclusions he had reached. The implication in the proviso was that a right of renewal in a registered lease was entitled to priority and indefeasibility. Barwick CJ said that no practical difficulties arose from his view of the operation of the Act and he concluded, referring to priority and indefeasibility (at 340) that while the right of renewal remained exercisable, the estate created by the subsequently registered memorandum was subject to the right of renewal. 19 Gibbs J referred to the issue as being one of priority (at 342 and 345). He said that the lease including the covenants for renewal was a registrable instrument. His Honour found support for that conclusion in s 119. An argument was put as to the inference which could be drawn from s 117 and the fact that the section referred to a right of purchase but not a right of renewal. However, a covenant giving a right to purchase is essentially different in character from a covenant for renewal. It is "not a covenant concerning the tenancy or its terms"; it does not "directly affect or concern the land" and it is "not a provision for the continuance of the term, like a covenant to renew": Woodall v Clifton . It is "a separate and independent contract": Sherwood v Tucker . Since such a covenant is collateral, and does not affect the estate or interest in land granted by the lease, the registration of the lease, in the absence of a provision such as that contained in s 117 , would not (or at least might not) confer any priority or indefeasibility upon the covenant or the right which it creates. The provisions of s 117 were necessary to make it clear that the protection of the Act extends to a right for or covenant to purchase the land described in a lease but the same reason did not exist to make specific provision for the protection of covenants for renewal. Were it not for s 117 it would be doubtful whether an option to purchase might properly be included in a registered memorandum of lease and whether, if included, its registration would confer indefeasibility upon a renewed term arising from its exercise. Such an option is of its nature unrelated to the tenant's estate or interest under the lease; it has no closer connexion with that estate or interest than that the parties to it happen also to be in the relationship of lessor and lessee of the subject land. With it may be contrasted a right of renewal, which is intimately concerned with the existing relationship between lessor and lessee and which, as Finlay J. said in Pearson v Aotea District Maori Land Board , "is, in a sense, definitive of the term of a lease ... is adjectival in relation to the term granted". Hence, no doubt, the need felt for express reference if an option to purchase were to be permitted to appear on the Register Book and to receive the benefits conferred by registration. A rather different reason accounts for the express provision in s 119. The ordinary rights of tenants under the short term leases to which the section applies are preserved, despite non-registration, by the opening words of s 119 ; but the proviso makes it clear that neither rights of renewal nor options to purchase, although terms of a lease, come within the scope of this particular concession to unregistered interests which is strictly confined to the leasehold estate or interest itself. However, the proviso recognizes that registration entirely alters the position. Section 116 permits of the registration of short term leases and if such a lease be registered both a right of renewal and an option to purchase contained in it will be "valid as against" those who subsequently deal with the registered proprietor. 24 The effect of Mercantile Credits is that, in addition to being a prior equitable interest, the option or right to purchase, being in a registered instrument, has the benefits of indefeasibility or priority as against the Gunabee Lease. In view of the concession and indeed the effect of s 117 of the RPA, it is not necessary for me to consider the principles relating to priority between two equitable interests (as to which see, for example, Rice v Rice (1853) 2 Drew 73; 61 ER 646; Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17 ; (1965) 113 CLR 265; RP Meagher, JD Heydon and MJ Leeming, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (4 th ed, 2002) at [4.150]-[4.175]). 25 These conclusions leave for consideration the principal submission advanced by the respondents, that is to say, that the option to purchase by its terms did not preclude the first respondent from granting the Gunabee Lease and that the first respondent did not fail to comply with the terms of the option to purchase if it tendered a contract for the sale of the fee simple of the property subject to the Gunabee Lease. 26 The answer to the question posed by that submission depends on the terms of the option itself. The right of the person who may be called the owner of the option is a right to prevent the owner of the property in question from disposing of it inconsistently with the option, together with a right, if he exercises the option, to compel the owner of the property to carry out the contract which has been made by the exercise of the option. The only relevant interest in existence at the time the option was granted was the lease held by the applicant itself and it merges with the fee simple acquired by the applicant pursuant to the option and is extinguished. 29 In Re Crosby's Contract; Crosby v Houghton [1949] 1 All ER 830, an owner of premises granted a lease of the ground floor of the premises to a tenant and included in the lease was an option to purchase the whole premises. Before the option was exercised the owner, who occupied the upper part of the premises with her husband as a residence, leased the upper part of the premises to her husband. The tenant exercised the option to purchase the whole premises. The question was whether the lease between the owner and her husband was binding on the tenant and whether the owner made good title to the premises so long as the lease remained on foot. Romer J decided this question adversely to the owner. He said that where property is sold with an express or implied obligation to give vacant possession on settlement it is a prima facie term of the contract that the purchaser shall on settlement be put in actual (and not constructive) possession of the property. He said that whether property is sold with vacant possession to be given on settlement or subject to the terms of some tenancy or occupation is a question of the intention of the parties. Romer J referred with approval (at 833) to a statement by Simonds J in Cook v Taylor [1942] Ch 349. I may add that that appears to me to be common sense, for it would be strange if, the vendor saying nothing about the matter which lay within his knowledge and not within the knowledge of the purchaser, the purchaser were to find himself purchasing a property subject to a tenancy of which he could know nothing. Therefore I hold that as a matter of law, on a contract of this character, there is the implied term that vacant possession shall be given on completion. In my opinion, the terms of the option are such that it is proper to conclude that the first respondent has agreed to transfer an unencumbered estate in fee simple to the applicant upon the applicant exercising the option. The terms of the option refer to the form of contract of sale approved from time to time by the Law Society of South Australia Inc. A copy of such a form of contract of sale is before me. There is in the form a clause (clause 9) requiring vacant possession to be given subject to tenancies and other interests referred to in Item 10. That item is in the Schedule to the contract and it makes provision for tenancies and other interests to be noted. Clause 5 makes it clear that other interests may include encumbrances, mortgages and the like. Clause 15 deals with the respective obligations of the vendor and purchaser in the event that there are lease or tenancy agreements. 31 The terms set out in the option to purchase (clause (e) A-F inclusive) are detailed and contain the main terms to be included in the standard form contract. They include a "subject to" provision in clause (e) C. In my opinion, there is no reason to think that the owner wished to reserve to itself a right to lease the property, particularly as the option to purchase was contained in an instrument granting a leasehold interest to the applicant. In my opinion, the intention of the parties, as revealed by the terms of the option, was that the holder of the option upon its exercise was to take an unencumbered fee simple in the property. The respondents referred to the fact that the previous option to purchase (that is, the option to purchase in the original lease between the owner of the property and Gunabee which had in fact expired) referred to the transfer, upon the option being exercised, of an unencumbered estate in fee simple. Had the option to purchase under consideration been worded in the same way that might have avoided the present dispute, but the contrast between the wording of the two options is no reason to construe the option to purchase other than in accordance with its terms. I mention only in passing because neither party referred to it that the contract for the sale and purchase of the business between the second respondent and the applicant also referred to an option to purchase to be granted in terms of an unencumbered estate in fee simple. 32 Both parties made submissions to the effect that the interpretation of the other party would lead to what was said to be an uncommercial result. For its part the applicant submitted that if the respondents are right the first respondent could enter into a totally uncommercial lease in terms of the rent to be paid thereunder (and they suggested that the Gunabee Lease was uncommercial in this sense) and yet the applicant, if he exercised the option, was required to purchase the property at the price fixed in the option to purchase. That might be so, but I prefer to base my decision in the applicant's favour on the terms of the option to purchase itself. For their part, the respondents referred to the fact that the option to purchase could (if the right of renewal were not exercised) extend beyond the term of the lease and if the applicant were right the first respondent would be required to hold the property for a time without being able to lease it other than on a very short-term basis or, alternatively, to lease it subject to a term that could defeat the interest. The option to purchase in this case was exercised before the term referred to in the lease and it does not seem to me that the respondents' submission is a reason not to give effect to the conclusion I have reached. 33 Both questions should be answered in the affirmative. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. | options and agreements to purchase where applicant leased premises from first respondent where lease registered where lease contained option to purchase where first respondent later leased premises to second respondent where applicant subsequently exercised option to purchase where first respondent delivered contract for sale and purchase of fee simple subject to lease to second respondent where separate questions to be decided whether option to purchase created equitable interest in property subject of lease whether any such equitable interest enjoyed priority in relation to lease to second respondent whether first respondent required to provide to applicant contract for sale and purchase of unencumbered fee simple landlord and tenant |
It is not in dispute that he suffers from anxiety disorder, alcohol abuse and hypertension. 2 On 14 May 2008 the Veterans' Appeals Division of the Administrative Appeals Tribunal, in effect, affirmed a decision of the Veterans' Review Board which refused Mr Kaluza a pension under the Veterans' Entitlements Act 1986 (Cth) ("the Act ") on the basis that none of the conditions from which he relevantly suffers was war-caused. 3 Mr Kaluza has exercised his statutory right of appeal from the decision on a question of law (s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("Administrative Appeals Tribunal Act ")). The Instrument determined that each person included in the No 37 Squadron Richmond is taken to have been allocated for duty in the operational area described in item 4 and 8 in Schedule 2 (in column 1 of the Schedule) to the Act during the period determined according to paragraphs 1 and 2 in Schedule B of the Instrument. I do not read the reasons for decision of the Tribunal in this way. 8 It is true that the Tribunal identified the dates of Mr Kaluza's operational service as one of the issues which it had to decide. Unfortunately we were not able to rely on Mr Kaluza's recollections as to further additional flights which could be classified as operational service, because understandably given the effluxion of time, he was not able to remember specific dates. We were mindful that Mr Kaluza participated in many flights, and could not be expected to recall them all. We have noted that he had a recollection of a flight in 1968, and described the aircraft having pressurisation problems. However we do not have a date on which to consider operational service, and we were satisfied from the thorough Brennan search of the records that Mr Kaluza was not recorded as having been on an operational flight in early 1968. 9 However, a fair reading of the Tribunal's reasons for decision as a whole, so far as they deal with Mr Kaluza's operational service, does not suggest that it proceeded on the basis that it was precluded from finding that Mr Kaluza had operational service if the specific dates of that service were not established. Rather as it seems to me, the explanation for the Tribunal's frequent reference to the "date" of Mr Kaluza's operational service is the language of the Instrument and, in particular, the reference to "the date" and "the day" in paragraphs 1 and 2 of Schedule B thereof. 10 The Tribunal noted that Mr Kaluza claimed that during the period that he was posted to 37 Squadron at Richmond he made five or six flights to Vietnam between 1968 and 1971. The respondent agreed that he made two such flights, namely a flight on 22 February 1969 and a flight on 20 November 1970. The claimed flights that were in dispute were a flight in early 1968, a flight in 1969 or 1970 and a flight in 1971. 11 Mr Kaluza gave evidence that the flight in 1968 was a Medivac flight which took stores, equipment and mail to Vietnam and repatriated wounded personnel. He named the commander of the flight and said that there was an incident on board involving a loss of cabin pressure. Mr Kaluza indicated that the 1969/70 and 1971 flights were also to carry equipment to Vietnam and bring personnel back. He did not recall specific incidents in relation to those flights and stated that they were "largely uneventful". 12 The Tribunal had the benefit of two reports prepared by Air Commodore Brennan of Writeway Research Services Pty Ltd. 13 The reports prepared by Air Commodore Brennan did not provide support for Mr Kaluza's claims concerning the 1968, 1969/70 or 1971 flights. 14 Air Commodore Brennan's research indicated that there was no entry in Personnel Occurrence Reports which included Mr Kaluza flying between Butterworth and Vietnam in 1968. Nor did 37 Squadron Unit History Sheets for 1968 contain any record of a diversion of an aircraft into Kuala Lumpur due to a pressurisation problem or for any reason. The Tribunal accepted the accuracy of the official records searched by Air Commodore Brennan. It therefore concluded that Mr Kaluza did not render operational service by being part of a mission to Vietnam in early 1968. 15 As to the other disputed flights, the Tribunal concluded that Mr Kaluza's recollections were not reliable. While mindful that records of the time might have some inaccuracies, it ultimately preferred to rely on those records, as researched by Air Commodore Brennan, than on Mr Kaluza's recollection. 16 The limited nature of Mr Kaluza's statutory right of appeal means that he may not challenge the Tribunal's findings of fact in this Court unless he can demonstrate that they are affected by an error of law. He has not so demonstrated. The Tribunal simply chose, in an entirely conventional way, to prefer evidence from one source over evidence from another. For this reason, Mr Kaluza's appeal, so far as it relies on Question 1, fails. We noted by reference to the Instrument, as stated below, that after Mr Kaluza left Vietnam on 22 February 1969, he arrived in Butterworth. We did not have any evidence to satisfy us that he performed duty there associated with a continuing journey to Australia. He then travelled from Butterworth to Pearce on 24 February 1969, but he had arrived at Butterworth on 22 February 1969, and hence his journey had ended on that day as far as operational service went. In coming to that decision we relied on the words of the Instrument which are reproduced below, and found that Mr Kaluza had journeyed to a place (Butterworth), outside Australia, on 22 February 1969. We had no evidence regarding whether Mr Kaluza was at Butterworth on 23 February 1969 to perform duty not associated with a continuing journey to Australia, or whether it was simply a rest day. However either way we are satisfied pursuant to the instrument that the period of operational service for Mr Kaluza, on that occasion, ended on 22 February 1969 when he arrived at Butterworth. The issue for the Tribunal's determination was whether Mr Kaluza had journeyed to Butterworth "to perform duties not associated with a continuing journey to Australia". There was, as the Tribunal recorded in its reasons for decision, no evidence that Mr Kaluza had journeyed to Butterworth to perform duties not associated with a continuing journey to Australia --- or even that while in Butterworth he had performed duties not associated with a continuing journey to Australia. 20 The plain intention of Schedule B of the Instrument is, as it seems to me, that a person sent from Australia on a mission to Vietnam is to be regarded as being allotted for duty in Vietnam during the whole of the period of the journey to and from Australia --- unless the person was diverted to another mission immediately after leaving Vietnam. For this reason the period for which the person is taken to have been allotted for duty in Vietnam commences from the date of the last port of call in Australia (paragraph 1(a)) and ends on the day when the person arrives at the first port of call in Australia (paragraph 2(b)) unless, immediately after leaving Vietnam, the person travelled to a place other than Australia for the purpose of performing duties not associated with a continuing journey to Australia (paragraph 2(a)). 21 The respondent argued that it was open to construe Schedule B of the Instrument as providing that the period for which the person is to be taken to have been allotted for duty in the operation area comes to an end if the person leaves Vietnam to a place outside Australia, unless there is evidence that, at that place, the person performed duties associated with a continuing journey to Australia. 22 I reject the respondent's argument. First, it does not accord with the ordinary meaning of the language of Schedule B of the Instrument. Secondly, it would, inexplicably as it seems to me, treat the homeward journey from Vietnam differently from the outward journey. That is, the relevant mission passed through Butterworth both on the journey to Vietnam and on the return journey. It is not apparent why the stop-over in Butterworth should have no significance on the outward leg but critical significance on the return leg. 23 I conclude that the Tribunal erred in its construction of Schedule B of the Instrument. 25 It is appropriate that the decision of the Tribunal be set aside and the matter remitted to the Tribunal. Neither party identified a reason why, if the matter were remitted, it would be necessary for the Tribunal to be differently constituted or for further evidence to be adduced. I therefore make no directions in these regards (see s 44(6) of the Administrative Appeals Tribunal Act ). I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. | appeal from the veterans' appeals division of the administrative appeals tribunal extent of operational service whether veteran taken to be allotted for duty in an operational area during whole of return flight from vietnam whether performing duties not associated with a continuing journey incorrect interpretation of instrument made under s 5b(2) of the veterans' entitlements act 1986 (cth) administrative law |
The question of penalty in respect of these breaches remains outstanding. It was common ground between RailCorp and the applicant, the Australian Rail, Tram, Bus and Industry Union ( the Union ), that cl 22.1 of the 2005 agreement is an "applicable provision" within the meaning of s 719(1) of the Workplace Relations Act 1996 (Cth). It follows that the Court (being an "eligible court") may impose a penalty on RailCorp in accordance with Div 2 of Pt 14 of the Workplace Relations Act . Under s 719(4) the maximum penalty that may be imposed on a corporation in respect of a breach of an applicable provision is 300 penalty units or $33,000. Alternatively RailCorp submitted s 719(2) applied so that the breaches in respect of each of the 22 positions must be treated as a single breach. The Union took issue with both contentions. It submitted that the breaches called for the imposition of a substantial penalty which should be paid to it in accordance with s 842 of the Workplace Relations Act . (2) RailCorp genuinely misunderstood the operation of cl 22 of the 2005 agreement and its interaction with cl 3.10 of the State Rail Authority of New South Wales Enterprise Agreement 2002 ( the 2002 agreement ). This is evidenced by the course of correspondence between RailCorp and the Union. (3) RailCorp's interpretation of the operation of cl 22 of the 2005 agreement and its interaction with cl 3.10 of the 2002 agreement was arguable, even if proved to be wrong by reason of the principal decision in this proceeding. The 2005 agreement contains many ambiguities and difficulties. (4) Although RailCorp and the Union had long been in dispute about cl 22, their communications related to the filling of positions as required by cl 22.4 and not the making of a decision as required by cl 22.1. The breaches found in this case involve cl 22.1 only. Moreover, the communications show that RailCorp did not simply ignore the Union's position. It engaged in processes as contemplated by the 2005 agreement, including the active management of vacant positions. (5) The Union did not suggest that RailCorp's breaches were wilful in the sense that RailCorp acted in knowing defiance of its obligations. At worst it is said by the Union that RailCorp did not do all it could and should have done to ascertain the true nature of its obligations under cl 22. (6) The breaches of cl 22.1 should be seen as administrative in character. They relate to the failure to make a decision about the continuation of authorised positions. However, even if decisions had been made, the situation at Town Hall Railway Station may have been the same. Clause 22.1 vested in RailCorp a unilateral power to decide whether a vacant position should continue as an authorised position or not. In theory, RailCorp could have decided that none of the 22 positions in question were to continue as authorised positions. (7) RailCorp's motives were to ensure that it did not fill vacant positions which might thereafter be discontinued as part of ongoing structural reforms. RailCorp rightly saw this as unfair to employees and inappropriate. It is for this reason that it made ad hoc decisions about positions as and when they became vacant. (8) RailCorp has not previously been found to be in breach of any industrial agreement. (9) RailCorp had expressed its remorse for the breaches and put in place procedures to ensure ongoing compliance with the provisions of the Rail Corporation New South Wales Collective Agreement 2008 ( the 2008 agreement ) equivalent to cl 22 of the 2005 agreement. RailCorp compared the circumstances of the present case to those in Australian Liquor Hospitality & Miscellaneous Workers Union v Broadlex Cleaning Australia Pty Ltd (1997) 78 IR 464 and Australasian Meat Industry Employees' Union v Australia Meat Holdings (1998) 82 IR 76 in which no penalty was imposed where the breaches arose by reason of a genuinely held and arguable, but incorrect, interpretation of an industrial agreement. I do not consider these submissions consistent with the relevant principles having regard to a proper understanding of the facts of the case. The principles are not in dispute. As the Union submitted, they are conveniently summarised in Martin v Fresho Foods Pty Ltd (No 2) (2009) 180 IR 300 ; [2009] FMCA 191 at [12] - [19] and I do not need to repeat them. Applying those principles to the facts of the present case highlights a number of matters of significance. In RailCorp's favour, it has an unblemished record. It was also common ground that the breaches of cl 22.1 of the 2005 agreement cannot be seen as wilful in the sense of undertaken in knowing breach of the obligations imposed by the clause. Further, I accept that RailCorp believed that its construction of cl 22 of the 2005 agreement and part of cl 3.10 of the 2002 agreement was correct. Despite these factors, it is also apparent that cl 22 of the 2005 agreement, providing a clearly defined method by which positions were to be identified and filled on station establishments, was an important part of the bargain that RailCorp and the Union struck. The clause was the subject of extensive negotiation. It represented a compromise between the Union's acceptance of RailCorp's management prerogatives and RailCorp's acceptance of the Union's interest in maintaining employment for its members. RailCorp's breaches undermined the central obligations imposed by cl 22 of the 2005 agreement. RailCorp's position was that so long as RailCorp defined an area as "under review" it never had any obligation to take the first step under cl 22.1, being the making of a decision about the continuation of a vacant position within four weeks. Because RailCorp never took the first step under cl 22.1, the balance of the clause (and thus, in substance, the clause in its entirety) was rendered nugatory at least insofar as station operations were concerned. Instead of conducting itself as required by cl 22, RailCorp, as the evidence of Gregory Greenhalgh disclosed, filled vacant positions on an ad hoc basis according to its requirements from time to time and its view of the importance of the particular position that had become vacant. RailCorp maintained its stance in the face of repeated allegations by the Union of breaches of cl 22 at Town Hall Railway Station. As the Union submitted, the communications between the parties cannot be construed as RailCorp submitted. The obligation to fill positions imposed by cl 22.4 was dependent on RailCorp starting the process by making a decision under cl 22.1. By not making a decision, RailCorp never accrued an obligation to fill the position. The substantive effect of RailCorp's view of the operation of cl 22 was to give it a unilateral discretion to cover, advertise and fill positions as and when it saw fit and within any time period it saw fit. This outcome was wholly at odds with the substance of the bargain RailCorp struck with the Union in cl 22 of the 2005 agreement. This ad hoc approach depending on the particular nature of the vacant position remained RailCorp's position for the whole of the life of the 2005 agreement. As the Union submitted, there is no evidence that RailCorp took legal advice on this approach. Moreover, and contrary to RailCorp's submissions, there is no evidence that RailCorp's own industrial experts gave it advice that its interpretation of cl 22 was correct. There is evidence that RailCorp genuinely held a particular view of the operation of cl 22 of the 2005 agreement but that is not the same as evidence that it sought or received advice supporting its view. For these reasons, and again as the Union submitted, the breaches of cl 22.1 cannot reasonably be described as administrative or technical in character. The breaches of cl 22.1 went to the heart of the clause binding RailCorp to deal with vacant positions in a particular way. Further, while it may be accepted that RailCorp considered it inappropriate to fill positions if a later restructure removed the positions altogether, that fact does not lead to an inference that RailCorp's motivation was the best interests of employees and not its own interests. If it had been in RailCorp's interest to decide whether a vacant position should continue as an authorised position within four weeks of it becoming vacant then RailCorp would have acted to do so irrespective of cl 22.1. Given the repeated claims by the Union (which may be inferred to have been acting in the interests of its members, being RailCorp's employees) it may safely be inferred that RailCorp's management of vacant positions suited its own purposes. This inference is supported by Mr Greenhalgh's evidence. RailCorp's approach manifestly gave RailCorp the maximum degree of flexibility by allowing it to deal with each position as and when it became vacant and on an ad hoc basis. Clause 22, however, restricted RailCorp's flexibility by requiring it to make a decision up front about the existence of the position. Further, unless the position was to be abolished altogether, the clause imposed substantive obligations on RailCorp to fill the position in a particular manner and within a particular time. RailCorp is a large organisation with significant resources available to it and responsibilities owed to a great many employees. In the face of the terms of an agreement which it described as complex and ambiguous, this large organisation with significant resources available to it adopted a position about the meaning of an important provision of an industrial agreement the effect of which was to vest in RailCorp a unilateral discretion to cover, advertise and fill positions as and when it saw fit and within any time period it saw fit. RailCorp maintained this position for the entire life of the 2005 agreement despite both repeated allegations by the Union that RailCorp had failed to comply with the clause in question and a change in the factual position which occurred when the employees rejected RailCorp's proposal for station reform in mid 2006. RailCorp's position meant that, over a lengthy period of time and in respect of 22 separate positions at Town Hall Railway Station, RailCorp breached cl 22.1 of the 2005 agreement. The evidence of Clyde Livingstone, the station manager of Town Hall Railway Station, supports an inference that the breaches played a real part in the constantly high levels of vacancies at that station and the associated difficulties Mr Livingstone said he experienced in effectively running that station. These facts indicate that declining to impose any penalty on RailCorp in respect of the breaches would be inappropriate. It would be inconsistent with the fundamental requirements for proportionate punishment for breaches, specific deterrence of RailCorp from future breaches, and general deterrence of others in a similar position to RailCorp from committing breaches of industrial agreements in the future, albeit recognising the rehabilitative steps RailCorp has now implemented in order to avoid future breaches. For the reasons given above RailCorp's breaches cannot be characterised as merely administrative or technical, albeit they are by no means in or approaching the worst category of case. Specific deterrence remains a relevant objective. Despite the steps RailCorp has taken to ensure future compliance with the equivalent provision in the 2008 agreement of cl 22 of the 2005 agreement, the facts described above disclose that, when confronted with allegations of breach of an important provision that it saw as ambiguous and difficult to understand, RailCorp's approach to compliance was not adequate. General deterrence is almost always important, although a penalty must be proportionate to the gravity of the particular breach in question. It follows that I do not accept RailCorp's submissions that it should not be subject to any penalty in respect of the 22 breaches of cl 22.1 found. The parties did not address the fact that I found multiple breaches in respect of some of the 22 positions. I infer that they did not do so because they implicitly recognised that RailCorp's treatment of a particular position over time should be understood as arising out of a course of conduct by RailCorp with respect to that position. Accordingly, and consistent with the way in which this matter was run by the parties, I treat all breaches of cl 22.1 found in respect of a particular position as a single breach of cl 22.1. The question is whether I also should treat all breaches of cl 22.1 in respect of the individual positions in question as breaches which arose out of a course of conduct by RailCorp so that those 22 breaches shall be taken to "constitute a single breach" of cl 22.1. RailCorp submitted that I should do so as all of the breaches related to cl 22.1 of the 2005 agreement. All arose out of RailCorp's mistaken belief that part of cl 3.10 of the 2002 agreement continued in force and qualified RailCorp's obligations under cl 22 of the 2005 agreement. All related to positions rather than individual employees. All were a consequence of one course of "multifaceted conduct" ( Klousia v TKM Investments Pty Ltd [2009] FMCA 208 at [75] citing Wells J in Attorney-General (SA) v Tichy (1982) 30 SASR 84 at 92---3, Gibbs v Mayor, Councillors and Citizens of the City of Altona [1992] FCA 374 ; (1992) 37 FCR 216 , Mason v Harrington Corporation Pty Ltd [2007] FMCA 7 citing Quinn v Martin (1977) 16 ALR 141 at 143---145; Seymour v Stawell Timber Industries Pty Ltd [1985] FCA 236 ; (1985) 9 FCR 241 at 244 and 266-267, and Textile Clothing and Footwear Union of Australia v Southern Cross Clothing Pty Ltd [2006] FCA 325 at [28] ). According to RailCorp, the facts in Jordan v Mornington Inn Pty Ltd (2007) 166 IR 33 ; [2007] FCA 1384 (affirmed in Mornington Inn Pty Ltd v Jordan (2008) 168 FCR 383 ; [2008] FCAFC 70) are distinguishable. In that case the employer applied duress to employees on separate occasions. The Union submitted that s 719(2) was inapplicable. RailCorp bore the onus of establishing the applicability of that section ( Australasian Meat Industry Employees' Union v Meneling Station Pty Ltd [1987] FCA 2 ; (1987) 16 IR 245 , affirmed in Meneling Station Pty Ltd v Australasian Meat Industry Employees' Union (1987) 18 FCR 51). The facts in Jordan are indistinguishable. Heerey J (the judge at first instance in Jordan ) at [91] observed that "the statutory provisions are not directed to a continuing state of affairs, but rather conduct which answers a particular description. If there are episodes of conduct distinct in time or place, albeit related and engaged in with the same purpose, there will be separate contraventions. To take an example discussed in argument, if an employer on each morning of a week threatened to assault an employee if he did not sign an AWA, there would be a contravention on each day". The Union also referred to the observations of the Full Court in Jordan at [58] that it would have been open to Heerey J to conclude that there was a single course of conduct but he was not obliged to do so. The Full Court recognised that other factors "suggested that the contraventions should be treated separately and as equally serious. The contraventions occurred on different days. They each involved conduct which, viewed in isolation, was of the same character and significance as the individual events concerning other employees. The fact that Mr Barry persisted, in circumstances where Ms Thompson was obviously distressed, gives support to the idea that the repeat contraventions could be regarded progressively more seriously rather than less seriously". According to the Union the critical factual reference established by s 719(2) is the nature of the conduct and not the reason for it. RailCorp's approach, focusing on the reason for the breaches, is not contemplated by the language of s 719(2). The 2005 agreement was certified on 19 July 2005. It remained in force until 2 October 2008. From not later than 18 January 2006 the Union repeatedly advised RailCorp that RailCorp was breaching cl 22 of the 2005 agreement with the consequence that authorised positions were not being filled as required. After initially communicating to the Union in its letter of 27 January 2006 that all authorised positions would be filled in accordance with cl 22, RailCorp appears to have adopted the view that cl 22 was subject to part of cl 3.10 of the 2002 agreement. This position is reflected in RailCorp's facsimile of 20 December 2006 and was maintained thereafter. According to Mr Greenhalgh, after the employees rejected the station reform proposal in June 2006, RailCorp considered all vacant positions to be at risk of future abolition unless RailCorp specifically determined that the position should continue. Mr Greenhalgh said that decisions to fill positions were thus made on an ad hoc basis by reference to the requirements of the particular position which had become vacant. He said these decisions were made "at senior HR management level". This evidence is consistent with the facts relating to the 22 positions in respect of which I found breach of cl 22.1 of the 2005 agreement. The positions in question are all at Town Hall Railway Station. They became vacant at different times throughout the life of the 2005 agreement (from January 2006 through to March 2008). Some of the positions were advertised. Others were not. Some were ultimately filled. Others were not. These facts make it difficult to accept that the breaches arose out of "a course of conduct" by RailCorp. It may be accepted that RailCorp held a view about the meaning of cl 22 of the 2005 agreement. Undoubtedly it relied on that view as authorising the actions it took (or did not take) when positions became vacant. But the fact that RailCorp held a view does not mean that the actions it took at different times over a period of two to three years in respect of different positions may be described as arising out of "a course of conduct". Not only were the positions different. They became vacant at different times. They were treated differently by RailCorp depending on RailCorp's approach to the particular position at the time it became vacant. This is demonstrated by Mr Greenhalgh's evidence of RailCorp's ad hoc approach and the factual summary in [100]-[105] and [119]-[170] of my principal reasons for judgment. For these reasons I do not accept that s 719(2) applies to the breaches found in respect of the 22 positions identified in the declaration made on 18 August 2009. By its actions RailCorp committed separate breaches of cl 22.1 with respect to those positions. The total penalty must be proportionate to the overall conduct ( Australian Ophthalmic Supplies Pty Ltd v McAlary-Smith (2008) 165 FCR 560 ; [2008] FCAFC 8 at [23] and Plancor Pty Ltd v Liquor Hospitality and Miscellaneous Union (2008) 171 FCR 357 ; [2008] FCAFC 170 at [34] ). In determining the appropriate penalty for each breach it is necessary to take into account all of the surrounding circumstances and consequences of the breaches and the position of RailCorp. I have identified the surrounding circumstances above. I have also identified the fact that RailCorp is a large organisation with many employees. It must have been subject to numerous industrial agreements. Despite this, neither RailCorp nor its statutory predecessors have been previously found in breach. This is a significant factor weighing in RailCorp's favour. I am also satisfied that RailCorp has taken steps to ensure that it is able to meet its obligations under the provisions of the 2008 agreement equivalent to cl 22 of the 2005 agreement. Further, I accept that RailCorp takes its industrial obligations seriously. Although I have found RailCorp to be in breach of cl 22.1 of the 2005 agreement and do not consider that its approach to compliance with cl 22 was adequate in all of the circumstances, I nevertheless recognise that RailCorp believed it was entitled to act as it did. RailCorp also devoted substantial resources to managing vacant positions. It did not do so in accordance with its obligations in respect of the 22 positions identified, but it did not simply ignore vacant positions. I have considered but rejected formulating different penalties having regard to the nature of any particular position or the length of time over which it remained vacant. First, I am not able to determine the relative importance of positions and understand Mr Livingstone's evidence about the resulting management difficulties he has experienced to be a consequence of none of the positions having been filled as cl 22 required. Second, cl 22.1 required a decision about the continuation of each position as it became vacant within a period of four weeks. Each breach was committed by reason of RailCorp's failure to make the required decision within the required time. The Union's allegations of breach were made throughout the period of RailCorp's contravening actions. RailCorp's conduct in respect of later breaches, accordingly, was no more or less serious than its conduct in respect of earlier breaches. Taking into account the maximum penalty and all of the factors to which I have referred above (including specific and general deterrence) I consider that each breach should attract a penalty towards the lower end of the scale in the sum of $5000. If this penalty were to be imposed for each of the 22 breaches, RailCorp would be subject to a total penalty of $110,000. I consider a total penalty of $110,000 disproportionate to RailCorp's overall culpability. In terms of RailCorp's overall culpability I consider that the total penalty should not exceed $70,000. Application of the totality principle thus requires each penalty to be reduced. As mathematical precision is neither necessary nor appropriate I have determined the penalty for each breach to be $3100. The penalties should be paid to the Union as sought. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | penalties breaches of industrial agreement where multiple breaches of one clause in industrial agreement whether no penalty should be imposed whether breaches should be treated as a single course of conduct within the meaning of s 719(2) of the workplace relations act 1996 (cth) application of the totality principle industrial law |
He had been working as a marketing manager for a medium sized mobile phone retailer with about ten outlets. In about September 2002 he approached Matthew Donnellan, then the general manager of Allphones Retail Pty Limited. Allphones was a mobile phone franchisor that had begun operating in Western Australia. By the time Mr Hoy met with Mr Donnellan, Allphones was expanding its operations onto the eastern seaboard. It had had a small number of outlets in New South Wales. These were franchised stores. They operated in large retail shopping centres or shopping malls. Mr Donnellan explained that one of the features of Allphones' business model was that, through its franchisees, it offered retail customers the opportunity to enter into contracts for the provision of mobile phone services with a range of telecommunications service providers, such as Telstra, Optus, Vodafone, Hutchison (or '3') and other carriers or networks. Allphones could complete with other mobile phone retail outlets which were tied to individual carriers because it could offer various plans or deals with a range of carriers through its expanding franchise base. Thus, a customer who wanted to buy a mobile phone in an Allphones store could choose which carrier, and which plan or deal offered by that carrier, he or she wished to select. The model made the carriers competitive with one another about the plans or deals they would offer Allphones' stores. The various carriers offered different mobile phones with differing plans or deals, although there was some overlap on the more popular models of phones at the various levels of plans or deals. The Trade Practices (Industry Codes-Franchising) Regulations 1998 (Cth) made the Franchising Code of Conduct as a mandatory industry code to which ss 51AD and 51AE of the Trade Practices Act 1974 (Cth) applied. The Code governed the relationship that Allphones had with its actual and potential franchisees. The purpose of the Code was to regulate the conduct of participants in franchising towards other participants in franchising (cl 2(1)). It required a franchisor to create a disclosure document for actual and prospective franchisees in accordance with the requirements of Div 2.1 of the Code both before entry into a franchise agreement, and also within three months after the end of each financial year after the agreement had been made (cl 6(1)). The purposes of the disclosure document were to give a prospective franchisee or an existing one who might wish to continue or renew the relationship: The Code prescribed that a franchisee be given a considerable amount of information (see esp Annexure 1 to the Code). Critically, a franchisor was required to give to a franchisee a statement whether the franchise was for an exclusive or non-exclusive territory or was limited to a particular site (Annexure 1, cl 8.1). A franchisor was also required to give a copy of the Code and a disclosure document to a prospective franchisee at least 14 days before the franchisee entered into a franchise agreement (cl 10). Importantly, the franchisor must not enter into a franchise agreement unless it had received from the franchisee or prospective franchisee a written statement that the franchisee or prospective franchisee had received, read and had a reasonable opportunity to understand the disclosure document and the Code (cl 11(1)). And, before a franchisee agreement could be entered into, the franchisor must have received from the prospective franchisee signed statements that the prospective franchisee had been given advice about the proposed franchise agreement or business by an independent legal advisor, independent business advisor or independent accountant. If no such statement were received, the franchisor had to receive from the prospective franchisee a signed statement, indicating that it had been given that kind of advice about the proposed franchise agreement or business or had been told that he or she should seek that advice but had decided not to seek it (cl 11(2)). In this case, both parties agree that a disclosure statement was provided to Mr Hoy in about September 2002, but neither party has a copy of it and neither party can identify the contents. Additionally, both parties agree that a written franchise agreement was signed, but, once again, neither has a copy of it. They have, however, agreed that an unsigned version dated 27 June 2003 contained the written terms on which they entered into their franchise agreement for Hoy Mobile to operate as an Allphones franchise from a store in a Westfield shopping centre at Eastgardens, a suburb of Sydney. Before the franchise agreement was signed, Allphones should have ensured that Hoy Mobile Pty Limited or Mr Hoy and his wife, Nicole, gave it one or more of the statements required by cl 11 of the Code. Hoy Mobile was the company which formed to conduct the franchise business. However, no statements under cl 11 were given to Allphones. And, more remarkably, the franchise agreement described Hoy Mobile's exclusive territory as 'N/A', an abbreviation for 'not applicable'. In that context, it is unsurprising that there is a dispute between the parties about the territory. Allphones asserted that its failures to comply with the Code lead to the result that any franchise agreement entered into between the parties was void. And, both sides accuse the other of having committed serious financial irregularities in their relationship. On the one hand, Mr Hoy has admitted that he committed fraud in the operation of the franchise business by unlocking and selling previously locked mobile phones for more than what he accounted and paid to Allphones in respect of the sales. On the other hand, Allphones did not pay to Hoy Mobile all the commissions that it had agreed to share. Nor did Allphones disclose, at material times, that the total commissions it reported to its franchisees, including Hoy Mobile, as payable by telecommunications carriers for sales they effected, had been deliberately understated by Allphones. Allphones kept the difference and did not share it with the franchisees as it was obliged to do so. After learning of Mr Hoy's fraud, Allphones wished to rely on it to terminate the franchise agreement. Hoy Mobile claimed that Allphones was not in a position to terminate, first because it was itself in breach of essential terms of the franchise agreement and secondly, it had affirmed the franchise agreement by requiring Hoy Mobile to perform obligations under it, having full knowledge of the fraud committed by Mr Hoy. The litigation has been particularly hard fought. The trial took over 16 days to hear. There were substantive disputes between the parties as to significant conversations and other events in their now dysfunctional relationship. Even so, the issues and amounts over which the parties have been fighting appear to be out of all proportion to the legal costs which each has incurred. Hoy Mobile claimed approximately $300,000 in underpaid commissions and damages. It also sought orders protecting its entitlement to be a franchisee. Allphones claimed to be entitled to bring the relationship to an end. 1. He thought that this was an unpromising location but he observed that the outlet appeared to be trading successfully. For the previous ten years Mr Hoy had worked for Ryder Communications. It was an exclusive retail dealer for the carrier, Optus, selling mobile phones and telecommunications services to the public. Mr Hoy approached Michael Davidson, a former Optus employee whom he knew to be then working at Allphones. Mr Davidson introduced Mr Hoy to Mark McLennan of Allphones, who made an appointment for him to see Mr Donnellan. They first met in September 2002. At the time, both had been working in the telecommunications industry for many years. At their first meeting, Mr Donnellan explained the Allphones business model to Mr Hoy essentially as follows. Allphones provided franchisees with stock on consignment for the franchisees to sell. The franchisees accounted to Allphones for the total sale proceeds. Mr Donnellan explained to Mr Hoy that the Allphones model was different to other mobile phone franchising arrangements which were tied to particular carriers. The Allphones model gave it, as franchisor, and its franchisees, access to a broad range of various carriers' plants and specials whenever they were available. Thus, when customers were in an Allphones shop, they could be offered the current plans and specials of whichever carrier or carriers were on offer at the time. Of course, the two men were discussing matters of some familiarity to them through their own involvements in the mobile phone industry over some years. The critical area of discussion focused on how the Allphones model was different to a conventional single carrier shop with which Mr Hoy was used to dealing. Neither Mr Hoy nor Mr Donnellan suggested that they discussed Mr Hoy's potential territory at that first meeting. Usually, the sale of a mobile phone would be accompanied by some arrangement with a carrier for the provision of telecommunication services, though this was not always the case. Sometimes the customer would enter into a contract or plan for a number of months or years with a carrier under which the customer would acquire a mobile phone for either no charge to the customer directly, or for a charge that was discounted from what the phone might otherwise be sold for were it offered separately or on another deal by that, or a rival, carrier. These sales were called post-paid phone sales. That is because the payment for the phone generally was made as part of the overall payment by the customer to the carrier over the time of the plan. As between Allphones and the carrier, the carrier would pay Allphones a commission for the sale of the phone at the franchised store, and further commissions over the term of the contract based on the customer's use of the carriers' network when making phone calls. Thus, when a post-paid phone was sold, the franchisor and the franchisee could look forward to an income stream from the sale, based on the customer's usage of the phone over the term of the contractor plan. On other occasions, customers purchased pre-paid phones. These were phones in which the carrier had placed a pre-paid card allowing calls to be made up to the limit of the card. When the customer had used all the credit on the card, he or she could return to a vendor of cards, including an Allphones store, and buy a recharge card for use of that carrier's network, or, if new arrangements were made, with another carrier. In that way a customer could continue to top up the amount of available credit for use on the phone. Sometimes, carriers offered locked phones as part of a pre-paid deal. A 'locked' phone was one that could only be used on the particular carrier's network and the customer would have to continue buying recharge cards for that carrier to utilise the phone. Locked phones were sold at a price discounted from that for which a similar phone, not locked to a carrier's network, would be sold in the stores. At the end of the meeting, Mr Hoy said that Mr Donnellan gave him an Allphones disclosure document prepared for the purposes of the Code. Mr Hoy said that in early 2004, after the franchise agreement had been entered into, he threw the disclosure document away. It is not possible to make any finding about what the exact contents of the disclosure document were, since neither party now has a copy of it. Sometime after their initial meeting, Mr Donnellan sent Mr Hoy an email on 23 October 2002 saying that because he had heard nothing further, he assumed Mr Hoy had decided not to go ahead with the franchise, but he would leave the door open for continued discussions. Mr Hoy telephoned Mr Donnellan later that day and discussed matters. Following that discussion Mr Hoy sent an email which, among other things, mentioned that he had forgotten to clarify how 'co-op' payments for shop fit out provided by telecommunications carriers were dealt with in Allphones franchises. ('Co-op' fit out payments were sometimes made by carriers to franchisors as part of their advertising or promotional expenditure. The carriers benefited by ensuring that the get-up associated with their brand and goodwill was inside the franchise shop. Customers would be attracted to that carrier's product and services by a ready identification of the brand and associated get-up. ) Mr Donnellan emailed back to Mr Hoy on 24 October 2002 saying that the whole amount received by Allphones from the carriers for co-op fit out was passed on by Allphones to the franchisee. He said that for the previous two franchises, the total amount paid for co-op payments for fit out had been $18,000 and '... [w]e will try to maintain or increase this. The carriers are slow payers'. Mr Donnellan explained in giving evidence that it had been in the carriers' financial interests to support Allphones' initial attempts in 2002 to penetrate markets in different States, through co-op payments to assist with store fit outs. As events turned out, the policies of the various carriers, who were highly competitive with one another, changed and co-op funds ceased to be used for this purpose before June 2003 when the franchise agreement was ultimately entered into between Allphones and Hoy Mobile. Thus, there were no monies paid by any of the carriers to Allphones for shop fit out which could have been passed on to Hoy Mobile. However, Mr Donnellan failed to pass on to Mr Hoy the information that the carriers' policies had changed. And also because no fresh disclosure document was given to him by Allphones at the time of entering into the franchise agreement, Mr Hoy was not aware of the change of position. That was an oversight by Mr Donnellan and a contravention of cl 10 of the Code. However, Mr Hoy did not give evidence that if he had been informed of the true position, he would have acted any differently in his decision to go ahead. I find that Allphones' contravention of cl 10 of the Code and its failure to inform Hoy Mobile, at the time of entering into the franchise agreement, that no co-op payments were likely to be available to assist in defraying the cost of fitting out its store would have made no difference to Hoy Mobile's decision to enter into the franchise agreement. Some further discussions occurred between Mr Hoy and Mr Donnellan. Critically, on 8 November 2002 Mr Donnellan had his secretary send to Mr Hoy, by email, a copy of a franchise agreement between Allphones and a company called China Lake Holdings Pty Limited for the Castle Hill Allphones franchise. The territory was described in item 14 of the schedule to that franchise agreement as 'Castle Hill, NSW'. The area of restraint against competition was described in the same terms (in item 10). The China Lake agreement also contained an Annexure A, which had a covenant against competition within an area of a circle having a radius of 25 km from the location of the shop in Castle Hill. The email attaching the copy of the China Lake franchise agreement is the only contemporaneous document which described a territory of which both Allphones and Hoy Mobile had knowledge prior to then entering into their own franchise agreement. On Monday 11 November 2002, Mr Donnellan sent an email to Mr Hoy. He referred to their having caught up on the preceding Friday and wrote: '[G]lad to have you on board'. I infer that after Mr Hoy received the China Lake franchise agreement, he considered its terms and then spoke to Mr Donnellan advising him that he would take up the opportunity to have a franchise agreement with Allphones. The two men had been discussing the fact that Mr Hoy wished to have more than one franchise. He also wanted to have a discount on the franchise fee payable on entry into the arrangements. At some point, probably around early November 2002, Mr Donnellan wrote to Mr Hoy informing him that Allphones operated a franchise model, and thus could not vary any terms concerning the split of gross profits or anything else which was inconsistent with the model. Neither party has retained the original or a copy of that letter. I infer that their letter was in similar terms to Allphones' letter to Hoy Mobile dated 27 June 2003. In that letter, Mr Donnellan said that it was not intended to disadvantage or advantage any particular franchisee over another and that Mr Hoy needed to understand and respect this position. Mr Donnellan pointed out that because Allphones took the stock risk, by retaining title to the stock which was supplied to franchisees, as the franchise business became more successful the lower its risk became. He then said that he appreciated that Mr Hoy was 'not a one-franchise person' and made an offer that, for the first franchise, the fee would be $35,000, of which only $25,000 would be payable upfront. This is conditional on you agreeing to join the programme in 2002. First, the upfront payment would be $20,000 with a further $15,000 payable for each of the two franchises, only if the relevant targets were not met. Secondly, the second franchise was to commence trading no later than 12 months after the first had commenced, and the third no later than 16 months after the first. Mr Donnellan said that it had been difficult to get concessions from the directors, but that he had persuaded them on the basis of his firm belief that Mr Hoy would be successful. In his email on 11 November 2002, Mr Donnellan updated Mr Hoy on three potential sites that they had been discussing. One of them was Eastgardens, where he said that Allphones had identified two sites but that the rents 'are stupid'. He said that there was one particular site which might become available in the first quarter of 2003. He asked for a payment of a deposit of $3,500 to ensure that Mr Hoy had the right of first refusal as the first of the various sites came up. (There is no evidence that Mr Hoy paid that money. ) Mr Donnellan also said in that email that if Mr Hoy was prepared 'to take a site in a smaller centre --- and I respect that you are unlikely to do so --- then we would grant you first right at all of these sites until you took one' (sic). Matters then moved a little slowly, but by 10 March 2003, Mr Hoy had prepared a two year forecast of the results he anticipated to achieve in trading as an Allphones franchisee and discussed it with Mr Donnellan. The forecast provided for trading to commence in August 2003. Mr Hoy sent the forecast to Mr Donnellan by email and sought some further information which both had discussed. Mr Donnellan replied on 3 April 2003. He said that he would give particular figures later that week. However, he provided indicative figures for the four operating stores that Mr Hoy had enquired about and the dates on which they opened. He commented on Mr Hoy's projections, noting that the projected sales figure of $60,000 per month would make Eastgardens the store with the second lowest turnover in New South Wales. I infer that by early March 2003 Eastgardens had been selected as the location of Mr Hoy's franchise. Mr Donnellan also mentioned that the fit out cost of $115,500 in Mr Hoy's projection appeared to be 'light' and that he had no idea how it had been estimated. He said that gross profit over the past 12 months had been 26%. This was an important calculation because it was used, as will appear, in the calculation of commissions payable by Allphones to its franchisees. By Monday 23 June 2003 discussions had proceeded to the point where Mr Hoy and Mr Donnellan were exchanging emails finalising the terms of the intended franchise agreement. On that day Mr Hoy sent an email which attached a copy of Mr Donnellan's 11 November 2002 email and, what I infer was a copy of the letter of offer for the three franchises to which I have referred above. He said that that copy needed to be added to the franchise agreement, but the time frames in it would have to be adjusted to fit in with the date of the first lease. Mr Donnellan emailed back on 26 June stating that he did not think that this needed to be in the agreement but that he stood by the offer which was binding. In the morning of 27 June, Mr Hoy responded by email saying that he was happy to rely on the letter, however its spirit was to allow for a number of months between the opening of the various stores, while the agreement said that the second store had to be opened in 2003 and the third by March 2004. He asked Mr Donnellan to confirm that the time frames would be moved so that the second store could be opened by August 2004 and the third by December 2004 to coincide with the late opening of the Eastgardens store. Mr Donnellan immediately replied saying that his secretary would write a new letter reflecting the changed date. In fact, on that day Mr Donnellan's secretary created a letter with the new times requested by Mr Hoy by cutting and pasting from an earlier version. The letter of 27 June 2003 was made Attachment A to the franchise agreement. It was signed by Mr Donnellan's secretary with his authority. Mr Donnellan's secretary also created a written franchise agreement between Allphones and Hoy Mobile and dated it 27 June 2003. The parties agreed that this document (which included the letter of 27 June 2003) reflected the written terms of their franchise agreement. However, the version in evidence bears no signatures, other than Mr Donnellan's secretary's signature on the letter of 27 June 2003. Mr Hoy said that he signed the original franchise agreement, and gave it to Mr Donnellan who signed it on behalf of Allphones. Two copies were not signed, but kept by Mr Hoy. Only Mr Donnellan had a copy of the agreement signed by both of them. Subsequently, when Allphones moved its head office from Perth (where I infer the original signed franchise agreement had been sent) to Sydney it lost a number of documents including, I infer, the signed franchise agreement between it and Hoy Mobile. In addition, at some stage, the hard drive of the computer used by Mr and Mrs Hoy crashed, and a number of documents, including emails between the parties, which it contained were lost. Allphones never asked Mr Hoy or Hoy Mobile to provide it with a written statement that he or it had received, read or had a reasonable opportunity to understand the language of the disclosure document or the Code. Hoy Mobile was never asked by Allphones to provide a signed statement that it had been given advice on the proposed franchise agreement by anyone, including a lawyer, or that it had been asked to seek advice on the proposed agreement by a lawyer or anyone else prescribed in cl 11(2) of the Code. Allphones admitted that it had not complied with cll 10 and 11 of the Code before entering into the franchise agreement with Hoy Mobile. Mrs Hoy said that she signed only one copy of the franchise agreement, and that she did so before her husband. She did not recall whether she signed or initialled each page and only recalled signing the execution page. She said that she did not recall looking at any particular part of the document. She made an appointment for her husband to see a solicitor, Colin Duff, on 1 July 2007, but she did not attend the conference with him. Mr Hoy recalled having had a discussion with Mr Duff concerning the proposed lease with Westfield, but he did not recall anything else. He had no memory of discussing the franchise agreement with Mr Duff although he accepted it was possible that he did so. While he said that he understood that he and his wife were giving a personal guarantee when they executed the franchise agreement, he claimed not to have put any weight on it. He asserted that the discussion concerning the proposed lease took up nearly the entire meeting with Mr Duff. Mr Duff gave evidence that his diary recorded that an appointment had been made for Mr Hoy to see him for the purpose of a certificate under s 16 of the Retail Leases Act 1994 (NSW) and thus, he said that the primary purpose of Mr Hoy's visit was to obtain such a certificate. He gave a certificate under s 16 of the Retail Leases Act on that date for the leases that Hoy Mobile entered into with the lessors of the Eastgardens store. Mr Duff had no independent recollection of the meeting, which is hardly surprising. I am satisfied that his contemporaneous file note of his conference with Mr Hoy accurately recorded the substance of the general topics they discussed, and in limited respects, what he told Mr Hoy. Mr Duff's file note commenced with the statement: 'Has gone into a franchise contract'. This accorded with Mr Hoy's evidence that he had already left the signed franchise agreement with Mr Donnellan before he saw Mr Duff. The file note recorded that Mr Hoy instructed Mr Duff that he intended, as part of the arrangements, to sign a lease. It then recorded that Mr Duff dealt with a number of issues arising in respect of the three headings with brief descriptions underneath them, 'Queries re Lease', 'Franchise Agreement' and 'Family Trust'. Under the heading 'Franchise Agreement' Mr Duff's note referred to cl 6.4(ii) of the franchise agreement and the amount of advertising being 5% or less of the net revenue. He also noted that there was a restraint of trade, a guarantee and indemnity and also noted the 'effect of Annexure "A" as amending terms of agreement'. I infer that the reference to 'Annexure "A"' referred to the letter dated 27 June 2003. Mr Duff's notes included a second page with calculations of gross profit for the purposes of working out the net revenue of 26% retained by Allphones, of which up to 5% could be applied to advertising under cl 6.4(ii). Mr Duff also explained issues relating to the family trust to Mr Hoy. I find that Mr Hoy asked Mr Duff for, or received some explanations of, particular parts of the franchise agreement which he had previously signed and left with Allphones, rather than receiving advice generally for the purposes of cl 11(2) of the Code. Although each of Mr Hoy and Mr Donnellan gave evidence as to what happened at various meetings between them, I have little confidence in their recollections of conversations which occurred over five years ago. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. 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. Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen [1940] HCA 20 ; (1940) 63 CLR 691 at 712. They are just as apposite in a case such as this where the question arises of what oral terms of the contract were agreed in the course of negotiations. 2. ... within the Territory referred to in the Schedule hereto (hereafter called "the Territory") in accordance with the terms and conditions of this Agreement. The Franchisee must not canvass sales outside of the Territory. Allphones was entitled to develop and change the system and intellectual property which it used in the conduct of its overall franchise business (cl 4). Hoy Mobile, among other obligations, agreed not to do or permit anything during the term of the franchise agreement or thereafter which might detract from Allphones' reputation or goodwill or be misleading or deceptive or otherwise cause confusion (cl 5.8). Thus, when a credit card sale was made to a customer in a store, the point-of-sale system would allow the payment to be received immediately by Allphones. Similarly, a cash sale was recorded by the system on the next working day and the franchisee would bank into Allphones' bank account the day's cash takings. The system caused the store's electronic cash register receipts to be printed which recorded the goods sold and their prices (this was also the customer's sole receipt for a cash sale) and a credit card or EFTPOS transaction receipt. The system recorded what stock each franchised store held on consignment and, as sales occurred, movements in that stock. Thus, Allphones was able to know at any time what stock was held by a franchisee, what sales it had made and what monies had been received. Title to the stock supplied to Hoy Mobile remained vested in Allphones until it received payment (cl 6.9). Under the franchise agreement, Allphones also retained management control over all stock supplied by it to the franchised business and it was entitled, without notice, to recall any stock, or to move it to another franchised business or elsewhere (cl 6.5(iii)). Allphones had the right to conduct stock audits on a minimum of 72 hours' notice during normal business hours (cl 6.46). Hoy Mobile was only permitted to make available, for sale or distribution at the franchise business, products that complied with Allphones' standards or specifications or which it had approved in writing. In general terms, Hoy Mobile was required to order its stock from Allphones and the latter had to supply that stock. Hoy Mobile had to offer for sale at its store the products or services specified by Allphones unless their sale would be contrary to law. And, Hoy Mobile was not permitted to limit its business to a portion only of the products or services authorised by Allphones (cl 6.5(i)). This requirement also applied to stock Hoy Mobile desired to sell which was not usually supplied to franchised businesses by Allphones. If Allphones decided not to supply such stock, it had to notify Hoy Mobile within 48 hours of the order (cll 6.5-6.7) in which case Hoy Mobile was free to obtain the stock elsewhere. However, if Hoy Mobile did so, it was not to use the point-of-sale system to record sales of that stock, and they were not to be made under the name 'Allphones' (cl 6.8). The total value of Allphones' stock held by Hoy Mobile was not to exceed $30,000 or a value equal to an average of 45 days of its product sales. However, Allphones had a discretion to allow Hoy Mobile to hold a greater value of stock (cl 6.14). Hoy Mobile had to operate the franchised business strictly in accordance with the standards and specifications contained in the Allphones operations manual, and other instructions provided by Allphones from time to time (cl 6.23). Hoy Mobile was not allowed to conduct any other business than the franchised business on or from the franchised premises (cl 6.24). The franchise agreement contained detailed provisions for the selection of a site at which the franchised business would be developed and operated (cl 6.28). Allphones could specify the criteria for site selection from time to time. Hoy Mobile was prohibited from doing anything which would tend to dishonour, discredit or damage Allphones' reputation or that of other franchisees or its system or image. In particular Hoy Mobile had to be guided by the highest standards of honesty, integrity, fair dealing and ethical conduct in all its dealings with members of the public (cl 6.34(ii)). Importantly, Hoy Mobile agreed that it would promote only directly its sales activities in the territory and Allphones covenanted that neither it nor any related body would grant to any person a licence to use the system within the territory without Hoy Mobile's prior consent (cl 6.45). Allphones had the sole right to determine the recommended sale price of each item of stock. That price would be set in the point-of-sale system. Hoy Mobile could discount the price for good reason, including to remain competitive, but, if it did so, it would bear any loss on the discounted sale price (cl 7.1). Allphones was required to bear all bank charges in relation to those deposits (cl 7.3(i)). Allphones had to transfer to Hoy Mobile, not later than monthly, an amount equivalent to 74% of the gross profit from the total monies received by Allphones under cl 7.3(i). The gross profit was to be calculated in accordance with cl 7.5. Hoy Mobile had to bear all costs and bank charges relating to a transfer to it of that money (cl 7.3(ii)). Allphones was given the right to delay such payments if Hoy Mobile was in breach of any term of the franchise agreement (cl 7.3(iii)). 'MTSC' was 'defined as income received from the mobile telephone networks ... in respect of the activation of a mobile telephone customer to the networks'. The carriers at the date of the franchise agreement were also identified. 'MTAC' was 'defined as the income received from the mobile telephone networks ... relating to the proportion of call revenue received by the networks that is payable to [Allphones] in accordance with its agreements with the networks' (cl 7.5(ii) and (iii)). While cl 7.4(i) referred to monies 'received by the Franchisee' (here, Hoy Mobile) in relation to MTSC and MTAC, it was common ground that the carriers had always paid Allphones those commissions. I accept Mr Donnellan's evidence that the money which Allphones received from the carriers in respect of those commissions was dealt with as if Allphones had received it from the franchisee in accordance with cl 7.4. He said, in effect, that if a telephone service had been activated through a sale made at an Allphones store, such as that of Hoy Mobile, Allphones was bound to pay the MTSC and MTAC it received from the carrier in respect of that activation to the relevant franchisee. He said that Allphones was obliged to account to the franchisee for that commission, in accordance with the terms of cl 7.4. This understanding expressed by Mr Donnellan reflects the way in which cl 7.4 should be construed in order to give it the commercial effect the parties must have intended. They both knew that MTSC and MTAC were significant rewards for the sales efforts of franchisees and that the franchisees were intended to receive the shares of commission for MTSC and MTAC provided in cl 7.4 however the carriers might pay those sums. No other provisions in the franchise agreement would have enabled a franchisee to benefit from MTSC and MTAC which was paid to Allphones directly by the carriers in respect of sales effected by the franchisee which generated such commission. Of course, in the unlikely event that the franchisee received either form of commission directly from the carrier, it would have had to account for it in accordance with cl 7.4. But the commonsense business understanding expressed by Mr Donnellan reflected the commercial reality that the two types of commission in cl 7.4 were very significant sources of earnings of a franchise business. The inelegantly drawn provisions of cl 7.4 were intended to divide any MTSC and MTAC paid by a carrier to either a franchisee or Allphones, between the two parties to the franchise agreement. Importantly in light of the way in which Mr Hoy later acted as explained below, cl 7.6 required Hoy Mobile to sell all stock either by way of cash, cheque, electronic funds transfer or credit card. And, Hoy Mobile had to supply Allphones with a copy of each invoice, together with a deposit slip relating to that invoice, for the sale of stock supplied by Allphones (cl 7.9(ii)). Hoy Mobile also had to keep and maintain records, accounts, books and data which accurately reflected all particulars relating to the franchised business (cl 7.12). Allphones was entitled to have its representatives or agents inspect the franchise premises and ensure that its standard get-up requirements were met (cl 7.17). Hoy Mobile covenanted against competing with Allphones for the ensuing six months following the termination of the franchise agreement (cl 7.22). The area of restraint was specified as 'the Territory' or, alternatively the area 'within a circle having a radius' of 25 km from the franchised business or any other franchised business (cl 7.22). Allphones formally elected not to seek to enforce this restraint in the event that it terminated the franchise agreement. This makes it unnecessary to determine the validity of the restraints or whether Hoy Mobile should be granted any relief in respect of the restraints. Allphones could not unreasonably withhold its consent to an assignment by Hoy Mobile of the benefit of the franchise agreement, provided, that among other things, Hoy Mobile was not in breach and had paid all monies due (cl 8.1(ii)). However, if Hoy Mobile wished to sell its rights under the franchise agreement, Allphones had a right of first refusal on the terms of the proposed sale (cl 8.3). Rights of termination were provided in cl 9. If Hoy Mobile failed to perform an obligation in circumstances where the default was capable of being rectified, Allphones could give notice requiring rectification within 30 days, failing which it could terminate. However, if Hoy Mobile had committed a breach of an obligation under the franchise agreement which was not capable of rectification, Allphones was entitled to terminate by notice in writing without requiring rectification of the breach (cl 9.1). Allphones was also entitled to terminate the agreement by giving written notice to Hoy Mobile on the occurrence of a number of events of default, including if Hoy Mobile misused or permitted misuse of Allphones' intellectual property or did any other act which harmed Allphones' goodwill and reputation and it failed to remedy that default within 24 hours' notice (cl 9.2(iii)). The latter provision also permitted a franchisor to terminate without notice where the franchisee was fraudulent in connection with the operation of the franchised business. The franchise agreement expressly provided that the business of Hoy Mobile was independent from the business of Allphones and that there was no agency, partnership or joint venture between them (cl 12). Importantly, cl 15 provided that the terms and conditions of the franchise agreement could not be modified, altered or amended except by written agreement of both parties. And, cl 16 provided that any waiver or partial waiver of any of Allphones' powers, rights or remedies under the franchise agreement would not be effective unless made in writing and signed by Allphones. In addition, a failure or delay on the part of Allphones to exercise a right or remedy would not operate as a waiver, nor would any single or partial exercise of any such right, power or remedy preclude any further exercise by it of any other right or remedy under the franchise agreement (cll 16.1, 16.2). The franchise agreement recorded that it constituted the entire agreement between the parties with respect to its subject matter and superseded all prior negotiations, representations or agreements, whether written or oral (cl 18). A dispute resolution mechanism was provided in cl 24.1. That provided that if a dispute arose between the parties they agreed to undertake and implement steps in accordance with Pt 4 of the Code. If the matter could not be resolved, they agreed to refer the matter to the mediation adviser appointed by the Franchising Policy Council (cl 24.2). A number of definitions were set out in cl 26. The franchised premises were defined to mean 'premises from which the Franchised Business is conducted', being the business conducted in the terms of the franchise agreement. And, 'outlet' was defined as 'all Franchised Businesses operating within the Territory' (cl 26.1). Significantly, the Code was deemed to be incorporated in the franchising agreement '... and in the event of any conflict between the terms of this Agreement and the Code then the provisions of the Code shall prevail' (cl 28). It was in terms similar to those in the China Lake agreement, providing for the area of restraint to be a circle having a radius of 25 km from the GPO (presumably the General Post Office in Sydney). There was also Attachment A to the franchise agreement being the letter dated 27 June 2003. 3. WHAT WAS THE TERRITORY? He also said he went through the disclosure document and then had a second meeting in about September 2002 with Mr Donnellan at Allphones' office. He said that at the second meeting Mr Donnellan began the conversation saying: 'We offer 5 km territories'. Mr Hoy said that he asked whether that was diameter or radius, and Mr Donnellan enquired what the difference was. Mr Hoy said that he explained that a 5 km diameter was really only a circle of 2½ km around the store. He said that Mr Donnellan replied that the measure was definitely radius. He said that Mr Donnellan had a large map of Sydney on the wall with coloured thumb tags and different colours for different purposes, including a colour for current stores and another for shopping centres that were available. It was at that point that Mr Hoy said that he raised the Eastgardens shopping centre location, because he was aware that an Optus dealer, Century 21 (or 'C 21'), had one of its most profitable stores in that centre. Mr Hoy said that next he had a meeting with Mr McLennan to go through a sample lease later in September 2002. He said that at some point during that meeting they moved from the Allphones' board room to a cubicle and Mr Donnellan walked past popping his head over the cubicle wall to say hello. You're not going to sell many of those in Sydney with that sort of territory. ' Mr Hoy then asked for a copy of a sample contract that he would be signing. Following this meeting, he received the China Lake franchise agreement by email on 8 November 2002 from Mr Donnellan's secretary. Mr Hoy said that he noticed in that agreement that the area of restraint and the area of the territory was defined as 'Castle Hill', which was not the same as the 5 km radius he claimed that Mr Donnellan had told him. He said that, at the time, he regarded the description 'Castle Hill' as fairly ambiguous and that he wondered whether it was the municipality of Castle Hill or the suburb of Castle Hill, yet he did not discuss that with Mr Donnellan or anyone else at Allphones. Despite his claimed observations concerning the China Lake agreement, Mr Hoy denied that he read it carefully at the time he received it. He also denied that he read the actual franchise agreement for Hoy Mobile carefully at the time he received it. He asserted that he did not then look at the territory provided in the Hoy Mobile franchise agreement. I do not believe this evidence of Mr Hoy. The territory which Hoy Mobile was to be granted was obviously important to Mr Hoy. It would be natural for someone in his position to turn to the schedule to make sure, among other things, of the territory and the commissions percentages which his company was to receive before he committed himself. I am not satisfied that any of the pre-contractual conversations concerning territory occurred in the way Mr Hoy asserted. First, no contemporaneous document supported his account that Allphones ever granted a 5 km territory or measured territory by a radius of 5 or 25 kms. Secondly, if Mr Hoy's evidence were accurate, then he had received the two documents, (namely a disclosure document showing a 25 km territory and the China Lake agreement showing his supposedly ambiguous 'Castle Hill') and had been given the explanations by Mr Donnellan, which were each inconsistent on the issue of territory. It is implausible that, in that situation, Mr Hoy did nothing to ensure that the territory was clearly defined after he had been given the franchise agreement proposed for Hoy Mobile. If his account were accurate, it would have been troubling for him that there was an ambiguity in the China Lake agreement's description of territory and that it was also inconsistent with Mr Donnellan's statement regarding a 5 km radius. Moreover, Mr Hoy was careful in 2002 to protect his position by obtaining from Mr Donnellan the letter identifying the conditions upon which he would be offered the three franchises, and to have those conditions repeated and made part of the franchise agreement in June 2003. I do not believe that Mr Hoy ever understood that Allphones would grant a 5 km territory to him or to Hoy Mobile. I do not believe his evidence that he did not notice 'N/A' in the schedule to Hoy Mobile's franchise agreement when the draft was provided to him. Mr Hoy had a significant self-interest in the outcome of these proceedings. The radius of 5 km from the Eastgardens store sufficed to provide Hoy Mobile with a territory large enough to include Randwick, where Allphones had opened a store in late 2005. Yet only in May 2006, some time after that event occurred, did Mr Hoy make any assertion that the territory was 5 km. I do not accept Mr Hoy's evidence on the discussions concerning territory. He asserted that the 2002 version of Allphones' disclosure document said that an Allphones' territory for its franchisees was a 'non-exclusive territory'. He said that the 2002 disclosure document had not been able to be located and had not been saved. At the time of his negotiations with Mr Hoy in 2002, Mr Donnellan knew that Allphones had only five franchises in New South Wales. Mr Donnellan had negotiated the sale of the franchise to China Lake in 2002. He also negotiated the grant of a franchise, commencing on 1 June 2002, of a shop in Wollongong Central Shopping Centre. The franchisee agreement for that shop had a description of territory in the schedule of 'Wollongong, NSW'. That franchise agreement had an area of restraint that conformed with the area of the territory it had granted, namely Wollongong, NSW. Subsequently, in cross-examination, Mr Donnellan was shown an Allphones franchise agreement entered into on 17 April 2003 for a franchise business in Shellharbour Square commencing on 10 July 2003 (i.e. around the time at which the negotiations with Mr Hoy were finalised). There, the territory was '[a]s per marked section on the attached map', but no such map was in evidence. The area of restraint, curiously, was a 25 km radius from the GPO. Mr Donnellan said that he did not negotiate the grant of the Shellharbour franchise. After he had been shown these other three agreements made in 2002 and 2003, Mr Donnellan admitted that there was no policy or strict prohibition on the grant of franchised territories beyond the leased shop premises when he had his conversations with Mr Hoy in 2002. Mr Donnellan claimed that before he gave his evidence he had not looked at franchise agreements from 2002 but he said he had looked at franchise agreements from 2003. I do not believe that evidence either. Mr Donnellan was conscious at this point in his cross-examination that he had previously made an assertion of a strict policy in 2002 which, by that stage, had been shown to be false. Next, he agreed that he had not mentioned to Mr Hoy that there was any strict prohibition on the grant of franchised territories larger than the leased shop premises in any of his 2002 conversations. --- We did have one general discussion, yes. --- Yes. --- I did in my affidavit. --- I denied the conversation that Craig [Hoy] said in his. Mr Donnellan was then pressed about what he now claimed had occurred. Was it him who raised it or you who raised it? --- He raised it with Mark McClennan. I was walking past; asked how things were going, and he said, "What about territories? " I said, "We don't give them, mate. Mr Hoy was not cross-examined about any such conversation when he first gave evidence. I infer that this was because the conversation was first raised by Mr Donnellan in his cross-examination. When he was recalled at the end of the trial, Mr Hoy denied the conversation asserted by Mr Donnellan. Mr McClennan was available. He had a position as a consultant with Allphones, but was not called to give evidence. I infer that nothing Mr McClennan could have said would have assisted Allphones' case: Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298. Allphones contended, based on the assertions initially made, but later disavowed by Mr Donnellan, that at the time the franchise agreement with Hoy Mobile was entered into, the only territory which Allphones was prepared to grant was limited to the physical shop in which the franchise was conducted. I reject this argument. Such a result does not fit within the matrix of mutually known facts or the very terms of the franchise agreement itself. First, Mr Donnellan never told Mr Hoy, prior to signing the franchise agreement, words to the effect that the territory was the area of the shop lease. There is no evidence that Mr Hoy was informed to that effect prior to Hoy Mobile's entry into the franchise agreement. Secondly, the Castle Hill franchise, known as Castle Towers, had opened in July 2002. That was operated under the China Lake franchise agreement. In November 2002, Mr Donnellan authorised his secretary to send Mr Hoy that agreement as a sample or template for the agreement which Allphones was proposing to enter into with Mr Hoy or his nominee once a site was agreed on by them. Thirdly, the franchise agreement with Hoy Mobile distinguished between the franchised premises for Hoy Mobile, the shop, and the territory. It would be commercially absurd for Allphones to contract, as in cl 2, that it would not operate a franchised business in 'the Territory' where that territory was a leased shop of which its franchisee had exclusive possession: Radaich v Smith [1959] HCA 45 ; (1959) 101 CLR 209. We didn't hold the lease. The remaining possibilities are that 'N/A' was literally the territory agreed between the parties, so that there was no territory at all; or that there was some other meaning of territory. Allphones argued that the agreement could work perfectly well without the specification of a territory. I reject that argument. A reasonable person in the position of the parties would have considered that the exclusive territory, to which cl 2 of the franchise agreement referred, was an essential term. In doing so, they would be mindful, both, that the China Lakes agreement had used a simple means of defining the territory by making it the suburb in which the franchised premises were, and that the Code required specification of, first, a territory, and secondly, whether the territory was exclusive, non-exclusive or limited to a particular site (Annexure 1 of the Code, cl 8.1). In that specification, the Code recognised that a 'particular site' was different to an exclusive territory. A reasonable person in the position of the parties here would reject as inappropriate a construction of their franchise agreement that it had no territory at all. The task of construing 'N/A' as the description of the territory must be approached in the manner described by Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [40] ; applied in International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 242 ALR 47 at 63 [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ. That requires the Court to put to one side the subjective beliefs or understandings of the parties about the rights and liabilities that govern their contractual relations, and to concentrate on the principle of objectivity for the ascertainment and definition of those rights and liabilities. Their Honours said that what mattered was what each party, by words or conduct, would have led a reasonable person in the position of the other party to believe. The meaning of the terms of the 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 ( Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at 461-462 [22] . See also the remarks of Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 350-352, and of Lord Bingham of Cornhill in Bank of Credit and Commerce International SA v Ali [2001] UKHL 8 ; [2002] 1 AC 251 at 259): "the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. " That knowledge may include matters of law, as in this case where the obtaining of intellectual property protection was of central importance to the commercial development of Mr Allen's ironing board (cf Bank of Credit and Commerce International SA v Ali [2001] UKHL 8 ; [2002] 1 AC 251 at 282, per Lord Clyde). In Australasian Performing Rights Association Ltd v Monster Communications Pty Ltd (2006) 71 IPR 212 at 235-237 [103]-[108] I referred to the principles applicable to the construction of contracts. I am of opinion that the genesis of the franchise agreement, the background context and market in which the parties were operating were all relevant, as known to both of them, for the purpose of construing what was intended to be referred to by the use of 'N/A' in describing the territory. There is no evidence that the terms of the franchise agreement as settled between the parties was the subject of drafting, before execution, by lawyers. The process of construction is intended elucidate and give effect to what the parties by their words or actions objectively conveyed to one another was their agreement. Courts seek to avoid being the destroyers of bargains and should be reluctant to find agreements void for uncertainty. The process of construction will result in a meaning which the court decides is the proper construction of the contract. As Barwick CJ emphasised in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8 ; (1968) 118 CLR 429 at 436-437, in the search for the parties' intention, no narrow or pedantic approach is warranted, particularly in the case of commercial agreements. Unless parties have expressed themselves in such a way that their terms are so obscure or incapable of any definite or precise meaning so that the Court cannot attribute to them any particular contractual intention, the Court will find a meaning which an objective person in the position of the parties at the time they entered into the contract would have understood them to have intended: see also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) [2000] HCA 25 ; (2000) 202 CLR 588 at 599 [15] per Gaudron, McHugh, Gummow and Hayne JJ; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ( CEPU ) v Australian Competition and Consumer Commission [2007] FCAFC 132 ; (2007) 162 FCR 466 at 510 [164] - [166] , 511 [171], 512 [174] per Weinberg and Bennett JJ and myself. The facts mutually known to both Mr Hoy and Mr Donnellan were that the China Lake franchise agreement provided for a territory of the suburb in which the franchised premises were located. Both men also knew that Eastgardens was the suburb in which the franchised premises were to be located for Hoy Mobile's first franchise. In addition, they contemplated that there would be two other franchised premises for Hoy Mobile pursuant to Attachment A to the franchise agreement (being the letter of 27 June 2003). I am of opinion that a reasonable person placed in the matrix of facts in which the parties were in June 2003 would have understood the reference to territory as 'N/A' was intended to convey that the territory would not be limited to the suburb in which the first of the three businesses would be established, but would in time expand to encompass severally the respective suburbs for each of the three businesses contemplated in Attachment A. That person would have understood that the franchise agreement provided that Allphones could neither operate, nor permit the operation, of a competing Allphones business within any of those suburbs. In the circumstances, I find that on its proper construction, the franchise agreement provided that the territory referred to in it was initially to be the suburb of Eastgardens. If and when Hoy Mobile opened new franchised premises, as envisaged in the letter of 27 June 2003, the territory would be increased to add each suburb in which a Hoy Mobile store was located. Allphones argued that when he was consulted by Mr Hoy, Mr Duff would have been able to notice, first, if there had been a non-compliance with the Code and, secondly, whether the description 'N/A' was meaningless. Significantly, Mr Duff's records have no reference to his advising for the purposes of the Code or generally on the franchise agreement. Rather, Mr Duff advised Mr Hoy on specific issues concerning the franchise agreement, raised by Mr Hoy and recorded by Mr Duff in his file note. There is nothing inconsistent with the construction at which I have arrived in him having done so. Contrary to its obligations under the Code, Allphones did not require Hoy Mobile to provide it with any statements under cl 11(2) of the Code (see below). I find that Mr Duff was not consulted by Mr Hoy for the purposes of receiving legal advice of the nature referred to in cl 11(2) the Code. The principal reason Mr Duff saw Mr Hoy was to give a certificate under s 16 of the Retail Leases Act , which he did. In addition, given that Allphones failed to comply in significant respects with cll 10 and 11 of the Code, I am not prepared to draw inferences in its favour as to what Mr Duff would have advised, assuming he had been asked to provide any advice to Hoy Mobile of the kind referred to in cl 11(2)(a) of the Code. 4. It relied on the decision of the New South Wales Court of Appeal on the earlier version of the Code, in force in early 2000, in Ketchell v Master of Education Services Pty Ltd [2007] NSWCA 161. Mason P, with whom Basten JA and Handley AJA agreed, held that s 51AD of the Trade Practices Act (prohibiting contraventions of the Code), read with the predecessor of cl 11 of the Code, directly prohibited the contract there in question: Ketchell [2007] NSWCA 161 at [30] . This is not a case of implying from the silence of the legislature a statutory policy about illegality of contracting. What is prohibited under cl 11 is not just conduct but the contract itself and the recovery of money under it. The Code was subsequently amended in October 2001. The version of the Code in force in 2003 contained the following relevant provisions. Critically, cl 6A had been added to the earlier version that was in force for the purposes of the decision in Ketchell [2007] NSWCA 161. Clause 6A provided that the purpose of a disclosure document was to give a prospective or existing franchisee proposing to enter into, renew or extend a franchise agreement, information from the franchisor to help the franchisee to make a reasonably informed decision about the franchise; and to give the franchisee current information from the franchisor that was material to the running of the franchise business. And, cl 11(1) provided that the franchisor must not enter into, renew or extend a franchise agreement unless it had received from the franchisee or prospective franchisee a written statement that the franchisee or prospective franchisee had received, read and had a reasonable opportunity to understand the disclosure document and the Code. Next, cl 11(2) provided that before a franchise agreement was entered into, the franchisor had to receive from the prospective franchisee either: In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 ; (2007) 230 CLR 89 at 151-152 [135] , Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said that intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is 'plainly wrong': see too Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15 ; (1993) 177 CLR 485 at 492 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ. And, where an intermediate appellate court holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong: Nguyen v Nguyen [1990] HCA 9 ; (1990) 169 CLR 245 at 250 per Brennan J, at 269 per Dawson, Toohey and McHugh JJ and at 251 per Deane J agreeing. In McNamara v Consumer Trader and Tenancy Tribunal [2005] HCA 55 ; (2005) 221 CLR 646 at 661 [40] McHugh, Gummow and Heydon JJ discussed the construction of a section which had been re-enacted in the same words in new legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court's jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and the hierarchical nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation. However, I am of opinion that the Court of Appeal's decision should not be followed for three reasons: First, that decision was on a different legislation, namely an earlier version of the Code that was not in force at the time when Hoy Mobile and Allphones entered into the franchise agreement. The subsequent decision of the High Court in Australian Competition and Consumer Commission v Baxter Health Care [2007] HCA 38 ; (2007) 237 ALR 512 demonstrates that the approach to construction adopted by the Court of Appeal was wrong (see below). (I note that special leave to appeal from the decision in Ketchell [2007] NSWCA 161 was granted by Gummow and Crennan JJ: Master Education Services Pty Ltd v Ketchell [2008] HCA Trans 89. ) I am convinced that the decision of the Court of Appeal is plainly wrong. A principal purpose of the Code is to protect franchisees. Mere non-compliance by a franchisor with any requirement of the Code, including cl 11, could not have been intended to have the draconian consequence of invalidating of any agreement with a franchisor entered into by a franchisee. The intention of the Code was to protect the position of franchisees, not to denude them of the capacity to enforce rights against their franchisor, either under the agreements they entered into, or under the Code itself. Nor could it have been the intention of the Code to strike down every agreement, even where a mere oversight had occurred, for example, if a franchisee truthfully told a franchisor that he or she had signed all of the required statements under cl 11(2), but the parties forgot to ensure that the franchisor received them. The framers of the Code would have been conscious that franchisees entering into franchise agreements would take on other obligations to third parties, such as to lessors for the premises from which the franchise businesses would be conducted, and to financiers from whom finance was to be obtained to run the business. If the franchisees were suddenly to be told that there was no franchise agreement at all that they could enforce, and that they would have to resort to court proceedings to establish their franchise agreement or to have s 87 of the Trade Practices Act invoked to impose a new agreement upon the parties, there would be commercial havoc where franchisors had perhaps innocently and inadvertently failed to do everything that was required by the Code. I am of opinion that, in such circumstances, it is plainly wrong and inconsistent with cl 6A and the Code as a whole to find that it was the intention of the Parliament to make a franchise agreement itself illegal, as opposed to stigmatising the conduct of the franchisor for its failure to comply with the Code. The consequence of Ketchell [2007] NSWCA 161 is that any, even the most insignificant, technical breach of cll 10 or 11 of the Code renders a franchise agreement void, even if the franchisee wishes to enforce it. The intention of the Code to protect a franchisee would be defeated in many cases to which it applies if a franchise agreement entered into after a failure to comply with any provision of cll 10 or 11 was held void. When he said that there was no need to seek guidance from implications in the legislative framework, in my respectful opinion Mason P did not undertake the task of statutory construction emphasised in the decisions of the High Court to which I have referred. The whole of the Code and the provisions of the Trade Practices Act bearing on its application required careful attention to discern whether it, indeed, was the intention of the Code to strike down as void every franchise agreement which had been entered into in circumstances where there was a failure to comply, whether technically or deliberately, with any of the provisions of cll 10 or 11. In Baxter Health Care 237 ALR at 527-528 [44]-[48], Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ noted that there was nothing unusual about legislation providing for a circumstance in which making or giving effect to a contract involves an offence by one party to the contract, but not by the other. In that case their Honours were also construing the operation of the Trade Practices Act . Leaving aside the extended operation given by s 6 , ss 46 and 47 according to their terms apply to conduct by corporations, not sole traders or partnerships. In a transaction between a corporation and an individual, the provisions may apply to the corporation but not to the individual. Differential application of legislation to parties to a contract is commonplace, although working out the legal consequences may be complex. Clause 11 does not in its terms seek to affect adversely the position of the franchisee; rather its aim is to protect the franchisee. The Code did not prohibit a franchisee from entering into or enforcing a franchise agreement with a franchisor where cl 11 had not been observed. It would be an unusual result if beneficial legislation, intended to protect persons in the position of a franchisee, were to destroy the legal validity of a franchisee's bargain and then throw upon it the burden of having to apply to a court and take on the risk of litigation, in seeking to establish a franchise agreement against a defaulting franchisor, errant in its compliance with cl 11 of the Code. A franchisor would be entitled, as Allphones suggests here, to say that it was not bound by a franchise agreement because of its own default. If the result in Ketchell [2007] NSWCA 161 is correct, the franchisee may be put in breach of its lease because it never had a franchise agreement. It may be put in breach of arrangements with its bankers or financiers for the same reason. The consequences which could fall upon a franchisee were not addressed by Mason P, because he said that there was 'no need to seek guidance from implications in the legislative framework'. Yet one express purpose of the legislation was to protect one of the parties to such a contract by giving that party rights arising from a corporation's failure to comply with an industry code as an instance of unconscionable conduct (see s 51AC(3)(g) and 4(g)). If that could be established, the franchisee may be entitled to obtain relief from a franchise agreement or certain related conduct under the Trade Practices Act . That consequence tends to suggest that non-compliance with the Code was not intended to avoid the contract, but rather to give rise to rights under the Act to have the contract varied or made void so as to remedy the consequence of a non-compliance with the Code. Indeed, the language of cl 5(1) provides that the Code applies to a franchise agreement entered into on or after 1 October 1998. That suggests validity rather than invalidity of the franchise agreement even where some provision of the Code has not been complied with. Moreover, the purpose of the Code in cl 2(1) is said to be the regulation of 'the conduct of participants in franchising towards other participants in franchising'. The clause is silent as to any intention to destroy franchisees' rights in certain circumstances. A franchisee who does not obtain statements required by cl 11 and provide them to the franchisor may nevertheless be entitled to protection or relief. Protection of the interests and rights of a franchisee in such a case is not likely to ensue from the destruction of the very agreement that the franchisee has apparently sought to enter. As Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ said in Baxter Health Care 237 ALR at 527 [46] (citing Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Ltd [1988] QB 216 ; [1987] 2 All ER 152 at 175-176 per Kerr LJ), when a statute contains a unilateral prohibition on entry into a contract, it does not follow that the contract is void. Ultimately, the question is one of statutory construction. As was pointed out in SST Consulting Services ([Pty Ltd v Rieson (2006)] [2006] HCA 31 ; 225 CLR 516 at 527 [30] ), the Act is far from being silent on the question of the consequences of illegality, but, rather, contains elaborate provisions. That is not to say that the express provisions of the Act answer all questions that may arise, but they answer many of them, and set the context in which others are to be resolved. To the contrary, I am of opinion that the intention of the Code is to place an obligation on a franchisor by setting a norm of conduct with which it is to comply. Failure to comply with that norm of conduct gives the franchisee rights to rely upon that failure in order to seek the setting aside of the agreement, if that relief is appropriate, and also to seek relief because of the unconscionable conduct such non-compliance by the franchisor may evidence: see ss 51AC(3)(g) and (4)(g) of the Trade Practices Act . But I am satisfied that it cannot have been the purpose of the Code to make void a franchise agreement for any failure, especially one by the franchisor, to comply with cl 11, however trivial, without any consideration of the franchisee's position. The starting point for the enquiry as to the effect of the Code, as identified by the passage I have emphasised in Baxter Health Care 237 ALR at 527 [46], was not addressed by Mason P because he said there was no need to seek guidance from implications in the legislative framework. That enquiry includes the mischief which the statute is designed to prevent and the consequences for the innocent party. Here cl 6A of the Codes elucidates the purposes of the disclosure document. And cl 11(2) shows that a purpose of the requirement for the written statements is to provide the franchisee, at the very least, with the opportunity to be informed by appropriate independent advice, if he or she wishes to obtain it. Importantly, cl 11(2)(b)(ii) makes it plain that the franchisee can choose not to seek such advice. In such a case, the mere oversight to obtain a signed statement that the franchisee had been told that he or she could seek advice but had chosen not to, when he or she had told the franchisor of that decision, could not have been intended to avoid a franchise agreement. No protective purpose would be achieved by such pedantry and much commercial inconvenience could result. In my respectful opinion, although his Honour did not have the benefit of the reasoning in Baxter Health Care [2007] HCA 38 ; 237 ALR 512 , which was delivered subsequently to the reasons in Ketchell [2007] NSWCA 161 , the reasoning of Mason P is plainly wrong. In addition, Ketchell [2007] NSWCA 161 was decided on different legislation: see McNamara 221 CLR at 661 [40]; Walker Corporation 242 ALR at 391 [31]. I am of opinion that the non-compliance by Allphones with its obligations under cl 11 of the Code did not make the franchise agreement void. That non-compliance is a factor which, had Hoy Mobile wished to do so, could have been raised by it to seek relief under s 87 of the Act. It would defeat the evident purpose of the Code if Allphones were entitled to rely on its own breach of its obligation imposed under cl 11 to deny a franchisee with whom it had entered into a contract, the entitlement to enforce that contract against it or to seek a variation of it or relief from it under the Act. For these reasons I reject Allphones' argument that the franchise agreement is void. Allphones had raised this argument shortly after it learnt of the decision of the Court of Appeal and that caused the second fixture of the hearing in September 2007 to be vacated. Given that it has failed on this argument the parties will need to deal with the consequences in terms of costs. 5. Hoy Mobile argued that when a carrier paid MTSC or MTAC to Allphones, that payment was a non-refundable payment within the meaning of cl 11(1)(c) and that, as a consequence, Hoy Mobile was entitled to receive the whole of the commissions paid by the carriers to Allphones in respect of activations within its territory without Hoy Mobile having to account for distribution of those payments in accordance with cll 7.3 and 7.4 of the franchise agreement. It argued that each commission payment was a payment 'under a franchise agreement'. Hoy Mobile pointed to sub-cll 9.1(j) and (k) of Annexure 1 to the Code. They provided that a disclosure statement had to indicate the details of the franchisor's requirements for the supply of goods or services to a franchisee and whether the franchisor or an associate would receive a rebate or other financial benefit from the supply of goods or services to franchisees (cl 9.1(j)), and whether that was to be shared directly or indirectly with franchisees (cl 9.1(k)). As will appear, I am of opinion that Allphones committed substantial breaches of its obligations in this regard for a considerable period of time prior to the events which gave rise to the present litigation. However, I am of opinion that Hoy Mobile's argument that the gross commissions paid by carriers to Allphones as MTSC or MTAC falls within the meaning of a 'non-refundable payment' under cl 11.1(c) is wrong. The purpose of cl 11.1 of the Code, having regard to cll 2 and 6A, in dealing with non-refundable payments is to protect a franchisee from the consequence of making a payment said to be non-refundable to its franchisor. Read together, cll 10(a) and (d)(ii) require a franchisor to give a copy of the Code and disclosure document to a prospective franchisee at least 14 days before the prospective franchisee makes a non-refundable payment to the franchisor. Although cl 10(d)(ii) uses the expression 'makes a non-refundable payment' with respect to a prospective franchisee, and cl 11(1)(c) does not identify the source of the receipt by the franchisor, I am satisfied that the 'non-refundable payment' in cl 10(d)(ii) refers to payment by or on behalf of the franchisee either under the franchise agreement (e.g. franchise fee) or in connection with the entry into it. It is difficult to discern any legislative purpose in the Code prohibiting the franchisor from receiving non-refundable payments made by third parties and not made under the franchise agreement. The carriers themselves had no obligation under the franchise agreement to make a payment to Allphones in respect of activations conducted or caused by transactions effected by Hoy Mobile. Their obligations were under agreements entered into between them and Allphones, to which Hoy Mobile was not a party. The commissions payments by the carriers to Allphones were made under those agreements, not under the franchise agreement. Hoy Mobile had no contractual relationship with the carriers. The money paid by the carriers to Allphones was paid under a separate and distinct contractual relationship to that existing between Hoy Mobile and Allphones and embodied in the franchise agreement. I am of opinion that Hoy Mobile's argument under cl 11(1)(c) must be rejected. 6. It also paid a $25,000 franchise fee to Allphones at this time. It claimed that $18,000 was due to it from Allphones in respect of co-op payments for its fit out costs, on the basis of Mr Donnellan's email of 24 October 2002, stating that Allphones' first two franchisees in New South Wales had been paid this sum. The July 2003 Optus dealer agreement with Allphones also provided that Optus would establish a co-operative advertising, or 'co-op' fund for Allphones and contribute to it in accordance with predetermined conditions. The fund would be available to provide a contribution by Optus to Allphones for store fit outs or other promotional activities. However, prior to Allphones committing to spend any part of that fund, it had to seek Optus' approval, which could not be unreasonably withheld. Mr Donnellan said that Optus and the other carriers updated their co-op guidelines regularly. He said that the guidelines had changed after his email of 24 October 2002 by the time of negotiations for the dealer agreement with Optus, and as a result Optus no longer contributed to store fit out costs through use of co-op funds. He said that by the first half of 2003 the other carriers had also made similar changes to their rules. Mr Donnellan said that he had been annoyed by these rule changes by the carriers. After having received a letter from Mrs Hoy in July 2004 raising a number of issues, Mr Donnellan and Mr Davidson met with Mr Hoy at the Eastgardens centre in late November 2004. Among other things, the letter noted that they had not been paid any co-op payment for store fit out costs. Mr Donnellan explained that Allphones had not received any co-op payments for Hoy Mobile's fit out from the carriers because of their new policies. Mr Hoy said that it would have been better to have been told, prior to entering into the franchise agreement, that arrangements with the carriers had changed and that co-op money was no longer provided for fit out. Mr Hoy claimed that Mr Donnellan told him that Allphones was still receiving co-op money, but was not passing it on to individual franchisees, and rather 'they were keeping it in the pool for the benefit of all franchisees'. I do not accept that evidence. Rather, I accept Mr Donnellan's evidence that the carriers had changed their policies and were not then making co-op payments to defray fit out costs. It may be that Mr Hoy misunderstood what Mr Donnellan was saying to him in the sense that co-op funds were still paid to Allphones and pooled for the benefit of franchisees, but they were not paid to assist with fit out costs. While the dealer agreement between Optus and Allphones envisaged that it was possible that co-op funds would be made available to defray the fit out costs of stores, in the absence of any evidence to the contrary, I accept Mr Donnellan's evidence that the carriers had formulated a different way of spending the co-op funds by the time Hoy Mobile entered into the franchise agreement. No reason was suggested why Mr Donnellan or Allphones would not have pursued the carriers for co-op funds to defray the fit out costs of Hoy Mobile's Eastgardens store, had the carriers indicated that such funding would be available for that purpose in mid-2003 or shortly thereafter. There is no evidence that Allphones received any co-op funds referable to the fit out of Hoy Mobile's store. Mr Hoy appreciated that Mr Donnellan had said that Allphones would pass on what it received for co-op funding for this purpose and that if nothing were received by Allphones from carriers, then Hoy Mobile would not receive any co-op payment either. In these circumstances, I am not satisfied that Hoy Mobile has established any basis on which it can be awarded $18,000 as it claims. I reject this claim. 7. Mrs Hoy's letter included a complaint about stock level restrictions imposed by Allphones in January 2004 which she said caused stock shortages on numerous occasions, particularly of popular models. Mr Hoy gave evidence that when the business began, he had 45 days' worth of stock levels. That meant that, generally, the store had sufficient numbers of any particular phone to last for 45 days of trading. He claimed that once the restrictions were imposed by Allphones in January 2004, Hoy Mobile was given a stock budget based on the number of connections activated through its trading and allocated 60% or 70% of that stock budget, depending on Allphones' rules for the product type. He said this resulted in the shop running out of particular items of stock even when replacement stock had been ordered, as stocks were running low. Orders were not always processed quickly by Allphones. He said that if there was 'a run' on a particular item of stock, such as a popular model phone, his store would experience an increase in demand, and similarly, if one of the competing stores in the Eastgardens centre ran out of a certain model, customers would come to his Allphones shop to seek it. But because Allphones had limited the amount of stock that Hoy Mobile could hold, he was not always able to satisfy any such increases in demand. However, apart from one incident on 30 June 2006 (which I will discuss later in these reasons), there was no evidence of damage or economic loss suffered by Hoy Mobile as a result of any conduct of Allphones in relation to stock levels. 8. This included warnings that stores would occasionally be 'mystery shopped' by an employed shopper who would rate his or her encounter. It required the stores to use a daily check list at the beginning and end of each business day to ensure conformity with Allphones' standards. The manual noted a requirement that network merchandise was to be restricted to the top shelf of display units. Hence, in carrying out the fraud which I describe below, Mr Hoy was able to display unlocked phones for sale on a lower shelf of the Vodafone cabinet. 9. That provided, in item 14 of the schedule, that the territory was: 'Defined as the description as under the shop lease' (sic). A covenant against competition operated '... in the Territory; defined as the shopping centre [sic] occupied under the lease description' (cl 7.22). Mr Donnellan said that since the introduction of this template, the territories that had been granted had been limited to the shop lease of the franchisee. Around July 2005 Allphones sent Hoy Mobile a new franchise agreement in the form of the new template. It was expressed to commence on 27 June 2003. The document had been executed by Mr Donnellan and Dominic Pompeii on behalf of Allphones. It was never signed by the Hoys or Hoy Mobile. On 14 November 2005 Katie Smith (whose married name was Jales), Allphones' national administration manager and Mr Donnellan's then secretary, sent Mr Harkin an email in which she noted that she had been chasing seven franchisees, including Eastgardens, for signed copies of the new franchise agreements. This prompted Mr Harkin to ask Mr Hoy to let him know what the position was immediately. Mr Hoy responded on 14 November 2005 saying that he already had a signed franchise agreement and did not require a second one. He said that if what had been sent was meant to replace the existing agreement, then he required a written explanation detailing why Allphones needed the update, identifying each variation to the original and explaining why it wished that variation to be made. He said that he had received two agreements in the mail but there had been no explanation as to what he was expected to do with them. He said he had thought that because he already had an agreement, they 'were sent to me by mistake'. He said that the first direct contact he had had about the matter was Mr Clarke's email of 11 November 2005 which had asked him to contact him about the agreements. Your non attendance at the quarterly franchise forum without a response to each of emails [sic] suggests something. Allphones responded by saying that the tiered bonus agreement, to which Mr Hoy had referred, had expired in July 2005. Mr Hoy claimed in his response that it had expired in November 2005, not July, and reiterated his request for Allphones to confirm the underpayment. Mr Donnellan sent Mr Hoy an email that same day saying that 'it might be nice' if Mr Hoy turned up to meetings 'before making wrong statements'. On 1 December, Mr Hoy responded saying that he understood his claim had been rejected. He reminded Mr Donnellan that the franchisees were entitled to 'all moneys' received by Allphones from the carriers in the form of commissions. Mr Donnellan responded saying that Mr Hoy's approach was 'all about blame and assumed knowledge', and that at the last two franchisee's forums Mr Donnellan had explained the workings of the Optus bonus. He said that a new 'flat $30 bonus' had been arranged with Optus when it had became clear that capped plans had changed the way that commissions had been payable. Mr Donnellan also referred to an admission by Optus that it had missed 6% of connections by Allphones in its commission payments, and that he, Mr Donnellan, had negotiated a settlement which was paid to franchisees, including Hoy Mobile. He said that the reason for the new change was to assist Allphones in identifying what had been paid or not paid and thus it could follow up shortfalls with Optus. Mr Donnellan denied 'the myth that somehow we were keeping this money', and pointed out that Optus had dropped its base commissions by $20 in 2005 and that airtime commissions had plummeted. He noted that if the Eastgardens store had had an average of three broadband connections per month for the previous five months it would have had an extra $16,800 in commissions. He asked what Hoy Mobile was doing to address that. He said that he had asked all State managers to send a monthly breakdown of commissions by store to the franchisees so that they could assess it to determine whether or not they had been underpaid. He said that he had 'no idea' whether Mr Hoy had been underpaid, but that he wanted Mr Hoy to 'make an appointment, sit down, go through things and work it out'. Mr Hoy responded on 12 December saying that he accepted Mr Donnellan's explanation about the 'flat $30 bonus' and had re-submitted the claim to reflect this. He said that he had no issue with Mr Donnellan's other points, but that he did take issue with the diversion of the bonus structure from the originating dealer code to the head office code without being repaid to the franchisees. Mr Donnellan responded saying that Allphones' books were 'always open' and Mr Hoy only needed to ask for information or alternatively to come in. 11. Mr Adams noted that he was also acting for another unrelated franchisee of Allphones. He said that the Australian Competition and Consumer Commission (ACCC) was responsible for enforcing the Code. The Hoys had consulted him about the difficulties they faced in taking any action in relation to the opening of the new Randwick Allphones store, which they understood may have been affecting sales within their territory, without evidence of how far their territory extended. Mr Adams understood that the Hoys thought that this might be revealed in the disclosure document. Mr Adams gave his opinion that the notation 'N/A' in Hoy Mobile's franchise agreement indicated that the concept of territory did not apply to their agreement and, if that were the case, the opening of the Randwick store would not cause Allphones to be in breach. He observed that the new, proposed, form of franchise agreement which Allphones had sent to Hoy Mobile had defined the territory as simply being the description under the shop lease, a description which was, he said, 'entirely unsatisfactory'. The Hoys then decided to consult Mr Birch, who has since acted as Hoy Mobile's solicitor. He wrote to Allphones on 8 March 2006 seeking a copy of the disclosure document provided to Hoy Mobile in 2003, prior to its entry into the franchise agreement. He referred to cl 19 of the Code which required Allphones to send a copy of the document within 14 days. On 23 March 2006, Mr Birch wrote to Mr Donnellan noting that he had not been provided with a copy of the disclosure document as requested, and enclosing a notice of dispute under cl 29 of the Code identifying the failure to provide the disclosure document. Mr Birch advised Mr and Mrs Hoy, on that day, that it would be premature to commence proceedings against Allphones or make further demands until he could determine the exact terms of the franchise agreement and the disclosure document. In April 2006, Allphones and Optus entered into a deed of release and set off under which they agreed to conduct a reconciliation process to determine the outstanding amount of the $2m loan made by Optus to Allphones in December 2003. Once that amount had been calculated, Allphones had to pay it within five business days. If payment were not made, then Optus was entitled to set off and apply any commission owed by it to Allphones under the original loan and special commission agreement and under Optus' authorised dealer agreement with Allphones. That is, monies owed by Optus to Allphones outside the original arrangements were to be made available to pay Allphones' debt due to Optus. This had the potential to affect all franchisees commission payments due by Optus to Allphones. Also in April 2006, Allphones requested Hoy Mobile to sign an RCTI agreement giving Allphones authority to issue recipient created tax invoices (RCTIs). Significantly, it recorded that Allphones and Hoy Mobile had entered into a franchise agreement, pursuant to which Hoy Mobile provided taxable supplies, including the 'Franchisee services the subject of the [franchise] Agreement', to Allphones. Initially, Hoy Mobile returned a signed version of the RCTI agreement which deleted the provisions authorising Allphones to issue recipient created adjustment notes on behalf of the franchisee in relation to adjustment events for taxable supplies. (As appears below, Hoy Mobile later executed a version which had no deletions. ) 12. Shortly after that, Mr Harkin belatedly responded to Mr Birch's letter of 8 March 2006 by sending a copy of Allphones' January 2004 disclosure document. Mr Birch wrote to Mr Donnellan noting that the document supplied was the then current disclosure document which could be accessed by any franchisee from Allphones' intranet. He again reiterated that Hoy Mobile was seeking a copy of the disclosure document provided to Mr Hoy in about September 2002. Mr Donnellan immediately replied saying that he had forwarded the letter and all correspondence to Mr Harkin, who was the national franchise manager, and that Mr Harkin would handle the matter. Mr Donnellan observed that the document which Mr Birch had received was the then current disclosure document, which had changed since 2002, but that Allphones was 'more than happy to warrant that this is no less favourable than what it was'. Mr Donnellan said Hoy Mobile's attitude was '... questionable. If they don't want tenure, noted and agreed'. He also noted that Hoy Mobile's failure to supply the RCTI agreement in the form prepared by Allphones would mean that adjustments could only be made after Hoy Mobile had done its own GST accounting, by preparing quarterly activity statements, which would delay payments to it by over 90 days. Mr Donnellan pointed out that the Hoys 'never turn up to franchise forums, where all major initiatives and changes to the system are discussed'. He said that he wrote to franchisees every quarter on everything that Allphones did. He said that it was extraordinary in every issue which the Hoys raised they sought to blame someone else and that the only time he had ever been asked for assistance by Mr Hoy was for a valuation of the business. Mr Donnellan offered to discuss the matter with Mr Birch, whom he had known for many years. On 27 April 2006, the office of the mediation adviser confirmed with Mr Birch that it had appointed a mediator. On 4 May 2006, Mr Harkin wrote to the mediator saying Allphones felt there was 'no dispute', and that it had provided a copy of the oldest available disclosure document, although they failed to see how it had any relevance at that stage to the Hoys' tenure. He also said that Allphones held no 'official' franchise agreement with Hoy Mobile, since it had refused to sign its copy or a subsequently provided agreement which Allphones had warranted to be exactly the same as the original. Mr Harkin said Allphones was happy for Hoy Mobile to exist within its business 'without a guarantee of tenure until [Mr Hoy] signs the required franchise agreement, as long as compliance with our system is maintained'. He noted that Mr or Mrs Hoy was required to attend a franchise review meeting by mid-May, which up until then they had refused to do. Following Mr Harkin's email, the mediator said that he would close his file because Mr Harkin had given a response that seemed to answer the notice of dispute. 13. He met with Mr Harkin and Mr Ilievski. After Mr Harkin had made an initial review of the figures that Mr Hoy had sent prior to the meeting he became overbearing and abusive towards Mr Hoy. Mr Harkin swore at him repeatedly. He demanded to know what Mr Hoy's intentions with Allphones were. Mr Hoy responded that the meeting was not for that purpose but that if Mr Harkin wished to pursue the topic he should put it in writing to the Hoy's solicitor. Mr Harkin then became more aggressive. His use of foul language increased. Mr Harkin said that he intended to make an example of Mr Hoy to show other franchisees what would happen to them if they opposed Allphones, as the Hoys had. Mr Harkin said that it was his right to come into Hoy Mobile's store and take the signage and stock away. He told Mr Hoy that Allphones had no signed franchise agreement for the Eastgardens store and that Hoy Mobile had no tenure. Mr Hoy said that he had a copy of the contract if they would like it. Mr Harkin said that he had no idea why the Hoys were suing Allphones. Mr Hoy retorted that he wanted to waste Mr Harkin's and Mr Donnellan's time. (I find that Mr Hoy said this as a reaction to the appalling way he was being treated by Mr Harkin. ) Mr Hoy told Mr Harkin that a claim had been submitted because Allphones was underpaying Hoy Mobile by $30 on every Optus connection. He said that at the end of the last quarterly review, he had informed Mr Harkin of his claim, and Mr Harkin had said that he would answer the claim for commissions by the following Friday. Mr Hoy said that because no answer had come, they had put the matter in the hands of their solicitors. Mr Harkin told Mr Hoy that he had no proof and that Hoy Mobile's claim for the $30 was 'bullshit'. Mr Harkin said to Mr Hoy that he was taking the word of one individual who was lying to him. Mr Hoy responded that he had all the proof he needed. Mr Harkin then said that he had supposed Mr Hoy had nothing to add to the quarterly review, such as what could be done to improve the business. Mr Hoy responded that Mr Harkin had said enough and that he could not see the point of continuing the meeting. 14. The letter stated that there was a signed contract between Allphones and Hoy Mobile dated 27 June 2003. Mr Birch pointed out that there had been no agreement to any modification, alteration or amendment of that contract, and that Hoy Mobile was not prepared to sign the amended version which had been sent by Allphones. He said that Mr Harkin's assertion at the quarterly review meeting that there was no contract was incorrect. Mr Birch then asserted that the franchise agreement needed rectification because of the entry 'N/A' after the word 'territory'. He pointed out Allphones' contraventions of cl 11 of the Code, prior to entering into the franchise agreement. He said that the territory represented and warranted by Allphones was an exclusive territory with a radius of 5km from the location of the business premises. The letter asserted that the opening of the Randwick store within the radius of 5 km from the Eastgardens store was a breach of Hoy Mobile's exclusive territory. He complained about the 'bullying' style adopted by Mr Harkin and Mr Donnellan in dealing with Hoy Mobile, and referred to the decision of Sundberg J in Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd [2000] FCA 1365 ; (2000) 104 FCR 253 at 268 [43] . On the next day Mr Donnellan wrote an email back to Mr Birch with a copy to Mrs Hoy saying that he had just read Mr Birch's letter and that it was '[p]riceless stuff'. He said that if Hoy Mobile was in breach of the agreement and did not remedy, it would be terminated like any other franchisee and that he did not care who was told. He said that Mr Harkin would respond and that Allphones was 'ready'. No other response was ever made by Allphones to Mr Birch's letter. Nor did Mr Donnelan identify any breach of the franchise agreement that he then alleged against Hoy Mobile. 15. I will now deal with how the fraud arose and Mr Hoy's assertions that Allphones had condoned it before returning to the narrative of events. He claimed he did this after a conversation he had with Allphones' area manager at the time, Brenton Clarke, while Mr Clarke was doing his regular check of the store at Eastgardens. Mr Clarke is still employed by Allphones and holds shares in it. That check involved going through a list of items to see whether or not the get-up and standard of the store was compliant with what Allphones required to ensure standardisation of the appearance and conduct of its various franchise stores. Three witnesses gave evidence about this conversation, Mr Hoy, Mr Clarke and one of Hoy Mobile's then employees, Ms Vanessa Jauregui. According to Mr Hoy he said to Mr Clarke that he was having trouble with one Virgin and two Telstra mobile phones. He said he had reduced them to cost price but no-one was buying them and so he asked what he could do about it. ... [O]ther stores are doing it and they are finding it much easier to sell the Telstra phones because they are not restricted to just selling them to Telstra customers. He claimed that Mr Clarke told him that if he knew a local repairer, they should be able to do it for him. Ms Jauregui said that she recalled Mr Hoy and Mr Clarke discussing pre-paid phones. She said that display models of those phones were placed in a cabinet in the store to offer them for sale. Ms Jauregui did not remember Mr Hoy saying to Mr Clarke that he did not know how to unlock phones and asking how he could go about it. Nor did she remember Mr Clarke saying to Mr Hoy that he should take it to a local repairer who would know how to do it. She said that her recollection was very vague because she did not remember a lot of detail. Ms Jaugerui said that she remembered the conversation about the Telstra phones because it was very rare that they sold a Telstra phone. She did not recall any discussion about other carriers' phones. She would stand next to Mr Hoy if the shop was not busy and she did not have anything else to do. She said that Mr Clarke was probably flirting with her before the conversation took place because he did it every time he came into the shop and this was the reason that she remembered the conversation. She asserted that about a month after the conversation she saw Mr Hoy showing Mr Clarke the display in the cabinet and that Mr Clarke took photos. Mr Clarke denied that any conversation concerning the unlocking of phones occurred. He did not recall Mr Hoy telling him that he was having trouble moving some of the pre-paid phones or that he had dropped the price on those phones. He did not recall Mr Hoy asking him what he could do about the problem. He was not sure whether the Telstra phones were harder to sell at that time. Mr Clarke, however, denied having told Mr Hoy 'why don't you unlock them' and that other stores were doing it. He denied saying that the other stores were finding it much easier to sell the Telstra phones unlocked because they were not restricted just to Telstra customers. He also denied that Mr Hoy told him that he did not how to unlock phones and enquired how to do it. He denied saying to Mr Hoy: 'Do you know a local repairer? They should be able to do it for you. ' Mr Hoy said that after this conversation he went to a mobile phone repairer called 'Andrew'. He did not know his surname. Mr Hoy continued to use Andrew's services until at least July 2006. Ms Jauregui remembered Andrew coming to the shop from time to time. She was not able to recall or estimate how many unlocked phones were sold while she worked at Hoy Mobile. Andrew was not called as a witness. I am comfortably satisfied his evidence would not have assisted Mr Hoy or Hoy Mobile. Mr Hoy claimed that after Andrew had unlocked the three phones, he telephoned Mr Clarke and told him that he had sold them and was now ready to get new models of pre-paid phones, which Allphones had previously threatened not to supply because of the unsold old stock. He claimed that Mr Clarke responded: 'See, I told you it would work. ' Mr Clarke said he did not recall Mr Hoy telling him this, although franchisees frequently called him about their problems. On Mr Clarke's next visit, Mr Hoy claimed that he went into the storeroom and asked Mr Hoy about six phones sitting on the top shelf in the storeroom, separate from other pre-paid phones. Mr Hoy said that he replied: 'They're the new ones that I unlocked. ' Ms Jaugerui said that about a month after the conversation about unlocking phones Mr Hoy and Mr Clarke had a conversation in the storeroom. She said that Mr Hoy said: 'This is where the phones are being kept. ' He pointed to some phones on the top of the cabinet. She claimed that Mr Clarke said: 'OK. ' Mr Clarke remembered that on one occasion he went into the storeroom and asked Mr Hoy about six phones on the top shelf, although he did not remember when that was. He said it was because he noticed that the packaging was open. Mr Clarke denied that Mr Hoy said to him that they were new phones that he had unlocked. Rather, Mr Clarke said that Mr Hoy told him: 'They're the phones the staff are using. ' Mr Clarke denied that pre-paid mobile phone packaging was open in the storeroom. He said the phones on the top shelf were 'high end handsets', meaning the more expensive handsets, rather than pre-paid ones. Mr Hoy had a practice of trying out handsets to learn of their characteristics. He took those phones out of their packaging and used them. I infer that he later sold these as 'new' phones when a customer wanted to purchase the particular model. Thus, from time to time, these would be unpackaged phones which Mr Hoy had used but not unlocked and their packaging would be kept in the storeroom at the Eastgardens shop. I am not satisfied that the conversation in the storeroom related to unlocked phones or pre-paid phones. Ms Jaugerui's account did not expressly identify whether she claimed to have observed unlocked or other phones in the storeroom when Mr Clarke was there. I find that Mr Clarke saw a number of phones which had been taken out of their packaging for use by Mr Hoy to enable him to learn of their characteristics. I accept Mr Clarke's evidence as to what occurred on that occasion in preference to Mr Hoy's. Mr Hoy also claimed that after the conversation in the store room he received a call from Mr Clarke warning him that someone from Optus was about to visit the store and that he should '... hide the unlocked phones until after their visit'. I accept Mr Clarke's denial that such a conversation occurred. He instructed his staff to follow it, and they did. The price charged for the phone after it had been unlocked was always greater than the price fixed in the Allphones point-of-sale system for it as a locked phone. The customer received a handwritten receipt for the price he or she paid. It recorded the item or items sold and the serial, or IEMI, number of the phone. A carbon copy of the receipt was made in the receipt book which was kept next to the computerised cash register. If the customer paid cash, the cash was placed in the till. The computer generated receipt was not given to the customer but was put into the waste-paper bin next to the till since it would show a lower price than that which was actually paid. If the customer paid by EFTPOS or credit card, he or she was also given a handwritten receipt together with a computer generated receipt for the electronic payment in the correct amount. In order to achieve this, the sales person entered into the point-of-sale system, sales of recharge cards equating to the difference in the system price for the locked phone and the sale price charged to the customer. However, the customer did not buy or receive those recharge cards and was not made aware of them being entered into the system. The computerised cash register generated a single receipt in two portions. One portion recorded the transactions entered (the locked phone at the price set in the system and recharge cards to the value needed to balance the price being paid by the customer). This portion was physically torn off by the sales person and thrown away when he or she handed over the handwritten receipt and remaining portion, which was the electronic transaction receipt for the purchase price actually paid by the customer. Recharge cards were generated in Hoy Mobile's store by machines provided by carriers which were not electronically linked into the Allphones point-of-sale system. Typically, customers bought recharge cards for cash and did not ask for or get receipts for them. The sales person would write down details of the cash recharge card sales on a list kept next to the electronic cash register. This was to provide what Mr Hoy called 'a bank' of those transactions available to be entered into the point-of-sale system whenever they were needed to process an electronic payment for an unlocked phone sale. If no recharge card sales were in the 'bank', then the sales person generated sufficient recharge card sales for later sale to customers who needed them and entered the 'sale' of those cards into the point-of-sale system. The sales person retained the recharge cards next to the electronic cash register for later cash sale. At the end of each day, Mr Hoy caused the copies of the handwritten receipts to be destroyed. The cash takings were reconciled and the surplus was taken by Mr Hoy, if he was doing the reconciliation, or left in a separate envelope for him by the staff member who did it. The balance of the takings, being all the cash sales as recorded in the Allphones point-of-sales system, was placed in an envelope for banking on the next business day. Thus, the unlocked phones would be recorded in Allphones' point-of-sale system as having been sold for the locked prices, together with all the recharge cards that had been sold to customers. But, a cash surplus was generated, which Mr Hoy kept, being the difference between the locked and unlocked phone prices for each sale. He paid Andrew from this cash. Mr Hoy said that initially he paid Andrew $30 per phone, but by December 2004 he claimed to have negotiated the price down to $15. Shortly afterwards, he acquired a computer programme which unlocked most, but not all, of the phones without the need for Andrew's assistance, therefore bringing the cost for unlocking down to what he claimed was an average of about $7 or $8 per phone. Ms Carey, another Hoy Mobile employee recalled that Andrew was paid about $5 to $10 per handset. She gave him the money from time to time. She thought male employees or Mr Hoy did some unlocking themselves. This appears to have been at the time in 2005 at which Mr Hoy asserts the price for unlocking had come down. A considerable cash profit was made on the sale of the unlocked phones. Mr Hoy knew that these phones were not intended to be used on carriers' networks other than that of the carrier who had supplied them as a pre-paid or locked phone. He knew that he was not accounting to Allphones for the full price for which the phones were sold and he was not recording or reporting, for taxation purposes, the surplus cash these transactions generated. 15.3 Did Mr Davidson condone the fraud? Mr Hoy also gave evidence that, in about June or July 2004, a newsletter was circulated by Allphones to franchisees referring to the practice of unlocking phones. He claimed to have telephoned Mr Davidson, then the New South Wales State manager of Allphones and asked him: '[W]hat's the story about this comment ... regarding the unlocking of phones? ' He claimed Mr Davidson responded that it was 'a political statement only, that Allphones has to be seen as doing the right thing'. Mr Davidson was not called. I am satisfied that he was in London and had not been willing to provide assistance to Allphones or give evidence in the proceedings. Allphones argued that Mr Hoy could have not understood Mr Davidson to be saying that the requirement not to unlock phones could be ignored by a franchisee. However, it is possible that such a conversation did occur. It was in Allphones' interest for its franchisees to sell the stock which they held on consignment. Slow moving stock was of no benefit to Allphones anymore than it was to its franchisees. It was also in Allphones' interest to ensure that the carriers were satisfied that it was not seen to condone the practice of unlocking. The newsletter's circulation at the time indicated that unlocking phones was a known issue and was occurring. In essence, Hoy Mobile's case is that Mr Clarke and, then, Mr Davidson suggested or condoned the unlocking of phones in 2004. Mr Clarke had nothing to gain from making the suggestion. He was not financially interested at that time in the outcome of Hoy Mobile's sales. The conduct involved Hoy Mobile doing something that was obviously wrong. Even on Mr Hoy's evidence, no-one from Allphones ever suggested to him that he should sell the phones at a price, or in a way, that involved Hoy Mobile making a profit from such sales or not accounting to Allphones for the sale proceeds. The way in which Mr Hoy structured the transactions establishes that Mr Hoy engaged in a planned and sophisticated fraud on Allphones, the carriers, the customers and the Australian Taxation Office. He knew his conduct was wrongful, because it involved interfering with the property of Allphones, being the locked phones held on consignment, and selling them in a way which misrepresented to Allphones what had happened. It also, of course, misrepresented to the customer the true nature of the transaction. He involved his staff members in this practice. These were often young people who had just left school and would look to him as a person in authority. 15.4 Did Mr Clarke condone the fraud? Both Mr Hoy and Ms Jauregui gave evidence that Mr Clarke told Mr Hoy that he could unlock, at least the two Testra phones. Mr Clarke denied that he did. The conflict among their accounts is not able to be resolved by resort to any contemporaneous documents or independent evidence. In terms of demeanour when each was giving this evidence, I was unimpressed by Mr Hoy and Ms Jauregui. I was favourably impressed by Mr Clarke and I formed the view that he was a credible witness who was also reliable. I found Ms Jauregui a difficult witness to evaluate. She asserted a clear recollection of the conversations because she said Mr Clarke was flirting with her. I have no confidence that Mr Clarke's flirtations caused Ms Jauregui to remember snippets of two conversations over three years later. However, no reason was suggested for Ms Jauregui to have fabricated her account of the conversations. Although, Mr Hoy was her first employer after she left school, Ms Jauregui had no apparent reason to give false evidence. She ceased to be employed by Hoy Mobile in July 2004. She denied having spoken to Mr or Mrs Hoy about her evidence. She said she was approached by Hoy Mobile's solicitor (Mr Birch) to give a statement about a year before giving evidence. That was the first time she was asked about her recollection of events. Ms Jauregui did not remember much of her time at the Eastgardens store. She could not recall much, if any detail, of how the handwritten receipt system worked, although she had used that system for three or four months until she ceased employment at Hoy Mobile in about July 2004. Given what was involved in that system I do not accept her evidence as reliable. On the one hand, she could not recall what the system for processing the sales of unlocked phones involved yet, on the other hand, she claimed to have a good recollection of the two conversations she recounted between Mr Hoy and Mr Clarke. When asked whether she thought what she had overheard about the unlocking of phones was 'a bit dodgy' she said that when she thought about it, after overhearing the conversation between Mr Hoy and Mr Clarke '... it was a bit weird but because I heard Brent say it was OK, well, then, I just assumed it was OK'. I do not accept that evidence. Rather, I find that because Mr Hoy, her employer, was engaged in this 'weird' conduct which involved her and, to her observation, the other staff at the Eastgardens shop, Ms Jaugerui assumed or accepted that it was appropriate. I formed the view that both Ms Carey and Ms Jaugerui saw Mr Hoy as an authority figure and were grateful to him for having given them their first jobs after leaving school. When working at the Eastgardens store, they were prepared to do what appeared to them, initially, to be apparently wrong, because he condoned it. And, of course, it was not their place to question their employer about what he instructed them to do. Each of them acknowledged that there was something either 'dodgy' or 'weird' about what Mr Hoy required them to do with these transactions. It is likely that because Ms Carey and Ms Jaugerui saw Mr Hoy conducting the fraud in front of them in the way he did that they became convinced that Allphones must have approved it, since to them it would be inconceivable that Allphones would not know of what was occurring. They saw that Mr Clarke, and the other area managers, regularly visited and inspected the shop and did not notice or raise any issues about what they knew to be the display of models of phones some of which Mr Hoy had unlocked. Mr Hoy's conduct was much than 'dodgy', it was downright dishonest, deliberate and done for the personal financial gain of Mr Hoy. He concealed this activity even from his wife, although he regularly brought home some cash and gave it to her. Only when Mr Donnellan emailed Mr Birch accusing Hoy Mobile of fraud on 10 July 2006 did Mrs Hoy learn from her husband of what he had been doing. At that point she was so shocked and concerned, that she asked Mr Birch whether Mr Hoy would go to gaol. Ordinarily, when one is faced with three people said to be present at the conversation, two of whom give a reasonably similar account and one of whom appears to have no present interest in the outcome of the proceedings, there is an instinctual tendency to think that the two people, giving consistent evidence, are more likely to be correct. However, I do not accept Mr Hoy's evidence about the conversations with Mr Clarke and Mr Davidson concerning the unlocked phones. Nor do I accept Ms Jaugerui's evidence, not because I believe she was consciously setting out to give false evidence, but rather because I consider that she has persuaded herself, unconsciously, that there must have been a justification for what she saw occurring. And, because Mr Clarke came to the shop, and would flirt with her, she must have come to the view that he saw nothing wrong in Mr Hoy's conduct even though unbeknown to her, he did not know what Mr Hoy was doing. She assumed he did. Her assumption led her to think that, because the Telstra phones were slow moving and Mr Hoy unlocked them, Mr Clarke had told Mr Hoy to unlock them. Of course, she knew that they were unlocked and that what Mr Hoy had done was odd. It is likely that there were conversations from time to time between Mr Hoy and Mr Clarke in the shop to do with the slow-moving nature of particular phones and quite probably those of Telstra. It may be that Ms Jauregui overheard a conversation with Mr Clarke in relation to slow moving Telstra phones. But I do not feel persuaded that she heard a conversation in which Mr Clarke suggested unlocking those phones. In coming to these conclusions I have relied on my overall impressions of Mr Hoy, Ms Jauregui and Mr Clarke as they gave their evidence and on my perceptions of their reliability based on their demeanour. I am not satisfied that the conversation, alleged by Mr Hoy, occurred. 15.5 Did Allphones otherwise condone the fraud? Mr Clarke was not the only area manager who visited the store in the ordinary course of his or her duties. Other area managers succeeded him, including Ms Tripoli, Mr Chandler, Mr Le and Ms Bortolo. Mr Hoy, Ms Carey and Ms Jauregui all said that the unlocked phones were displayed in the Vodafone cabinet on a lower shelf accompanied by a standard form Allphones display card. The card had been prepared by Mr Hoy. The card identified the phone, its features and price and stated, in the example in evidence of the promotional material for the phones: 'Phone Not Locked; Works On All Networks; Works Overseas'. That was a correct description of the capacities of the phones that had been unlocked, since they could also work in their original state (i.e. before carriers locked them) in the way described, and were models which were also sold without ever having been locked. Some of the area managers gave evidence that they did not inspect as thoroughly as perhaps they should have. I accept the evidence of the area managers, Mr Clarke, Ms Tripoli and Mr Chandler that they did not notice that Mr Hoy was offering phones that had been unlocked for sale at any time. But, that may have been because the same model of the phone was also being sold legitimately as a phone that had never been locked. I am satisfied that Mr Hoy presented the unlocked phones in a way which made them appear to be ordinary products for sale. Their manner of presentation was such as to allay any suspicion by the area managers who regularly inspected the Eastgardens store. In particular, I formed the view that Ms Tripoli was an honest witness who was careful in the performance of her duties. She struck me as an intelligent and attentive person who would have been alert to an obvious irregularity. There was no suggestion that she condoned overtly, or had any knowledge of, Mr Hoy's fraudulent activities, yet I am satisfied that she did not notice anything unusual in her careful inspections of Hoy Mobile stores. Moreover, at the time she gave her evidence, she was independent of Allphones. Thus, while I am satisfied that the unlocked phones were displayed in a way which indicated that they were being sold as phones that were not locked, I am equally satisfied that the display was made in such a way as did not draw attention to the fact that the fraud had been committed in respect of those phones. 15.6 Did Mr Shepherd observe Allphones condoning the fraud? In October 2005, Tony Shepherd was an employee of Allphones. At Mr Donnellan's suggestion he transferred to work at the Eastgardens store as an employee of Hoy Mobile. Mr Donnellan had told Mr Shepherd that he was a good salesman and could lift the numbers of the store which were down and he would gain some experience along the way. Mr Donnellan described Mr Hoy to Mr Shepherd as 'a very good operator' who could teach him. Mr Donnellan was a friend of Mr Shepherd's father, and this was known to Mr Hoy. Mr Shepherd told Mr Hoy that he had drinks on a regular basis with Mr Donnellan and Mr Harkin. Mr Shepherd recalled that when he worked at Hoy Mobile, Ms Tripoli had been replaced as area manager by either Philip Le or Carmen Bortolo. He became aware that the new area manager was going to visit Mr Hoy's store. Mr Shepherd said that before that visit, Mr Hoy removed the five or so unlocked mobile phones from the Vodafone cabinet and put them into the storeroom so that there were no unlocked phones in the selling area of the store when Mr Le or Ms Bortolo arrived. Within about half an hour after they left, he said Mr Hoy collected the phones from the top shelf of the storeroom and put them back on display. However, Mr Hoy said that the only time at which Mr Le and Ms Bortolo were in the store was on the Friday afternoon before Mr Shepherd finished his employment, when Mr Hoy was returning from holidays in Kiama. Mr Shepherd said that shortly after he began working at the Eastgardens store, and became familiar with the selling of unlocked phones there, he had to attend a training session at Allphones' head office. The area manager at the time, Philip Le, arranged to pick him up and take him to Burwood. Mr Hoy claimed that Mr Le arrived 45 minutes early and, because Mr Hoy and Mr Shepherd were busy, Mr Le went to assist a customer who wanted to buy a phone that was not locked. Mr Le pointed out that the customer wanted to buy the particular model phone which was in the bottom of the Vodafone cabinet. In fact, it was a phone which had been unlocked. Mr Hoy said that he would process the sale and did so. Before Mr Shepherd left with Mr Le, Mr Hoy claimed that he asked Mr Shepherd to check with Mr Le whether it was in order for them to be selling unlocked phones. Mr Hoy then claimed that the next day Mr Shepherd came to work and said that he had spoken to Mr Le and that Mr Le did not care. In cross-examination, Mr Hoy claimed that he did not ask Mr Le this himself because he knew that Mr Shepherd was a friend of his and since they were driving together he could ask him on the way. --- I don't remember that conversation. --- I don't recall that at all. He said he believed that the higher pricing was unusual. Mr Shepherd discussed the matter with Mr Hoy who told him that he had unlocked the phones and sold them himself. Mr Shepherd said that he asked: 'Isn't that dodgy? ' but could not recall Mr Hoy's response. Mr Hoy introduced Mr Shepherd to Andrew and told him that he paid Andrew $15 per phone. However, Mr Shepherd said that in around January 2006, Mr Hoy told Mr Shepherd that Andrew had increased his price to $30 per phone. He observed Andrew attending the store every two or three days, and being handed between five and ten mobile phones by Mr Hoy to unlock. When Andrew returned on the next visit, the phones would be in their packaging, which had by then been unsealed, and they were unlocked. He said that there was not a standard price for an unlocked phone, but as far as he could ascertain they were generally sold at a mark up of approximately $50 more than the price in the Allphones point-of-sale system. He recalled that about ten unlocked phones were sold per week. Mr Shepherd also saw Mr Hoy using the internet to find unlocking codes for certain phones which he then unlocked. Hoy Mobile argued that because Mr Hoy was conscious of the relationship between Mr Shepherd, Mr Donnellan and Mr Harkin, it was unlikely that Mr Hoy would have persisted in the unlocking of phones had he not then believed that Allphones condoned the practice. I do not accept this argument. It is inconsistent with Mr Hoy's claim that he asked Mr Shepherd to enquire of Mr Le whether Mr Le was comfortable with the practice although I do not accept that such a conversation occurred. The fact that Mr Hoy asserted that it did enables me to draw the inference that he was conscious that recounting such a conversation would bolster his claim that Allphones had condoned the practice of unlocking. There was no reason that Mr Hoy could not have asked Mr Le himself, if what he was saying were true. If he thought that different area managers might have different views about unlocking, then he must have appreciated that none of those views was a formal authority given by Allphones, since, had such an authorisation been given once, there would have been no need to seek confirmation again. However, I do not accept Mr Shepherd's evidence that Mr Hoy removed the phones prior to the visit by Mr Le or Ms Bortolo. It may be that Mr Shepherd did that of his own initiative because he was concerned that a visit from Allphones representatives might disclose some involvement by him, given that he felt the practice was 'dodgy'. Mr Shepherd said that he had made the wrong decision by not reporting to Allphones the sale of unlocked mobile phones by Hoy Mobile for fear that he would lose his job. But, nevertheless, Mr Hoy had no reason to act in this way given the success his fraud had had to that time. 15.7 How much profit did Hoy Mobile make from the fraud? Mr Hoy claimed that he had received about $30,000 from his fraud. Both he and Mrs Hoy said that they included this figure in Hoy Mobile's 2006 tax return as net income after paying the costs of the unlocking. No documents in evidence support this claim and no analysis was made by Hoy Mobile to support it, other than by relying on this broad brush estimate. Ms Carey worked about three days per week at the Eastgardens store. She speculated that perhaps she sold two or three unlocked phones on average per week but was not really prepared to offer any definite figure. Ms Jaugerui could not remember how many, on average, she sold a week but she thought that in total she had sold less than 100 and, perhaps, less than 50. The best Mr Hoy could do was to say that '... it would be close to 1,000'. He speculated that, after paying expenses, he made on average about $1,200 profit per month on the sale of the unlocked phones. He thought, on average, that he took home about $200 in cash from this profit each week in the first year of the fraud and about $400 per week in the second year. On another occasion he said that the gross profit (before paying for the unlocking) varied between zero and $60 per phone, but was on average about $50. On Mr Shepherd's estimate of ten unlocked phones being sold per week at a net profit of $35 each, Hoy Mobile made $18,200 cash per year. Allphones suggested that the benefit received by Mr Hoy may have been greater than he claimed. It pointed to the fact that Mr Hoy had destroyed the handwritten receipt books containing the records from which his profit could be calculated. Where a person deliberately destroys a document that, depending upon which its contents may have been, would have told strongly either for or against the person, the strongest possible assumption arises that if it had been produced, the document would have told against the person. This is so even if there was no intention to destroy evidence. The principle is that the person is in the position that they would have been in without the corroboration which might otherwise have been expected: Allen v Tobias [1958] HCA 13 ; (1958) 98 CLR 367 at 375 per Dixon CJ, McTiernan and Williams JJ, applying The Ophelia [1916] 2 AC 206 at 229-230. Allphones had a means of investigating and attempting to quantify the amounts Mr Hoy received through Hoy Mobile from the fraud. It knew that the modus operandi of the fraudulent scheme involved the sale of pre-paid mobile phones with recharge cards. Thus, Allphones could have made some investigations of its own point-of-sale system in respect of Hoy Mobile's sales to produce some form of analysis seeking to segregate legitimate, from illegitimate patterns of trading, but it did not do so. I am mindful of the difficulties in quantifying these amounts over a period where the records, such as they are, can only produce patterns or estimates. However, in the end Allphones did not assert that Mr Hoy's largest estimate of $30,000 net profit from the fraud should not be accepted. While I am satisfied that the benefit Hoy Mobile derived from the fraud was in the order of Mr Hoy's largest estimate of $30,000, he offered that estimate on the basis that he ceased to unlock phones at about the beginning of June 2006, after seeing the newsletter of 31 May 2006. I do not accept that he ceased unlocking phones before 10 July 2006 in the circumstances recounted later in these reasons. Thus, Hoy Mobile derived a larger profit than Mr Hoy claimed. Doing the best I can, I find that the net benefit to Hoy Mobile from the fraud was $32,000. 16. Allphones, without telling Mr Hoy, asked Mr Shepherd to work as the manager of the Randwick store and to report to Allphones' offices on Monday 13 March 2006 for a training session. On 14 March 2006, Allphones told Mr Hoy that it would be paying Mr Shepherd's wages from the preceding day as he had been in training at Allphones' head office. Allphones suggested that Mr Hoy contact its learning and development manager if a replacement was needed. Also on 14 March 2006 Graham Quarmby bought an unlocked mobile phone from Mr Hoy at the Eastgardens store. Mr Quarmby was an interstate truck driver. The phone originally had been locked to Optus but had been unlocked by Mr Hoy or at his direction. However, the unlocking was defective and some of the Optus programming remained on the phone so that it displayed information, branding and other Optus features. Mr Quarmby wanted to use his Vodafone SIM card with the phone, but when malfunctions occurred, he became annoyed. After going to a local Allphones outlet near his home, he returned to the Eastgardens store and complained to Mr Hoy who removed some, but not all, of the Optus features and downloaded some Vodafone features. Mr Quarmby left, but remained dissatisfied. Eventually he went to an Allphones outlet in Broadmeadows, Victoria. They told him that the phone had been unlocked and put him in touch with the New South Wales State manager of Allphones, Robert Ilievski. On about 29 May 2006 Mr Quarmby first contacted Mr Ilievski. He provided Mr Ilievski with details of the IEMI number of the phone and the place and date of purchase. In the meantime Mr Donnellan came to learn of the allegations. He issued a quarterly newsletter on 31 May 2006 addressed to all Allphones' franchisees. In it he noted that Allphones had recently received correspondence from two carriers regarding the unlocking of handsets. Over the years, three franchisees have been terminated for this practice. We have a zero tolerance policy on this. He asked all staff to be reminded of this and noted that Allphones was committed to police the matter rigorously and to adhere to the best practices. Mr Hoy claimed that when he read this he stopped unlocking phones, and from then on only sold phones that had already been unlocked. I do not believe that he did stop at that time. Mr Birch's contemporaneous file notes of discussions he had with Mr and Mrs Hoy on 10 and 11 July 2006 do not refer to Mr Hoy having stopped unlocking the phones at an earlier time. I find he stopped only later, after Mr Donnellan raised the question of fraud on 10 July 2006. On 5 June 2006 Mr Ilievski arranged to meet Mr Quarmby at Allphones Randwick's store later that week. They had an interview there on 7 or 8 June. Mr Quarmby then described to Mr Ilievski his experience at the Eastgardens store, and gave him the original handwritten receipt that he had received from Hoy Mobile for $199 for the sale of a Nokia 6060 phone and Vodafone SIM card together with the portion of the point-of-sale system which receipt showed a corresponding credit card charge of $199. Mr Quarmby also gave Mr Ilievski the phone he had bought at Hoy Mobile's store, along with the packaging that came with it. Mr Quarmby said that Mr Hoy had given him, without charge, a $10 Vodafone SIM card. Mr Ilievski gave Mr Quarmby a replacement phone and asked him to co-operate in making a written statement later. Mr Ilievski also spoke briefly to Mr Shepherd before returning to Allphones' office where he discussed with Mr Harkin what he had been told by Mr Quarmby. I infer that no mention of recharge cards had occurred during Mr Ilievski's discussions with Mr Quarmby prior to this time. Mr Ilievski said that Allphones was able to trace the transaction in the point-of-sale system with this information and understand how Mr Hoy had effected it. Mr Hoy, himself, had conducted this sale and the receipt was in his handwriting. The point-of-sale system disclosed that Mr Hoy was the salesperson who sold the phone as an Optus pre-paid Nokia 6060 at a price of $149 together with an Optus $30 recharge card and a Vodafone $20 recharge card. That information, especially when coupled with what Mr Quarmby had said about the sale, suggested that a fraud may have occurred. After Allphones found the point-of-sale record, Mr Harkin concluded that Mr Hoy had been 'skimming'. He explained what was involved in that practice to Mr Ilievski, namely that the franchisee had recorded the sale of an item at cost price in the point-of-sale system, but had in fact sold it to a customer at a price above the cost price reported to Allphones. About a week after Mr Quarmby was interviewed, Mr Shepherd was interviewed by Mr Ilievski at the Burwood offices of Allphones. Mr Shepherd explained the processes that he had observed and used while working at the Eastgardens store in relation to the sale of unlocked phones. It was then obvious to Mr Ilievski that, not only were unlocked phones being sold at Hoy Mobile's store, but that cash was being received and not accounted for to Allphones. Mr Ilievski continued to discuss matters with Mr Harkin and Mr Donnellan. In the meantime, on 9 June 2006, Mr Harkin emailed Mrs Hoy and Mr Birch saying that it was necessary for a complete RCTI agreement to be signed by Hoy Mobile so that Allphones could pay it commission as it had in the past. Mr Harkin said that Hoy Mobile's deletion of the two paragraphs in the RCTI agreement was unworkable in Allphones' system. He also noted that he would respond in full to Mr Birch's letter of 22 May 2006 by the end of the following week. On 15 June 2006 Hoy Mobile sent back to Allphones a fully completed RCTI agreement. 17. Allphones had a number of communications with its solicitors in the period following the initial consultation with Mr Rook. In April and June 2007, Bernard Lloyd, then an employed solicitor of Bartier Perry, swore affidavits in which he identified Allphones' discovered documents for which it had made a claim to legal professional privilege, which were read before Tamberlin J, who upheld the claim. Mr Lloyd also identified the facts supporting each claim for privilege. Hoy Mobile tendered Mr Lloyd's affidavits as admissions by Allphones of its state of knowledge during the period leading up to it giving notice of its intention to terminate on 28 August 2006 (see Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [2008] FCA 369). Mr Lloyd's affidavits revealed that by 14 June 2006, Tony Baker, another director of Allphones, and Tony Mitchell, the chairman of Allphones, were involved in email exchanges relating to the dispute with Hoy Mobile. On 23 June 2006, Bartier Perry discussed with Allphones the formulation of a strategy to deal with the dispute. On 26 June 2006, Mr Baker sent an email to Mr Harkin, Mr Ilievski and Mr Rook in relation to the sale of unlocked phones by Hoy Mobile, and provided Mr Baker's instructions about the process of 'skimming' by franchisees. On 30 June 2006, Gordon Berner, another partner of Bartier Perry, had a telephone interview with Mr Quarmby for the purposes of preparing a statement by him for use in providing Allphones with legal advice and for the anticipated litigation. He sent a draft statement to Mr Quarmby for his instructions on 5 July 2006. In giving evidence, Mr Harkin claimed that he was not fully aware of how skimming actually worked until after he had read Mr Hoy's affidavit filed in the proceedings. Mr Harkin discussed with Mr Ilievski not just what Mr Quarmby had revealed, but also, following his interview in mid-June 2006, what Mr Shepherd disclosed as to the way in which unlocking of phones had occurred at Hoy Mobile while he worked there. In June 2006 Mr Harkin appreciated, after he had considered Mr Quarmby's handwritten receipt for the phone of $199 and its recommended retail price of $149, that the $50 difference needed to be reconciled. He said he first concluded that there had been a fraud by Hoy Mobile 'skimming' that difference after receiving internal advice from Allphones officers who were more familiar with the point-of-sale system than he was. But he claimed that he reached this conclusion only a week or weeks before Allphones issued the notice of intention to terminate. I do not believe Mr Harkin's evidence that he became aware of the fraudulent nature of Hoy Mobile's selling of unlocked phones only shortly before 28 August 2006. Mr Shepherd's information was cogent and clear. By mid-June 2006 Mr Shepherd had told Mr Ilievski that while Mr Shepherd was employed at Eastgardens, Mr Hoy had profited by taking cash from sales of unlocked phones which he was not banking. I accept Mr Ilievski's evidence that Mr Harkin explained skimming to him about a week after he had reported to Mr Harkin on what Mr Quarmby had revealed in the interview at Randwick. Hence, by 26 June 2006, Mr Rook was being instructed by Allphones about the 'process of skimming'. I am satisfied that the process of skimming referred to in the email of 26 June 2006 from Mr Baker was a matter which Mr Harkin fully appreciated by the time of his receipt of that email. Mr Harkin was evasive in his evidence on this topic because he was conscious that Allphones had waited a considerable time after learning of the fraud before giving its notice of intention to terminate. He was conscious that Hoy Mobile had alleged Allphones had made an election to affirm the franchise agreement during that period after Mr Quarmby's complaint with knowledge of what Hoy Mobile had done. He was also aware that his knowledge was relevant to that issue because of his role and position. I was not impressed with Mr Harkin's reliability or credibility generally. 18. Mr Hoy said that he would transfer the phone if he could be given a replacement so that he would have a sufficient number of these popular models to sell over the weekend. Mr Ilievski told Mr Hoy to organise a replacement for himself, and insisted that Mr Hoy provide the phone, but he did not do so. Shortly afterwards, the customer was sent by the retentions team to the Eastgardens store and entered into a contract upgrading his current Optus plan to include the new phone. After the conversation, Mr Ilievski spoke to Mr Harkin who instructed him to send a 'breach letter' to Mr Hoy. On the following Monday, 3 July 2006, Mr Ilievski and Mr Harkin finalised the letter and sent it to Mr Hoy. The letter stated that Hoy Mobile was in breach of the franchise agreement by having refused to release the phone. It also insisted that until Hoy Mobile execute and return the new version of the franchise agreement, which had been sent previously, all stock and commission payments would be withheld from it. Mr Harkin had inserted that last condition. Mr Birch responded to Mr Ilievski on 6 July 2006 stating Mr Hoy's version of what had happened. He wrote that the customer had complained to Mr Hoy that the retentions team had failed to supply a phone to him on time and that he had wished to go into a store to sign a contract and obtain a phone then and there, which he did. Mr Ilievski said that Mr Birch's letter only came to his attention a week or two later. However, there was no response to the letter. On 18 July Mr Ilievski and Mr Hoy discussed Allphones' lifting of the hold on Hoy Mobile's stock the previous day. Mr Hoy enquired whether the hold on Hoy Mobile's commission would now also be lifted. Mr Ilievski said that it would not because Mr Hoy had not contacted him. Mr Hoy pointed out that Mr Birch had written to him on 6 July. Mr Ilievski said that he had not seen that letter. He told Mr Hoy that the hold on Mr Hoy's stock had been lifted because it had been long enough, but he persisted in the demand that a new franchise agreement be signed by Mr Hoy as the condition for lifting the commission hold. Mr Hoy accused him of blackmail and said that he had an existing franchise agreement which he had signed two years previously and would not sign another one. Mr Ilievski said that he would not lift the commission hold, but the next day, Hoy Mobile was paid commission. Allphones did not attempt to justify any of the conduct involved in this episode. I am satisfied Mr Harkin was the architect of the conduct to withhold stock and commissions. Doubtless he and Mr Ilievski were aware by 30 June 2006 of the progress that was being made in the investigation into Mr Hoy's fraud. No provision in the franchise agreement entitled Allphones to demand the immediate release of an item of stock which Hoy Mobile had ordered and Allphones had supplied pursuant to cl 6.5(i). Moreover, it was unreasonable for Mr Ilievski to insist that Hoy Mobile provide the phone without making appropriate arrangements for it to be replaced over the course of the weekend, which was busiest trading time for the store. Still less did Allphones have any justification for insisting that Hoy Mobile return a new signed franchise agreement. The only financial loss claimed by Allphones was an amount of $15.75 for the commission hold. That claim was persisted in and resisted until the parties came to an agreement, on a without admissions basis, that Allphones would pay half of this amount and Hoy Mobile would abandon the balance. This conduct is, however, relevant to the claim for unconscionable conduct. On 6 July 2006 Mr Birch wrote three letters addressed to different Allphones officers. First, he wrote to Mr Donnellan complaining that he had not received any written response to his letter of 22 May 2006, or the disputes and matters referred to in it. He asserted that Allphones was in breach of cl 24.3 of the franchisee agreement because it had not undertaken prompt action to settle the dispute. He wrote that the breach had been aggravated by Allphones' 'breach' letter of 3 July 2006. Mr Birch's second letter was written to Mr Ilievski. It dealt with the circumstances in which the commission and stock holds had been imposed. Mr Birch's third letter was written to Mr Harkin. This complained about the store refresh notice sent by Mr Harkin in late June, requiring Hoy Mobile to pay $10,000 to Allphones as the asserted cost of refreshing its store's fit out. (I will return to this issue later in these reasons. ) Mr Birch's letter asserted that there was no provision in the franchise agreement entitling Allphones to require such action. Upon receiving the letter, Mr Harkin telephoned Mr Birch's office and left a message saying that he wished to arrange an appointment for the week commencing 17 July. On 7 July 2006 Mr Birch emailed Mr Harkin referring to the telephone message of the previous day and agreeing to a meeting on a without prejudice basis. He sought an agenda five days in advance and advice as to who from Allphones would be present. He asked that the meeting be at a neutral venue. Mr Birch referred to his detailed letter to Mr Ilievski of the previous day and noted the fact that the deadline that he had set for Allphones to provide written confirmation of its withdrawal of the stock and commission holds had passed. 19. Ian Harkin is on annual leave next week. We propose Thursday 20 July. Your client will be given an opportunity to respond to those matters and failure to do so will result in immediate termination of his franchise agreement, based on the advice of our lawyers . You and your client always have the option to refer any matter to any regulatory body. My strong advice would be to be careful about doing so prior to understanding the entire situation, which has very little to do with the recent correspondence between the parties. He noted that the proposed meeting in Mr Donnellan's letter had no agenda. He complained that the threat of 'immediate termination' of the franchise agreement had no weight but noted that Allphones had finally admitted the existence of a franchise agreement with Hoy Mobile. He pointed to the fact that it was difficult to understand any reference to an 'entire situation' when the conduct of Allphones appeared to be adversarial. As an officer of the court I would ask you to take care on taking what was said by a fellow officer out of context. I again make the offer for the 20 th of July. Your client is accused of fraud and the evidence in our view is overwhelming . We will protect the integrity of our system and our franchisees. If your company is going to rely upon any allegation of fraud to terminate my client's agreement, you are required to provide full particulars of the allegation/s. I invite you to do so by return. Mr Donnellan responded that the allegations were serious and were not made lightly. It's not good. She told him that Mr Hoy had been engaged in unlocking Optus pre-paid phones explaining what that involved. She told Mr Birch that she was unable to say how many unlocked phones had been sold, 'but a lot' had been and that her husband had told her that he had done this 'so they can eat'. She said that Allphones knew that Mr Hoy had been engaged in the activity because someone from Allphones had come to a store audit and advised Mr Hoy how to do it. Mrs Hoy said she understood that Optus had apparently served some form of notice on Allphones to comply strictly with Optus' conditions. Mrs Hoy asked Mr Birch whether they were in deep trouble. He advised that, at first blush, it appeared so. She asked whether Mr Hoy would go to jail and whether they could lose the store. The next day Mr Birch had a conference with Mr Hoy. Among other things, Mr Hoy gave him a detailed explanation about how and why the phones were unlocked. He asserted that unlocking was prevalent in the industry, that Allphones was fully aware of this and its store representatives had initially suggested unlocking the phones to Mr Hoy. He asserted that subsequently the store representatives had acknowledged what had been happening and turned a blind eye. Mr Birch told him that on a preliminary basis it was difficult for him to know whether or not the activity Mr Hoy had described was a fraud at that stage. However, he said that it could be a fraud on the Australian Tax Office for failing to account. They then discussed issues of the stock and commission holds and preparing the application to the Court. He did not take a detailed note of the conference. The next time Mr Birch discussed the question of unlocking or fraud with Mr and Mrs Hoy was after the proceedings commenced during the course of a conference with senior counsel on 24 October 2006. Mr Birch said it was only at that time that it became clear to him that Mr Hoy had not been accounting to Allphones for monies in respect of the sale of unlocked phones. Then, between 17 and 19 July, the stock and commission holds were lifted. On 24 July 2006 Mr Hoy sought a meeting of two hours with Mr Ilievski in response to his email of 10 July 2006 to all franchisees requesting quarterly review meetings. Mr Ilievski replied that he was booked out for all that week and would be away on a conference for the following week. He suggested 8 August or later in that week. After a number of emails were exchanged, on 9 August 2006 they finally arranged to meet on 22 August 2006 at 2.00pm. On 4 August 2006 Mr Berner spoke with Mr Ilievski and Mr Shepherd. He took instructions for the purposes of preparing Mr Shepherd's draft statement. Mr Berner had a further conversation with Mr Shepherd on 14 August 2006 to clarify some matters and sent him a draft statement on that day. 20. They understood this was for the quarterly review with Mr Ilievski. However, Mr Harkin arrived with Mr Ilievski and said the meeting was for the purpose of advising Mrs Hoy that Allphones would be serving Hoy Mobile with a termination notice giving seven days' notice. Mr Birch objected to what was happening. Mr Harkin asserted that Mr Donnellan had sent a letter telling them of the meeting and held up a document which Mr Birch could not identify. Mr Birch said that he had received no such letter and asked if he could see what Mr Harkin was referring to, but Mr Harkin refused. Mr Birch said that he did not believe that such a letter existed and that Mr Harkin was fabricating that it did. Mr Harkin said that Allphones would be alleging that Hoy Mobile had been involved in fraudulent activities associated with unlocking phones and skimming of money owed to Allphones. He said that Allphones was in possession of affidavits and statements supporting those allegations. He then invited Mr Birch and Mrs Hoy to enter into 'without prejudice' discussions. Mr Birch said that they would not do so and wanted to continue the meeting 'on the record'. Mr Harkin then brought Allphones' chief financial officer, Angus Begg, into the room and announced that the meeting was now to be 'with prejudice'. He repeated the allegations and again invited Mr Birch and Mrs Hoy to enter into without prejudice discussions, which Mr Birch again declined. Mr Birch asked if the quarterly review meeting was going to take place and Mr Harkin responded that he thought that would be a waste of time. Mr Birch asked when the termination notice would be served. Mr Harkin replied: 'Tomorrow. ' Mr Birch wrote the above account of the meeting, which I accept, in a letter to Mr Harkin on 24 August, noting that no notice of termination had been served by that stage. He also said that Mr Harkin had continued making threats against Hoy Mobile of a significant kind and that this conduct was 'harassing and unconscionable'. He foreshadowed that Hoy Mobile would seek an injunction if a notice of termination were served and, asserted that his client had '... no fear about having all of their issues dealt with by the court, including your allegation of fraud'. 21. It stated that this was because Hoy Mobile had sold the unlocked phone to Mr Quarmby on about 14 March 2006 charging $199 him but only recording a sale of $149 and failing to account to Allphones for $50. The notice also recited that '... during the period of December [2005] to February 2006 [Hoy Mobile did] cause various pre-paid mobile telephones locked to the telephone network of telephone carriers to be unlocked and sold to customers'. Allphones gave notice that upon termination, it would require Hoy Mobile to cease operating as a franchisee, transfer to it all material relevant to the operation of business, assign or transfer the lease of the Eastgardens premises and pay any monies outstanding. The notice was said to be without prejudice to Allphones' right to terminate the franchise agreement at an earlier date in accordance with the provisions of cl 9 of the franchise agreement. The notice was based on the information from Mr Quarmby and Mr Shepherd. Although the reference to the period of 'December to February 2006' omitted the date 2005, the evidence suggests that Allphones only had knowledge of the activities revealed by Mr Quarmby and Mr Shepherd. While it may have had suspicions that the fraudulent conduct had been occurring prior to Mr Shepherd commencing work at the Eastgardens store in around November 2005 and continuing after Mr Quarmby visited there in March 2006, at the time the notice was given, there is no evidence that Allphones had knowledge of any fraudulent activities outside that period. 22. DID ALLPHONES ELECT TO AFFIRM THE FRANCHISE AGREEMENT? It asserted that Allphones became aware in late May and early June 2006 of what happened with Mr Quarmby and, by the middle of June 2006, of Mr Shepherd's observation while employed by Hoy Mobile, and thus had sufficient knowledge of the fraud to justify a finding that it had elected to affirm the franchise agreement. (2) Allphones' letters of 26 and 29 June 2006 required Hoy Mobile to pay for and participate in the store refresh. A further or alternative act of affirmation was Allphones' subsequent letter, reiterating this requirement on 28 July 2006. (3) Mr Ilievski's demand on 30 June 2006 for Hoy Mobile to release a phone to Allphones for its retention customer. (4) Allphones' letter of 3 July 2006 which referred to mutual obligations between it and Hoy Mobile, complained of a breach by Hoy Mobile of the franchise agreement, relied on cl 7.8 and required Hoy Mobile to comply with the franchise agreement. Moreover, Allphones then required Hoy Mobile to sign a new franchise agreement. (5) On around 17 and 19 July 2006 Allphones lifted, first the stock hold, and then the commission hold, it had imposed. Hoy Mobile said this was an unequivocal affirmation. (6) Allphones permitted the franchise agreement to continue on foot until 28 August 2006. In the intervening period it had received from and paid to Hoy Mobile various sums by way of commission and other monies due in accordance with the provisions of the franchise agreement. (7) In letters of 23 May, 7 July and 10 July 2006, Allphones had invoked dispute resolution procedures under the franchise agreement. The letter of 7 July had threatened to terminate if Hoy Mobile did not avail itself of the opportunity to respond to the allegations. Ultimately, the meeting was arranged for 22 August, but by then Hoy Mobile said that Allphones had affirmed the contract. For the reasons which follow, I am of opinion that none of these seven matters was sufficient alone or in combination to constitute an election by Allphones to affirm the franchise agreement. Thus, they held that a party could only be held to have elected if he had so communicated his election to the other party in clear and unequivocal terms: Immer 182 CLR at 39. They noted that there was a distinction between the situation where a party to a contract, faced with the choice of terminating it or keeping it on foot, chooses to terminate as opposed to when the contract remains on foot. In the case of a termination, the party ordinarily will have acted in a way that leaves no doubt as to the choice made, which would be clearly inconsistent with the exercise of the right to keep the contract on foot, because it no longer exists: Immer 182 CLR at 41. Deane, Toohey, Gaudron and McHugh JJ emphasised that at the heart of election was the idea of a confrontation which, in turn, produced the necessity of the party confronted making a choice: Immer 182 CLR at 42. Mere awareness of a right to rescind or terminate or of facts giving rise to a right to rescind or terminate will not necessarily have the consequence that the party will be held to have elected to affirm the contract if he or she acts on the basis that the contract remains on foot. While in Mr Donnellan's email of 10 July 2006 Allphones had stated that it was relying on fraud, the precise nature of the fraud on which it was relying had not been revealed by it, despite requests through Hoy Mobile's solicitor, that it do so. Nor, had Hoy Mobile disclosed anything about the existence, nature or extent of its fraud to Allphones. Hoy Mobile, however, was acutely aware of the fraud it had committed and uniquely placed to understand its full implications. In his classic speech in Scarf v Jardine (1882) 7 App Cas 345 at 360-361 Lord Blackburn discussed the principles upon which the doctrine of election had developed. He said that where a person had an option to choose one or other of two inconsistent things, when once he or she had made his or her election, it cannot be retracted: Scarf 7 App Cas at 360. Lord Blackburn emphasised that election involved, first, the making of the choice between one of two inconsistent rights and, secondly, the notification or communication of that choice to the party against whom the rights existed in a way that affected that other party. Hence, in Immer 182 CLR at 43 Deane, Toohey, Gaudron and McHugh JJ referred to the party being '... confronted with the necessity of making a choice'. In Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55 Kitto J said that the person with the choice might keep the question open '... so long as it did nothing to affirm the contract and so long as the [other party's] position was not prejudiced in consequence of the delay'. He said that when the vendor in that case told the purchaser that it would not rescind a contract for the sale of land before a particular date if the purchaser paid an additional sum for interest, costs and expenses, the vendor was doing no more than promising that it would not elect to rescind the contract before that date if the conditions were complied with. Kitto J said that in that case a grant of an extension of time was not an election to affirm but, rather, amounted to an announcement of an intention to refrain from electing either way until the money had been paid or the extended time for performance had elapsed: see too Champtaloup v Thomas [1976] 2 NSWLR 264 at 268C-269B per Glass JA; 273D-274D per Mahoney JA; Street CJ agreeing with both at 266: Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 at 435C-436B per Giles J: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 89-92 [356] - [364] per Finn J. And, as the judgment of the Exchequer Chamber written by Blackburn J (see Scarf 7 App Cas at 360) established, this principle applies to a party to a contract who discovers his entry into it was induced by the fraud of the other: Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34-35. I am satisfied that by no later than 7 July 2006 Allphones had clear and detailed knowledge that Hoy Mobile had engaged in a fraud by unlocking phones and selling them for cash profits which were not paid to Allphones (i.e. skimming). Based on the information given to it by Mr Quarmby and Mr Shepherd, Allphones was then aware that this fraud had been carried out since at least before Mr Shepherd began work at Hoy Mobile in about November 2005. I find that Mr Donnellan's letter of 7 July relied on the power of termination without notice, expressly given to Allphones by cl 9.3(viii). Allphones, through Mr Donnellan and Mr Harkin, was also aware by 7 July 2006 that it had the choice of continuing with or immediately terminating the franchise agreement under cl 9.3(viii). On the other hand, at that time Allphones did not know how long before November 2005 Hoy Mobile had engaged in the fraudulent conduct. Nor was it aware of the details of the number of phones or the amount of money involved (other than the transaction with Mr Quarmby). The full nature and extent of Mr Hoy's and Hoy Mobile's fraudulent conduct was not known to Allphones at any relevant time before these proceedings began. However, I am not satisfied that at that time it had discovered or fully absorbed the implications of two recharge cards appearing on its point-of-sale records in connection with the payment of $199 for Mr Quarmby's phone. Nor am I satisfied that Allphones' asking for the complete RCTI agreement to be signed was inconsistent with Allphones keeping alive its right to terminate. After all, there was no provision in the franchise agreement which required Hoy Mobile to execute the RCTI agreement. Its execution was proffered by Allphones as a means of facilitating prompt payment of money which was payable once the requirements of the Goods and Services Tax (GST) legislation were satisfied. I am not satisfied that, at this time, Hoy Mobile had any belief that Allphones had made a choice to affirm the franchise agreement. At that time, Hoy Mobile was ignorant that Allphones had any awareness of its fraud. It did not believe that Allphones made an election at any time in June 2006. Indeed, Hoy Mobile was then complaining directly, and through its solicitor, that Allphones was refusing to recognise the existence of any franchise agreement. Hoy Mobile was hardly in a position to suggest that, in fairness to it, Allphones was confronted with the requirement to make a choice then and there: see Immer 182 CLR at 41. Nor, apart from ease of administration, and the obligation to pay Hoy Mobile more promptly, was there any identifiable 'benefit' accruing to Allphones from seeking execution of the RCTI agreement. I am of opinion that Allphones had insufficient knowledge by the time its receipt of the RCTI agreement on 15 June to find that it had elected not to terminate the franchise agreement by reason of Mr Hoy's fraudulent conduct. However, Allphones was still seeking legal advice as to its position. Mr Berner only interviewed Mr Quarmby on 30 June 2006, although I infer that the information Mr Quarmby had given to Mr Ilievski had been passed on to Allphones' solicitors by that time. And, by 30 June, Allphones' solicitors were proceeding on the basis that they were acting in anticipation of litigation as well as giving Allphones advice as to its position. Nonetheless, as between it and Hoy Mobile, there was nothing to indicate to Hoy Mobile that Allphones was at that time aware of Mr Hoy's fraudulent activity. Mr and Mrs Hoy did not believe that by requiring the store refresh to be paid, Allphones had made a choice between keeping the franchise agreement on foot or terminating it, since Hoy Mobile was then unaware that its fraud had come to Allphones' knowledge. And, although Allphones made the demand, Hoy Mobile did not act on it. Indeed, Mr Birch wrote to Mr Harkin on 6 July 2006 complaining that there was no provision in the franchise agreement entitling Allphones to require Hoy Mobile to undertake the store refresh or to pay for it. At the very least, that raised a bona fide argument as to whether one or other party was persisting in an erroneous interpretation of the contract. Likewise, Allphones' demand that Hoy Mobile execute a new franchise agreement could not have been understood as an election to affirm a different agreement. In addition, Mr and Mrs Hoy did not give evidence that they believed that Allphones had affirmed the franchise agreement existence prior to this time. To the contrary they perceived its actions as breaches of the franchise agreement, or denials of its existence. Once Mr Donnellan's letter of 7 July had been received by Hoy Mobile, it was clear to both parties that Allphones wished to discuss a serious matter. By the following Monday, 10 July, Allphones had communicated that it believed Hoy Mobile had committed a fraud. Mr Hoy was instantly aware, on receiving that news from his wife, that the fraud concerned the unlocking of phones. Mr Donnellan's evidence was that he wanted a meeting so that he could hear what Hoy Mobile had to say about the allegations. I accept his evidence that he wanted to give Hoy Mobile an opportunity to provide its response, if any, to the allegations which were being made by Allphones. However, Mr Hoy never attended a meeting with Allphones after 9 May 2006, when Mr Harkin had insulted and berated him during the quarterly review. I have some sympathy with Mr Hoy's reluctance to attend a further meeting after that experience. Allphones submitted that Mr Harkin's behaviour during this quarterly review was merely to be characterised as part of the rough and tumble of business dealings. I reject that submission. Of course, business dealings can be, and often are, robust exchanges. Mr Harkin did not offer any justification for his abusive conduct towards Mr Hoy on 9 May at the quarterly review. Objectively, there was no justification for it. He acted in a bullying, offensive and overbearing manner towards Mr Hoy. I reject the argument that such behaviour should be characterised as acceptable or normal in the relationship between franchisor and franchisee. Obviously, allowances must be made for different people and the way in which they react and interact. Having had the benefit of seeing both Mr Hoy and Mr Harkin in the witness box, I am satisfied that in a commercial negotiation and meeting, Mr Hoy was quite capable of looking after himself and his own interests. He was no 'wilting flower'. However, in his relationship with Mr Harkin, Mr Hoy was not in a particularly powerful position. To be abused and sworn at as Mr Hoy was, during the course of a business meeting, for no good reason, was not something which, in the ordinary course, anyone should have to face. Mr Harkin's behaviour was inappropriate. I do not draw any adverse inference against Mr Hoy for refusing to have a further meeting with Mr Harkin. Hoy Mobile argued that by the time Mr Donnellan wrote the letter of 7 July 2006, Allphones had sufficient knowledge that it was in a position to allege fraud and thereafter to be held to an election to affirm the franchise agreement by its subsequent acts. I reject that submission. I am of opinion that Mr Donnellan's letter of 7 July 2006 and subsequent emails demonstrated that Allphones was asserting that it did not wish finally to elect to terminate the franchise agreement without giving Hoy Mobile an opportunity to explain conduct that, prima facie, appeared to be fraudulent. Allphones was entitled to keep the franchise agreement on foot while it considered whether or not to terminate. And, it was entitled to afford Hoy Mobile the opportunity to explain its conduct so that, if appropriate, the franchise agreement might be kept on foot. Allphones' conduct after 7 July 2006 communicated to Hoy Mobile that a meeting was necessary for the parties to understand how to assess the status of their relationship. Through neither party's fault, a meeting was unable to be arranged between 7 July and 22 August. During that period, Hoy Mobile wished the contract to remain on foot while Allphones had indicated that it was keeping its options open until Hoy Mobile had had an opportunity to explain its, prima facie, fraudulent conduct. A reasonable person in Hoy Mobile's position could not have understood Allphones' conduct at this point to amount to an affirmation of the franchise agreement. Both parties were still pursuing the course of holding a meeting for the purposes set out in Mr Donnellan's letter of 7 July. That course was being pursued with Hoy Mobile's full knowledge, and indeed at its request, through Mr Birch's email of 10 July to that effect. And, neither Mr nor Mrs Hoy gave evidence that they understood that Allphones had chosen to affirm during this period. Allphones was not making a choice of affirming the franchise agreement, while holding matters in abeyance pending the meeting at which Hoy Mobile could explain its position. Rather (as Kitto J observed was permissible in Goonan 111 CLR at 55) Allphones had said that it intended to refrain from electing until the meeting occurred. Nor, in fairness to Hoy Mobile, was Allphones required to make a choice before that meeting had occurred: Immer 182 CLR at 41. Based on what Mr Quarmby and Mr Shepherd had revealed, Allphones had knowledge by mid-June 2006 of Mr Hoy's modus operandi and the general nature of what he had done from late 2005 to mid-March 2006. But, Allphones was not aware of other fraudulent acts by Mr Hoy before or after that period. When she first discussed the matter with Mr Birch on 10 July 2006, Mrs Hoy did not know how many unlocked phones had been sold by her husband after he unlocked them or the extent of his failure to account. There is no evidence that Allphones knew the full picture at that time. And, at that time, Mrs Hoy raised with Mr Birch the question whether they could lose the store. He told her that if Allphones were able to terminate the franchise agreement because of the fraud, then Hoy Mobile would not be entitled to compensation. That showed that, as at 10 July 2006, Hoy Mobile had not been affected adversely by any delay on Allphones' part to communicate its election. From 10 July 2006, the parties were acting on the common understanding that Allphones had postponed an immediate termination of the franchise agreement at Hoy Mobile's express request, so that Hoy Mobile could meet with it and discuss the serious matters involved. In that context, acts and performance required by Allphones in the period leading up to any meeting could not have been understood by a reasonable person in Hoy Mobile's position --- and I find were not understood by Mr and Mrs Hoy --- to be an unequivocal affirmation of the franchise agreement. Rather, these were matters which a reasonable person would have understood as occurring in the context of the position being left open by Allphones while the parties waited to have an arranged meeting to discuss what was to happen. The meeting was delayed for over a month through no one's fault. In that context, both parties knew that contractual performance had to occur in the interim. Commissions had to be collected, remitted, and then paid. Stock had to be ordered, delivered and other usual incidents of their contractual relationship had to be given effect. Of course, there are limits to the ability of a party to a contract to act 'without prejudice' to the legal consequences of those acts in the particular relationship. Unlike a landlord accepting a payment of rent and thus electing to waive reliance upon any pre-existing breach, Allphones did not communicate an unequivocal intention that the franchise agreement remain on foot. Rather, at Hoy Mobile's request Allphones had agreed to postpone making an election until the meeting occurred: cp: Goonan 111 CLR at 55. In that context, a reasonable person in the position of the parties would have understood that Allphones was acting on the basis that it was acceding to Hoy Mobile's request to postpone making an election. It was not electing once for all by its conduct in offering and requiring performance pending the meeting to make a choice. Allphones, in the context in which the parties then found themselves, was not evincing by its actions an unequivocal choice to keep the franchise agreement on foot and not to terminate it. I find that both parties proceeded on the agreed footing that Allphones would refrain from terminating for fraud until the meeting, ultimately arranged for 22 August 2006, had occurred. Both parties knew that, in the interim, they had to carry out the normal incidents of their relationship under the franchise agreement. The principle of election operates to hold a party to a position it has communicated to the other party as the choice that it has made between two inconsistent rights. Communication of the choice cannot occur in a factual vacuum. The circumstances and context of the communication affect how a reasonable person in the position of the other party would understand it. A landlord accepting rent ( Matthews v Smallwood [1910] 1 Ch 777 per Parker J) or a fire insurer, exercising rights to take possession of the insured's damaged premises ( Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64 ; (1920) 28 CLR 305 per Knox CJ, Isaacs and Starke JJ) acting unilaterally, could not say that it was acting 'without prejudice'. However, those situations are far removed from that presented here. Hoy Mobile asked Allphones not to terminate pending a meeting. It cannot now say that, because Allphones expressly acceded to its request on 10 July for a meeting, it affirmed the franchise agreement. At the heart of the principle of election, as Deane, Toohey, Gaudron and McHugh JJ showed in Immer 182 CLR at 41, is not only the confrontation of the elector with a choice, but also the requirement that when so confronted the elector '... must, in fairness to the other party, make his choice' (emphasis added). Having requested Allphones not to make the choice before Hoy Mobile could meet with it, Hoy Mobile cannot complain that, in fairness to it, Allphones should be held to have made a choice that neither party intended it to have made. Each party accepted that neither would be taken by the other as having unequivocally chosen between inconsistent rights until at least the time after the meeting had occurred. Fairness, in the sense referred to in Immer 182 CLR at 41, would be eschewed, not advanced, if Allphones' accommodation of Hoy Mobile's request not to terminate until a meeting occurred, were used to preclude it from terminating at or immediately after that meeting. The position is analogous to the situation in which parties to a contract enter into a course of negotiation which has the effect of one leading the other reasonably to suppose that the strict legal rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, pending the outcome of the negotiation. Here, Hoy Mobile's request of 10 July that Allphones hold a meeting on its terms, can be seen as such a suspension. In those circumstances equity would not allow the parties' strict legal rights to be enforced so as to deprive Allphones of a right to terminate the franchise agreement because it acted on Hoy Mobile's request to delay doing so: cp Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 at 448 per Lord Cairns LC (explaining the doctrine of equitable estoppel). Although no equitable estoppel was alleged here, a reasonable person in the position of the parties would have understood that nothing Allphones did after the exchange of emails on 10 July 2006 and until the meeting of 22 August 2006 amounted to an unequivocal election involving a choice between inconsistent rights. Where one of the parties to a contract has committed a fraud in its performance, the fraudster cannot complain that he or she has been prejudiced by acts of the other party done without sufficient knowledge of his or her fraud. That is why the courts have always held that fraud fundamentally affects the way in which relations between parties are viewed. ... Fraud unravels everything. Part of that 'benefit' involved concealing from or not disclosing to Allphones circumstances knowledge of which would entitle Allphones to terminate the franchise agreement. Even where fraud is involved, it is possible for the innocent party to be held to have elected between inconsistent rights accruing to it in consequence of that fraud. But before the innocent party is held to such an election, clear evidence is necessary that it, with full knowledge of the facts, intended to do so. There would be an inherent unfairness if one party to a contract, who has already achieved, or sought to achieve a benefit by his or her own fraudulent conduct, was able to take advantage of the other party's ignorance of the fraud by holding the innocent party to an election that he or she has affirmed the contract. The insidious nature of the fraud begins with the deception inherent in its commission. The innocent party to the contract, or sometimes a third party, is deceived by the fraudster's conduct. The nature of the deception is to convey a state of affairs, contrary to fact, on which the innocent party proceeds. Here, Hoy Mobile had for over two years unlocked phones and made undisclosed profits. Each of those activities put Allphones in breach of its arrangements with the carriers. Each was dishonest. And each was, at all times prior to the discovery of Mr Quarmby's transaction, unknown to Allphones. I find that, in July and August 2006, Allphones was unaware that Mr Hoy had been committing the fraud beginning sometime early in 2004. All that Allphones knew at the time was what Mr Shepherd and Mr Quarmby had told it. There is no evidence that Allphones had any other knowledge of when, or the circumstances in which the fraud first commenced. Nor did Allphones have knowledge that the fraud continued after Mr Quarmby had purchased his phone, although I have no doubt it suspected that this had occurred. But suspicion is one thing, and knowledge another. Mr Hoy had made no, let alone full and frank, disclosure of what he was doing at any time prior to Allphones issuing the notice of intention to terminate. While Allphones may have suspected that more was involved than it knew, given the element of fairness inherent in the concept of election ( Immer 182 CLR at 41) Hoy Mobile's assertion of election by Allphones based on incomplete information and disclosure by Hoy Mobile, does not provide any occasion to find that Allphones elected to affirm the franchise agreement. So far as Hoy Mobile relied on matters occurring after 7 July 2006, I find that the lifting of the stock and commission holds were not unequivocal affirmations of the franchise agreement. Commissions had been earned prior to that time. It would be unjust to impute to Allphones an election, once for all to give up its right to terminate for Hoy Mobile's undoubted fraud, simply because, in ignorance of the full nature and extent of that fraud, it acceded to Hoy Mobile's request not to terminate until the 22 August meeting could occur. And, Hoy Mobile's argument that Allphones had delayed unreasonably, until 28 August, from issuing the notice of its intention to terminate is, in my view, without substance. Hoy Mobile had requested the delay. Through neither party's fault, the meeting could not be arranged earlier than 22 August. Any delay in the six days after that was inconsequential. Mr Harkin said Allphones would issue the notice. Hoy Mobile did not contend that anything occurred, after he said this and before 28 August, which amounted to an election by Allphones. Nor do I consider that the conduct of Allphones amounted to it invoking contractual procedures for dispute resolution in such a way as to preclude it from terminating. If disputes could not be resolved under the franchise agreement, the parties were entitled to exercise their rights under it, including, as it contemplated, terminating the relationship. The franchise agreement did not require the disputes to be resolved. It merely required the parties to follow a particular procedure in certain cases. Were the procedure not to produce the result of resolution, I am of opinion that, had it been ready and willing to perform, it would have been open to Allphones to terminate. I will consider this issue below. For these reasons, I am of the opinion that Allphones did not make an election depriving it of any right to terminate the contract. 23. Because of my findings above it is not necessary to consider the application of R v Paulson [1921] 1 AC 271 at 282-283 to cll 15 and 16 on which Hoy Mobile relied. However, their Lordships indicated that the issue depends on the facts for they said, as Owen J pointed out in Owendale Pty Ltd v Anthony [1967] HCA 52 ; (1967) 117 CLR 539 at 610, that '[i]t may well be that many cases may occur to which the clause as to waiver would be applicable' before saying that, in that case, it was not: see too Owendale 117 CLR at 590 per Taylor J with whom Barwick CJ agreed on this issue at 569; per McTiernan J at 581; per Kitto J at 581-582. And, in any event, contractual provisions like cll 15 and 16 are strictly construed: Craine 28 CLR at 325-326; affirmed in Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541 at 546; (1922) 31 CLR 27 ; see too Melbourne Harbour Trust Commissioners v Hancock [1927] HCA 26 ; (1927) 39 CLR 570 at 584 per Knox CJ and Gavan Duffy J; 589 per Isaacs J; 590 per Rich J; and 594 per Starke J. 24. There was some justification in their concerns. In the period leading up to the entry into the franchise agreement, Mr Donnellan was also negotiating for Allphones to be an authorised Optus dealer. A dealer agreement was executed between Optus and Allphones in mid-July 2003. Optus was obliged to pay to Allphones monthly the various amounts of commissions, which included bonus commissions due in respect of activations of services and airtime usage. Thus, Optus was contractually obliged to pay to Allphones, and not to its franchisees, what the franchise agreement described as MTSC and MTAC. In the second half of 2003, Allphones began deducting or withholding portions of commissions paid to it by Optus in respect of activations made at the Eastgardens store. But Allphones did not disclose to Hoy Mobile that it was acting in this way A joint report prepared by Kieran Lynch, an expert accountant engaged by Hoy Mobile, and Carl Nicoll, Allphones' commercial manager, established that numerous deductions were made from different Optus commissions, including those commonly known as bonuses and super bonuses. Capped plans became a prominent feature of the mobile phone market after mid-2003. The commission scales previously used by carriers in agreements with Allphones were not initially appropriate to reward the sales of this new product. Over time, between 2003 and 2005, Mr Donnellan negotiated with Optus and other carriers a new basis for the payment of commissions and bonus commissions. He said that the carriers kept changing the way in which they paid bonuses and super bonuses. He asserted that the carriers had no contractual obligation to give any such bonuses and they could be withdrawn at any time. Commissions, including bonuses and super bonuses, were paid by some carriers directly to the Allphones' head office account, with the accounting code of 'ALL30', and then Allphones paid the franchisees a proportion of that commission. A super bonus was payable to Allphones by Optus if a store achieved at least one successful Optus broadband connection in a month. Other types or levels of bonuses were payable depending on the plan or product sold. The parties have described this as 'the Optus stretch bonus'. Mr Donnellan said that this was introduced to help Optus compete with an aggressive marketing campaign by its rival carrier Hutchinson, which was also known as '3'. Otherwise, your commission department could pay us the additional similar figures to Allphones head office (ALL30) . Mr Donnellan said that Allphones retained at least a portion of the $150 bonuses that Optus paid under the agreement referred to in the email, without accounting for it under the franchise agreement. The email shows that by May 2004, Allphones was negotiating commission payments to itself based on its franchisees' sales which, however, it did not propose to disclose to, let alone share with, the franchisees in accordance with cl 7.4 of the franchise agreements. Mr Donnellan claimed that he understood that cl 4 (which dealt with Allphones being able to make alterations to its system) authorised Allphones to take a higher share of commissions paid by carriers than cl 7.4 permitted, '[i]f it's for the interests of franchises'. A core part of our system is that we have choice between the networks and there is an inherent competitive tension between them, so my view is that clause 4 enables us to act subject to good faith and subject to our fiduciary obligations to make our franchisees - provide them with the opportunity to make more money, because we are an agent. It's not our money, remember . We are trying to act on behalf of others and if they put conditions around promotions and they want us to do things, then provided it fits within the overall ambit of increasing the pool of funds paid to franchisees, we generally support it. --- No, your Honour. Ultimately, however, he agreed that cl 4 did not of itself authorise Allphones to change the agreed division of commissions provided in cl 7. He also admitted that cl 6.4(iv) did not specifically say anything about the division of commissions payable by carriers between franchisor and franchisee nor did it justify Allphones' head office retaining anything from those commissions. In the passage I have emphasised above, he then explained that he understood that Allphones had athe bility to be the judge of what was in the interest of the franchisees. Mr Donnellan understood that if Allphones had acted strictly in accordance with cl 7, then 72.5% of the $150 would be payable to the franchisees under cl 7.4. But, he said that because Allphones had 'improved' the system under cl 4, it was entitled to take money out of the $150 bonus and keep it for itself. If he seriously thought that Allphones was acting in a fiduciary capacity in negotiating these arrangements, a proposition which Allphones' submissions denied, then Mr Donnellan had no understanding of the fiduciary's duty not to profit from its position without fully informed consent. He would also lack any understanding of contract law if he seriously thought that Allphones could avoid paying commission to franchisees under cl 7.4 by relying on cll 4 and 6.4(iv) as he asserted. I find that Mr Donnellan considered that Allphones could do what it wanted in accounting to its franchisees for commissions, without regard to its obligations under cll 7.3 and 7.4, as well as in negotiating commercial benefits for itself based on the franchisees' sales with carriers. He did this because he knew that Allphones had concealed from its franchisees the true amount that it was paid by Optus. His explanations of how cll 4 and 6.4(iv) justified this conduct were specious. Allphones argued that despite the 'seemingly clear terms' of the email of 4 May 2004 from Optus' Mr Miller, the evidence of Mr Donnellan 'suggests that there may have been some conditions applicable to the payment of this commission by Optus' (emphasis added). It argued that it was simply not possible to know whether there were such conditions, based on the email viewed in isolation. Whether there were conditions attaching to the payment which disentitled Hoy Mobile to receive its share of this commission had been in issue on the pleadings and in the expert evidence well before the hearing. However, Allphones called no substantive evidence on the matter, other than to rely upon Mr Donnellan's speculation. In his examination in chief on this topic, Mr Donnellan said that Allphones had asked Optus to ensure that it was allowed to offer different incentives to different franchisees in order to promote performance, in the hope that the bonus payments would continue. He said that Optus had agreed to pay the $150 bonuses as per connection 'on a budget basis', meaning that Allphones had to modify its marketing, order stock and ensure that franchisees knew that they could make money over the three month period. He was not asked what the supposed conditions were for the payment of this commission to franchisees. His vague and general assertions do not fit with Mr Lim's insistence in his email of 3 May 2004 that if the payment of the $150 commission appeared on the stores' RCTIs, Allphones would expect the same money to be paid to it in full. The most natural inference to draw (as I do) from Mr Donnellan's failure to give any evidence on this aspect of the topic in chief, is that any such evidence as he might have given would have exposed facts unfavourable to Allphones' case: CEPU 162 FCR at 525 [230]; Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E-G per Handley JA. Mr Lynch traced through the correspondence and found no such conditions. I accept Mr Lynch's evidence that the commission was paid in full by Optus to Allphones. Mr Lynch found recipient created tax invoices addressed to Allphones from Optus evidencing Allphones' receipt of bonuses paid to Allphones' ALL30 account. That was what Allphones had instructed Optus to do in order to hide these payments from the franchisees so that they did not learn about the payments through their own recipient created tax invoices that they could generate at their stores. Thus Mr Lynch did not find any identified figure connecting those payments to Hoy Mobile. Allphones argued that the experts merely assumed that the full $150 commission per connection had not been paid to Hoy Mobile, and that the experts had agreed than an amount of stretch bonus had been paid by Allphones during the three month period in 2004. I reject that submission. Mr Lynch established that Allphones received full payment. He also said that '[o]ther stretch bonus amounts were involved in that program'. The only material he had seen dealing with the stretch bonus payments were Allphones' RCTIs which he had seen before. I am satisfied that Mr Lynch did not consider that any money in respect of the $150 stretch bonus had been paid to Hoy Mobile by Allphones. Again, it would have been easy for Allphones to demonstrate that it had made such payments. But, it chose not to do so in circumstances where Mr Lim's email evinced a clear intention that Allphones wished to retain the whole sum for itself. I am satisfied that, on the evidence before me, that is exactly what Allphones did. Allphones' instruction to Optus for the payment of this commission was a deceitful way of doing business with franchisees who were entitled, under cl 7.4, to be paid 72.5% of all commissions paid by Optus to Allphones for MTSC and MTAC. I am of opinion that Allphones' argument that there were possible conditions is spurious. I find that there were no conditions which disentitled Hoy Mobile to be paid its share of this commission in full under cl 7.4. The experts agreed that Hoy Mobile was entitled to $16,388.63 (including GST and excluding interest) for the stretch bonuses. The total of these deductions in respect of Hoy Mobile's store was $2,041.66 excluding interest. And, between July 2006 and August 2007 Allphones deducted $5 per transaction for Virgin and Vodafone commission payments which involved, for Hoy Mobile, $1,132.45 and $709.78 respectively. The effect of these deductions was to reduce the amounts which Allphones reported were due by it to the franchisees under cl 7.4 for commissions earned. Allphones issued a new disclosure document dated 29 August 2006, in which it disclosed to franchisees for the first time that it was charging a 'fee' of $5 for each post-paid contract 'for carrier reconciliation charges'. There was no contractual basis which entitled Allphones to charge this fee to Hoy Mobile. In November 2006, after these proceedings were commenced, Mrs Hoy spoke with Mr Nicoll concerning her perception of irregularities in the payment of commissions by Allphones. She mentioned a big court battle going on and she wants to use this file we sent her as a "weapon" to prove her case. Mr Harkin's response was simply to refer, in insulting language, to Mrs Hoy being a fraud. On 7 December 2006 Mr Ilievski sent an email to Mr Nicoll noting that during the quarterly review meeting with the Hoys, there had been a discussion about sending the Optus RCTIs for the Eastgardens store to them. He asked Mr Nicoll to see if it was possible to send the last two months' RCTIs for Optus. This caused Mr Nicoll some concern. The stores generally are not aware of this as all information from the carrier is filtered to account for this $5 . For example, the commission schedule is adjusted for the $5 admin fee . I have concerns that sending the Optus RCTI will flag to Eastgardens the discrepancy, and it will cause a fight . I'd like to tell them that they will not get the RCTI, and they can get commission based on the schedules we provide and they can verify payment from the breakdown files we send them . Thoughts? ... It is not my role to tell a franchisee that there is going to be a [change] in the commission structure they had not been aware of ... before. Mr Nicoll explained one way in which this was done. At the beginning of every month, Allphones sent to franchisees a statement of the commissions and bonuses which were to be paid for the various plans and deals offered by the different carriers for that month. Those statements were the basis on which franchisees were informed what they and Allphones would earn by way of MTSC and MTAC for their sales activities in that month. The Optus statement was in the form of an excel spreadsheet prepared by Optus and electronically sent to Allphones. Typically, between 2003 and mid-2005, (before the flat rate of $30 was introduced) the Optus spreadsheet was three A4 pages long, with each page listing the details of over one hundred different commissions for the various plans and deals offered. However, unbeknown to the franchisees, including Hoy Mobile, Allphones had electronically manipulated Optus' version of the excel spreadsheet sent to Allphones, in order to reduce the commissions that it represented Optus would pay to Allphones in respect of activations made by the franchisee in that month. Mr Nicoll said that this manipulation took about twenty seconds. For example, Allphones manipulated the schedules provided to it by the carriers by deducting the $5 'administration fee' from each item. The deduction did not appear on the face of the schedules which appeared to a franchisee as if it were the carrier's schedule of commission rates under cl 7.4. Thus Allphones reduced the amount it paid to the franchisees as MTSC. Mr Nicoll was asked about the commercial ethics of this practice. He emphasised that he was not the author of this deceit but was simply giving effect to his instructions. --- That's correct. --- Yes. --- I think it was justified, yes. --- Yes, that is the commission amount that is going to be paid for that connection. We are being honest in telling the franchisee that is what we are going to pay you for that connection . --- No, I'm telling the franchisees that is what we will pay you for that connection. --- Yes. Hoy Mobile pleaded that this practice amounted to a breach of Allphones' obligation to pay 72.5% of the MTAC commissions received by Allphones, because it was a failure to account for and a withholding of that money from Hoy Mobile. I so find. Allphones also sought to make a distinction between a 'commission' and a 'bonus' or 'super bonus' paid to it by a carrier, so that the definitions of MTSC and MTAC in the franchise agreement somehow applied only to 'commission' paid. On that basis, it argued that bonus payments of any description were not 'income received from the mobile telephone networks' in respect of either activation of a mobile phone customer or call revenue. I reject Allphones' argument. The bonus payments were 'income received' within the meaning of MTSC and MTAC in cll 7.4 and 7.5 of the franchise agreement. The carriers' schedules of commissions sent to Allphones and communicated by it to franchisees clearly treated the bonuses as part of the commission structure, rewarding particular sales or levels of sales. Such sales were the basis of activation and airtime usage of mobile telephone services. Optus was aware that some commission it paid was being retained by Allphones without this being reported to franchisees. Thus, in late June 2005, Mr Miller informed a commissions analyst within Optus that the flat $30 bonus had been approved for Allphones on a three month trial. The analyst asked: 'Is there to be a siphoned amount to head office? ' Mr Miller replied: '... a flat $5 to head office', before correcting this in a later email that to say that 100% of the standard bonus should be paid to the Allphones' head office, account code ALL30. I infer that the reference to a 'siphoned amount' indicated Optus' understanding that Allphones was, by then, retaining sums from commissions paid to it by Optus, which were not disclosed to franchisees for the purposes of dividing commissions under cl 7.4 of the franchise agreement. When he gave evidence, Mr Donnellan accepted that Allphones had to deal with commissions collected by it, from the carriers, in accordance with the terms of the franchise agreement. He also acknowledged that Allphones had 'to disclose what is due and payable to the franchisee as a result of their activities under their dealer code , [that is] the activation of a mobile service under the franchise agreement' (emphasis added). Mr Lynch and Mr Nicoll in their joint report had concluded that, in the four years to 31 August 2007, Allphones withheld or deducted, from payments due to Hoy Mobile, $27,944.39 (including GST and excluding interest) in Optus bonus and super bonus commissions. Allphones argued that these deductions were justified because payments of commission by Optus, which were called 'bonus' or 'super bonus', did not fall within the ordinary and natural meaning of MTSC and MTAC in cl 7.5 of the franchise agreement. For the reasons given earlier I reject that argument. Mr Lynch and Mr Nicoll agreed that the individual Optus RCTIs for each Allphones store (including Eastgardens) showed the amounts in this claim as having been payable by Optus to Allphones. That is, as between Optus and Allphones, Optus was liable for the relevant amounts as commission due in respect of Hoy Mobile's store. Allphones could only withhold such commission from Hoy Mobile pursuant to some provision in the franchise agreement. But, it was unable to identify any provision, either in the franchise agreement, or in any separate agreement it had with Optus, that changed the character of the payments by Optus, so that they were not commissions within the meaning of cll 7.4 and 7.5. Optus' own records showed no support for Allphones' argument. I reject it. 25. It sent a memorandum in mid-2006 outlining this charge and others, including a $50 rental fee for the EFTPOS terminal and banking fines of $50 per day for failure to bank for two consecutive days. Allphones also disclosed that it was then charging stores 74% of the merchant fees charged by banks and credit card companies and would continue to apply such charges. The definition of 'gross profit' in cl 7.5(i) required the deduction from the receipts from sales of the actual cost of goods sold, the cost of freight, and 'credit charges' (including all government duties and charges). I am of opinion that the cost charged by a credit card provider for the use of its services to gain payment for goods sold, falls within the ordinary and natural meaning of 'credit charges' within cl 7.5(i) and that Allphones was therefore entitled to deduct from commissions payable to franchisees, 74% of the amount it had paid for merchant fees. The monthly rental fee is $50 (Inc GST)'. That amounted to the unilateral imposition of a rental fee for equipment which Allphones required each franchisee (including Hoy Mobile) to have. Allphones asserted that this was a 'credit charge'. It deducted $50 per month, from the calculation of gross profit, for Hoy Mobile's use of the EFTPOS terminal provided. This charge was not provided for under the franchise agreement. Indeed, the franchise agreement required the franchisee to use the Allphones point-of-sale system (see e.g. cll 6.5(ii), 7.1, 7.21(iii)). It did not provide for Allphones to charge the franchisee for its providing elements of that system. Allphones had decided what profit shares to offer its franchisees and what amounts it would be entitled to receive in order to operate its business when it entered into the franchise agreement. As the memorandum said, this was a 'rental fee', not a 'credit charge'. I am of the opinion that Allphones was not entitled to make a charge or deduction of $50 per month in respect of this matter for provision of the EFTPOS terminal. This fee was $50 per month prior to August 2006 and $150 per month thereafter. It was also charged in relation to the use by Hoy Mobile of Allphones' point-of-sale computer system. It is common ground that for a year before August 2006 Allphones charged Hoy Mobile $50 per month for IT costs. Mr Donnellan asserted in evidence that Allphones was entitled to impose these charges, because they reflected a change by Allphones to the 'system' pursuant to cl 4 of the franchise agreement. In my opinion such an argument is without foundation. Clause 4 did not authorise Allphones to make demands or impose obligations upon its franchisee to pay money. The system remained the same, insofar as it was the same business developed by Allphones and described in recital B and cl 4 of the franchise agreement. Neither cl 4, nor any other provision in the franchise agreement entitled Allphones to make separate charges for the provision of a critical part of its 'system'. Next, Allphones argued that cl 6.35 of the franchise agreement authorised it to issue a direction making a demand for a payment such as the IT management fee. Rather, it dealt with procedural matters going to the operation of the system and business as agreed to by the parties. Express words would be necessary to confer a contractual and unilateral right on one party to a contract to create a new liability on the other to pay it money without the other's agreement. I am of opinion that Allphones was not entitled to deduct IT management fees from Hoy Mobiles' commission. However, they were unable to allocate that sum among the individual categories. In my opinion, it was for Allphones to justify its deductions. Hoy Mobile has established that Allphones made substantial deductions from commission amounts it was paid without a contractual basis. Mr Nicoll could have given evidence as to any basis for reducing the unallocated balance but did not. And, in their reports neither Mr Nicoll nor the two expert accountants could allocate the sums involved. Hoy Mobile has discharged any onus on it: Blatch v Archer [1774] EngR 2 ; (1774) 1 Cowp 63 at 64; [1774] EngR 2 ; 98 ER 969 at 970; Weissensteiner v The Queen [1993] HCA 65 ; (1993) 178 CLR 217 at 225 per Mason CJ, Deane and Dawson JJ and see too at 233 per Brennan and Toohey JJ; R v Burdett (1820) 4 B & Ald 95 at 161-162 per Abbott LCJ at 140 per Holroyd J; 106 ER 873 at 898 and 890. She established a retention program and set up a telemarketing call centre. Ms Tripoli said that there are about 10 people working on the team, including the telemarketers. This program was designed to retain customers whose contracts with Optus were about to expire. The customers had entered into those contracts initially through an Allphones outlet. Optus provided Allphones with information concerning customers in this class, other than those who had switched carriers or had a bad credit history. Thus, Allphones, but not its franchisees, received the contact details of customers who were commercially worth pursuing for a new contract. The information provided by Optus identified the Allphones store at which the customer had entered into the original contract, so that the retentions team could refer the customer to that store to look at the latest model phones or to collect phones that had been ordered. Alternatively, if the customer re-signed with the carrier through the efforts of the telemarketers, a courier could deliver the phone to him or her at a charge to Allphones of about $11.00 per delivery. Ms Tripoli said that some of the franchisees were better than others at following up customers who were nearing the end of their contracts. When the customer was re-signed, even if they never went back to the franchisee's store where the initial Optus plan was made, MTAC were continued to be paid by Allphones to the same franchisee (including Hoy Mobile) as if it had been earned under cl 7.4. Allphones charged $50 as an administration fee before passing on the MTSC paid by the carrier in respect of these retained customers. In addition, Optus paid Allphones the standard bonus of $30.00 for each customer retained by the retention program. There is no dispute that Hoy Mobile has been paid all MTAC for those retained customers. Mr Lynch and Mr Bell agreed that for the 16 months from May 2006 to August 2007 the total amount Allphones had retained by deductions from payments of MTSC was an average of $102 per customer (inclusive of the $30 Optus retention bonus). They agreed that, if Allphones were not authorised to make these deductions, Hoy Mobile been underpaid $6,507.60 including GST and excluding interest. Allphones argued that it was entitled to deduct these fees, and in fact that it had no obligation under the franchise agreement to make these payments in the first place, because Hoy Mobile had not itself retained the customers. However, part of the retention program envisaged that the customer might be referred back to the Allphones store where he or she entered into the original contract. Furthermore, there is no evidence that Allphones was altruistic towards its franchisees or made voluntary payments to them. Rather, on numerous occasions, it withheld or deducted amounts from commission earned by Hoy Mobile and other franchisees. For the reasons that follow, I infer that the payments made by Allphones of MTSC and MTAC in relation to retention canvassing were made as admissions by it that, at least, those sums were due to Hoy Mobile under cl 7.4. Allphones admitted in its defence that it was required to pay Hoy Mobile 72.5% of the MTSC and MTAC received by Allphones '... as a result of the operation of [Hoy Mobile's] business'. The retention program was designed to identify commercial opportunities to earn further MTSC and MTAC from existing customers whose then current contracts with the carriers had come about directly as a result of the operation of Hoy Mobile's business. The decision by Allphones to pay to Hoy Mobile all MTAC, together with part of the MTSC due to it under cl 7.4, resulting from the re-signing of retained customers was a recognition that use of the 'system' referred to in cll 4 and 6.45 of the franchise agreement had brought about both the original and the new 'retention' contracts with those customers. Hoy Mobile said that the telemarketing for retentions was a 'call centre activity' or 'related cost' referred to in cl 6.4(ii). Hoy Mobile argued that the terms of cl 6.4(ii), permitted Allphones to apply up to 5% of net revenue received by it to '... advertising, promotions (including web site and call centre activities) and related costs'. 'Net revenue' was defined in cl 6.4(v) as being equal to the gross profit defined in cl 7.5, less the monies transferred to Hoy Mobile pursuant to cl 7.4. And, cl 6.4(iii) required any advertising in relation to the franchised business in excess of the 5% of net revenue, specified in cl 6.4(ii), to be mutually agreed between the parties in writing. Hoy Mobile had not agreed that any amount in excess of 5% of net revenue could be used by Allphones for the retention program. Allphones first disclosed the retention team's activities in its quarterly update newsletter of 31 May 2006 to franchisees. Despite the benefit that Hoy Mobile received from this retention program, it argued that it could have sought to to retain customers itself. Hoy Mobile did not have any retentions program in operation at the relevant time. But, it noted that it did not have access to the information that Allphones received from Optus, identifying which customers would be worth pursuing. Hoy Mobile argued that the money retained by Allphones from the retention program was revenue received by it 'pursuant to this [franchise] Agreement' within cl 6.4(ii). Thus, it argued cl 6.4(ii) permitted Allphones to retain only 5% of the net revenue from call centre related activities. Allphones' retention program was mutually beneficial to both parties. However, Allphones prepared the standard terms of its franchisee agreement. Those terms expressly provided, in cl 6.4(ii), that no more than 5% of call centre charges were payable from net profit, unless otherwise agreed in writing between the parties. Allphones, did not take any step to obtain Hoy Mobile's agreement to any greater expenditure or amount of reimbursement for the retention program. It chose, unilaterally, to deduct money from what it owed to Hoy Mobile. As in other instances, Allphones acted as it pleased, regardless of the express terms of cl 6.4(ii) of the franchise agreement. I am satisfied that Allphones was not entitled to make the deductions that it did for the retention program. No suggestion was made in evidence or argument that any reduction of the sum claimed under this head should be made as part of the 5% allowance in cl 6.4(ii). Allphones arranged for shopfitters to do the work. There is no dispute that all franchisees were required to make the changes and were charged on an equivalent basis. The store refresh requirement had been made by Allphones in late June 2006. In late July 2006, Mr Harkin wrote a more detailed circular explaining the basis for the requirement. One purpose was to enable a new broadband display cabinet to be installed in each store for the benefit of Optus. Optus made a co-op payment of $1,100 (inclusive of GST) per store to Allphones for the cost of fitting out its broadband promotional cabinets for display. Allphones applied the $1,100 from Optus to reduce the amount of the refresh charge payable by each franchisee, other than Hoy Mobile. In its written submissions, Allphones said that it had not credited Hoy Mobile with the co-op payment from Optus, because Hoy Mobile had not complied with the refresh requirement and, thus, was in breach of the franchise agreement. It also submitted that it would apply the Optus $1,100 toward the store refresh when Hoy Mobile undertook it. Allphones, however, had no evidence to support these submissions and I do not accept them. The submissions are inconsistent with Allphones giving a further $1,000 credit, received from an organisation named 'Dodo', to Hoy Mobile in reduction of the deductions made by Allphones for the store refresh. Hoy Mobile argued that Optus was not entitled to charge the store refresh deductions at all, and that it was also entitled to receive the benefit of the Optus co-op payment of $1,100. Allphones claimed that it was entitled to require its franchisees to make changes to the standard appearance of their store pursuant to cll 4, 6.23 and 6.35 of the franchisee agreement. Clause 6.23 obliged Hoy Mobile to conduct the operation of its business in accordance with the standards and specifications in documents which identified what the system and the get-up were at any particular time. The store refresh direction was a written direction, in respect of the development, operation or management of a franchised business and the maintenance and appearance of the franchised premises, and with which Hoy Mobile was required to comply pursuant to cl 6.35. Allphones argued that this would be part of improving the system and enhancing Allphones' image within the meaning of cl 4. In general, each party to a contract agrees, by implication, to do all that is necessary on its part to enable the other party to have the benefit of the contract: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51 ; (1979) 144 CLR 596 at 607 per Mason J applying what Griffith CJ had said in Butt v M'Donald (1896) 7 QLJ 68 at 70-71. A duty to co-operate is not always implied. Whether it will be is a question of construction based on an objective consideration of the whole of the terms of the contract: Secured Income 144 CLR at 607-608 per Mason J. Here, the work to refresh the Eastgardens store included the new Optus broadband display cabinet. Since Optus paid Allphones the money in order to achieve the installation of that work, it was necessary for Allphones, when exercising its contractual power to impose a reasonable charge for the work, to apply Optus' payment in reduction of the amount Hoy Mobile had to pay. I am of opinion that cll 4, 6.23 or 6.35 and the franchise agreement as a whole, entitled Allphones to charge Hoy Mobile for no more than the reasonable cost to it of the work required for the fit out. If Allphones received money from carriers to do some of the fit out or refresh work or to defray its cost, it could not use any contractual power to reimburse itself by charging its franchisee with a sum greater than the reasonable cost that Allphones had incurred. The powers in the franchise agreement, on which Allphones relied to impose and charge for the store refresh, did not authorise it to make a profit from Hoy Mobile by requiring it to effect the store refresh for the benefit of a carrier, like Optus, yet retaining co-op sums paid by the carrier to Allphones to defray the very cost of that fit out. These clauses entitled Allphones to act reasonably for the purpose of giving effect to them. They did not confer a power to act capriciously. Allphones led no evidence to justify the reasonableness of the round figure of $10,000 as the charge it sought to impose on the franchisees, including Hoy Mobile. Both parties had to co-operate to bring about the refresh. Hoy Mobile had to permit the shopfitters access to its store, and pay for the reasonable cost of the work. Allphones had to arrange for the work to be designed and carried out, as well as to fix a charge which was a reasonable reflection of the cost it incurred in respect of the refresh. It was not entitled to profit by use of its powers under the franchise agreement to impose a reasonable charge as cost of the work to be done. Allphones deducted the amount of $10,000 from payments due to Hoy Mobile. That sum was greater than the amount it would have been entitled to deduct, were it shown to have been reasonable, because it failed to give Hoy Mobile the benefit of the amount of the Optus broadband fit out contribution. In the absence of evidence to justify it, I am not satisfied that the amount of $10,000 was a reasonable charge for the work, so as to be authorised by the franchise agreement. The construction of the franchise agreement at which I have arrived (requiring Allphones to apply the money received from Optus to reduce the reasonable cost it charged Hoy Mobile for the work) may also be arrived at by implying a term that each party to the franchise agreement was under an implied duty to act in good faith. However, it is not necessary to determine that matter: cf Cheshire & Fifoot's Law of Contract (8 th Aust ed, Lexis Nexis, 2002) at [10.43] ff. It was unreasonable for Allphones to impose or retain the part of the charge for the Eastgardents store refresh for which Optus had paid or agreed to pay. The unreasonableness of Allphones doing so was demonstrated by its actions in reducing every other franchisees' store refresh charge by the amount of the Optus payment. There is no evidence that the imposition of the $10,000 charge, or that sum less the Optus contribution, in the circumstances, is reasonably capable of fulfilling the purposes of the powers under the franchise agreement on which Allphones relied. I find that Allphones has not established that it was entitled to deduct any sum for the store refresh on the basis it did so. While Allphones, no doubt, may be able to justify some deduction for this, it has not done so here. Accordingly, it must repay the sum of $9,973.37 (inclusive of GST) to Hoy Mobile. 26. Allphones itself owned and operated the Randwick store. Because I have found that the 'territory' was only the suburb of Eastgardens, the Randwick store was outside that area. Accordingly, the only part of this claim which requires consideration is that relating to loss from the incorrect operation of the 138000 Allphones telephone number. For a period of about one year, Allphones' advertised telephone number of 138000 failed to divert callers automatically from the territory of the suburb, Eastgardens, to Hoy Mobile's store. Mr Hoy gave evidence (which I accept) that on a number of occasions in 2006, he telephoned the 138000 number from Hoy Mobile's store or the shop next door, only to be put through to the Randwick store. Mr Hoy said (and I accept) that from about March 2006, the store received fewer telephone calls than before. Allphones' marketing director, Mr Pompeii, explained to Mrs Hoy in early October 2006, and in his evidence, that this fall in the number of calls appeared to have been the result of incorrect programming or incorrect operation of the technology used to divert calls made to the 138000 number to the appropriate store. Nonetheless, for six months after Mrs Hoy brought the matter to Mr Pompeii's attention, the incorrect diversion continued without being remedied. Allphones argued that it had no responsibility because it had engaged an independent contractor, Zintel, to arrange for the way in which the 138000 number diverted calls to the most appropriate local Allphones store. Allphones contended that it was not contractually responsible to Hoy Mobile for any loss of sales if Zintel had made a mistake. I reject that argument. The 138000 number was a part of the system in cl 4 of the franchise agreement. Allphones covenanted first that it would not operate a franchised business in Hoy Mobile's exclusive territory (cl 2) and, secondly, that it would not grant to anyone a licence to use the system within the territory (cl 6.45). If the Randwick store achieved sales from calls which were diverted to it instead of Eastgardens, Hoy Mobile would have lost those sales and any commissions to Allphones. Hoy Mobile called no evidence of any actual lost sales. However, it is difficult to establish a precise basis for assessment of the value of the loss of a chance to earn revenue resulting from the erroneous diversion of 138000 calls to the Randwick store. Mr Hoy did not give evidence about what sales the Eastgardens store achieved from or as a result of telephone inquiries. I infer that he could give no evidence helpful to Hoy Mobile's case: Ferrcom 22 NSWLR at 418. Significantly, Allphones considered the 138000 as commercially useful in generating sales opportunities. Indeed, at the franchisee forum on 6 October 2006, where Mrs Hoy first discussed with Mr Pompeii the problems that the Eastgardens store was experiencing with the 138000 number, he said that the number was an important tool for sales generation. Mr Pompeii showed Ms Hoy a number of Zintel documents on his laptop computer. These showed that the Eastgardens store had five calls diverted to it by the 138000 number in March 2006, but only one in September that year. Mr Hoy had said that he had noticed a drop from 10 calls per day to only one or two. While I am not satisfied that the number of calls at the Eastgardens store was as high as 10 call per day before the drop, I infer that once Allphones began publicising the 138000 number, customers began calling it rather than the individual stores' phone numbers. As that happened, the number of calls that the Eastgardens store received fell. Mr Pompeii's Zintel files recorded only the calls diverted to the Eastgardens store, not those which were generated in the suburb of Eastgardens, or the ones made directly to Hoy Mobile's phone number. And, as Mr Hoy's experience showed, even calls from Hoy Mobile's store itself were diverted to the Randwick store. Zintel had programmed the 138000 number to divert calls from the Rose Bay, Vaucluse and Edgecliff telephone exchanges to the Eastgardens store. The areas served by those exchanges were well away from Eastgardens and, indeed, Randwick was closer to them. Only in February 2007 did Allphones advise Zintel that those areas belonged to the catchment area for the Randwick store, and then it required them to be changed urgently. The expert agreed that the period of the deficient operation of the 138000 number was about one year. During this period, Mr Lynch and Mr Bell concluded that the Randwick store generated revenue which would have resulted in about $90,000 in commissions and bonuses. That was less than one third of what Hoy Mobile earned in the equivalent period. Allphones argued that only $20 nominal damages should be awarded if a breach of its obligations in relation to the 138000 number to Hoy Mobile were established. I am satisfied that Allphones was responsible for the diversion of calls from Hoy Mobile's territory of Eastgardens because of, first, the inappropriate programming by Zintel from March 2006 and, secondly, from October 2006 its own failure to correct what it knew was a problem. I am satisfied that Hoy Mobile lost the opportunity to make some sales from calls to the 138000 number during the period of the diversion. I am also satisfied that this loss had some value. Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages: see Sellars v Adelaide Petroleum NL [1994] HCA 4 ; (1992) 179 CLR 332 at 349-350 per Mason CJ, Dawson, Toohey and Gaudron JJ. However, it is not possible to make any precise calculation of the value of this loss, which included payments under cll 7.3 and 7.4 and the ongoing right to receive MTAC. Doing the best I can, I find the value of this to be the loss of about 1% of the sales of the Randwick store made during the period of the diversion. That results in a past loss of about $900, but this amount excludes any MTAC which Hoy Mobile would have earned after March 2007 on those sales. Although there is some guesswork involved, I find the total loss of Hoy Mobile as a result of the diversion to be $1,500: see generally Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ; (2003) 196 ALR 257 at [37] - [38] per Hayne J with whom Gleeson CJ, McHugh and Kirby JJ agreed: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd [2007] FCAFC 40 ; (2007) 157 FCR 564 at 569-570 [35] - [36] per Black CJ and Jacobson J, at 581 [99]-[101] per myself. 27. Hoy Mobile claimed that it was entitled to be paid at the higher rate of 74% as its entitlement to gross profit on sales under cl 7.3. The issue arised because, unlike the other carriers, Vodafone paid Allphones a fixed amount of commission on sales of particular plans. But, Vodafone allowed Allphones to select the phone which the customer received. Thus, when a handset was sold to a customer as part of an overall plan or contract for the provision of a mobile phone service by Vodafone, no separate amount was attributed in that contract to the value of the phone itself. In effect, the handset was given to the customer as part of the consideration for him or her entering into a long term plan or contract with Vodafone. Mr Nicoll asserted that the handset was given away for free. He said that Vodafone had simplified the way in which it paid commission to Allphones, by combining the reimbursement for the cost of a handset provided to the customer, together with the initial commission (as would be payable on an MTSC basis) into one single payment. He said that this gave Allphones '... more freedom to use whatever handset we wish to use'. He said that because Allphones had purchased the handset initially, it recovered its cost against the payment of commission by Vodafone. Mr Lynch and Mr Bell agreed, however, that Allphones' internal accounting treatment for such transactions was done on a gross profit basis, like that involved in the calculations made for sales under cl 7.3 of the franchise agreement. The transaction effected by Vodafone, with the ultimate customer, through the agency of Hoy Mobile and Allphones, was one in which the customer acquired a bundle of rights. Those rights included ownership of the mobile phone 'given away' to him or her 'for free', and the right to use Vodafone's mobile phone service, subject to complying with the obligations for payments over the term of the contract. Another contract existed between Vodafone and Allphones for payment of money in respect of such transactions effected with customers. No written terms of such an agreement were in evidence. Mr Nicoll gave an oral description of what he said were those terms. However, the documents examined by Mr Lynch and Mr Bell showed that, for its purposes, Allphones treated the transaction as a sale of goods, rendering it a gross profit. The cognate transaction between Vodafone, through the agency of Allphones and Hoy Mobile, and the customer, involved the ultimate sale of the 'free' phone. The phone was not, in fact, 'free' to the customer but was part of the consideration provided by Vodafone under the plan it entered with its customer. The use of the word 'free' in this context is apt to mislead: cp Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 483B-G per Black CJ, von Doussa and Cooper JJ. Mr Nicoll's description of Allphones' internal accounting, in the absence of any documentary evidence, was also revealing of the nature of the relationship between Alllphones and Vodafone. He said that Allphones could determine what the 'rebate', or amount it attributed to the sale price of the phone, would be. That is, Allphones could determine the amount of profit made on the transactions, as between itself and Vodafone, by selecting both the phone to be supplied to the customer, and the price to be attributed to it in accounting to Hoy Mobile. Mr Lynch and Mr Bell characterised Allphones' accounting treatment of the transaction between it and Vodafone as a sale of goods. I accept their evidence and find that this was, indeed, a sale of goods. Allphones' internal accounting showed that it was treating the receipt from Vodafone as part of the calculation of the cost of goods sold, and not simply as the payment of commission by Vodafone. Allphones' gross profit would depend on the price it chose to attribute as the 'cost' of the phone in the transaction. The literal terms of cl 7.3 dealt with monies received by Hoy Mobile (as opposed to Allphones) in relation to the sale of stock or services supplied by Allphones. As noted above, cl 7.4 has to be construed as relating to the commercial reality that Allphones, not Hoy Mobile, received payments of commission. Here, Allphones received a payment for what it treated as goods sold through the agency of Hoy Mobile. Allphones argued that the only difference between the way in which the other carriers reimbursed Allphones when a customer purchased a 'free' phone with a plan, was that Vodafone, as an administrative matter, did not break up the sum paid to Allphones into the components of MTSC and reimbursement for the cost of the phone. However, Mr Nicoll explained a further difference, namely that Allphones could set the price of the phone as between itself and a franchisee. Thus, as Allphones' internal accounting showed, the transaction in fact had more in common with a sale of goods than with merely accounting for a payment of commission and reimbursement of the cost price of the goods. Vodafone paid Allphones money, from which there was an apportionment of the price of the phone supplied to the customer, and a surplus for commission (MTSC). It does not matter that Vodafone made the payment. Where Hoy Mobile received money in relation to the sale of stock or services supplied by Allphones, cl 7.3(i) required that money to be deposited promptly by Hoy Mobile to Allphones' account. Mr Donnellan's evidence showed that, in the industry, marketing of mobile phones and contractual arrangements with various carriers changed constantly. Sales methods, plans and marketing concepts varied frequently. For example, he pointed out that 'capped' mobile phone plans became very common only after 2003. The ordinary commission structure, which had been offered by carriers under previous marketing arrangements, did not directly accommodate capped plans. The dynamism of the various marketing techniques and structures for inducing customers to buy mobile phone products and services was known to both parties at the time the franchise agreement was made. And, both Mr Donnellan and Mr Hoy had been involved in the industry for some years before they negotiated it. The mutually known facts included that methods, by which mobile phone carriers sought to induce their customers to contract with them, were constantly evolving. The carriers then adjusted the way in which the retailers of their services were remunerated. The commercial purpose of cll 7.3 and 7.4 was to provide an agreed basis to renumerate each of Allphones and its franchisee, for sales effected by Hoy Mobile. The clauses were intended to apply to the two sales activities contemplated by the parties --- sales of stock or services supplied by Allphones to Hoy Mobile, and sales of plans or contracts with carriers generating MTSC or MTAC. Although the clauses are worded to deal with particular circumstances in which the payments for such sales might occur, they must be construed in a common sense way to cover other methods of receipt of the sale proceeds used in the relationship. This is because no other provisions in the franchisee agreement applied to such receipts, and the essential purpose of cll 7.3 and 7.4 was to provide an agreed means of dividing them. Neither party could have intended that, in situations where the one named in cll 7.3 or 7.4 as receiving payment did not receive, but the other received, a payment matching the description, the receipt would be treated differently, even though its purpose was the same. Hence, Mr Donnellan's ready acknowledgement that cl 7.4 applied to monies received by Allphones, despite its literal wording. Likewise, cl 7.3 was intended by the parties to divide the receipts of payments for goods or services supplied by Allphones. If Hoy Mobile sold goods or services but processed the sale using the customer's credit card, it would not receive or bank such money under cl 7.3, but the parties must have intended the direct receipt by Allphones to be treated as if Hoy Mobile had been paid in cash. Of course, at common law the courts cannot make a contract for the parties which they did not make for themselves (cp: s 87(2) of the Trade Practices Act ). But commercial contracts '... ought to be construed fairly and liberally for the purpose of carrying out the object of the parties': Duncan v Koster; The Teutonia (1872) LR 4 PC 171 per Mellish LJ at 182, applied by Isaacs J in Cohen & Co v Ockerby & Co Ltd [1917] HCA 58 ; (1917) 24 CLR 288 at 300. Isaacs J went on to hold that expressions in a mercantile contract are not to be read narrowly, but as the Court would suppose two honest business people would understand the words they actually used with reference to their subject matter and the surrounding circumstances: Cohen & Co 24 CLR at 300. And the Court construes a commercial contract to avoid it making commercial nonsense or working commercial inconvenience: Zhu 218 CLR at 559 [82] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. I am of opinion that cl 7.3 applied to all transactions, involving either Allphones or Hoy Mobile receiving payment for sales of goods or services supplied by Allphones, which were effected by Hoy Mobile. Thus, the sale of goods, being the 'free' mobile phones provided to Hoy Mobile's customers who entered into plans with Vodafone, generated gross profit, to the division of which cl 7.3(ii) applied. The internal accounting by Allphones for those mobile phones 'given away' to customers when they entered into contracts with Vodafone recorded the reality of the transaction, namely a sale of goods for which Vodafone ultimately paid Allphones. That entitled Hoy Mobile to be remunerated on the basis of cl 7.3, namely for 74% of the gross profit. Mr Lynch and Mr Bell agreed that if the transaction were a sale of goods, the gross profit calculation under cl 7.3 resulted in Hoy Mobile being entitled to a further $2,299.46 (including GST) than it was paid. 28. (For a list of the individual damage amounts, see discussion headed 'Conclusion' below. ) From this sum I will deduct $32,000, the amount which I have found fairly reflects the benefit obtained by Hoy Mobile over the period in which it was committing the fraud. That leaves a net sum of $43,169.75 in damages. Interest will need to be added to this sum at the pre-judgment rates of interest used by the Supreme Court of New South Wales: cf Hilditch Pty Ltd v Dorval Kaiun KK (No 2) [2007] FCA 2014 at [110] . 29. COULD ALLPHONES TERMINATE THE FRANCHISE AGREEMENT? Here, both the fraud of Hoy Mobile and Allphones' conduct, including its dishonesty in respect off commissions which I have found, affect the question whether Allphones can terminate the franchise agreement. Professor Carter has noted that such instances create serious difficulties of analysis (JW Carter, Breach of Contract (2 nd ed, Law Book Co Ltd, 1991) at [1034] pp 346-347). He observed that there was tendency in the cases to eschew strictly logical analysis and rely on the general circumstances of the case. There, the time for completion of a contract for the sale of land had been made of the essence. Two days before the contractual date for completion, the vendors' solicitor told the purchasers' solicitor that the vendors would not be in a position to complete on the appointed day. Neither party attempted to settle on the due date, but two days afterwards, the purchasers gave a notice of rescission. Brennan, Deane, Dawson and Gaudron JJ, in separate judgments, held that the purchasers could rescind and were entitled to the return of the deposit. Mason CJ dissented. A number of the justices discussed, in obiter dicta, the position where there was an actual breach of contract entitling the other party to treat that breach as a repudiation. In other words, the requirement is that the plaintiff be ready and willing to perform except to the extent that the defendant dispensed with his performance. ... [I]n the case of actual breach the requirement of readiness and willingness is more stringent; it continues through to the time of performance. That is because the termination of the contract does not antedate the time for performance. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his part when his turn comes, simply because his incapacity to do so is not necessarily final or logically complete. Since a party's right to rescind an executory contract for the other party's repudiation is limited to cases where the first party is ready and willing to perform, neither party is treated as without fault where both would be at fault were the contract to continue until the time for performance arrives . When Brennan J referred to an entitlement to rescind, he used 'rescind' in the sense of one party electing to terminate for breach or repudiation by the other, as explained in Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22 at [2] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ. Brennan J identified the principle to be applicable in the case of an anticipatory breach of mutually dependent and concurrent obligations, occasioned by one party informing the other that he would not be able to perform at the time for performance. His Honour said that, unless the other party were ready and willing at the time when that intimation was given, the first party's failure to perform was not a breach of contract. Thus, where the party to whom the intimation had been given was itself substantially incapable of future performance of its obligation, or had already definitively resolved or decided not to perform it, that party was also not ready and willing. Thus, he could not treat as a breach the other's intimation that performance would not be given on the future day for performance. If that be so, it must follow that neither party could have terminated for the failure of the other on the appointed date to offer performance (see Foran 168 CLR at 427). But, whether or not he placed some reliance on the intimation in abstaining from performance of his own obligation, a disposition not to perform or an incapacity to perform when the intimation was given denies the character of breach to a failure to perform by the party giving the intimation . He then expressed the obiter view that, while the absence of the other party being able to show that it was ready and willing would preclude it from seeking an order for damages or specific performance, that other party could terminate based on the intimated repudiation: Foran 168 CLR at 437-438. He said that if the position were otherwise, the law would require useless and futile expenditure by innocent parties of whatever time, effort or money was necessary to place themselves in a position where they could positively demonstrate actual or potential ability to perform a contract in order to be able to bring it to an end on the ground that it had already been repudiated by the other party. He cautioned against carrying too far the principle that repudiation of a contract by one party could absolve the other party from the obligation of tendering useless performance. He said that when the principle applied, it could reduce the extent or alter the nature of the readiness and willingness which a plaintiff was required to show, but there was no reason why it should be eliminated as a requirement entirely. Even where a party has been absolved by the repudiating party from performing his future obligations under the contract he must show that at the time of the repudiation he was ready and willing to complete the contract had it not been repudiated. But in proving his readiness and willingness where he has been absolved from tendering performance he may not have to prove a great deal. Thus, three of the justices (Mason CJ in dissent, with Brennan and Dawson JJ) expressed the obiter view that where both parties were in actual (as opposed to anticipatory) breach of a fundamental term, or otherwise evincing an intention not to be bound, neither could terminate. The three justices did not confine their expression of the operation of this principle to cases of mutual or dependent obligations. Rather, they expressed the principle as deriving from a general readiness and willingness of each party to perform his obligations at the relevant time. Earlier, in Green v Sommerville [1979] HCA 60 ; (1979) 141 CLR 594 at 609 Mason J (with whom Murphy and Aickin JJ agreed) recognised that '[a]n obligation may be essential, yet not interdependent with an obligation imposed on the other party to the contract ...' At common law, a party who brings an action for breach of contract must show that he is ready and willing to perform his part of the concurrent acts: Cohen & Co 24 CLR at 298 per Isaacs J. Where, at least in English law, both parties to a contract are in breach of a mutual obligation owed by each to the other, neither can rely upon the other's breach as giving him a right to terminate, following the decisions of the House of Lords in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909 at 978-988A per Lord Diplock, with whom Lords Edmund-Davies and Russell of Killowen agreed; Paal Wilson & Co v Partenreedere Hannah Blumenthal [1983] 1 AC 854 at 908H-909F per Lord Brandon of Oakbrook with whom the other members of the House agreed in separate speeches. In Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 at [61] - [62] , Keane JA (with whom Jerrard JA at [1] and Cullinane J at [66] agreed) expressed the obiter view that it did not make much commercial sense to say that where both parties had expressed a firm resolve not to perform the contract, the contract continues 'in existence in some legal limbo' for the reason that neither party is ready, willing and able to perform. His view is similar to that of Deane J in Foran 168 CLR at 438. Keane JA said that in such circumstances, the case could be characterised as one of termination by mutual consent, although he recognised that his was a tentative view and that the issue did not need to be resolved in order for him to decide the case: Highmist [2005] QCA 357 at [62] . Keane JA did not examine the authorities. In Paal Wilson [1983] 1 AC at 915C-916D Lord Diplock discussed the entry of both parties to an executory contract into a 'new contract' which he styled 'the contract of abandonment'. He explained that in such a case, each party promises by words or conduct to release the other from further performances of obligations on its part which remain to be performed, including the obligation to pay damages. And in Australian law the parties to a contract can so conduct themselves that they can be seen to have mutually abandoned or abrogated the contract; for example where neither takes any steps to perform over a period: see Summers v The Commonwealth [1918] HCA 33 ; (1918) 25 CLR 144 at 151-152 per Isaacs J; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 ; (1978) 138 CLR 423 at 434 per Stephen Mason and Jacobs JJ; Foran 168 CLR at 422-423 per Brennan J. I am not satisfied that either party regarded the franchise agreement at an end or as having been abandoned or abrogated. Hoy Mobile wanted it to continue and Allphones sought to exercise its rights under cl 9.3 to terminate. Nor did Allphones plead that the franchise agreement had been abandoned or abrogated or terminated by mutual consent. 29.2 Was Allphones evincing an intention not to be bound? It is not necessary, for repudiation of a contract, that the repudiator make plain that he will never perform his contractual obligations at all, as Deane and Dawson JJ pointed out in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23 ; (1989) 166 CLR 623 at 658-659. There, Mason CJ said that there was a difference between evincing an intention to carry out a contract only if and when it suited the party to do so, and evincing an intention to carry it out as and when it suited the party to do it. He said that in the first case, the party intended not to carry the contract out at all, in the event that it did not suit him. Whereas in the second case, the party intended to carry out the contract, but only to carry it out as and when it suited him. Mason CJ said that it is easier to say of the first than the second case that a party has evinced an intention no longer to be bound by the contract, although ultimately the question whether a party is taken to have evinced such an intention is determined objectively: Laurinda 166 CLR at 634; see also 643 per Brennan J, and 666 per Gaudron J. In Koompahtoo Local Aboriginal Land Council v Sanpine [2007] HCA 61 ; (2007) 241 ALR 88 at 101 [44] Gleeson CJ, Gummow, Heydon and Crennan JJ said that unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. They said: 'In contractual renunciation, actions may speak louder than words. ' Their Honours held that it was important to classify whether the obligation with which there had been a failure to comply had been agreed by the contracting parties to be essential, or whether there had been a sufficiently serious breach of a non-essential term enlivening the right to terminate: Koompahtoo 241 ALR at 101 [47] and 102 [49]. They held that the interests of justice were promoted by limiting the right to rescind the contracts (i.e. terminate for breach) to instances of serious and substantial breaches of contract: Koompahtoo 241 ALR at 104 [52]. I am of opinion that the cumulative effects of Allphones' deliberate and secretive underpayments of commissions were of such seriousness that, had it wished to do so and been itself an innocent party, Hoy Mobile could have terminated the franchise agreement. A party in breach of an essential but independent term may also rescind for fundamental breach: see State Trading Corporation of India Ltd v Golodetz Ltd (at 285-287); compare Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 at 50-51. Roadshow , we consider, was not, by reason of its conduct, unable to terminate on the ground of CEL/Vision's repudiation. And they said that they did not need to undertake a comprehensive analysis of the effect of a breach on a party's right to rescind: see Roadshow 42 NSWLR at 479F. They recognised that, although a party in breach of a non-essential term was not prevented from rescinding for a fundamental breach or a repudiation by the other party, there may be an exception where a causal relationship existed between the breaches of non-essential terms by the party attempting to rescind and the fundamental breach relied on: Roadshow 42 NSWLR at 479G-480B referring to Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613. When Gleeson CJ, Handley JA and Brownie AJA said in the passage, which I have quoted, that a party in breach of an essential but independent term may also rescind for fundamental breach, they relied on the decision of the English Court of Appeal in State Training Corporation of India Ltd v Golodetz Ltd [1989] 2 Lloyd's Rep 277. Other parts of Kerr LJ's judgment have been disproved by the House of Lords: Vitol SA v Norelf Ltd (The Santa Clara) [1996] AC 800 at 812A-B. Gleeson CJ, Handley JA and Brownie AJA also referred to what Ipp J had said in Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 at 50-51 (Pidgeon ACJ and Franklyn J agreeing). The Full Court there was dealing with an appeal from the entry of summary judgment. Ipp J noted that the argument concerning the question whether a party in breach was entitled to terminate was faintly argued and had not been canvassed fully by counsel. He distinguished Foran [1989] HCA 51 ; 168 CLR 385 and Lombok Pty Ltd v Supetina Pty Ltd (1987) 14 FCR 226 from the facts of case before the Full Court saying that the terminating party's rights to payment of money were independent of, and not concurrent with, the obligations alleged to have been breached by it. He said that there was nothing in the principles in those cases to prevent the party allegedly in breach from relying on non-payment of progress claims to terminate the contract. A party who is in breach may nevertheless have the right to terminate, so long as the breach is not repudiatory or of an essential term or such as to deprive the other party of the substantial benefit of the contract. While the dicta of the Court of Appeal in Roadshow Entertainment 42 NSWLR at 481B-C are of great weight, I am of opinion that on analysis, they are inconsistent with the considered, albeit equally obiter dicta views of three of the justices: Foran 168 CLR at 405-408 per Mason CJ, 424, 427 per Brennan J and 452, 454 per Dawson J. In DTR Nominees 138 CLR at 433 Stephen, Mason and Jacobs JJ held that for a party to be entitled to rescind for anticipatory breach, he must be at the time of rescission himself be willing to perform the contract on its proper interpretation. Allphones was not an innocent party, any more than Hoy Mobile. I am satisfied that Allphones considered itself to be free to account for commission as and when it pleased and in the way it pleased, regardless of its contractual obligation pay the whole amount of MTSC due to Hoy Mobile on the construction of the franchise agreement I have found. Each had engaged in dishonest conduct towards the other in a way which evinced an intention not to be bound. Allphones argued that because Hoy Mobile had engaged in a fraud which fell within cl 9.3(viii) of the franchise agreement and which had continued for a considerable period, it should be allowed to terminate pursuant to its express contractual right. I do not quarrel with the phrase, or mean in the smallest degree to impeach the various cases which have been founded on the proof of fraud. But we must recollect, that the principle which I have mentioned is always applied ad hominem . He who is guilty of a fraud shall never be permitted to avail himself of it; and if a contract founded in fraud be questioned between the parties to that contract, I agree, that as against the person who has committed the fraud, and who endeavours to avail himself of it, the contract shall be considered as null and void. ... They reflect a principle which still runs through the common law of identifying fault as an appropriate basis for the court exercising its power to grant or withhold relief. In Suttor v Gundowda Pty Ltd [1950] HCA 35 ; (1950) 81 CLR 418 at 441, Latham CJ, Williams and Fullagar JJ discussed a contractual power to avoid a contract in circumstances where the consent of a third party, there the treasurer of the Commonwealth of Australia, had not been obtained within a particular time. They said that in that case, the event in question could be brought about by the failure on the part of either party to take certain necessary steps, or it could be brought about without default by either party. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract . If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him. I am of opinion that in the contractual position which I have found, where each party was in default and acted dishonestly in respect of its financial accountability to the other, neither party was able to rely upon its contractual or common law rights to terminate the franchise agreement in late August 2006. While that may create a situation which Deane J described in Foran 168 CLR at 438 of making the franchise agreement 'hang like an albatross around their necks', I prefer the views of Mason CJ, Brennan and Dawson JJ that a party who wishes to terminate must be ready and willing to perform at the time at which the right is sought to be exercised. Each party was in breach of the franchise agreement in a way which, had the other known of or appreciated that breach prior to late August 2006, would have entitled it to terminate, subject to it not being in any relevant breach itself. That is, Hoy Mobile was in breach of cl 9.3(viii), because it it had been fraudulent in connection with the operation of the franchised business through the unlocking and sale of mobile phones and its failure to account for the illicit profits that it had made from that activity. Likewise, Allphones was evincing an intention not to be bound by its obligation to pay the MTSC in the various manners in which I have found. Each party's conduct amounted to an assertion by it of the freedom to act as and when it pleased in respect of fundamental obligations to the other. Each party was behaving quite dishonestly towards the other in relation to the performance of its obligations under the franchise agreement. Although Hoy Mobile did not plead that Allphones had committed fraud, Allphones' behaviour, in misrepresenting what carriers were paying as MTSC and keeping the difference, was every bit as dishonest as Hoy Mobile's fraud. In essence, Allphones' behaviour in relation to the payment of commission amounted to it evincing an intention not to take seriously its obligations to pay MTSC in accordance with cll 7.3 and 7.4 the franchise agreement. Its conduct was that of a person who evinced an intention that he was prepared to carry out his part of the contract if and only when it suited him and, in the way that it suited him. That was a repudiatory breach which continued over virtually the whole time in which Hoy Mobile was in breach: see Carr v JA Berriman Pty Ltd [1953] HCA 31 ; (1953) 89 CLR 327 at 351-352 per Fullagar J with whom the rest of the Court agreed. A party to a contract cannot act with impunity in a way which amounts to a refusal to be bound. Allphones concealed its underpayment of commission by a continuing deceit. Its action in doing that month after month, evinced an intention not to adhere to its promise to pay commission in accordance with the provisions of cll 7.3 and 7.4. This is not a case of a bona fide mistake in interpretation. No bona fide interpretation of a contract could justify Allphones' electronic manipulation of material data to disguise the true position. Here, Allphones' cumulative failures for over two years to account to Hoy Mobile for all of the commissions Hoy Mobile had earned from activations generated by its conduct of the franchise business, evinced an intention by Allphones not to be bound by the franchise agreement itself. Rather, Allphones evinced an intention to carry out that contract as and when it pleased. Mr Donnellan's evidence indicated that, as the chief executive officer, he saw it as open to Allphones to determine how and in what way it would perform its obligations in relation to the sharing of commissions. The evidence satisfies me that Allphones in fact did choose which commissions earned through activations of mobile telephone services generated by the sales of Hoy Mobile and other franchises would be shared. It did this regardless of the common understanding of Allphones and Hoy Mobile that cl 7 operated, as I have found, to cover all earnings of commissions from sales to customers in the stores of carriers' plan products, however the carriers paid those commissions (i.e. directly to the stores or to Allphones). The deliberate concealment from the franchisees, including Hoy Mobile, of the true amounts paid to Allphones as commission for those activations is evidenced in the various emails to which I have referred and the conduct described by Mr Nicoll in his evidence. That conduct places Allphones' behaviour outside that of a party who is seeking to perform the contract according to its terms, but acting on an incorrect interpretation of it: cp DTR Nominees 138 CLR at 432 per Stephen, Mason and Jacobs JJ. The intention to conceal payments from the franchisees demonstrated a consciousness on Allphones' part that the revelation of what it was doing would be seen, correctly, by the franchisees as a fundamental departure from the conventional understanding of how their commissions were earned. Allphones was not seeking to perform the contract according to its terms, but rather was seeking to perform it as and when it pleased and in the manner it pleased. Thus, at the time at which Allphones learnt of Hoy Mobile's fraudulent conduct, Allphones itself was evincing an intention not to be bound and to perform the franchise agreement as and in the manner it pleased. Although it was carrying out some of its obligations, it was concealing the existence of other obligations from Hoy Mobile, conscious that Hoy Mobile was asking for more detail about the way in which its commission had been calculated. It was an essential term under the franchise agreement that the franchisee (Hoy Mobile) be paid the commissions to which it was entitled arising from its performance of its obligations. The evidence established that Allphones was not paying commissions earned by Hoy Mobile in full, and sometimes at all. Just as Hoy Mobile's conduct in relation to the fraud evinced an intention not to be bound, Allphones' conduct in respect of the short payment of the commission can be described as conduct which evinced an intention no longer to be bound by the franchise agreement or to fulfil it in a manner substantially inconsistent with Allphones' obligations: Koompahtoo 241 ALR at 100 [44] per Gleeson CJ, Gummow, Heydon and Crennan JJ applying; Laurinda 166 CLR at 634 per Mason CJ. In my opinion, for the reasons given by Mason CJ in Foran 168 CLR at 408, Allphones was not entitled to exercise its rights under cl 9.3(viii). In August 2006, Allphones was not ready or willing to perform the franchise agreement. Nor has it proved that it is now ready or willing, so its cross-claim must fail. 30. WAS ALLPHONES A FIDUCIARY? Allphones contended that their relationship was entirely contractual, and that Allphones did not hold or receive money in a fiduciary relationship, but rather pursuant to the terms of the franchise agreement. There is a danger in approaching commercial relationships with an overlay of equitable considerations. The relationship between the parties here arose in the contractual settings of the franchise agreement and the Code. Indeed, cl 12 of the franchise agreement expressly stated that the relationship between the parties was not one involving agency, partnership or joint venture. Nor does the Code create a fiduciary relationship between franchisor and franchisee. The necessity to identify the precise content of an alleged fiduciary relationship was emphasised by McHugh, Gummow, Hayne and Callinan in Pilmer v Duke Group Ltd (in liq) [2001] HCA 31 ; (2001) 207 CLR 165 at 198-199 [77] - [79] . Here, each party expected to earn profit by its own efforts. While it was in the joint interests of Allphones, and the franchisees, for Allphones to negotiate the best terms it could with carriers, the first question for consideration is what the terms of cll 7.3 and 7.4 require Allphones to do on their proper construction. If the contractual claims made by Hoy Mobile for the right to receive payments under one or other of those clauses in respect of the monies identified by it are correct, then it is not necessary to consider whether any fiduciary relationship existed. I propose to approach the problem in this way. I am of opinion that the relationship between the parties had a commercial, rather than a fiduciary, character. In any event, nothing flows from the attribution of some fiduciary relationship in the present case. The breaches of contract which I have found relating to underpayment of commission by Allphones can find an effective remedy in the common law. Characterisation of a fiduciary relationship would not add any consequence from any breach of Allphones' fiduciary obligations since no different result would ensue for Hoy Mobile: see Blackmores Laboratories Ltd v Diskin Pty Ltd (unreported, Supreme Court of New South Wales, 20 December 1989, per McLelland J; BC8901294 at 7). 31. Having regard to my findings in relation to the territory and the construction of the franchise agreement at which I have arrived, rectification is not necessary. 32. WAS ALLPHONES REQUIRED TO ACT IN GOOD FAITH IN SEEKING TO TERMINATE? It argued that the content of the obligation is that such a power could not be used for an extraneous purpose or capriciously. Hoy Mobile accepted that, subject to those limitations, the party entitled to exercise the power may do so in its own self-interest. Hoy Mobile argued that a reasonable inference from the behaviour of Allphones, after it began investigating what Mr Quarmby had revealed to it, was to put pressure on Hoy Mobile in the negotiation or consideration of its claims. Hoy Mobile argued that Allphones' failure to respond on the merits to those claims, the letter Mr Donnellan sent on 7 July 2006 (seeking to reserve the power to terminate) and the email of 10 July from Mr Donnellan to Mr Birch (which referred to the claims made by Hoy Mobile in correspondence and to Mrs Hoy's correspondence with other franchisees) showed such a linkage. Hoy Mobile also argued that under cl 24 of the franchise agreement, Allphones was obliged to co-operate and progress in dispute resolution. Thus, Hoy Mobile argued that it was an extraneous and an improper purpose to hold the power to terminate in reserve or 'as a lever' to stifle consideration and negotiation of Hoy Mobile's claim on their merits, as an inducement to Hoy Mobile to refrain from referring the dispute to the ACCC, to stifle discussion with other franchisees concerning issues and common concern and, contemporaneously, to demand that Hoy Mobile execute a new franchise agreement. Allphones accepted that, while a requirement to act in good faith was implied in many contracts, it said that was not necessarily so in every contract. As Finn J observed in GEC Marconi 128 FCR at 208-209 [920] it is not yet clear in Australian law whether a duty of good faith and fair dealing is implied as term of all contracts, or is an incident of particular classes of contract. I need not decide that here because I am not persuaded that Mr Donnellan was motivated by an extraneous purpose, or that he acted capriciously or otherwise than in good faith when Allphones was contemplating the exercise of its right to terminate in early July 2006, or when he caused the notice of intention to terminate to be given in late August 2006. I find that Mr Donnellan was genuinely concerned by the discovery of the fraud in which Hoy Mobile had been engaged. He was entitled to be so concerned. A party to a contract is entitled to exercise contractual rights conferred on him or her honestly. Rarely do people act from a single motive, particularly where they have been involved in a long-term relationship with the other party or parties. In a contractual context, relationships can give rise to a complex set of considerations which one party may apply to the other. Thus, in a contract for the sale of goods where time is of the essence, and one party defaults in timeous performance, the law merchant recognises that the innocent party has a right to terminate. And such rights exist in the Sale of Goods Act 1923 (NSW) and its analogues. Thus, when a vendor fails to deliver goods, or a purchaser fails to pay for them, on the due date, the innocent party is permitted to terminate without being subjected to an enquiry as to its motive. Often merchants terminate contracts when the other party defaults so as to take advantage of a substantive change in the market price for the goods that has occurred between the date of contract and the date on which default occurs. Indeed, the primary reason for termination at that time may be that the innocent party wants to get the benefit of the market change. In one sense, that motivation could be characterised as a purpose extraneous to the contract because it implies a disloyalty to the mutually co-operative relationship created by the contract. However, such a view would protect contract breakers from the consequences of their own disloyalty to the contractual obligation of which they were in breach. In a long term relationship such as that between Hoy Mobile and Allphones, it can be expected that the parties will develop personality differences, as well as commercial differences of approach to particular aspects of their relationship. Courts must be cautious in characterising or giving undue weight to particular aspects of or incidents in such a relationship when arriving at a decision that some action has been taken otherwise than in good faith. Lord Diplock made the telling observation in his classic speech in Horrocks v Lowe [1975] AC 135 at 150C-E that in ordinary life it is rare indeed for people to form their beliefs by a process of logical deduction from facts ascertained by rigorous search for all available evidence and a judicious assessment of its probative value. He pointed out that, in greater or less degree, according to their temperaments, training and intelligence, men and women are swayed by prejudice, rely on intuition instead of reasoning and leap to conclusions on inadequate evidence. People tend not to recognise the cogency of material which might cast doubt on the validity of the conclusions they reach. And, he said, that despite the imperfection of mental processes by which a belief is arrived at, it may still be 'honest', that is, a positive belief that the conclusion reached is true. He said this in the context of assessing whether a person may or may not have been malicious for the purpose of the law of qualified privilege. But it is an observation about human behaviour. What Lord Diplock said can be applied as well to the way in which people act in contractual relationships. As I have found, Mr Donnellan sought to give Hoy Mobile an opportunity to explain its conduct from 7 July 2006. He was the person within Allphones who made the decision issue the notice of intention to terminate. I am satisfied that he honestly believed that Allphones should terminate the franchise agreement because it was not in Allphones' interest to have a franchisee which had engaged in the fraud which Hoy Mobile had. The fraud was serious and, having seen and heard Mr Donnellan, I am satisfied he decided to terminate the franchise agreement because of the undesirability of having a relationship with Hoy Mobile as a party which had committed that fraud. No doubt other factors, including some irritation at the way Hoy Mobile was behaving, may have been a part of Mr Donnellan's thinking processes, but I am quite unpersuaded that he acted, and thus Allphones acted, otherwise that in good faith in exercising the power to terminate. I reject this ground of Hoy Mobile's case. 33. DID ALLPHONES ENGAGE IN UNCONSCIONABLE CONDUCT? I have found that the franchise agreement is a valid agreement, thus this basis for invoking s 51AC does not arise. Next, Hoy Mobile alleged that, in the circumstances pleaded by it, it was unconscionable within the meaning of s 51AC for Allphones to deny that the franchise agreement contained or ought to contain the following three terms: Based on my findings, the first two of those issues do not require consideration because no such terms were agreed. In relation to the third issue, the franchise agreement included, in substance, an entitlement of Hoy Mobile to be paid commissions as it claimed. Allphones was in breach of those obligations. Hoy Mobile also alleged that by threatening, up to the present, to terminate the franchise agreement in all the circumstances pleaded, Allphones was acting unconscionably within the meaning of s 51AC. Thus, there were two bases for Hoy Mobile's claim under s 51AC namely: first, the failure of Allphones properly to pay all moneys due, including commission; and, secondly, its decision to terminate. Hoy Mobile did not plead that any particular factor under s 51AC(3) and (4) had been enlivened. However, it is common ground that Allphones contravened cl 11 of the Code. That contravention attracts the operation under ss 51AC(3)(g) and (4)(g) . Moreover, I have found that Allphones committed repeated breaches of the franchise agreement, under which it retained commission and other moneys to which it was not entitled: cf ss 51AC(3)(i) , (4)(i) and see also (ja) and (k) of sub-ss (3) and (4). But, in the end, s 51AC(1) and (2) require the Court to have regard to all the circumstances in which the conduct complained occurred. Indeed the relationship began to sour around late 2005 when Mr and Mrs Hoy complained of underpayment of commissions. This behaviour included failing to address the substance of any of Mr Birch's correspondence after that time (except to a limited way by Mr Donnellan's exchange with Mr Donnellan on 10 July 2006), making the demand for Hoy Mobile to provide a mobile phone for the retention customer on 30 June 2006 (including the threatening way in which that was done) and then placing it on stock and commission holds, making unjustified demands that Hoy Mobile sign a new franchise agreement, combined with the threat that it had no 'tenure' as a franchisee. On the other hand, some degree of righteous indignation on Allphones' part is understandable after its discovery of Hoy Mobile's fraud. However, Allphones' conduct to which I have referred went beyond any reasonable response. And, it never had the meeting Mr Donnellan said he wanted in his letter of 7 July, at which it may have been appropriate to ventilate some legitimate sense of disappointment. Allphones argued that, in the period leading up to its giving notice of its intention to terminate on 28 August 2006, Mr and Mrs Hoy had no difficulty in airing their grievances robustly, not only with Allphones' personnel but also through Mr Birch and to the ACCC. It pointed to the fact that Mr Birch competently represented Hoy Mobile from March 2006 and was able to protect its interests. Allphones also argued in its written submissions that there was no evidence that its conduct had any effect on Hoy Mobile and that it was '... more than up to the task of batting back to Allphones anything that was thrown at them and did so'. For all that, Hoy Mobile was overcharged and underpaid by Allphones. While Hoy Mobile could talk or send letters, it received an insouciant reception from Allphones. Whatever they 'batted back' was not scoring runs. And Allphones persisted throughout the litigation to force Hoy Mobile to prove its monetary claims. As I have found, Allphones not only evinced an intention to not to be bound, it acted in that way. Hoy Mobile could complain as much as it liked, but Allphones had the substantive power in the relationship and used it. This was evident not just in its financial breaches, but, as Mr Harkin said in his May 2006 meeting with Mr Hoy, (before his fraud had come to light) he was going to make an example of Hoy Mobile to show other franchisees what would happen to them if they opposed Allphones as the Hoys had. No justification existed, at that time, to treat Hoy Mobile in accordance with 'the Admiral Byng principle', viz: 'pour encourager les autres' (in order to encourage others): see Attorney-General v Guardian Newspapers Ltd [1987] UKHL 13 ; [1987] 1 WLR 1248 per Lord Oliver Aylmerton at 1317; Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd [1987] HCA 45 ; (1987) 75 ALR 461 at 464 per Deane J. Nor was Allphones able to advance any legitimate reason for refusing to credit Hoy Mobile with the $1,100 which Optus had allocated to defray the cost of the store refresh. I am satisfied that Allphones was acting vindictively in refusing to give Hoy Mobile that credit. I have found that Allphones had not proved that it was entitled to make the $10,000 charge (as opposed to a reasonable charge) but its conduct in relation to the Optus payment indicated that Allphones considered that it could make a profit at Hoy Mobile's expense without justification. They said that the section was intended to build on, and not be constrained by the common law. Their Honours said ( National Exchange 148 FCR at 140 [33]): '... "[U]nconscionable conduct", on its ordinary and natural interpretation, means doing what should not be done in good conscience'. They said that the question was whether the conduct of the corporation complained of was 'unconscionable' according to the natural and ordinary meaning of that term having regard to the list of statutory considerations in ss 51AC(3) and (4): National Exchange 148 FCR at 142 [39]. And their Honours said that the section was not, of course, intended to protect the reckless or the unreasonable. They approved what Spigelman CJ had said in Attorney General (NSW) v World Best Holdings Ltd [2005] NSWCA 261 ; (2005) 63 NSWLR 557 at 583 [121] that '[u]nconscionability is a concept which requires a high level of moral obloquy'. Tamberlin, Finn and Conti JJ held that the analogue of s 51AC required the Court to focus primarily on the unconscionable conduct of the corporation and to determine whether that conduct was contrary to the norm of conscientious behaviour. They held that the conduct in that case insisted of a carefully formulated and systematic approach which clearly offended against basic notions of good conscience and fair play: National Exchange at 148 FCR at 143 [44]. Although their Honours were speaking of s 12CC of the ASIC Act , their remarks apply equally to the notion of 'unconscionable conduct' in its analogue, s 51AC: Cannon Australia Pty Ltd v Patton [2007] NSWCA 246 at [43] per Campbell JA, with whom Harrison J agreed. Campbell JA had referred ([2007] NSWCA 246 at [40]) to the earlier decision of a Full Court of this Court in Hurley v McDonald's Australia Ltd [1999] FCA 1728 ; (2000) ATPR 41-741 at [21] - [22] . There Heerey, Drummond and Emmett JJ said that for conduct to be regarded at an unconscionable, serious misconduct or something clearly unfair or unreasonable had to be demonstrated. They found that the term carried with it the meaning given by the Shorter Oxford English Dictionary, namely '... actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable', relying on Qantas Airways Ltd v Cameron [1996] FCA 1483 ; (1996) 66 FCR 246 at 262. In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315 at 324-325 [20] - [22] , Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said that the word 'unconscionable' involved the concept of unconscientious conduct. They said that the conscience which equity considers for these purposes is a 'properly formed and instructed conscience', citing Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 208 CLR 199 at 227 [45] . The onus is on the party alleging that the other has engaged in unconscionable conduct, so as to prevent the latter's exercise of its contractual rights to terminate. In this respect, the Code specifically permitted termination without notice where a franchisee was fraudulent in connection with the operation of the franchise business (cl 23(f)). However, for reasons unexplained, Allphones instead issued a notice of intention to terminate the franchise agreement on seven days' notice, rather that pursuant to cl 9.3(viii) which permitted termination in the circumstances without notice. A consequence of termination under cl 10 of the franchise agreement would be the transfer, at Allphones' request, of the lease of the shop premises at Eastgardens (cl 10.1(x)). One purpose of s 51AC(1) was to set a norm of conduct for corporations acting in trade or commerce in the context in which the section operates: cp Compomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [103] . The second reading speech stated that this norm of conduct had the purpose of protecting the legal rights of small businesses and ensuring that they could confidently deal with large firms: see National Exchange 148 FCR at 143 [48], 144 [50]. Here the supply or possible supply of services to Hoy Mobile included the rights, benefits and privileges which Allphones had to provide to it under the franchise agreement. That congeries contained an entitlement to be paid all amounts of commission due in accordance with the franchise agreement, as well as other valuable rights, such as Hoy Mobile's right to assign its interest under the franchise agreement with Allphones' consent (cl 8.1). Termination of the franchise agreement by Allphones would actuate a contractual regime under which Hoy Mobile would lose the benefit of the congeries of services. Allphones argued that this result was justified because the franchise agreement and the Code contemplated it in the circumstances which have arisen. The equitable jurisdiction to prevent an unconscientious assertion of legal rights by one party under a contract against the other is usually exercised only where the circumstances include one of the special heads of that jurisdiction, namely: fraud, accident, mistake or surprise: Tanwar 217 CLR at 335 [58]. Where accident or mistake is not involved, it is usually necessary to point to some conduct of the party asserting the rights which in some significant way has caused the other party to be in the position of being confronted by that assertion. It is not necessary that the circumstances be exceptional before equity will intervene, but the party challenging the assertion of the rights must show why it would against conscience (unconscientious) for the other to proceed: Tanwar 217 CLR at 335 [58]-[60]. The statutory jurisdiction under sub-ss 51AC(1) and (2) of the Act has a broader reach than its equitable counterpart (see also s 51AA(2)). The non-exclusive range of matters to which the Court may have regard in sub-ss 51AC(3) or (4) suggest that the Parliament was concerned not to restrict the operation of the norm of conduct in sub-ss 51AC(1) and (2), simply to the focus which equity has on whether the corporation (as the party asserting the right) has caused the business consumer or small business supplier to be in the position where the corporation's right is available to be asserted. Thus, here, equity would consider whether Allphones had caused Hoy Mobile to be fraudulent in connection with the operation of the franchise agreement (cl 9.3(viii)). On the facts, I have found Mr Hoy alone was responsible for that fraudulent conduct of Hoy Mobile. So, equity would not find a nexus between Allphones' entitlement to terminate and the fraud in which Hoy Mobile had engaged. That context includes the breaches of the franchise agreement which I have found Allphones to have committed as the basis of my finding that it was not entitled to terminate the franchise agreement because it was itself in breach of an essential term or evincing an intention not to be bound. In addition, Allphones engaged in other conduct which is relevant under ss 51AC(1) and (2). A central feature of the Code is its requirement that a franchisor must maintain and utilise disclosure documents. The purpose of a disclosure document, in the context of an ongoing relationship between a franchisor and franchisee, is to give a current franchisee among other things: Here, the first time Allphones disclosed to franchisees, including Hoy Mobile, that it charged them a $5 fee for each post-paid mobile phone contract as a carrier reconciliation charge, was in a disclosure document it issued on 29 August 2006. That was the day after it gave to Hoy Mobile its notice of its intention to terminate. That document contained no other disclosures about deductions made by Allphones from the MTSC, which I have held it was required to pay to Hoy Mobile. Those deductions did not fall within rebates or other financial benefits received by Allphones (because I have found that it was not entitled to them), however, if it had been frank about what it was doing, it should have revealed them. But, even if I were wrong in that finding, then Allphones should have given details about the terms it received from carriers in accordance with cl 9.1 in Annexure 1 to the Code. I am satisfied that Allphones' conduct in relation to its suppression of the true commissions paid by carriers to it in respect of activations falling within cll 7.4 and 7.5 was a deliberate and significant departure from honest dealing with Hoy Mobile. This conduct evinced a high degree of moral obloquy. It created an imbalance in the relationship between Allphones and Hoy Mobile, because it deprived Hoy Mobile of earnings to which it was entitled under the franchise agreement, and concealed from Hoy Mobile its true entitlement. I do not consider that the conduct of Allphones towards Hoy Mobile in this regard was in good faith. However, as sub-ss 51AC(3)(k) and 4(k) make clear, the propriety of the conduct of both parties may be relevant. Hoy Mobile also exhibited a lack of good faith in conducting its fraudulent activities of unlocking and selling phones for undisclosed profits. Unlocked phones would not usually be connected to a plan on which MTSC or MTAC or other commissions for sale of air time would be payable. It is relevant that Hoy Mobile engaged in equally dishonest conduct to that which Allphones did. The prohibition in sub-ss 51AC(1) and (2) are against Allphones, as the relevant corporation, engaging in conduct that is, in all the circumstances unconscionable in connection with the supply or possible supply of goods or services by Hoy Mobile. The activities in which Allphones and Hoy Mobile were engaged under the franchise agreement amounted to conduct in trade or commerce. The question is whether Allphones' overall conduct up to the time at which it issued the notice of intention to terminate was unconscionable 'in all the circumstances' within the meaning of s 51AC. Hoy Mobile seeks to restrain Allphones from relying upon its notice of intention to terminate the franchise agreement. In addition, Allphones has indicated that it intends to terminate for fraud under cl 9.3(viii) of the franchise agreement. In balancing the conduct of Allphones against that of Hoy Mobile for the purposes of determining whether or not, in all the circumstances, Allphones' intention to proceed towards a termination of the relationship is unconscionable, it is also important to appreciate that the commercial relationship of the parties is dysfunctional. Each has committed substantial financial irregularities towards the other. While Hoy Mobile's irregularities were categorised by the use of the epithet 'fraud', the behaviour of Allphones in relation to its non-payment and disguising of withheld commissions was equally dishonest. In the conduct of this litigation, Allphones doggedly persisted in its denial of any entitlement of Hoy Mobile to any of the monies claimed until some time during the trial when an agreement was made, without admissions, that some of the parts of the claim would be recognised. That meant that Hoy Mobile has had to litigate those issues together with the others on which I have upheld its claims. These were in monetary terms, out of all proportion to the cost of the litigation. Of course, those costs have been attributable largely to Hoy Mobile's attempts to preserve its status as a franchisee. It sought to establish, unsucessfully, that Mr Clarke, on behalf of Allphones, condoned the unlocking of phones. But even if he had, there was no attempt made by Hoy Mobile to justify its fraudulent retention of money from those sales. Allphones was not willing to carry out the franchise agreement honestly or in good faith according to its terms. Both parties have been in default of their obligations, both contractual and moral, towards one another in the conduct of the relationship. I have had regard to all of the circumstances, including Allphones' conduct leading up to the notice of intention to terminate, and the consequences on Hoy Mobile of a termination. I am of the opinion that it would be unconscientious for Allphones to insist upon its strict legal rights to force an immediate termination in all the circumstances where the performance of its own obligations under the franchise agreement has been lamentably and dishonestly short of the standards that it ought to have followed. It engaged in unjustified bullying and oppressive conduct: cf Simply No-Knead 104 FCR at 270 [51]. I am of opinion that Allphones should be restrained under s 87 of the Trade Practices Act from relying on the fraud of Hoy Mobile effect a termination of the franchise agreement. 34. The orders should also provide for the amount of the damages to be awarded for the breaches of contract that I have found, less the amount of profit that I have found Hoy Mobile to have retained. Interest will need to be added. The interest on Hoy Mobile's receipts from its fraudulent trading should offset some of that due by Allphones. It may not be possible to be mathematically exact, and the parties may need to adopt a practical position of halving each year's interest in respect of the new amount for that year to approximate its progressive accrual over that period. And the parties will need to address the question of costs. To summarise, I have found that: The territory granted to Hoy Mobile in the franchise agreement was the suburb of Eastgardens. Allphones was obliged under cll 7.4 and 7.5 to pay commission to Hoy Mobile on all sums which Allphones received from carriers in respect of sales and activations of plans effected by Hoy Mobile. The franchise agreement was not void because of Allphones' failure, before it was entered into, to comply with cll 10 and 11 of the Code, and that Ketchell [2007] NSWCA 161 should not be followed. Hoy Mobile was fraudulent in connection with the operation of the franchise business within the meaning of cl 9.3(viii) of the franchise agreement. Allphones did not know of that fraud and did not condone it. Nor did Allphones elect, after it learnt of the nature of the fraud, to affirm the franchise agreement. Allphones was not entitled to terminate the franchise agreement by reason of Hoy Mobile's fraudulent conduct because Allphones, itself, was not ready and willing to perform. This was because it, both, had evinced an intention not to be bound and had breached the essential term in cl 7.4 by its withholding and underpayment of commissions, and its dishonesty in concealing that conduct. Allphones has not established that the amount it had charged Hoy Mobile in respect of the refresh charge was a reasonable sum to charge under cll 4, 6.23 or 6.35. In particular Allphones has shown that the sum was not reasonable by its failure to reduce it by the $1,100 paid to Allphones by Optus as a co-op payment for the purpose of defraying the store refresh charge for each Allphones' franchise. Allphones was not a fiduciary as alleged by Hoy Mobile. The franchise agreement remains on foot and does not need to be rectified. Allphones contravened s 51AC(1) of the Trade Practices Act because it engaged in conduct which was unconscionable in all the circumstances in connection in with the supply and acquisition from Hoy Mobile of services under the franchise agreement. In the event that the parties cannot agree on the formulation of the orders, each should prepare its own draft of the orders and the matter can be re-listed for further argument. I will direct Hoy Mobile to serve its draft orders with supporting schedules by 3 June 2008 together with its written submissions in respect of costs and, Allphones to serve its response by 5 June 2008 together with written submissions in respect of any areas of disagreement. Any written submissions in reply should be served by Hoy Mobile by 6 June 2008, and I will relist the matter for the making of final orders on 10 June 2008. I certify that the preceding four hundred and thiry-one (431) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | trade practices act 1974 (cth) and related legislation trade practices (industry codes franchising) regulations 1998 (cth) franchising code of conduct consequences of franchisor's failure to comply with cll 10 and 11 of code whether franchisor's non-compliance made franchise agreement void whether decision in ketchell v master of education services pty ltd [2007] nswca 161 should be followed purpose of code need to seek guidance from implications in legislative framework trade and commerce |
2 The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural and Indigenous Affairs to refuse to grant a Remaining Relative (Subclass 835) visa to the appellant. 3 The appellant and his wife are citizens of Fiji. The appellant and his wife both entered Australia for the first time on 25 September 1995 on Tourist Short Stay visas. They have since re-entered Australia on a number of occasions. Relevantly, they both entered Australia on 9 August 2001 and were granted a Subclass 773 (Border) visa which authorised their stay until 8 September 2001. On 30 August 2001 they were granted a Subclass 010 (Bridging A) visa on the basis that they would make application for an Other Family (Residence) (Class BU) visa which has as one of its subclasses Remaining Relative (Subclass 835) visa. 4 In order to satisfy the criteria for the grant of a remaining relative visa, the appellant had to satisfy the definition of 'remaining relative' in reg 1.15 of the Migration Regulations 1994 (Cth) ('the Regulations'). In that application, the appellant disclosed that his parents were both deceased and his siblings were all resident in Australia. He said that he and his wife had a child resident in Fiji. 6 The application also stated that the appellant's wife's father was deceased and her mother 'never known'. A letter, under the letterhead of a migration agent, accompanied the application. (b) usualy (sic) resides in Australia. and (c)(i) has no other relative overseas. Mrs. Hassan has never seen her mother or heard about her. They arranged there (sic) daughters (sic) marriage with someone else and later stage Mrs. Hassan's Mother left Fiji with her new husband. She has never tried to be in touch with her daughter. As you have not provided any documentary evidence that Nur Begum is living in another country nor she is still alive or otherwise, then you do not meet the requirements of Subregulation 1.15(3) which states that ... an overseas near relative is taken to reside in his or her last known country of residence unless the applicant satisfies the Minister that the relative resides in another country. ● You also confirmed in a statement that your daughter (Zureen Nisha) is under your care but she lives in Fiji. If this is the case, then your daughter (Zureen Nisha) is considered as your "overseas near relative" and that you are in regular contact with her. As this is the case, you are unable to meet Subparagrap 1.15(1)(c)(ii) which provides that ... an applicant for a visa is a "remaining relative" of another person who is an Australian citizen, an Australian permanent resident or an eligible New Zealand citizen if the applicant satisfies the Minister that neither the applicant nor the applicant's spouse (if any) have had contact with that relative within a reasonable period before making the application. If Subregulation 1.15(3) and Subparagraph 1.15(1)(c)(ii) is not met, the Tribunal has no option but to affirm the Department's decision not to grant you the visa. He also said that he had been making inquiries in Fiji and now believed his wife's mother to have passed away, and was in the process of obtaining a death certificate which would be forwarded to the Tribunal as soon as it was received. 11 At a hearing of the Tribunal on 6 July 2004, the appellant provided the Tribunal with a death certificate for his wife's mother ('the death certificate'). On 28 July 2004 a registered migration agent acting on the appellant's behalf wrote to the Tribunal in response to the Tribunal's letter. The agent made representations as to why the appellant's daughter should not be considered an overseas near relative and enclosed statutory declarations from relatives and friends of the appellant, who had taken money from the appellant to Fiji for the care of the appellant's daughter. 12 On 3 August 2004, against pursuant to s 359A , the Tribunal wrote to the appellant. The Tribunal stated that it had received information from the Registrar-General in Fiji that the death certificate was fraudulent, because it did not match any of the death records in the Registrar-General's office. The Tribunal also stated that the Registrar-General had provided information that the appellant's wife's mother and father had five other children. The Tribunal stated that these pieces of information were relevant because, if true, they would mean the appellant's wife had six overseas near relatives and thus could not fulfil the criteria in reg 1.15(1)(d) that the appellant and his wife together have no more than three overseas near relatives. 13 On 13 October 2004 the appellant wrote to the Tribunal stating that he had relied upon a third party in Fiji to provide him with the death certificate. I wish to make the following comments in order to substantiate my claim and satisfy the Tribunal before I can ask that the matter be remitted Back to the Department. After extensive Investigations (sic) and no results we decided to expand our investigations and it was revealed that she has expired which we thought was unfortunate and sad. I along with my lady wife did not ruled (sic) out the possibility that she may would (sic) have been deceased and asked one of our friend (sic) to enquire and he informed us that she has passed away, this was not sufficent (sic) for us to believe and we requested him to provide us with evidence to substantiate his claim and he sent us the "death Certificate" which is on file with the Tribunal. I want the tribunal to understand that we are in Australia far away from our home and it was virtually impossible for us to do anything. We had only one choice and that is to rely upon the informations (sic) given to us by the third party. In response to this All I would like to say is that Ms Nur Begum is quite a common name and I have personally experienced so many peoples who had same name and Date of Birth even in Australia, therefore, I would ask the Tribunal to give a benefit of Doubt. The evidence before the Tribunal indicates that the secondary visa applicant's mother is resident in Fiji and that the death certificate is a fraudulent document and the evidence of the Australian High Commission is that the secondary visa applicant's mother has five other children. The Tribunal places greater weight on the evidence provided by the Australian consular investigations than the rebuttal evidence of the review applicant received by the Tribunal on 13 October 2004. This evidence states that the review applicant had relied on the evidence of a third party pertaining to the obtainment of the death certificate and that the authenticity was not able to be verified due to the review applicant being in Australia. In addition this (sic) the Tribunal does not place any weight on the assertion of the review applicant that Nur Begum is a common name and that it is just coincidental that this person had the same birthdate. The Tribunal accordingly finds that the secondary visa applicant is unable to meet the legislative definition of remaining relative as she has more than three overseas near relatives at time of application. This ground was particularised in several ways, including a failure to make further inquiries of the appellant; a failure to advise the appellant that it was unwilling to consider the 'additional evidence' provided by the appellant; making a decision without verifying whether the 'additional evidence' had merits; and failing to enquire further about the relationship (or lack thereof) between the appellant's wife and her mother. Scarlett FM treated this ground as a failure to make further enquiries and held that it was clear that the Tribunal had made enquiries about the death certificate. 16 The second ground of review was that the Tribunal erred in law. This ground was also particularised in several ways; including a failure by the Tribunal to properly consider evidence of the abandonment of the appellant's wife by her mother; whether there was a break in their relationship; a failure to consider the appellant's response to the Tribunal; and a failure by the Tribunal to follow up the possibility of there being another person with the same name as the appellant's wife's mother. Scarlett FM characterised this ground as 'largely a request for a merits review', which was not within the Federal Magistrates Court's jurisdiction. 17 His Honour noted that a complaint that the Tribunal had not sent documents to the appellant's migration agent had no merit because the appellant's contact details with the Tribunal had never been changed to include the migration agent's details. 18 In his notice of appeal on this proceeding, the appellant claims that the ground of appeal is that the Tribunal exceeded its jurisdiction or constructively failed to exercise its jurisdiction under the Act. The Tribunal discounted and refused to give weight to evidence regarding another person by the same name. The Tribunal rejected or discounted claims and only verified issues which could have adverse effect. The Tribunal with evidence and forming the view that the documents falsified and bogus, then erred by not rejecting the matter on character grounds. The Tribunal further erred by making a decision on documents which the Tribunal had believed to be correct without attempting to verify Mohammad Hassan's claims and not rejecting on character grounds. The grounds of appeal, including the particulars, do not articulate any error on the part of the Federal Magistrate. The grounds relate to evidence upon which the Tribunal's decision was made. None of the grounds indicate the possibility of jurisdictional error on the part of the Tribunal. It has not been suggested, nor could it be, that there was no evidence upon which the Tribunal could have relied for its decision. The grounds of appeal do not claim that the Tribunal failed to comply with the procedures in the Act. It was suggested on the appeal that the Tribunal had failed to comply with s 359A but, as I have pointed out in these reasons, that claim cannot be sustained. The Tribunal clearly provided the information that the Tribunal considered would be the reason, or part of the reason, for affirming the decision which was under review before the Tribunal. 20 Mr Hassan was unrepresented at the hearing of the appeal. He raised only two matters. First, he pointed to two birth certificates in the Appeal Books which he said showed the unreliability of Fijian record keeping. The birth certificates are not necessarily inaccurate. There is nothing in the papers which demonstrate whether or not they are accurate. Secondly, he said all of his siblings were now living in Australia and he wanted to be with them. Whilst that is an important matter to Mr Hassan, unfortunately, it is not relevant to any issue on the appeal. 21 In my opinion, no error has been demonstrated on the part of the Federal Magistrate or any jurisdictional error on the part of the Tribunal. 22 The appeal must be dismissed. | appeal from decision of federal magistrate no matter of principle appeal dismissed. migration |
At the hearing of the appeal, the Tribunal was added as a respondent: see SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 228 CLR 294 at 324-325 [91] . I would dismiss the appeal for the reasons that follow. Before detailing these reasons, however, I note by way of background that the Tribunal found that the appellant was a Ugandan national, who arrived in Australia on 6 July 2008 and lodged an application with the first respondent's Department for a protection visa on 15 August 2008. Essentially, the appellant claimed refugee status on the basis that she would be harmed in Uganda because the Ugandan authorities claimed that she collaborated with a rebel group called the People's Redemption Army ('PRA'). On 12 November 2008, a delegate of the first respondent refused her application. On 19 December 2008, the appellant applied to the Tribunal for a review of the delegate's decision. The Tribunal affirmed the delegate's decision on 23 March 2009. The appellant filed an application for judicial review in the Federal Magistrates Court, which was heard on 20 August 2009 and dismissed on 7 September 2009. In summary the appellant made the following claims: The Tribunal asked the appellant several questions regarding certain aspects of her claims. Thus, the Tribunal asked the appellant why, after she had gone to her mother's house following her initial release from detention, she returned to Kasese, where she was in danger. The appellant stated that she returned because she needed to work. Regarding her claim that she travelled to her mother's house in Fort Portal following her escape from detention in 2007, the Tribunal asked the appellant why she did not first contact her mother to make sure that the authorities had not been looking for her at her mother's house. The appellant stated that the authorities thought she was in Kasese, and that neither her mother nor any of her other relatives had been questioned by the authorities. The Tribunal asked the appellant why she believed she was still of interest to the authorities despite the fact that they had not looked for her in such obvious places as the homes of close relatives. The appellant stated that the authorities would not have arrested her a second time if she was not of interest, and that they "work underground and take their time" and "have their own special way of doing things". She also stated that the authorities were looking for her in Kasese or Fort Portal. The Tribunal questioned the appellant about her familiarity with the FDC. It asked her if the words "one Uganda, one people" were familiar. She said it was the slogan of the FDC. When the Tribunal asked the appellant why she had not mentioned the phrase earlier, she stated that "Change" was the FDC's main slogan, but the slogan was changed from time to time. The Tribunal indicated that the emblem of the FDC consisted of a key, a Ugandan flag, a blue flag, and the initials FDC, not a hammer. The appellant stated that Kasese was a small village, and people printed their own t-shirts, posters and flyers using their own emblems. She later stated that she was "not very deeply involved with the FDC". The Tribunal also indicated to the appellant that it considered her claims "extremely similar" to those advanced by her sister in a separate Tribunal proceeding. I interpolate here that the appellant's sister also came to Australia in July 2008 and applied for a protection visa. On 20 February 2009, the Tribunal wrote to the appellant, inviting her to comment on aspects of her claims, specifically, the similarity between her account and that of her sister; her apparent lack of familiarity with the FDC despite her claim to have distributed FDC flyers, posters and t-shirts; the inconsistency between her return to Kasese following her release from detention in 2006 and her claimed fear of persecution; and the inconsistency between the lack of attention from the authorities following her claimed escape and her claimed fear of persecution. In a response received by the Tribunal on 16 March 2009, the appellant stated: In Uganda, it is not uncommon for entire families to belong to the same political party. Her family was associated with the FDC. The majority of the Ugandan population is rural, and the government's strategy is to "indoctrinate the Ugandan rural populations who have little access to information about governance and development". For this reason, "[t]he few from the rural areas who had the chance to go to school and live in the other parts of Uganda . . . and who are against the government are harshly silenced by the government machineries". The appellant and her sister are both from rural Uganda, and both were supporters of the FDC. The letter stated that "we took a lead in the campaign and every political activity for the FDC in my village". The FDC does not make an effort to inform its rural Ugandan supporters of its logo. Rather, information about the party is communicated through "a picture of the FDC president and the slogan of two fingers up". Even very active rural supporters of the FDC pay little attention to the symbol for the FDC. Most rural supporters do not have membership cards or "written formal recommendations from the party on the party's letter head". The FDC website to which the Tribunal referred at the hearing is directed to those outside Uganda. Arrests are common in Uganda "because of the circumstances surrounding political crimes in the country". People are often detained because their relatives have escaped from prison, particularly if the relatives are close. It was "very easy to escape from the detention of the captors simply because arrests are arbitrary --- no records are maintained, the officials can easily be corrupted". Escapees who are re-arrested are killed to cover up the fact that their captors accepted bribes to aid their escape. The appellant knew it was very risky to return to Kasese after her first arrest but returned knowingly. She and her family "took it for granted" that "the situation [would] normalize", and she needed to raise money to pay for medical expenses and subsistence. The military operatives in Uganda have a very extensive spy network in rural areas, and hiding at a relative's residence is not safe, unless the relative lives in a distant area where the network is limited. When this spy network fails, the military operatives "decide to pick on the relatives". They "do not just visit to inquire about a missing prisoner, but they just invade the family". The spy network was limited where the appellant was hiding with relatives in Fort Portal, but the situation was still risky. For these reasons, the Tribunal concluded that the applicant was not a person to whom Australia has protection obligations under the Refugees Convention and therefore did not meet the criterion for a protection visa set out in s 36(2)(a) of the Migration Act 1958 (Cth). After careful examination, the learned Federal Magistrate rejected the claim of apprehended bias, holding that "[a] fair reading of the Tribunal's decision does not disclose any prejudgment on the part of the Tribunal" and "does not suggest that the Tribunal approached its task other than with a mind open to persuasion": see SZNNN v Minister for Immigration [2009] FMCA 876 at [67] and [68]. The Federal Magistrate also rejected the submission that the Tribunal's findings were illogical, irrational and based on unwarranted assumptions, holding instead that the Tribunal's findings were open to it on the evidence (at [72]-[73]). Both grounds were said to disclose jurisdictional error. The appellant made the much same points in support of the two grounds as before the Federal Magistrate, and urged that the Federal Magistrate erred in failing to accept them. The respondent sought to uphold the judgment of the Federal Magistrate. The appellant properly conceded that this was not a case in which it could be said that the Tribunal's conduct of the proceeding indicated that the Tribunal had a predetermined view about the appellant and issues relevant to her claim. Rather than rely on the Tribunal's conduct, the appellant submitted that a reasonable apprehension of bias arose from the face of the Tribunal's reasons for decision. The appellant argued that a fair-minded observer, properly informed as to the nature of the proceedings, the matters in issue, and the reasons for the Tribunal's decision, might reasonably apprehend that the Tribunal might not have approached her case with an impartial mind: see Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425 at 434-35 [27] - [29] . The appellant argued that the Tribunal's reasons showed that the claims of the appellant and her sister were effectively "bundled up" and that this bundling up gave rise to the appellant's apprehended bias claim. As part of this argument, in written submissions, the appellant contended that the Tribunal erred in failing to inform her that the Tribunal was referring to her sister's file. Plainly enough, however, the Tribunal's questions at the hearing would have made the appellant aware that the Tribunal was treating her sister's claim as relevant to the assessment of her own. The appellant submitted that, in failing to adjourn the appellant's review to allow the appellant additional time to respond to information on her sister's file, the Tribunal had failed to comply with s 424AA of the Migration Act 1958 (Cth). The appellant's argument in this regard did not, however, carry the appellant far, because the appellant did not allege that this failure resulted in any material error. Nor did this argument support the appellant's apprehended bias claim. As the appellant noted, the Tribunal afforded the appellant an opportunity under s 424A to respond to information that it considered would be the reason, or part of the reason, for affirming the decision under review. This information included the fact that the Tribunal considered that the claims made by the appellant and her sister were relevantly similar. The appellant did not contend that the Tribunal was obliged to do more than this with respect to the information on the appellant's sister's file. It follows from this that the fact that the Tribunal referred to the appellant's sister's file in the way that it did does not advance the appellant's case on apprehended bias. In written submissions and at the hearing of the appeal, the appellant argued that there were three other elements of the Tribunal's reasons that might lead a fair-minded observer to conclude that the Tribunal might not have approached her case with an impartial mind. These three elements were: (1) the adverse inference the Tribunal drew from the similarities between the two sisters' accounts; (2) the inaccurate description of the guard who released the appellant as "kindly"; and (3) and the mischaracterization of some of her evidence as "recent invention". The appellant argued that the sisters' similar backgrounds readily explained the similarities in their accounts. At this point, the appellant's argument tended to trespass into an attack on the Tribunal's fact-finding. Be this as it may, it is clear enough that, even if it were accepted that the sisters' shared backgrounds might logically explain many of the similarities in their claims, nonetheless the Tribunal could rationally draw an inference adverse to the appellant on the basis of the similarities in the two accounts. This is particularly true considering the fact that, as the respondent noted during oral submissions, the sisters claimed to experience similar events in geographically distinct parts of Uganda during the same relatively brief time period. In the circumstances, the Tribunal: (1) could rationally conclude, as it did, that the sisters constructed different stories using the same basic outline; and (2) could rely on this conclusion in deciding whether or not to accept the appellant's claim, without it being said that this in any way evidenced apprehended bias. It is also worth noting in this regard that the Tribunal specifically considered the possibility that one of the accounts put forward by the appellant and her sister should be accepted. Having rejected this possibility, it was thus open to the Tribunal to conclude that, on the evidence before it, the similarities in the claims were indicative of fabrication and should not be accepted. The appellant's second and third points in support of her apprehended bias claim involved the submission that that the Tribunal exaggerated and misrepresented her evidence. The appellant cited the Tribunal's reference to a "kindly guard" as an exaggeration of her evidence, which might lead a fair-minded observer to conclude that the Tribunal might not have brought an impartial mind to her case. The appellant noted that, according to her account, the guard only released her after she repeatedly begged him and bribed him with her ATM card. The point that the appellant makes is that, in this circumstance, the Tribunal's statement that she claimed to have been helped to escape by a "kindly" guard is inapposite (with which one can agree); and that this misdescription of her claim might have led a fair-minded observer to infer that the Tribunal might not have had an impartial mind. I do not accept that this inference arises. First, in its reasons the Tribunal also recorded that, at the hearing, the appellant told the Tribunal that the guard "seemed a little bit more human than the others". This presumably led the Tribunal to describe the guard in the way it did. Bearing this in mind, the Tribunal's choice of the word "kindly" is understandable, even though inapposite. Secondly, it is well settled that a reviewing court "should not be 'concerned with looseness in the language . . . nor with unhappy phrasing' of the reasons of an administrative decision-maker". Nor should the court examine a decision under review "'minutely and finely with an eye keenly attuned to the perception of error'". See Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ, quoting Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 per Neaves, French and Cooper JJ. Applying these principles, the Tribunal's description of the guard cannot carry the weight the appellant would place on it. Apprehended bias must be clearly shown. An isolated choice of an inapposite description which is not central to the judgment is insufficient to satisfy this standard. The Tribunal's description of the guard was not essential to its judgment. Although the guard's 'kindliness' was one of the similarities on which the Tribunal relied in finding the appellant's claims implausible, the Tribunal cited various other similarities which the appellant did not attack as erroneous. The third point made by the appellant was that the Tribunal wrongly characterized some of her evidence as "recent invention". To make good this point, the appellant referred to the Tribunal's description of her statement that she was a strong supporter of the FDC, and to her suggestion that members of her family other than her uncle were as well, as "new claim[s]" raised for the first time in response to the Tribunal's letter. . . relies on new claims not previously made, namely that the applicant and her sister were both active supporters of the FDC who took a leading role in FDC activities. The applicant previously stated that she was hardly involved with the FDC at all, but merely assisted her uncle. . . . This is, in effect, a new claim made for the first time in her s 424A response, and ... the Tribunal considers that, if it were true, the applicant would have raised it either in her written application or at the hearing. In any case, neither the applicant's, nor her sister's claims were initially put squarely on the basis that they were supporters of the FDC, or that they came from a FDC family. To claim at this late stage that they were does not serve to explain the relevant similarities in their respective accounts. When attention is given to the words "in my village", then, according to the appellant, her statement did no more than expand on what appeared in her application, including that she had distributed political materials during the 2006 election. As already noted, the appellant relied on this exaggeration to support her submission that the Tribunal's reasons supported her contention about reasonably apprehended bias. I would reject this contention. First, there is nothing in the Tribunal's reasons to suggest that, in omitting reference to the words "in my village", the Tribunal intended to ascribe a broader scope to the appellant's claimed political activities than the appellant had given. Even if limited to a single rural village, it was clearly open to the Tribunal to consider that "taking the lead" in a campaign was different in degree from distributing t-shirts and flyers, and connoted a greater level of involvement in party activities than "not very deeply involved". The Tribunal was entitled to refer to the appellant's claim as a new one, and no apprehension of bias arises from its description. In sum, there is nothing in the Tribunal's reasons for decision that indicates that a fair-minded lay observer, properly informed, might reasonably apprehend that the Tribunal might not have brought an impartial mind to the resolution of the appellant's case. The appellant relied on much the same points in support of her alternative contention that the Tribunal's decision was illogical and irrational, and based on unwarranted assumptions. It is unnecessary to decide, whether, if made out, this contention might have supported some 'unreasonableness' ground: compare NACB v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 235 at [29] and SZLUD v Minister for Immigration and Citizenship [2009] FCA 549 at [66] - [67] per McKerracher J, citing Minister for Immigration and Multicultural and Indigenous Affairs v SGLB (2004) 207 ALR 12 at [38] per Gummow and Hayne JJ. For the reasons already stated, the Tribunal's decision did not disclose any material illogicality or irrationality, and was not relevantly based on an unwarranted assumption. For the most part, the appellant's contention that the Tribunal's reasoning was "illogical, irrational and based upon unwarranted assumptions" was little more than an attack on the Tribunal's findings of fact. By itself, such an attack cannot lead to a finding of jurisdictional error and, as the first respondent said, can have "no legal consequences". For the reasons stated, there is no error shown in the judgment of the Federal Magistrate and the appeal should be dismissed. I certify that the preceding thirty-three (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. | tribunal found applicant's account of circumstances leading to fear of persecution implausible, based in part on similarities between applicant's account and her sister's account applicant claimed tribunal exaggerated and misrepresented her evidence tribunal's decision was neither affected by reasonably apprehended bias nor was it irrational migration |
Judgment was entered for the principal sum of $373,772.47. 2 There was a failure to satisfy the judgment and the Applicant was served with a Bankruptcy Notice on 17 August 2007. The proceeding commenced in this Court on 5 September 2007 seeks an order setting aside that Bankruptcy Notice . 4 The District Court, when entertaining the proceedings against the present Applicant for unpaid taxes, was said to be exercising federal jurisdiction. It is this exercise of federal jurisdiction that the Applicant apparently relied upon both in respect to his contention that he was entitled to a trial by jury and his contention as to the District Court being " improperly constituted ". 5 The " grievances " to which he previously referred are understood to be contentions that the Respondent had been improperly giving " multinational companies " tax breaks. The relevance of those " grievances " to the position confronting the Applicant remained elusive. 6 A Notice of a Constitutional Matter was filed in this Court on 16 April 2008. By reason of the issues sought then to be agitated, an order was made on 31 March 2008 requiring the service of notices in accordance with s 78B of the Judiciary Act 1903 (Cth). Those notices were apparently served upon the Attorneys-General of each of the States on or about 21 April 2008. No s 78B notice was apparently served upon the Attorney-General of the Commonwealth. Nor was there service upon the Attorneys-General of the Australian Capital Territory or the Northern Territory. Section 78AA of the 1903 Act defines the term " State " as including those two Territories. The Second Reading Speech in the House of Representatives makes it apparent that the purpose of s 78AA was to " put the Northern Territory on an equal footing with the States as regards receipt of such notices ": Parliamentary Debates , House of Representatives, 21 September 1983 at 1049. In such circumstances it is thus apparent that there has been non-compliance with the order requiring service of notices in accordance with s 78B. 7 The Applicant initially appeared before this Court unrepresented but has since 23 June 2008 been represented by a solicitor and Counsel. 8 The most recent Outline of Submissions filed on behalf of the Applicant is that dated 8 August 2008 and was prepared by Counsel. That written outline, not surprisingly, expressly withdraws " prior submissions ". 9 The proceeding was listed for hearing on 8 September 2008 and on that date a Notice of Motion was filed seeking an order that " the Court hear and determine the Applicant's application for the trial of questions of fact herein with a jury and the trial of those questions ". That Motion thus sought an order that this Court direct a trial by jury of the Application to set aside the Bankruptcy Notice . Reservation may be expressed as to whether or not prior notice of any such Motion was provided to the Deputy Commissioner of Taxation. Whether or not such prior notice was given, Counsel appearing for the Deputy Commissioner did not oppose the Motion being filed and heard on that day. That Application, it was submitted, would involve the resolution of a series of questions of fact. A " Schedule of Questions of Fact and/or of Mixed Law and Fact " had been prepared on behalf of the Applicant and included questions as to whether representations were made that " the Applicant's small business was an exempt entity ", whether the representations were " binding on the DCT ", and "[w] hether the Applicant relied on the representations ". As became apparent from submissions subsequently filed by the Applicant on 11 September 2008, some of the questions of fact as formulated in the Schedule were " not pressed ". 11 The Schedule as provided by the Applicant, it should be noted, is no substitute for compliance with O 31 r 1 of the Federal Court Rules . That rule requires a Notice of Motion to be " supported by an affidavit stating the particular facts and grounds upon which the application is based ". There was no such affidavit. The requirement of an affidavit, it is considered, provides a valuable safeguard to ensure that the " particular facts and grounds " are properly formulated. 12 One fundamental difficulty confronting the Applicant was the relevance of any of the asserted facts which he wished to have tried by jury to the Application to set aside the Bankruptcy Notice . The judgment upon which the Bankruptcy Notice was founded was a judgment of the District Court entered summarily against the now Applicant. His defence was there struck out. Section 41(1)(a) of the Bankruptcy Act requires there to be a " final judgment or final order that is of the kind described in paragraph 40(1)(g) ". Section 40(3)(b) would appear to confirm that the judgment of the District Court was such a " final judgment or final order ". How any of the facts which the Applicant wanted resolved would go to that issue remained unexplained. And no cross-claim or set-off as against the Deputy Commissioner was attempted to be formulated or articulated by the Applicant for resolution by this Court. 13 Although considerable reservation is thus expressed as to the relevance of the factual matters which the Applicant wants resolved to the Application as filed in this Court, for present purposes it has been assumed that the relevance of one or other of those facts will ultimately be explained. 14 Compliance with s 78B of the Judiciary Act 1903 (Cth) became unnecessary to resolve when Counsel for the Applicant confirmed that reliance upon s 80 of the Commonwealth of Australia Constitution Act was abandoned and that no matter would arise under the Constitution or involving its interpretation. The Outline of Submissions dated 8 August 2008, it may be noted, contended that " the obligation does not arise in this case from the Constitution section 80 , although the existence of that provision indicates that the Founding Fathers endorsed the jury process as a fundamental part of Commonwealth judicial power ". 15 Evidence and submissions thereafter proceeded in respect to the Motion as filed and necessarily in advance of the Application to have the Bankruptcy Notice set aside. 16 It is considered that the Notice of Motion should be dismissed. As understood, that prior submission was directed to whether a jury was required before the District Court. But it would matter not whether the submission was directed to the District Court proceedings or to the proceeding presently before this Court. 18 However the contention be expressed, it was rightly abandoned by Counsel on behalf of the Applicant on 8 September 2008. It was a contention without substance. But some brief reasons should be set forth for reaching that conclusion in order to avoid the prospect that the Applicant is left believing that an argument of substance had been wrongly abandoned. 20 The contention as previously sought to be advanced by the Applicant was understood to be a contention that in bankruptcy proceedings " potential bankrupts ... [are] entitled to the higher standard of proof ". It is further understood that the argument was that there had been some " abolition " of the " common law " in that such proceedings should have been commenced by way of indictment. It is this assertion which was the springboard for the contention that s 80 guaranteed the Applicant a right to trial by jury. 21 Section 80 , it may readily be accepted, " lays down ... a fundamental law of the Commonwealth ": R v Snow [1915] HCA 90 ; (1915) 20 CLR 315 at 323 per Griffith CJ. The entitlement conferred by that provision " is an important constitutional privilege ": Weininger v The Queen [2003] HCA 14 at [54] , [2003] HCA 14 ; 212 CLR 629 at 646. 22 The difficulty, however, which would have inevitably confronted the Applicant -- even had it not been abandoned -- is the simple fact that s 80 is confined to a " trial on indictment ". It is Parliament, and not this Court or the High Court, which determines whether proceedings are to be commenced by way of indictment. It is not for this Court to determine that proceedings are sufficiently " serious " that they should be commenced by indictment: Li Chia Hsing v Rankin [1978] HCA 56 ; (1978) 141 CLR 182 at 189---90. The limited submission of the applicant that, for the reasons given on his behalf, the present offence was a "serious" offence, in my opinion, fails. ... Further, to so reduce the universality of the language of the section would be insufficient to create a constitutional guarantee that those offences must be treated as indictable offences. The applicant's submission in reality is that s 80 postulates that some offences are of their nature, or of their nature and circumstances, "indictable" offences, ie offences which may not be prosecuted except on indictment. The applicant describes these offences as "serious" offences. Section 80 , however, only operates on indictment. Its language was chosen in the knowledge of Art 3 of the Constitution of the United States and of the experience of that country with the construction and operation of that article over the considerable period of time which had elapsed before the terms of s 80 were accepted. ... [I]t is, in my opinion, not possible to conclude, apart of course from the expressed intention of the Parliament in the relevant statute, that an offence is of its nature "indictable". Summary prosecution for a wide variety of offences has a long history, though punishment upon summary conviction is generally limited so far as imprisonment is provided to a term of twelve months or less. It was unanimously decided in R v Archdall and Roskruge; Ex parte Carrigan and Brown [1928] HCA 18 ; [(1928) 41 CLR 128] that the section placed no impediment in the way of the Parliament providing for the summary prosecution of an offence. 23 Confined in this way, it has been said of s 80 that "[w] hat might have been thought to be a great constitutional guarantee has been discovered to be a mere procedural provision ": Spratt v Hermes [1965] HCA 66 ; (1965) 114 CLR 226 at 244 per Barwick CJ. Early judgments of the High Court were strongly critical of a narrow construction of s 80: eg, R v Federal Court of Bankruptcy; Ex parte Lowenstein [1938] HCA 10 ; (1937) 59 CLR 556 at 581---2 per Dixon and Evatt JJ (dissenting). Writing extra-judicially, Justice Kirby has commented that the " significance of the Australian guarantee has been diminished by the narrow interpretation applied to its language ": ' The High Court of Australia and the Supreme Court of the United States -- A Centenary Reflection ' (2003) 31 UWAL Rev 171 at 180. See also: Re Aird; Ex parte Alpert [2004] HCA 44 at [112] , [2004] HCA 44 ; 220 CLR 308 at 343---4 per Kirby J. 24 But it must now to be accepted -- at least in this Court -- that s 80 is confined to a " trial on indictment ": Kingswell v The Queen [1985] HCA 72 ; (1985) 159 CLR 264 at 276---7; Cheng v The Queen [2000] HCA 53 , 203 CLR 248. 25 The rejection of this contention of the Applicant -- even had it been advanced -- is not only dictated by the terms of s 80 itself, as it has been interpreted; it is further dictated by the rejection of the same argument by the High Court: Wilson v Deputy Commissioner of Taxation [2003] HCA Trans 403. Reference was also made to ss 39 and 40 of the Federal Court of Australia Act -- but those provisions, it was contended by the Applicant, were " qualified or not determinative of jury usage to decide factual questions in bankruptcy cases ". 27 This Court unquestionably has a discretionary power to direct that a trial be by jury. The relevant source of that power is said by the Applicant to be ss 30(3) and 31 of the Bankruptcy Act . ... 31 Exercise of jurisdiction (1) In exercising jurisdiction under this Act, the Court shall hear and determine the following matters in open Court: ... (i) applications for the trial of questions of fact with a jury and the trial of those questions; ... (2) All other matters under this Act may, in the discretion of the Court, be heard in open Court or in Chambers. Section 30(3) is a provision which " specifically provides for a discretion to order trial by jury in a bankruptcy matter " : Commonwealth Bank of Australia v Rigg [2001] FCA 590 at [8] per Beaumont J. 40 Power of Court to direct trial of issues with a jury The Court or a Judge may, in any suit in which the ends of justice appear to render it expedient to do so, direct the trial with a jury of the suit or of an issue of fact, and may for that purpose make all such orders, issue all such writs and cause all such proceedings to be had and taken as the Court or Judge thinks necessary, and upon the finding of the jury the Court may give such decision and pronounce such judgment as the case requires. 29 It was understood that Counsel for the Applicant quite properly did not contend that the Applicant had any entitlement to a trial by jury -- whichever Act was invoked. It was understood that Counsel for the Applicant accepted that the question as to whether or not there should be a trial with a jury was ultimately a matter -- not of entitlement -- but a matter for the discretion of this Court. In the written submissions as filed on 11 September 2008 the Applicant also sought to urge that a further " factor " as to why this Court should order a jury was that " questions of ulterior or improper purpose, misrepresentation, fraud, reliance and loss are peculiarly appropriate for a jury trial ". On behalf of the Applicant it was further contended that the Motion should not be resolved with any " predisposition " against the appointment of a jury; the common law, it was suggested, favoured the resolution of disputed questions of fact being resolved by a jury. 31 It was further contended that the Bankruptcy Act itself, in particular s 31 , provided a basis upon which a legislative intent could be discerned favouring the resolution of questions of fact being undertaken by a jury. 32 Rather than supporting the conclusion being sought by the Applicant, it is considered that the provisions of both the Federal Court of Australia Act and the Bankruptcy Act -- and the authorities which have previously considered those provisions -- strongly support the rejection of the relief sought in the present Motion in the exercise of the Court's discretion . 34 But that history, contends the Applicant, should be put to one side. Indeed, the Applicant contends that these provisions of the 1976 Act " are not to the point, as they deal with the general jurisdiction of the Court in civil cases not the exercise of its jurisdiction as a court of bankruptcy ". "[S] ection 39 ", the Applicant contends, " is not the governing provision in determining the notice of motion before the Court ". 35 Whether that be correct or not need not be resolved; the provisions of the 1976 Act nevertheless remain a useful starting point for any consideration of the circumstances in which a proceeding in this Court should be heard with a jury. 36 By reference to those provisions, the Federal Court of Australia Act provides no support for the submissions advanced on behalf of the Applicant. 37 The normal method or mode of trial in this Court is by judge alone: Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172 at 182. " Substantial reason ", it has been said, must be shown for a departure from the usual mode of trial: Gargan v Commonwealth Bank of Australia [2004] FCA 641 at [6] per Hely J. 38 Sections 39 and 40 of the Federal Court of Australia Act , it may further be noted, are in substantially the same form as ss 12 and 13 of the High Court Procedure Act 1903 (Cth). Those latter provisions were considered by Fullagar J in McDermott v Collien [1953] HCA 44 ; (1953) 87 CLR 154. The first is that with the merits and demerits of trial by jury as a means of determining civil causes I have nothing whatever to do. ... [S]o far as any question of general policy is involved, it is settled for me by the High Court Procedure Act. Trial without a jury is the normal mode of trial of actions in this Court, and some special reason must be shown for a departure in any particular case from that normal mode. The second thing that seems clear is that it is not enough to show that the cause of action is of a kind which could quite properly be tried with a jury and which was normally tried with a jury in England before the Judicature Act 1873 (36 & 37 Vict. c. 66). The decisions of Hodges J. and of Isaacs J. perhaps suggest that the nature of the cause of action is not even a relevant consideration. I would not be prepared to assent to that as a general proposition: indeed I would rather have thought that it might in some cases be a potent consideration. But it is clear that it is not enough to say: "This is a kind of action which is quite suitable for trial with a jury, and I would like to have it tried with a jury. 39 It is not considered that the present proceeding exposes any sufficient reason to depart from the " general policy " set forth in s 39 of the 1976 Act. The only legislative limitation on the exercise of the discretion conferred by s 40 is one directing attention to whether " the ends of justice appear to render it expedient to do so ": Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172 at 181. Relevant to the exercise of the discretion is a recognition of the important role that juries have long played in English and Australian law and the circumstances in which juries have traditionally been employed. Although the scarcity of the population was a reason why in colonial New South Wales the number of jurors was confined to 4 and not 12 persons (see: Henchman P, ' The New South Wales Jury of Four Persons ' (1959) 33 ALJ 235), the importance of juries in the administration of justice was acknowledged from the outset: Caledonian Collieries Ltd v Fenwick (1959) 76 WN (NSW) 482 at 488---92 per Else-Mitchell J. " It is the fundamental institution in our traditional system of administering criminal justice ": Brown v The Queen [1986] HCA 11 ; (1985) 160 CLR 171 at 197 per Brennan J. 40 Even in the absence of any " general policy " as may be exposed by s 39, however, it is independently considered that the discretion conferred by s 40 should be exercised adversely to the application as made in the Motion. The statement of claim as filed in that Court was available to this Court, as was a note of the reasons for judgment of the District Court Judge. The defendant also relied on the High Court decision in Kable v. Director of Public Prosecutions [1996] HCA 24 ; (1996) 189 CLR 51. The defendant also appears to assert that collection of tax in the form commonly known as "GST" is a form of civil conscription contrary to s.51(23A) of the Constitution and that because the defendant has declined to be conscripted, he owes the plaintiff nothing. I hope not to have done injustice to the defendant by summarising the defence in this way. In my view the whole defence in untenable. ... If there was dissatisfaction with the manner in which the District Court Judge proceeded, it was that decision which should have been challenged. Other than that which may be gleaned from the note of the reasons for judgment, little is known as to the manner in which the District Court proceeded, other than the fact that a statement of claim was there filed and summary judgment entered. The learned District Court Judge obviously considered that the case then pending before him was an appropriate matter in which to enter summary judgment. The defence to the proceedings in the District Court was not sought to be tendered in this Court, nor was there any evidence as to whether any cross-claim or set-off was there sought to be relied upon. Whether or not there was in those proceedings in the District Court (or any collateral proceeding) any claim for (for example) damages as against the Deputy Commissioner was not a matter pursued in the present application before this Court. 41 An acceptance of the important role long played by juries provides no basis for any different exercise of the discretion conferred by s 40. The " ends of justice " in the present proceeding do not " render it expedient " to appoint a jury to determine such questions of fact as may be contained within the Applicant's Schedule . Included within the written submissions as filed on 11 September 2008 was a submission that " a grievous wrong is being perpetrated on Mr Harding by the Respondent by now denying him the chance to have his story told and his claim heard in this proceeding ". Whatever facts may be relevant to the Application to have the Bankruptcy Notice set aside will be heard and determined by this Court; no " grievous wrong " will be suffered by the Applicant if it is a Judge alone who determines that Application . 42 Notwithstanding a contrary submission advanced on behalf of the Applicant, it is not considered that public confidence in the administration of justice by this Court would be impaired or called into question by a Judge of this Court sitting alone in the present proceeding to hear evidence as to the conduct of the Deputy Commissioner of Taxation or her officers and to make findings of fact based upon such evidence, always assuming such evidence is relevant. 43 Albeit in a different context, applications made pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) may allege in an appropriate case that statutory powers have been exercised for an " improper purpose ". Indeed, the 1977 Act expressly contemplates that a ground upon which an administrative decision may be sought to be impugned is " bad faith ": s 5(2)(d). It may be considered that an allegation of " bad faith " is a more serious allegation than one of pursuing an " improper purpose ". Both are serious allegations. But such applications have long been heard and determined by Judges of this Court without a jury. Although it must readily be recognised that an allegation of " bad faith " is a " very serious allegation " to make, it is an allegation that has in fact been made in other proceedings against both a Deputy Commissioner of Taxation (eg, Haritopoulos Pty Ltd v Deputy Commissioner of Taxation [2007] FCA 394 at [32] , [2007] FCA 394 ; 66 ATR 225) and against others exercising statutory power (eg, SCAS v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 397 at [19] ; SBBS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 361 , 194 ALR 749). " Fraud " or " equitable fraud " is likewise a very serious allegation. Public confidence in the administration of justice by this Court, it is considered, has only been enhanced by this Court entertaining and resolving such " serious " allegations. Such allegations have been made in the past and presumably will continue to be made. And when made they will be resolved. It may be that a case will arise where a Judge of this Court orders a jury. But this proceeding is not that case. 44 Proceedings against a Deputy Commissioner of Taxation are not relevantly different for present purposes to proceedings against other Commonwealth office holders or decision-makers. But Deputy Commissioners have attracted in the past allegations of serious wrongdoing. Thus, for example, in Thurecht v Deputy Commissioner of Taxation (1984) 3 FCR 570 ; 84 ATC 4480 ; 15 ATR 822 there was an allegation that a statutory power had been exercised in " bad faith " by reason of the Deputy Commissioner seeking to make an example of the applicants. That policy was designed to ensure that anybody else minded to make such an application would be discouraged from doing so. That is the applicants' case. The question is whether I should accept it. The allegation was rejected. There was no suggestion, however, in that case that public confidence in this Court would have been enhanced if those facts relevant to the resolution of such an allegation had been resolved by a jury. 45 The conferral by the Commonwealth legislature of such jurisdiction as that conferred by the 1976 Act upon this Court is only consistent with a legislative recognition that this Court will impartially and independently determine each case which comes before it, including litigation in which the Commonwealth or its instrumentalities may be respondents. No submission was advanced, nor could it be advanced, that there is any lack of public confidence in the manner in which this Court resolves contentious disputes involving allegations of misconduct or the pursuit of improper purposes by the Commonwealth or its instrumentalities; nor is it considered that public confidence in the administration of justice by this Court would be enhanced if such applications were to be heard by Judge and jury. 46 Each application for a trial by jury must necessarily depend on the facts upon which such an order is sought and the individual judgment of the legal practitioners making the application. Subject to that qualification, the decision of the Full Court in Taylor v Deputy Commissioner of Taxation [1999] FCA 195 , 99 ATC 4268 provides some limited assistance. The Deputy Commissioner had there obtained judgment, a bankruptcy notice and a sequestration order. The trial judge had declined to appoint a jury. As in the present case, Constitutional rights were there also sought to be invoked; unlike the present case, the scope for disputed facts was apparently more confined. They submit that the power to make a sequestration order is a power to acquire property of a person which falls within s51(xxxi) of the Constitution . The constitutional guarantee that the power may only be exercised upon the provision of just terms to the person from whom the property is acquired gives rise, they submit, to the jury issue of whether the taking of their property is upon just terms. The submission misunderstands the administration of the property of a bankrupt for the benefit of the bankrupt's creditors. There is no acquisition of property within the operation of s51(xxxi) of the Constitution when the property of a bankrupt is sequestrated and vested in a trustee in bankruptcy. S51(xxxi) has no bearing on the matter: Re Dohnert Muller Schmidt and Co; Attorney-General of the Commonwealth v Schmidt [1961] HCA 21 ; (1961) 105 CLR 361 at 372. [41] The appellants' submission as to the right to trial by jury on a trial on indictment of an offence against a law of the Commonwealth (s80 of the Constitution ) and to the requirements of full faith and credit being given to the laws of every State (s118 of the Constitution ) do not advance their case to a right to a trial by jury on the hearing of the bankruptcy petitions. [42] In these circumstances there were no issues of fact in dispute on the hearing of the bankruptcy petitions or on the hearing of the review of the District Registrar's decisions, which were capable of, or appropriate for, resolution by the verdict of a jury. 47 A submission that public confidence in this Court would be affected if a jury were not appointed in this case is, with respect, without substance. 49 Section 30(3) employs the language of this Court being empowered to " direct the trial " of a question of fact " if it thinks fit ". The sub-section confers a " wide discretion ": Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385 at [29] , [1999] FCA 385 ; 88 FCR 445 at 450. This language, it was submitted in oral submissions, places a " gloss " upon the language employed in s 40 of the 1976 Act. Section 30(3), it was submitted, is the more specific test to be applied by this Court when considering an application for trial by jury in bankruptcy proceedings. 50 Whether or not s 30(3) does in fact place any such " gloss " upon the statutory test as formulated in s 40 may also be left to one side. Even if attention is confined to the language of ss 30 and/or 31 of the 1966 Act, it is not considered that any different conclusion should be reached in respect to the Applicant's Motion . Sections 30(3) and 31, it is again considered, support a conclusion contrary to that now advanced on behalf of the Applicant. 51 Neither section confers any entitlement to a trial by jury; indeed, it was understood that Counsel for the Applicant again properly accepted that conclusion. 52 Section 31(1)(i), it was accepted, is simply a provision which sets forth the manner in which applications for the trial of questions of fact are to be made -- such applications are to be made in open court. The Application in the present proceeding was made in " open Court ". The importance of that provision may readily be understood. If there are said to be " questions of fact " which it is appropriate for a jury to determine, it is assumed that there is a public importance in having those questions exposed in " open Court ". That provision reads: "(3) If in a proceeding before the Court under this Act a question of fact arises that a party desires to have trial before a jury, the Court may, if it thinks fit, direct the trial to that question to be had before a jury, and the trial may be had accordingly in the same manner as if it were the trail of an issue of fact in an action. " [28] The appellants say that it is a civil right of all Queenslanders to have a trial by jury under s30(3). [29] In view of the approach taken by his Honour, which we consider to be correct, the question of a jury trial does not arise; so we do not accept the applicants' submissions in relation to this matter. Moreover, there was no relevant question of fact raised for a jury to determine. The Court under s30(3) has a wide discretion and there is no entitlement to a jury trial given by the section. We are not persuaded, given the necessity for a clear case of error to be shown on a matter of principle that there is any justification for ordering a jury trial in the present case. We see no error on the part of his Honour. Section 30(3) is not beyond the legislative competence of Commonwealth Parliament and is not invalid because of any unfounded assertion that it " undermines or perverts " the Constitution : Commonwealth Bank of Australia v Heinrich [2000] FCA 1255 at [18] ---[25] per Mansfield J. Nor is there any entitlement to trial by jury arising by reason of either some " unwritten law " such as natural justice or by reason of Schedule 2 to the Human Rights and Equal Opportunity Commission Act 1986 (Cth): Hubner v ANZ Banking Group Ltd [2000] FCA 140 at [9] ---[10], [2000] FCA 140 ; 101 FCR 71 at 73 per Drummond, Dowsett and Katz JJ. 54 Moreover, and although there may be trial by jury in bankruptcy proceedings, it is the exception rather than the rule: Re Shields; Ex parte Australia and New Zealand Banking Group Ltd (1994) 51 FCR 308. ... A jury trial involves a great deal of expense and time both to the parties and the Court, as well as considerable inconvenience to the members of the community who constitute the jury. The use of juries in civil matters has steadily declined during this century and is now largely reserved for those areas where serious imputations are to be made against the character of a party. Like divorce, bankruptcy is no longer regarded as such a matter. In the absence of some very compelling special circumstance, the intention of Parliament is clearly that bankruptcy proceedings be heard by a judge. See also: Re Allen (1905) 5 SR (NSW) 55 at 57; Draper v Official Receiver [2004] FCA 1379 at [5] per Mansfield J. Some " special reason " must be shown for a departure from the normal mode of trial: Commonwealth Bank of Australia v Rigg [2001] FCA 590. Section 30(3) only applies where " a question of fact arises ". See: Ray v Perrett [2007] FCA 1672. " While fraud generally is some ground for giving the parties or one of the parties a right to trial by jury, this fact is not conclusive ": Stapleton v Brady [1952] QWN 15 per Clyne J. 55 Such authority as there is in respect of s 30(3) (and other comparable provisions) provides no support for any conclusion other than that there is no entitlement to trial by jury in bankruptcy proceedings and, of more immediate importance, no support for a conclusion that trial by jury in bankruptcy cases is the norm. Even in the more confined context of bankruptcy proceedings, it has thus been accepted that " special reason " must be shown if a jury is sought. 56 The Applicant's Outline of Submissions dated 8 August 2008 contends that " Justices in civil cases especially bankruptcy cases should not approach applications for a jury with diffidence, or with an inclination to refuse such an order, or to feel somehow diminished or limited by an application for the trial of a civil matter by a jury ". It is not considered that any application for trial by jury in any bankruptcy application should be approached in any manner other than that set forth in the authorities. To the extent that the written submissions seem to advocate a different approach, they are rejected. 57 Confining attention to the language of s 30(3) of the Bankruptcy Act , the present proceeding is not one in respect to which it is considered " fit " to " direct the trial " of such questions of fact as now remain in the Applicant's Schedule . The same discretionary reasons which have been relied upon to refuse the relief sought in the Motion , if the provisions of the Federal Court of Australia Act were invoked, are also relied upon when considering the discretionary power conferred by s 30(3). 58 There nevertheless remains a difference in the statutory language employed in the 1966 Act and the 1976 Act. In the context of the former Act, it has been said that there must be some " special reason " to direct a trial with a jury; in the context of the 1976 Act, it has been said that there must be some " substantial reason " to order a trial with a jury. Obvious care must necessarily be exercised in substituting for the terms employed by the legislature other words which merely attempt to give content to statutory language. There may be little difference in the circumstances of an individual case to the approach to be pursued in the application of either provision. Common to both statutes, however, remains the fact that the normal mode of trial is a trial without a jury. Whichever approach is pursued in the present proceeding, the end remains the same -- there is considered to be no reason, be it " special " or " substantial ", to order or direct a trial with a jury. 60 In the event that the Motion was dismissed, the Deputy Commissioner sought an order that her costs be paid on an indemnity basis. Considerable costs were incurred prior to 8 August 2008. Prior to that date the written submissions as were filed by the Applicant raised issues without substance. Those arguments were withdrawn in the submissions dated 8 August 2008, albeit only filed on 11 August 2008. 61 Although this Court has expressed greater reluctance to order indemnity costs against an unrepresented litigant, it may do so: Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537 at [20] and [26] per Kenny J. Kenny J considered the competing interests in determining whether to make an award of indemnity costs against a self-represented litigant. A lack of knowledge of the law, unfamiliarity with court practice and a lack of objectivity are common traits of unrepresented litigants. A person's ability to get redress should not depend on lawyerly skills or an ability to pay for legal representation. However, the Court owes a duty to all parties to ensure that the trial is conducted in a fair and timely fashion (at [28]) and without significant difficulties and unnecessary expense for the parties against whom an unrepresented litigant proceeds. see Bhagat v Royal & Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at [13] per Hodgson CJ. 62 In the circumstances of the present case it is considered that the arguments which the Applicant initially wished to have resolved were without substance and that it is appropriate to make an order that costs incurred prior to 8 August 2008 be paid on an indemnity basis. Those allegations were properly withdrawn, but prior to that date the Respondent had been unreasonably subjected to the expenditure of costs. The proceeding in this Court has been unnecessarily prolonged by reason of those prior submissions being advanced -- only to be withdrawn shortly prior to the hearing of the Motion . Moreover, the Applicant, it may be noted, had previously tried to agitate at least some of the same arguments before the District Court and there had been told that such arguments were " untenable ". To again seek to agitate those same arguments in this Court was, in such circumstances, to expose the Respondent to unnecessary expense. 63 Although it is further considered that the arguments as were ultimately advanced in the 8 August 2008 submissions and during the hearing on 8 September 2008 also had little merit, it is considered that the Applicant should pay the costs of the Deputy Commissioner as from that date -- but not on an indemnity basis. Although applications for trial by jury may be uncommon in this Court, when made they should be heard and determined in the usual way. The circumstances in which the present application was ultimately presented may have had little merit, but the absence of such merit is not a sufficient reason in itself to attract an indemnity costs order. The Notice of Motion as filed on 8 September 2008 be dismissed. 2. The Applicant is to pay the costs of the Respondent, those costs incurred prior to 8 August 2008 to be paid on an indemnity basis. I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. | application to set aside bankruptcy notice motion seeking trial with jury no entitlement to jury discretion normal mode of trial without jury no substantial reason to depart from normal mode of trial bankruptcy |
3 The respondent contends that the first application was not valid because at the time it was made the applicant was subject to an administration order under the Guardianship and Administration Act 1990 (WA) (the Act). The respondent further contends that the second application is not valid because it is out of time and there is no power to extend time. 4 The applicant contends that the respondent was aware at all times that he had an administrator appointed but chose to exclude the administrator from the proceeding on numerous occasions and only now relies on the appointment of the administrator when the effect of it may be to preclude the applicant appealing to this Court. He also alleges he made the first application in his own name on advice from an officer of the respondent's department, the Australian Taxation Office. He claims that the effect of the respondent's contentions being upheld would be to condemn him to bankruptcy without any right of appeal. 5 The respondent relies on written submissions and on the affidavit of Mr Devaney, a level 5 Australian public servant employed in the Legal Services Branch, Debt Litigation Area of the Northbridge Office of the Australian Taxation Office and an affidavit of M/s Redknap, the Acting Director of the MEI Technical Business Unit in the Upper Mount Gravatt Office of the Australian Taxation Office and, at the time of her dealings with the applicant, a Technical Advisor in that Unit. 6 The applicant relies on submissions to the effect set out above and on his affidavit. 9 The administration order made on 11 April 2006 was itself reviewed under s 84 of the Act by the Tribunal on 4 April 2007 and was revoked on that day. 10 Although the administration order of 11 April 2006 does not set out in its terms the basis upon which that order was made, that is set out in an earlier administration order made by the Guardianship and Administration Board (the predecessor of the Tribunal under the Act), on 18 November 2002. This order was itself an order made upon review of an earlier administration order dated 27 April 2000. The Full Court there overruled an earlier decision of the Full Court of the Supreme Court of Western Australia in Johnson v Staniforth [2002] WASCA 97. The principal issue in "DDM" 27 WAR 475 was whether s 77(1)(a) of the Act had any application to a will made by a testator who was subject to an administration order under s 64 of the Act. The Full Court found that s 77(1)(a) had no application to a will made by a testator the subject of an administration order on the basis that the making of a will did not involve any disposition in respect of the estate or any part thereof or interest therein (as any disposition under the terms of a will would only take place following the death of the testator and because the functions which could be conferred on an administrator under the Act did not include the power to make a will or other testamentary writing). 18 The leading judgment, with which the other members of the Full Court concurred, was that of Heenan J. In this regard it seems essential to appreciate that the Guardianship and Administration Act is intended to provide for the guardianship of adults who need assistance in their personal affairs, for the administration of the estates of person who need assistance in their financial affairs ... and to make provision for a power of attorney to operate after the donor has ceased to have legal capacity, and for connected purposes (see the long title to the Act). From this, and an examination of the entire Act, it is obvious that the legislation is designed for the protection of adult persons whose faculties may be impaired, for any reason, and who are therefore in need of protection and assistance so as to ensure that their financial affairs and other welfare is not jeopardised by improvident, or ill-considered personal decisions or action, or by unscrupulous or ill-advised influence of relatives, friends and others who may deliberately or inadvertently exploit the vulnerability of the person in need of assistance and protection. The emphasis is on conserving the property and financial resources of the disabled person to ensure that they are available for his or her own needs, welfare and enjoyment and are not dissipated. These seem to be the primary objectives of the legislation and all the provisions of the Act can be seen to have meaning and effect as leading towards the achievement of those purposes. In the main, these will be accomplished by conserving the resources and property of the person under administration for use to his or her own advantage or, in cases where expenditure or imminent disposition of property are necessary or advantageous, by scrutinising the transaction to see that it is justifiable or provident having regard to all the circumstances, bearing always in mind the continuing and future needs of the person whose estate is under administration. In McVey v St Vincent's Hospital (Melbourne) Ltd [2005] VSCA 233 the Court of Appeal of the Supreme Court of Victoria was called upon to consider the validity of a notice of appeal issued by an appellant who was subject to an administration order. The Court (Eames JA, with whom Ashley JA and Hollingworth AJA agreed) held the notice of appeal was void. By s 58B(1)(b) of the Act, upon appointment as administrator it is the duty of the administrator, inter alia, "to manage the affairs of the represented person and to exercise all rights statutory or otherwise which the represented person might exercise if the represented person had legal capacity". Pursuant to s 58B(2)(l) an administrator may, in the name of and on behalf of the represented person, bring and defend actions and other legal proceedings in the name of the represented person. By s 50(1) the administrator is empowered to sign and do all such things as are necessary to give effect to any power or duty vested in the administrator. By s 52(2) every dealing by a represented person "in respect of any part of the estate which is under the control of the administrator is void and of no effect and the money or property the subject of the dealing, transfer, alienation or charge by any represented person is recoverable by the administrator in any court of competent jurisdiction". ) but the lodging of a notice of appeal rendered the applicant liable to orders as to costs and in lodging his notice of appeal while the administration order continued the applicant was dealing with that part of his estate which was the subject of the order, namely such rights as were concerned in legal proceedings against St Vincent's. In my opinion, he was not empowered to take that step, nor, indeed, was he empowered to file a summons seeking an adjournment of the hearing of the s 23A application, because that step was also taken when the administration order applied to the proceedings. That conclusion is consistent with authority. In Re Barnes, A Protected Person (fn 3 [1983] 1 VR 605, at 608. ) Beach J held, citing the decision of the Court of Appeal in Re Walker (fn 4 [1905] 1 Ch 160. ) , that whilst a person was subject to a protection order the estate of that person could be dealt with only by the Public Trustee. Beach J quoted with approval the words of Eve J in Re Marshall (fn 5 [1920] 1 Ch 284 at 288---9. ) who, in applying the decision of the Court of Appeal held that were the situation otherwise "this unsatisfactory result would follow, that the affairs of the person of unsound mind, although put under the control of one person, the receiver, would in fact be controlled by two persons -- namely, the person of unsound mind and the receiver. That defect of the notice of appeal might, however, be capable of being overcome. In dismissing the application Hayne J on behalf of himself and Crennan J said that there was no reason to doubt the correctness of the conclusions reached by the Court of Appeal. 20 In David by Her Tutor the Protective Commissioner v David (1993) 30 NSWLR 417 consideration was given to the effect of an order committing the management of an estate of a protected person to the Protective Commissions under the Protected Estates Act 1983 (NSW). There is no equivalent provision in the Protected Estates Act 1983 . But, in my opinion, such a section would do no more than confirm the effect of committing the management of a person's estate with express consequential powers, authorities and duties to the Protective Commissioner . 22 There is no evidence before the Court that the administrator of the applicant's estate as at 8 March 2007 had, with the consent of the Tribunal, authorised the applicant in writing to commence the proceeding WAD 51 of 2007. 23 Although not expressly stated in the administration order of 11 April 2006, the respondent submits that it can be inferred from the terms of the administration order of 11 April 2006 which continued the appointment of the limited administrator that the Tribunal remained satisfied of the matters set out in Order 2 of the administration order of 18 November 2002. 24 The respondent further submits that consistently with the terms of ss 77 and 69 (3) of the Act the making of the administration order of 11 April 2006 has the effect that the administrator was empowered to bring and defend actions, suits and other legal proceedings in the name of the applicant and that the applicant was thereby incapable of bringing and defending actions, suits and other legal proceedings in his name whilst the administration order remained in force. If the applicant remained capable of bringing and defending actions, suits and other legal proceedings in his own name whilst the administration order was in force, this would render otiose the administration order of 11 April 2006 and defeat the only purpose for which that administration order was made. 25 The respondent submits that, consistently with the legislative intention found by the Full Court of the Supreme Court of Western Australia, the effect of s 77(1)(a) is that the particular functions in respect of the estate of the persons subject to the administration order which was vested in the administrator by s 69 of the Act can only be performed by the administrator and that the person who is the subject of the administration order is legally incapable of performing those functions whilst the administration order is in force. 26 The respondent also submits that as the administration order of 11 April 2006 was in force at the time the applicant purported to commence the proceedings WAD 51 of 2007 he was not legally capable of commencing those proceedings at that date and the proceedings should, accordingly, be dismissed. 27 In supplementary submissions the respondent addressed the effect of the McVey [2005] VSCA 233 case. He argues that the decision supports the submissions of the respondent on the invalidity of the application. It is pointed out that the administration order in McVey [2005] VSCA 233 , like the order in issue here, was limited to the conduct of legal proceedings in respect of the applicant. It is contended that although the wording of the relevant section of the Guardianship and Administration Act 1986 (Vic) s 52 is in different terms to the corresponding s 77 of the Act, the reasoning of the Victorian Court of Appeal is equally applicable to the applicant's position. Additionally it is argued that the reference in McVey [2005] VSCA 233 to Re Barnes [1983] 1 VR 605 and to David 30 NSWLR 417 are consistent with the respondent's earlier submission to the effect that if the applicant were to remain legally capable of bringing legal proceedings while the administration order was in force it would defeat the only purpose for which the administration order had been made. The applicant's submissions are directed to two aspects of fact. The Australian Taxation Office brought a bankruptcy proceeding against me in June 2006 with no involvement of my Administrator (...), which show evidence that the Tax Office dealt with me alone. I went and saw my local Member of Parliament (Mr Denis Jensen) and the Tax Office credited me with $8 367.81 (...). On the 15 th August, 2006 a cheque for the amount of $8 367.81 was sent c/o Mr Amin Haddad, Administrator (...). The Tax Office excluded my Administrator from this matter, but released the above cheque care of my Administrator. On the 8 th January, 2007 a 'Notice of Decision on Objection' was sent to Mr Eric Veder, my Accountant. The notice was sent to Mr Veder's P.O Box (...). I was made aware of this 'decision' by Mr Veder on the 15 th February, 2007, when Mr Veder gave me a copy of this 'notice'. On the 15 th January, 2007, the Tax Office issued a 'Notice of Income Tax Audit', which was sent to Mr Veder (...). That is, neither of them involved the bringing and defending of an action, suits or other legal proceedings in the name of the represented person. 31 As to paragraph 1 of the applicant's affidavit and the institution of a bankruptcy proceeding against him in June 2006, it is relevant to turn to the affidavit of Mr Devaney. He states that on 13 April 2006 as part of his duties he was allocated instructions to seek a sequestration order against the applicant. Prior to that involvement judgment had been handed down in the District Court on 29 November 2005 directing the applicant to pay the respondent $53 121.24 and $698.70 costs. A bankruptcy notice was issued by the official receiver on 31 January 2006 for the amount of $53 819.94. At the time Mr Devaney received these instructions he was not aware that the applicant had an administrator appointed. 32 His affidavit continues by stating that he arranged for the preparation and service of a creditor's petition in the Federal Magistrates Court and organised for the petition to be served personally on the applicant at his home address, which occurred on 11 May 2006. On 1 June 2006 the applicant filed a notice stating grounds of opposition to the petition and an affidavit in support of this together with a notice of appearance. It was not until 6 June 2006 in the Federal Magistrates Court, when the District Registrar advised the applicant that he could not represent himself as he was under an administration order, that Mr Devaney became aware of the appointment of an administrator. The matter was adjourned until 8 August 2006. 33 The following day Mr Devaney sent a letter to the applicant's administrator, Mr Haddad, advising him of what had had happened in the proceedings and requesting him to contact Mr Devaney. 34 On 8 August 2006 Mr Devaney again appeared on behalf of the Deputy Commissioner in the Federal Magistrates Court before the District Registrar. The applicant attended with his administrator. Mr Devaney advised the District Registrar that the tax had been cleared by the issuing of a credit assessment and he sought on behalf of the Deputy Commissioner to have the petition dismissed, with the Deputy Commissioner's disbursements paid by the applicant. The applicant objected to such payment. It was later decided that the Deputy Commissioner would not pursue the issue of costs and a letter was written on 10 August 2006 advising the Court of this. Accordingly, on 29 August 2006 the Federal Magistrates Court ordered that the matter be dismissed with no order as to costs. 35 It is apparent from these circumstances that as soon as Mr Devaney became aware of the appointment of the administrator he placed him with full knowledge of what had occurred on 6 June 2006 and the administrator thereafter attended on 8 August 2006. From the evidence it cannot be inferred that the respondent was aware 'at all times' that the applicant had an administrator appointed and chose to exclude the administrator from the proceeding. The inference which the applicant seeks to draw is not open on the evidence relating to any of the four matters on which he relies. On 8 th March, 2007 I spoke to Ms Patricia Redknap (Tax Office, Brisbane), and I asked her whether the application to the Federal Court in appealing the 'decision' should be made by me or my Administrator. Ms Redknap stated that as the 'notice' was in my name that I needed to make the application to the Federal Court and not my Administrator. It was on this advice that I lodged my application to the Federal Court. She states she was the officer responsible for considering and deciding the objections lodged by the applicant's tax agent, Mr Veder, dated 2 November 2006 against the amended assessments dated 8 April 1999 for the years ended 30 June 1993, 1994 and 1996. She states that she decided to disallow the objections and a formal notice disallowing the objections was sent to Mr Veder on 8 January 2007. 38 M/s Redknap accepts that a few weeks later the applicant telephoned her. To the best of her recollection the conversation took place in January 2007. She states that as it was just a general query, she did not make a written record of the conversation but has a good recollection of it. Mr Abuothman complained about the objection decision and asked me what he could do about it. I advised him he had provided no evidence to support his claims and it was decided to disallow his objection. I told him that he had a right of appeal that was set out in the attachments to the objection decision that had been sent to him. We spoke in general terms and mainly about appealing to the Administrative Appeals Tribunal. I was aware from my earlier reading of the decision in his previous appeal to the AAT that he had an Administrator but this had slipped my mind at the time of our conversation. At no time in my telephone discussion with Mr Abuothman did we discuss what the Administrator's role would be in an appeal. I am quite certain that Mr Abuothman did not ask me nor did we ever discuss whether any application to the Federal Court needed to be made by the Administrator. They have different recollections of the conversation. I am inclined to find that the effect of the evidence of both witnesses is that M/s Redknap advised the applicant that, as the notice was in his name, he needed to make the application himself to the Federal Court. However, that was stated without any reference to the position of an administrator. 40 In any event, whatever the advice given by M/s Redknap it cannot preclude any effect which the statute law might have in relation to the validity of his application. I therefore return to those issues. However, he contends that the validity of the application would not have been an issue had it not been for the misleading advice of the officer Ms Redknap, as set out in the applicant's affidavit filed on 15 May 2007. The applicant seeks an exercise of the discretion of the Court to grant leave for the fresh application to be lodged in view of that misleading advice. Further the applicant asserts the Court should have regard to the likelihood of him succeeding before this Court. Above all, he seeks that the issues be judged on their merits. It is clear that it and the other authorities referred to in it do provide that support. Not only should this Court follow the reasoning in McVey [2005] VSCA 233 but there is no apparent legal reason for not doing so. In particular I agree that any differences in the wording of the legislation under consideration here and that considered in McVey [2005] VSCA 233 does not provide a foundation for making the reasoning in McVey [2005] VSCA 233 inapplicable here. The consequence is that the application was invalid. 43 The plea of the applicant for his application to be considered on its merits is understandable. However, given the invalidity of the application there is no discretion which arises in the Court to grant him leave to file a fresh application. It is not open to the Court to take the steps which the supplementary submissions of the applicant seek. The objection decisions which the applicant seeks to appeal were made on 8 January 2007 and served on the applicant's tax agent by post sent on that day. Consequently, the second application filed on 5 April 2007 was lodged outside the prescribed period of 60 days. 45 Section 14ZZN of the Taxation Administration Act 1953 (Cth) (the TAA) is the substantive statutory provision which prescribes that an appeal to the Federal Court against an appealable objection decision must be lodged with the Court within 60 days after service of the notice of the decision. 46 Whether the Federal Court was empowered to extend the time limit prescribed by s 14ZZN of the TAA has been considered by the Federal Court in Bayeh v Deputy Commissioner of Taxation [1999] FCA 1194 ; (1999) 100 FCR 138 and Kimberley-Clark Australia Pty Ltd v Commissioner of Taxation (1994) 28 ATR 47. 47 In both Bayeh [1999] FCA 1194 ; 100 FCR 138 and Kimberley-Clark 28 ATR 47 the Court determined that there was no statutory provision giving it the jurisdiction to extend the time in s 14ZZN of the TAA to lodge and appeal. This was unlike the positions in s 14ZZC of the TAA which modified s 29 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) in respect of making an application for review of an objection decision by the AAT Act but expressly saved s 29(7) of that Act which gives the Tribunal power to extend time for the lodging of such an application. 48 No statutory provision that saves any former jurisdiction of the Court to grant an extension of time in making an application to appeal against an appealable objection decision was enacted by the TAA at the time that Pt IVC (which included s 14ZZN) was introduced to the TAA. Although the Court in Bayeh [1999] FCA 1194 ; 100 FCR 138 and Kimberley-Clark 28 ATR 47 queried whether this was an oversight on the part of the legislature, no amendment to Pt IVC of the TAA has been made to address this issue. On the authority of Bayeh [1999] FCA 1194 ; 100 FCR 138 and Kimberley-Clark 28 ATR 47 the second application was not lodged within the 60 day time limit prescribed by s 14ZZN of the TAA and is not, therefore, a valid application. The respondent submits that the second application should therefore be dismissed. 49 In my view these submissions on the law are correct. The applicant considers that that has the consequence that, 'contrary to justice' he is precluded from appealing his bankrupt status. 51 However, as s 29(7) of the AAT Act empowers the Tribunal to extend the time for the lodging of applications to the Tribunal for review of the objection decisions, it would appear the applicant may remain entitled to make an application to the Administrative Appeals Tribunal under s 29(7) to extend the time for the lodging of applications for review of the objection decisions in question. 52 For his own reasons, the applicant states he does not wish to make an application to the Administrative Appeals Tribunal. That must be for him to decide. The fact is that he could not properly conclude he has no remaining remedies. 53 For these reasons the first and second applications must each be dismissed. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson. | appeal from objections decision first application filed by the applicant while subject to an administration order under guardianship and administration act 1990 (wa) whether application validly filed selective attention by respondent to role of administrator alleged advice from department for first application to be made in name of applicant second application filed outside time limit whether any power to extend time taxation |
There, the Federal Magistrate upheld the Refugee Review Tribunal's decision affirming the denial of the appellant's application for a protection visa. The appellant is a citizen of Sri Lanka and is also the mother of two children. She grew up in a family that had an active history in the United National Party ("UNP"). At the age of twenty-one she became involved personally with the UNP and later went on to become President of the Women's Front of the parliamentary seat. In this capacity, she alleges she was actively involved in campaigning and fundraising for the party, often making donations of her own to the UNP. She also alleges that she made frequent speeches on behalf of the UNP and the Women's Front, some of which spoke out against rival political parties. 2 Following the UNP's loss in the general and Presidential elections in 1994, the appellant alleges that she and her family were harassed and threatened by the winning party: the People's Alliance ("PA"). The appellant claims that her house and car were attacked and vandalised with stones, and that windows were broken. Frequently she believed she was followed home by members of the PA or saw men loitering around the front of her house. She also claims that threatening phone calls were made to her home and to the family business that threatened to "hurt" or "torture" her or her family if she did not cease participation in the UNP. According to the appellant, these threats went so far as to threaten to kidnap her children and/or kill members of her family, and the appellant claims she was once accosted by men on motorcycles who repeated similar threats. The tribunal is the entity responsible for examining the facts that lie behind an application for refugee status and making findings of fact. The Court's function is merely to scrutinise the process through which the tribunal ascertained those facts, reached its conclusions, and then applied its findings to the relevant law. Absent procedural error or error as to the law itself, the courts have no power to set aside the tribunal's decision. 4 In terms of legal error, this appeal presents one issue: whether the tribunal failed to comply with the requirements of s 424A of the Migration Act 1958 (Cth). That section provides that the tribunal must give to the applicant particulars of any information that the tribunal considers would be the reason, or a part of the reason, for affirming the decision under review; must ensure that the applicant understands why the information is relevant to the review; and must invite the applicant to comment on it. 5 In fact it is not the appellant but the first respondent who has raised the possibility that the tribunal decision may have been based on information not provided to the appellant under s 424A. The first respondent's counsel referred to decisions in the High Court to the effect that the tribunal must strictly comply with s 424A (see SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162). Thus, any finding that information was not properly provided would be a jurisdictional error and the tribunal's decision would necessarily be vacated by this Court. 6 The first instance involves the dates on which the Sri Lanka Provincial Council elections occurred. There were, however, no such elections in 1996; rather these occurred in 1999, in the months before her departure for Australia. 7 At first blush, it might appear that the tribunal was comparing written information from the appellant's visa application with the appellant's testimony at the hearing. In its reasons, however, the tribunal explained that the appellant's visa application was merely the medium that raised the issue for the tribunal: see eg SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 at [49] - [50] per Moore J; at [244] per Allsop J. The inconsistency itself arose between the appellant's testimony that she participated in 1996 Provincial Council elections, and the independent country information stating that the scheduled 1996 elections never occurred and were, instead, postponed until nearly 1999: see ibid. Thus, the information which is relevant for the purposes of s 424A is the independent country information and the appellant's hearing testimony. 8 Section 424A(3)(b) provides that information given by an applicant for the purpose of the application is exempted from the disclosure requirements of s 424A. While some cases might call into question when, specifically, information is given "for the purpose of the application", I think it is beyond question that testimony given by an applicant in a statutory hearing pursuant to s 425 of the Migration Act is given in support of, and therefore "for the purpose of", the application. 9 Similarly, with regard to independent country information, s 424A(3)(a) exempts such general information from the requirements of s 424A when it is not specifically about the applicant or another person. This is established by numerous Full Court authorities: see VJAF v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCAFC 178 ; VHAP of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) ALD 559 at 562-563 per Gyles and Conti JJ, at 564 per Allsop J; VAAC v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 74 ; (2003) 129 FCR 168. Thus, with regard to the first instance of possible error, I find no violation of s 424A by the tribunal. 10 The second possible error concerns the tribunal's emphasis on the sequence of events surrounding a visit to Australia by the appellant and her husband. In the appellant's statutory declaration of 2003 in support of her application to the tribunal, she stated that she and her husband came to Australia for a visit in March 1999, during which time she learned that the lives of her children had been threatened. Upon her return to Sri Lanka, in April 1999, she claims that she was stopped and threatened by men on motorbikes. During the tribunal hearing, however, the tribunal noted that the appellant first testified that she came to Australia with her husband after the incident with the men on motorbikes. When questioned by the tribunal about this discrepancy, the appellant changed her story and testified in accordance with her statutory declaration. 11 The information relied upon by the tribunal, then, is comprised of the appellant's testimony during her hearing, and the appellant's statutory declaration (which is not to be confused with her original visa application made in 1999). Both the testimony and the statutory declaration were given directly to the tribunal by the appellant to assist the tribunal in its review of her application. Accordingly, under s 424A(3)(b) , they are exempted from the disclosure requirements of s 424A , and there was no error on the part of the tribunal in noting and relying on evident inconsistencies. 12 Since I have determined that the "information" in question all qualifies under the statutory exemption in s 424A(3) , it is not necessary to examine the specifics of whether and how the information was relayed to the appellant. I do note, however, that the High Court's ruling in SAAP makes it clear that any information required under s 424A must be given to an applicant in writing : see SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 at 183 per McHugh J; at 196 per Gummow J; at 205 per Hayne J. This would be necessary even in a situation where the tribunal discusses adverse information with an applicant during the hearing and gives the applicant an opportunity to comment. Thus, were any of the information at issue in this case not subject to exemption under s 424A(3) , the appellant might very well have succeeded in her appeal. 13 Finally, I wish to say a brief word about an authority cited by the appellant during the hearing. Appearing on her own behalf, the appellant referred to one case in support of her argument. The case, Applicant M164/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 16 , is one where the Full Court allowed an appeal on multiple grounds, including failure of the tribunal to comply with the requirements of s 424A. Unfortunately for the appellant, the case does not significantly advance her claims in the matter before me now. 14 In M164 , the tribunal had noted and relied on inconsistencies between direct oral testimony of the applicant and conflicting testimony by the applicant's husband. Though the husband's testimony was given at the hearing and in the presence of the applicant, the Full Court found that, under a strict reading of s 424A , the applicant was to be given notice, in writing, of the tribunal's intended reliance on discrepancies between the husband's testimony and the applicant's testimony: Applicant M164/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 16 at [97] - [100] . 15 In the instant case, the hearing-testimony relied upon by the tribunal came directly from the appellant, herself, and was therefore exempted under s 424A(3)(b) as information that "the applicant gave. " There was no third party testimony cited or relied upon by the tribunal in reaching its decision. 16 The appeal will 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 Finkelstein. | appeal s 424a of migration act 1958 (cth) meaning of information given "for the purpose of the application" " for the purpose of the application " migration words and phrases |
An amended application supported by a statement of claim was filed on 23 May 2008. The applicants claimed that the respondent engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1974 (Cth) and s 42 of the Fair Trading Act 1987 (NSW) and in breach of certain settlement agreements with respect to past disputes between the applicants and the respondent about similar conduct. 3 The respondent did not appear when the matter was called for hearing on 12 September 2008. The evidence establishes that the respondent was served with copies of the amended application, statement of claim, notice of motion and affidavits in support and was aware of the hearing date. The applicants submitted that the respondent's failure to appear at the hearing, file any defence when the Court directed he do so, and file any notice of appearance as required by Order 9 r 2(1) of the Federal Court Rules established that the respondent "is in default" within the meaning of Order 35A r 3(2)(c). Hence, the applicants said the Court could grant the relief to which they appeared entitled on the statement of claim. The applicants also said that the evidence demonstrated their substantive entitlement to the relief sought. 4 The allegations of fact in the statement of claim arise from a lengthy history of dispute between the applicants and the respondent with respect to the respondent's registration of domain names. The evidence leads to the following findings of fact. 5 The first applicant conducts a banking business. The second applicant is the ultimate holding company of the first applicant. The second applicant owns all of the core trade marks for the Macquarie group of companies. The Macquarie group of companies are very well known in Australia. 6 The World Intellectual Property Organisation Arbitration and Mediation Centre resolved two disputes between the first applicant and the respondent in 2003 about the respondent's registration of domain names macquarie-bank.com and macquarie-bank.net (cases D2003-0374 and D2003-0890). Both matters resulted in an order for transfer of the domain name to the first applicant. 7 The first applicant also discovered that the respondent had registered another domain name, macquariebank.net. Following negotiations, the first applicant and respondent entered into an agreement signed by the respondent on 24 November 2003. 8 The first applicant subsequently commenced proceedings against the respondent in the Local Court at Lismore alleging breach of the agreement of 24 November 2003 and claiming damages. These proceedings were concluded by judgment in favour of the first applicant in the sum of $16,431.04 and costs. The first applicant recovered a part of this amount by a garnishee order. On 16 December 2004 the first applicant and respondent entered into a deed reciting these matters and that the parties were "desirous of resolving all matters...in relation to the current and future use of domain names, and have reached agreement accordingly". 3 Mr Seagle agrees to forthwith remove from all websites under his control all references to Macquarie Bank and staff, and henceforth refrain from publishing or disclosing any information concerning the Bank, its business or staff. 4 Mr Seagle agrees not to interfere with the business of the Bank either directly or indirectly. 5 Mr Seagle agrees not to do any act or thing which he knows or should reasonably suspect would harm the reputation of the Bank or its employees. The Court made orders as sought by the applicants ( Macquarie Bank Ltd v Seagle (2005) 146 FCR 400 ; [2005] FCA 1239). 11 The first applicant also found other cases involving the respondent's registration of domain names resolved by the World Intellectual Property Organisation Arbitration and Mediation Centre. The applicants in these matters were the University of Oxford, Harvey Norman Retailing Pty Ltd, Texas Instruments, Inc, Imperial Chemical Industries, PLC, Imperial College of Science, Technology and Medicine, and Westpac Banking Corporation. The applicants also found two matters resolved by the National Arbitration forum commenced by America Online, Inc against the respondent. Each matter resulted in the making of an order for transfer of the disputed domain name from the respondent to the applicant in the matter. 12 Searches for the owner of a domain name may be carried out using what is known as a "Whois" search. 13 Searches establish that, from about November 2007, the respondent registered further domain names (namely, www.macquarry.com, www.macuarie.info, www.macuarie.biz, www.macuarie.us, www.maquarie.info and www.maquarie.biz, referred to as the "Domain Names" in the applicants' proposed orders). The websites associated with these domain names contain what is described as "sponsored links" to other websites including, for example, to the applicants' websites. However, there is no sponsorship arrangement between the applicants and the respondent. 14 Searches also disclosed that, after the date of the agreement and deed, the respondent published material on websites in respect of which the respondent is the owner of the relevant domain name (namely, HonourMission.com, www.federal-court.net, MyPute.com, TerrorismSupport.com, Arrogantosa.com, BDWaldRon.com, I-C-A-C.com, may-day.biz, www.response.continues.biz and www.muckworry.com, referred to as the "Further Domain Names" in the applicants' proposed orders). The material published on these websites includes material that would tend to harm or injure the reputation or good name of the first applicant, its officers or employees. 15 The applicants submitted that the Domain Names are substantially identical or deceptively similar to the names of the applicants and involve a representation in trade and commerce that the applicants are the registrants of the domain names, which representation is false and likely to mislead and deceive in breach of s 52 of the Trade Practices Act and s 42 of the Fair Trading Act . 16 The applicants referred to CSR Ltd v Resource Capital Australia Pty Ltd (2003) 128 FCR 408 ; [2003] FCA 279. In CSR the Court held that the registration of the domain names csrsugar.com and csrsugar.com.au represented either that CSR Ltd was the owner of the names or was affiliated with the owner in some way. As CSR Ltd was not the owner or affiliated with the owner the representations were likely to mislead and deceive in breach of s 52 of the Trade Practices Act . 17 In support of their submission that the respondent's conduct was in trade or commerce the applicants pointed to s 6(3) of the Trade Practices Act , the negotiations in 2003 about the disputed domain names, and a statement on one of the respondent's websites that some of his domain names were available for sale. Section 6(3) extends the application of the Trade Practices Act (other than excluded parts that are not presently relevant) to individuals who use postal, telegraphic or telephonic services (the latter encompassing access to the internet). 18 The applicants also submitted that the respondent's conduct of publishing material that would tend to harm or injure the reputation or good name of the first applicant, its officers or employees on the websites associated with the Further Domain Names breached the agreement dated 24 November 2003 and deed dated 16 December 2004. These were matters within the respondent Court's associated jurisdiction (s 32 of the Federal Court of Australia Act 1976 (Cth)). 19 I accept the applicants' submissions summarised above. By registering the Domain Names the respondent breached s 52 of the Trade Practices Act , s 42 of the Fair Trading Act , clause (3) of the agreement dated 24 November 2003, and clauses 2, 4 and 5 of the deed dated 16 December 2004. In publishing material that would tend to harm or injure the reputation or good name of the first applicant, its officers or employees on the websites associated with the Further Domain Names the respondent breached clause (5) of the agreement and clauses 3, 4 and 5 of the deed. 20 In Macquarie Bank (2005) 146 FCR 400 ; [2005] FCA 1239 at [24] the Court considered the meaning of the words "entitled to on the statement of claim" in Order 35A r 3(2)(c). In light of the evident objectives of the O 35A procedure in providing for a ready and expedient means to dispose of uncontested litigation, I consider that the Bank's submission duly reflects a correct description of the subr (2)(c)(i) requirement. 21 The requirements of Order 35A r 3(2)(c) are satisfied in this case. The respondent is in default. The relief to which the applicants appear entitled on the statement of claim (and which the Court has power to grant) is relief to remedy and restrain the respondent's breaches of s 52 of the Trade Practices Act and s 42 of the Fair Trading Act and the terms of the agreement and deed. 22 The applicants' proposed orders 1 to 4 and 10 involve declarations relating to the respondent's breaches and injunctions to restrain them in relatively conventional terms. The extension of the injunction to restrain the respondent under his own name and various aliases is supported by the evidence. Orders should be made, but the declarations are unnecessary. 23 Proposed orders 5 and 6 involve transfer of the Domain Names (that is, the names deceptively similar to the names of the applicants) to either of the applicants. The applicants submitted that these orders were appropriate as: - (i) the Federal Court is a court of equity as regards matters within its jurisdiction (s 5(2) of the Federal Court of Australia Act , McIntyre v Perkes [1990] FCA 100 ; (1990) 22 FCR 260 and Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (1987) 14 FCR 461) , (ii) the websites are instruments of the respondent's misleading and deceptive conduct and the Court has inherent jurisdiction, in effect, to order delivery up and destruction of these instruments from the respondent's hands, (iii) these orders are necessary not to deny the respondent's title to the infringing articles, but rather to prevent their use in derogation of the applicants' rights, and will operate in aid of the injunctions, and (iv) by analogy, in a case for trade mark infringement the power to order delivery up and destruction covers not only infringing articles but also items used to manufacture infringing articles ( Geodesic Constructions Pty Ltd v Gaston (1976) 16 SASR 453 at 471-2). I accept these submissions and will make orders accordingly. 24 Proposed orders 7, 8 and 9, as the applicants acknowledged, are less conventional. They involve cancellation of the Further Domain Names. The applicants submitted that the respondent used these domain names to publish material interfering with the applicants' business and causing harm to their reputation in breach of the agreement and deed, and with the consequence of clear but unquantifiable damage to the applicants. Section 87 of the Trade Practices Act authorises the making of orders if the Court considers that they will compensate for, prevent or reduce the loss or damage. In the alternative, the applicants sought orders for removal of material from the websites identified as being in breach of the provisions of the agreement and deed. 25 The difficulty with the applicants' primary position with respect to proposed orders 7, 8 and 9 is that the Further Domain Names are not deceptively similar to the applicants' names and trade marks. The breaches relied upon by the applicants in their statement of claim arise by reason of the material published on the websites, not the registration of the Further Domain Names. The material, as noted, contravenes clause (5) of the agreement and clauses 3, 4 and 5 of the deed. Accordingly, I consider that the applicants' alternative approach is appropriate and make orders accordingly. 26 Proposed order 11, in effect, would prevent the respondent from registering any domain name without the leave of the Court and the giving of notice to the applicants of the application for leave. The applicants acknowledge that there is no precedent for an order in these terms but submitted that it is supported by the evidence establishing that the respondent is a "vexatious domain name registrant" who has repeatedly registered misleading and deceptive domain names. The applicants described the order as an orthodox step along from the direction made in CSR (2003) 128 FCR 408 ; [2003] FCA 279 at [41] . In that case Hill J required the Registrar of the Court to forward a copy of the judgment to Melbourne IT Limited (a company that registers domain names) with the suggestion that when dealing with the respondent in that case or its principal or any company in which the principal was a director, a statutory declaration be required to the effect that the principal was not aware of any trade mark or business or company name identical with or substantially similar to the domain name sought to be registered. 27 Although the evidence establishes that the respondent has repeatedly engaged in the registration of misleading and deceptive domain names, the context is not the same as a vexatious litigant order. Vexatious litigant orders are specifically authorised by rules of courts (for example, Order 21 of the Federal Court Rules ). Proposed order 11 goes further than I consider necessary to vindicate and protect the applicants' rights. I also consider that the presence of material about the Court on the websites in dispute is a separate matter and immaterial to the applicants' claims (despite the apparent cause of the respondent's publication of that material being the applicants' proceedings against the respondent). For these reasons I will not make proposed order 11. 28 I also consider a direction similar to that made in CSR (2003) 128 FCR 408 ; [2003] FCA 279 at [41] inappropriate in this case. The direction made by Hill J related to a single domain name registrar (Melbourne IT Limited). I infer that there was evidence before Hill J identifying that registrar as the one used by the respondent to register the offending domain names. In this case the evidence indicates the use of at least three registrars. Their location is unknown. The Whois searches also state that "domain names in the .com and .net domains can now be registered with many different competing registrars". In these circumstances the direction sought by the applicants as an alternative to proposed order 11 appears to have little utility. 29 As the applicants did not seek damages the only remaining issue in the proceedings is that of costs. The applicants sought a gross sum costs order fixed in the amount of $38,308.78 as provided for in Order 62 r 4(2)(c) of the Federal Court Rules . The purpose of this rule is to avoid the time, expense, and delay involved in taxing a bill of costs. 30 The evidence establishes that the applicants' costs are far higher than the sum of $38,308.78 (with actual costs incurred as at 11 July 2008 of $53,570.71 and estimated costs of a further $16,363.34). The respondent has not defended or participated in the proceedings. The evidence suggests that it is unlikely that the applicants will in fact be able to recover the costs they have incurred by reason of the respondent's breaches of the Trade Practices Act , Fair Trading Act , agreement and deed. In these circumstances I accept that a gross sum costs order should be made as sought. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. | registration of domain names deceptively similar to applicants' names publication of material on websites in breach of earlier agreements application for orders where respondent is in default order 35a rule 3(2)(c). held: orders made requiring transfer of disputed domain names to the applicants and otherwise to remedy and restrain the respondent's breaches. trade practices |
The female appellant relies on the claims of the male appellant whom I shall call simply "the appellant". The appellant claimed that he was the subject of state persecution because he had instigated legal proceedings in Latvia for a drug conviction against him to be reviewed. He told the Tribunal that he had been arrested on 22 February 2002 after three kilograms of narcotics were found in a place where he worked. He claimed that he had been falsely accused of involvement in the narcotics trade and had confessed to this in order to save his brother from also being arrested and imprisoned. He was sentenced to six years' imprisonment but was released on parole on 8 January 2007. He remained in Latvia during his parole period and contacted a lawyer who agreed to file a case seeking review of the conviction. He also sought compensation for false imprisonment. He claimed that after commencing legal action, he received threatening telephone calls and was beaten by unknown persons. He claimed to have been the subject of police searches, one with a warrant and one without. When he contacted the lawyer in November 2007 to ask about the case, the lawyer told him that there was no case, that it had disappeared from the court and that the lawyer no longer wanted any involvement with the case or the appellant. The appellant claimed that the lawyer refused to take his calls. He then began to make plans to leave Latvia because he feared that he would be the subject of further problems from the state. The Tribunal was not satisfied as to the appellants' general credibility. It considered that their core claims relating to the alleged court case in 2007 had been fabricated to enhance their protection visa application. As a result, the Tribunal did not accept that the appellant was harassed as a result of his court case. It accepted that the appellant had been imprisoned for five years but found that this was because he had committed the crime alleged. The Tribunal found the appellant's claim that he had confessed under duress to be fabricated. It was not satisfied that the appellant faced any fear of persecution in Latvia. The appellant stated that he did not have any specific documents or information regarding the court case but that he could recite what was written by the lawyer and lodged with the court. He said that he was too scared to bring anything with him when he left Latvia. When the Tribunal commented that hiring a lawyer and filing a court case would commonly result in some paperwork and that the appellant would either have been given copies of documents or would have had access to them, the appellant stated that the Tribunal could contact his lawyer and the courts in Latvia to verify his claims. The Tribunal commented that, according to the appellant, the lawyer was hostile and uncooperative towards the appellant and had told the appellant that a case did not exist in the courts. The appellant said that he did not know in which court the case was filed. The Tribunal commented that there was no investigation which the Tribunal could reasonably undertake which would yield any useful evidence regarding the court case. The Tribunal commented to the appellant that if indeed the appellant had approached the lawyer and the lawyer had prepared a case for him and the case had been filed in a court in Riga, the Tribunal expected that the appellant would be able to name the court and have access to documents relating to the case. As part of its findings and reasons, the Tribunal said that it had formed the view that if indeed the appellants had initiated court proceedings as they claimed, even if the court case no longer existed, they would have had some documents relating to the case and more information regarding the court where the case was allegedly filed. The Tribunal noted that the appellants had asked the Tribunal to contact their lawyer and the courts in Latvia to verify their claims. The Tribunal noted that the appellants did not provide any information to the Tribunal regarding the lawyer or the courts in Latvia which would enable the Tribunal to conduct further investigations to verify the appellants' claims. The Tribunal concluded that no real information was provided by the appellants regarding these matters because the court case did not exist and they did not have any useful information to provide. The appellants asserted in the grounds of the application that they had requested the Tribunal to contact their lawyer to verify their claims, as the Tribunal accepted, and that they were ready to provide the lawyer's contact details to the Tribunal. The appellants say, as part of their grounds of application, that they formed the view that the Tribunal was not interested in the lawyer's contact details but that the lack of those details then formed the basis, or a basis, for the Tribunal's decision to affirm the delegate's decision. Before the Federal Magistrate and in the appeal, the appellants contended that the Tribunal had failed to apply s 424A(1) of the Migration Act 1958 (Cth) ( the Act ). Do you have a copy of the applicant that that [sic] went to the court? No, I actually want to see the document. Can you contact your lawyer and get him to send a copy of any papers that you lodged with the court? Wait. So there is no court case? That is not my question. Is there actually a court case currently before the court in Latvia regarding this matter? (37 min. You know what I can do? (interrupted). You told me that there is no case... they would not speak to you... what am I supposed to do? trying... I am beginning to have serious doubts that that there is a court case or that there was a court case. It is not really my job to make your case for you. You need to do that yourself. You should have... If there was such a court case you really needed to get some information to back your claims (1 hr. 18 min. The appellant took advantage of this opportunity and provided a further written submission to the Tribunal several weeks after the hearing. You sad [sic] that you had no information about the lawyer and about the court case. You also said that it is up to me to provide the Tribunal with evidence. I must say, as a person who is about to make a decision on my case you can and should contact the lawyer to verify my accounts. I am aware that there is a department within the Tribunal which was established to verify such matters. I said and I am saying again --- I authorize you, moreover I ask you to contact my lawyer. There is no point for me to contact him, because he will not provide me with any written evidence. However, if you contacted him he would confirm that he lodged application [sic] with the court, that I had been subjected to harm and the reason the case 'disappeared'. It is just one phone call and I do not think it is difficult for the Tribunal, for you to make such a phone call to find out the truth. Federal Magistrate Raphael characterised the gravamen of the appellant's submission as the Tribunal's failure to contact the lawyer even though the appellant had the lawyer's contact details and could have provided them to the Tribunal ( SZNBX v Minister for Immigration and Citizenship [2001] FMCA 103 at [12] ). His Honour considered the obligation of the Tribunal to make enquiries, as discussed in Minister for Immigration and Citizenship v Le [2007] FCA 1318 ; (2007) 164 FCR 151 by Kenny J and in SZHUH v Minister for Immigration and Citizenship [2008] FCA 1893 by Perram J. Federal Magistrate Raphael referred to Prasad v Minister for Immigration and Ethnic Affairs [1985] FCA 47 ; (1985) 6 FCR 155 , which may provide the basis for an argument that in certain circumstances the existence of material which clearly calls for explanation or reconciliation may, as a matter of procedural fairness, generate a duty upon a decision-maker to make further inquiries ( SZHUH at [11] per Perram J). His Honour noted that in SZHUH , Perram J suggested that that principle may not have survived the enactment of s 422B of the Act, notwithstanding later decisions such as Le and SZMCE v Minister for Immigration and Citizenship (2008) 105 ALD 508 ; [2008] FCA 1803. Federal Magistrate Raphael said that, in his opinion, this was not a case where the need for further inquiry was so obvious and no impediment to the conduct of the inquiry was apparent, so that the failure of the Tribunal to proceed without making enquiries constituted unreasonable conduct within Prasad . His Honour noted that it was the appellant's responsibility to make his own case and to provide sufficient information to the Tribunal that would enable the Tribunal to come to the requisite state of satisfaction ( Abebe v Commonwealth of Australia (1999) 197 CLR 510). Further, his Honour concluded that the failure to provide the contact details was not the only reason for the Tribunal's conclusion. The Tribunal based its decision also on the failure to provide any details of the court to which the complaint had been made and the nature of the complaint. His Honour decided that, in the end, the decision of the Tribunal was one concerning credibility and that the Tribunal had explained why it did not believe the appellants. It is apparent that before his Honour, the appellants did not define the information which they said constituted information for the purposes of s 424A(1). Federal Magistrate Raphael dismissed the application. The appellants submit that the Tribunal and Raphael FM overlooked the fact that their failure to provide the details of the lawyer and the courts was not because they did not have the lawyer's contact details, but because the Tribunal refused to take them. The appellants contend that the Tribunal was obliged to state clearly what information was needed and what was not. They say that, in the absence of such "clearness", they cannot be blamed for failure to provide the information. The appellants contend that the Tribunal failed to comply with s 420 of the Act which requires the Tribunal to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick. They say that it was not fair to refuse to take certain information from the appellant and then to make a decision based upon the absence of that information. The appellant contends that he was "convinced" that he needed the Tribunal's consent to accept the information in question. That follows, he says, from the transcript which, he says, makes it apparent that he tried to hand the lawyer's contact details to the Tribunal and that the Tribunal ' virtually refused to accept it '. The appellants also contend that the Tribunal failed to comply with s 424A because it failed to invite them to comment on the "information" that the Tribunal did not have any information regarding the lawyer or the courts in Latvia which would enable it to conduct further investigations to verify their claim. The High Court stated at [24] that it is difficult to see any basis upon which a failure to inquire could constitute a breach of the requirements of procedural fairness at common law, even apart from s 422B of the Act. As the High Court pointed out at [25], considerations of a failure to make obvious inquiries or a duty to inquire direct consideration away from the question of whether the decision of the Tribunal is vitiated by jurisdictional error. If so, such a failure could give rise to jurisdictional error by constructive failure to exercise jurisdiction. It may be that failure to make such an inquiry results in a decision being affected in some other way that manifests itself as jurisdictional error. It is not necessary to explore these questions of principle in this case. The lack of information concerning the claimed Latvian case was critical to the Tribunal's conclusion that there had been no such case. However, it is necessary to examine the basis of the Tribunal's conclusion at [61] that it was not satisfied as to the appellants' general credibility and finding that they fabricated their core claims relating to the alleged court case. The applicants claim that it was too dangerous for them to have or transport documents relating to the case. However, the Tribunal has formed the view that the applicants have no documents, and only vague information regarding the court where the alleged court case was filed, because there was no court case and they did not instigate any legal action in Latvia against the police, the authorities, or the government. The Tribunal finds that these claims were fabricated by the applicants to enhance their protection visa applications and it does not accept as credible the applicants' claim that they instigated any action against individual police officers, government officials, the authorities, or the government of Latvia. The Tribunal commented that they did not provide any information regarding the lawyer or the courts which enabled the Tribunal to conduct further investigations. The Tribunal's reasons show that Tribunal's conclusions as to the existence of the court case were based on the appellants' lack of knowledge about that case and the court in which it was allegedly conducted and their failure to provide documents relating to that case. The Tribunal also recorded the appellants' request that it contact their lawyer and the courts in Latvia and explained why it could not do so. The question is not what was in the minds of the appellants but whether there was jurisdictional error on the part of the Tribunal that vitiates its decision ( SZIAI ). It may well be the case, as the appellants contend in their submissions on the appeal, that the appellants were awaiting a response from the Tribunal to ask for the details of the lawyer which, according to the appellants, they had proferred to the Tribunal and which the Tribunal had refused to accept. The appellants say that after that refusal they assumed that they could not force the Tribunal to accept the details. They assumed that if the Tribunal thought that they were important, the Tribunal would ask them to submit those details. There is no evidence from the appellants, who appeared in person assisted by an interpreter, but a reading of the transcript does support the appellants' case in this regard. However, as the Tribunal noted in its reasons, in the further submissions sent by the appellants to the Tribunal after the hearing, they again asked the Tribunal to contact the lawyer but did not actually provide the lawyer's contact details. The Tribunal would be forgiven for thinking that if the appellants really did have those details, they would have provided them at that stage. The appellants say that they were not given the opportunity to provide the lawyer's details. While that may have been the case at the Tribunal hearing, that contention cannot stand in view of the opportunity given by the Tribunal to the appellants to give any further information to it in writing after the Tribunal hearing. It was not obvious to ask yet again for further information . The next question is whether, even if the Tribunal did have the lawyer's details, it had a duty to inquire of the lawyer whether there had been a court case. This would have required the Tribunal first to ask the appellants for the lawyer's contact details and then to make inquiries of the lawyer. The appellants had told the Tribunal that they themselves did not contact the lawyer because the lawyer had refused to have anything more to do with them or to assist them in any way. In those circumstances, it would not have been obvious to the Tribunal to contact the lawyer. Nor was it apparent that the critical fact, the existence of the court case, could have been easily ascertained from the unhelpful lawyer. The indications available to the Tribunal were that, even if it had the contact details, the lawyer would not assist the appellants nor provide the details of the appellant's alleged court case. The indications were that the outcome would not have been different even if the Tribunal had tried to contact the lawyer ( Minister for Immigration and Citizenship v Dhanoa [2009] FCAFC 153 at [50] per Jagot and Foster JJ). Finally, it is for the appellant to provide to the Tribunal whatever evidence or argument he wishes to advance in support of his claims ( Abebe at [187] per Gummow and Hayne JJ). It is not for the Tribunal to make the appellant's case for him. The Tribunal is not obliged to stimulate elaborations that the appellant did not choose to give or to act as his "nursemaid" ( Minister for Immigration and Multicultural Affairs v SZFDE [2006] FCAFC 142 ; (2006) 154 FCR 365 at [199] ---[200] per Allsop and Graham JJ --- appeal allowed by the High Court but not on this point). The failure by the Tribunal to press the appellants to provide the lawyer's contact details could not, in the circumstances, be said to be so unreasonable as to support a finding that the Tribunal decision was affected by jurisdictional error ( SZIAI at [26]). As it was the responsibility of the appellants to make out their own case and in the context of the failure to provide any documents or details of the court case, it was reasonable for the Tribunal to leave the onus on the appellants to provide the contact details of the lawyer to the Tribunal if they wished the Tribunal to make further inquiries. Given the two opportunities the appellants had to provide more information, in particular in the further written submissions sent after they had been provided with the tapes of the hearing, it was not unreasonable for the Tribunal to find that the appellants did not provide any real information because the court case did not exist and they had no useful information to provide. The appellants have not established jurisdictional error by lack of compliance with s 420 or s 425. The failure on the part of the appellants to provide details about the lawyer or the courts in Latvia constituted a defect in the material given to the Tribunal by the appellants. The lack of provision of those details formed part of the reasoning process of the Tribunal as it weighed the evidence as to the existence of the court case by reference to the available information. Neither the lawyer's contact details nor the fact that they were not given by the appellants to the Tribunal constitute information for the purposes of s 424A(1) of the [2007] HCA 26 ; Act ( SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at [18] ). In any event, the existence or otherwise of the lawyer's details and the fact that the appellant did or did not have such details would have been information given to the Tribunal by the appellants within the meaning of s 424A(3)(b). The Tribunal did not contravene s 424A of the Act. The ground is not particularised and there is no evidence to support it. There is no basis for this ground. The appeal should be dismissed with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. | appellants claimed persecution after commencing court case in latvia appellants asked tribunal to contact lawyer in latvia to obtain more information about the court case but did not provide lawyer's contact details tribunal found the court case did not exist based on the lack of information provided by the appellants whether tribunal had obligation to ask for lawyer's contact details or to contact lawyer duty to inquire migration |
The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse grant of a protection visa to the appellant. 2 The appellant is a citizen of India and is of Muslim religion. Before the Tribunal the appellant claimed to have a well-founded fear of persecution for his political opinion and religion. He claimed to have previously been a member of the Muslim League and that he was being persecuted by the Muslim League in order to prevent him from providing evidence about riots and murders in 1996, and because he refused to travel to Pakistan for training as a militant. The appellant also claimed persecution by the police for his religion as a Muslim and his political opinion, and persecution by local Hindu shopkeepers who were part of the Hindu Nationalist movement and who were jealous of the appellant's successful business. 3 The Tribunal did not accept the appellant's claims as credible. It found that the evidence regarding the Muslim League wanting to send the appellant to Pakistan appeared improbable, including his explanation that they wanted to send him there to silence him. The Tribunal could find no country information as to the Muslim League having contact with 'Pakistani underground agents', which the appellant claimed that they had. The Tribunal also found that the appellant's material claims were not convincing and that some of those claims were implausible. It would evidence as to the appellant's involvement in political groups and being on a 'hit list' to be inconsistent. It also found that the appellant's delay of 10 months in leaving India after the issue to him of a passport appeared inconsistent with the appellant having a subjective fear of remaining in India. Even though the Tribunal made adverse credibility findings, the Tribunal went on to consider the reasonableness of relocation in the event the appellant's claims were true and were Convention related. The Tribunal considered the appellant's language skills, independence and political profile, amongst other things, in conjunction with the fact the appellant's problems were local, and found that relocation within India was a reasonable option. 4 On 19 March 2004 the appellant sought judicial review of the Tribunal's decision in the Federal Magistrates Court of Australia. On 12 November 2004 the appellant filed an amended application which alleged that the Tribunal exceeded its jurisdiction and constructively failed to exercise jurisdiction by: failing to find that the appellant would be abducted by Pakistani underground agents and the Muslim League even if he relocated; that it failed to give valid reasons why relocation would be safe; failed to consider that the appellant was on a hit list; and failed to understand that the appellant did not face harassment from shopkeepers but from Pakistani underground agents, the Muslim League and Indian authorities. 5 On 28 March 2006 the appellant filed written submissions raising the following grounds of review: that the Tribunal made a jurisdictional error by way of identifying a wrong issue; that the Tribunal relied on irrelevant material; made an erroneous finding and reached mistaken conclusions; that the Tribunal was biased; that it did not comply with procedural fairness; that the decision was made in bad faith; the Tribunal erred in its relocation findings which were unfair and out of context; that the Tribunal held a positive state of disbelief while making credibility findings; and the independent country information was irrelevant. In support of his claims the appellant quoted various legal authorities. 6 The Federal Magistrate noted the grounds in both the amended application and the written submissions bore very little relationship to one another, and proceeded to deal with the grounds in the written submissions in order. His Honour found that the appellant had misquoted the Tribunal's findings in one of the grounds as the Tribunal did not find that the appellant's claims were true and the Tribunal had gone to great lengths to point out why the Tribunal did not accept the appellant's evidence as credible. The Federal Magistrate also concluded that: there was no evidence to support an allegation of bad faith; that the Tribunal gave detailed reasons as to reasonableness of relocation which were also in context; that the appellant had misconceived the decision of the Federal Court in Kopalapillai v Minister for Immigration and Multicultural Affairs (1998) 86 FCR 547 which said it was not necessary for a decision maker to hold a positive state of disbelief before making an adverse credibility assessment; that there was no evidence of bias or failure to comply with procedural fairness; some of the grounds sought to obtain merits review; that it was unreasonable to expect the Tribunal to foresee future events upon which the appellant sought, with hindsight, to rely; and that credibility was a factual matter. The Federal Magistrate dismissed the application as there was no jurisdictional error in the decision. 9 At the hearing of the appeal before me the appellant appeared in person and was assisted by an interpreter. He explained that his ground of appeal should be understood to allege that the Tribunal had exceeded its jurisdiction or constructively failed to exercise it by failing to have regard to a number of relevant considerations. His real complaint was that his evidence and submissions about these matters had been rejected on the merits. Matter (c) was far too generalised to have been of assistance to the Tribunal. Even if it had been entitled to look back with hindsight to matters that were not before the delegate matter (c) was certainly not a matter which the Tribunal had been bound to take into account. 11 No error is shown in the Federal Magistrate's decision. The appeal will be dismissed with costs. | no point of principle migration |
On 13 September 2005 I published reasons ( Australian Securities and Investments Commission v Reid [2005] FCA 1274) ('the principal reasons') in which I concluded that the applicant had established that the respondent was guilty of contempt as alleged in the statement of charge. I did not at that time determine whether the respondent's contempt should be categorised as technical, wilful or contumacious: Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited [1986] HCA 46 ; (1986) 161 CLR 98. The matter was adjourned to enable submissions to be made in relation to the categorisation of the contempt and sentence. 4 I have now been addressed on both the categorisation of the respondent's contempt and the question of penalty generally. 5 In the principal reasons I set out the history of this long running matter. It commenced on 31 January 1992 when the Australian Securities Commission (the former name of the applicant) brought proceedings in this Court seeking declarations against the respondent that he had engaged in conduct which contravened the Corporations Law ('the Law') by managing a company whilst prohibited from doing so within five years of having been convicted for serious fraud without the leave of the Court. 6 On 10 March 1992 Jenkinson J made an order prohibiting the respondent from managing a corporation until 10 August 2036. 7 On 11 November 1993 the applicant sought an order that the respondent be committed to prison or otherwise punished for contempt for breaching Jenkinson J's order on 10 March 1992. Jenkinson J found the respondent guilty of two charges of contempt by being concerned in the management of two corporations, namely Mistoil Pty Ltd and Resourceful Mining Pty Ltd in breach of Jenkinson J's own order of 10 March 1992. 8 Jenkinson J sentenced the respondent to imprisonment in Pentridge Prison for a term of six months but suspended the operation of that order for as long as the respondent abstained from a further contravention of the order of 10 March 1992. As I noted in the principal reasons, the terms of that order effectively meant the order for imprisonment was suspended until 2036. 9 On 14 May 1999 the applicant sought a further order that the respondent be committed to prison or otherwise punished for contempt for a further breach of the order made by Jenkinson J on 10 March 1992. During the hearing of that notice of motion before Kenny J on 8 October 2001, the respondent gave an unequivocal undertaking on oath that he would not be involved in the management of a company in any form at all in the future. 10 On 12 February 2002 Kenny J committed the respondent to prison for a term of 12 months but ordered that the warrant lie in the Registry for a period of two years provided that the respondent abstained from contravention of Jenkinson J's order of 10 March 1992 and provided that the respondent comply with other conditions. 11 Kenny J also discharged the earlier sentence of imprisonment ordered by Jenkinson J on 6 May 1994. 12 The history of the proceeding before me is fully described in the principal reasons. Relevantly, on one occasion Mr Reid did not appear in answer to the charge and the applicant sought the issue of a warrant for Mr Reid's arrest pursuant to O 40 r 9 on the basis that Mr Reid was likely to abscond or otherwise withdraw himself from the jurisdiction of the Court. A warrant issued. Mr Reid could not be found until 11 August 2004 when the warrant was executed by the Federal Police. 13 Mr Reid remained in custody until 2 November 2004. The reasons for his incarceration are set out between [61] and [67] of the principal reasons. If Mr Reid is to be imprisoned in respect of the contempts which I have found proved, the period which he served, nearly three months, should be taken into account in fixing the further period of imprisonment. 14 The intent and purpose of Jenkinson J's order was to disqualify the respondent from managing a corporation until 2036. As these reasons show and the principal reasons more fully show, this was the third occasion that the respondent has been charged with and found guilty of contempt of Jenkinson J's order of 10 March 1992. The respondent has been sentenced to imprisonment in relation to two previous contempts on two occasions. In both cases, the sentences of imprisonment were suspended. Indeed, in respect of Kenny J's order, a warrant for Mr Reid's committal to prison for a period of 12 months was lying on the Court file when these further contempts occurred. 15 In the principal reasons I have set out in detail Mr Reid's conduct which, in my opinion, contravened Jenkinson J's order of 10 March 1992. I found Mr Reid had involved himself in the management of the two corporations referred to in the statement of charge, namely, Battstone Australia Pty Ltd between about 3 March 2003 and 3 June 2003 and Australian Marble Pty Ltd between about 1 February 2003 and 14 July 2003. 16 The respondent was well aware that he was prohibited from managing a corporation. The conduct, which I have detailed in the principal reasons, show that he committed these breaches knowingly in contravention of both the order and the undertaking. The respondent's conduct must be viewed in circumstances where he has twice before been charged with and found guilty of contempt, and ordered to be imprisoned. At the time that the respondent conducted himself in breach of Jenkinson J's order and the undertaking given to Kenny J, a warrant was lying in the Court which would issue if a contravention occurred. However, disobedience or breach of an undertaking amounts to a criminal offence if it involves deliberate defiance, or as it is sometimes said, if it is contumacious. It was contumacious. It made the contempt a criminal contempt. I will expand on this a little later but Mr Reid's contumacy is evidenced by a number of statements which he made to a psychologist whose report was tendered to this Court. 19 The applicant seeks an order that Mr Reid only be punished for the breach of Jenkinson J's order made on 10 March 1992 and not for the further breach of the undertaking given to Kenny J on 8 October 2001. That seems to me appropriate. The undertaking given to Kenny J was in similar terms to the order made by Jenkinson J. In those circumstances, it would not be appropriate, as the applicant has recognised, that the respondent be punished for the same conduct which contravenes the order and the undertaking. He should only be punished for breach of the order. 20 However, the applicant has submitted that I should not disregard the order made by Kenny J because the applicant's conduct was such that he breached a condition of the order which allowed the warrant to lie in the Registry and not to issue. 21 The applicant submits that, in the circumstances, I should exercise my discretion to direct that the warrant, which presently lies on the Court file, issue and I should further sentence the respondent to an additional term of imprisonment in relation to the contempt which I have found established. I do not accept that submission. 22 In the criminal law, if a person is sentenced to imprisonment and the sentence is suspended upon the person being of good behaviour for a period of time and the person then commits a further criminal offence, the person can be called upon to serve the original suspended sentence and to serve a further sentence of imprisonment in respect of the later criminal offence. Whilst such an order might be appropriate in the ordinary criminal law, I do not think it is appropriate in this case where the Court is imposing a sentence to uphold the authority and dignity of the Court. 23 Kenny J made her order on 12 February 2002, more than four years ago. Even though I am of the opinion that Mr Reid's conduct is contumacious, I do not think it would be appropriate to require him to serve the sentence of imprisonment imposed four years ago and a further sentence of imprisonment. I do not think there is a need for such harshness, notwithstanding this is the third occasion in which the appellant has breached the same order of the Court. 24 In my opinion, it would be inappropriate to both allow the warrant which has been lying in the Court for a period of some years to issue and to separately sentence Mr Reid to imprisonment. I think the better course is to simply take into account the previous sentence of imprisonment which was imposed by Kenny J which she allowed to remain suspended as a significant matter in the sentencing of Mr Reid, but to sentence him separately for his contempt. 25 There is no doubt that I have power to order imprisonment. The Court's wide range of penalties were summarised in Australian Competition and Consumer Commission v Info4PC.com Pty Ltd [2002] FCA 949 ; (2002) 121 FCR 24 by Nicholson J at 54. The underlying rationale for every exercise of the contempt power was the necessity to uphold and protect the effective administration of justice. As the authors of Borrie and Lowe's Law of Contempt (2 nd ed, 1983) say, at p 3: 'if a court lacked the means to enforce its orders, and its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute. Of course, a court in considering whether or not to impose a sentence of imprisonment on a contemnor must have regard to matters personal to the contemnor. 28 As the principal reasons show, a consideration of each of the indicia mentioned by Spender J must lead to a conclusion that this was a very serious contempt committed in full knowledge of the existence of the order and undertaking which were contravened, and in circumstances where the respondent has shown not the slightest indication of remorse or contrition or, indeed, even an acknowledgement of the commission of the contempt. 29 I am satisfied, unless the applicant's personal circumstances require otherwise, that the respondent must be sentenced to imprisonment in respect of his contempt. 30 The respondent was born in Tasmania on 10 August 1944 and thus, is nearly 62 years of age. 31 The respondent had an apparently uneventful childhood. He was educated until the age of 15 and a half years, and left school at his father's instigation to work on the family farm. He left home to marry at the age of 17 years. He was mainly employed as a farm labourer until he left Tasmania at about the age of 42 years. 32 He has been married three times. He separated from his third wife in August 2004, apparently, as a result of these matters. The respondent has three children, a son and two daughters who are aged 38, 40 and 43 years. He has no mental illnesses. 33 The respondent describes his health as 'only fair' because he suffers from a condition of the spine. His spinal condition has been diagnosed as 'isthmic spondylolisthesis'. He is presently unemployed and in receipt of a Centrelink sickness benefit. He has twice been declared bankrupt. 34 He described himself to a psychologist, Dr Richard Balfour, as a 'risk taker' in dealing with financial matters. 35 Importantly, Dr Balfour offers the opinion that the respondent's behaviour did not occur as a result of any underlying psychological disorder or mental impairment. His intention was to earn an income and to assist some close friends who had requested his assistance with their business ventures. He continues to believe he is innocent of the charges he has been found guilty of following a trial. His view of his offending behaviour is somewhat self-serving and egocentric. As soon as ASIC know that I'm there in the circumstance they investigate right away and they're still doing it today. They continually phone my business associates in North America to find out what I'm doing". It's been the switching around and pressure with witnesses from ASIC that's brought this about. And this would have never happened except for a liquidator asking ASIC for help with the liquidation of a corporation. And as soon as they found out that I worked there they investigated me and didn't investigate what the liquidator asked them. The liquidator after the trial rang me and told me to go to his office and told that to me himself". Continually investigated by ASIC. The Judge already knows. I'm sorry that's [sic] it's all happened but its circumstances that get me here". 38 Apparently, the respondent has been imprisoned on previous occasions for the commission of offences. Therefore I have no confidence that further periods of incarceration will act as a significant deterrent against future offending behaviour. It shows that he cannot accept that his conduct has been in contravention of the order made by Jenkinson J and the undertaking given to Kenny J. He continues to see himself as the victim and ASIC, the applicant, as the persecutor. 41 A sentence of imprisonment must be a sentence of last resort. A sentence for contempt can be no different than a sentence for an ordinary criminal offence where a sentence of imprisonment is a matter of last resort. 42 In this case, I am of the opinion that there is no alternative but to sentence Mr Reid to a sentence of imprisonment. It is necessary to require Mr Reid to serve a sentence of imprisonment to impress upon him the seriousness of his behaviour. I reject Mr Mancini's submission that a form of punishment in the nature of home detention would be appropriate. 43 Mr Reid spent a period of between two and three months in gaol for the reasons shown in the principal reasons when he failed to attend Court. I take that into account in the sentence which I am about to impose. I also have taken into account the order for costs which I intend to make. 44 Having regard to the period already served and the order for costs which I intend to make, the order of the Court is that Mr Reid be committed to prison for a period of nine months. 45 I accept Mr Mancini's submission that it would be appropriate to discharge Kenny J's order of 12 February 2002. Of course, the order is now spent because the period of two years mentioned in paragraph 4 of the order has now expired, although it had not when these further contempts occurred. Nevertheless, it would be appropriate to discharge the order so that the threat of any further imprisonment for any other contempt which might have been committed during that two year period is removed. 46 The applicant has sought an order for costs on an indemnity basis or on a solicitor and client basis. The applicant has submitted that it was obliged to bring these proceedings to vindicate the authority of the Court. I accept that submission. I think the applicant had a duty to bring these proceedings not only to vindicate the authority of the Court but to protect persons of the kind in these proceedings who might otherwise deal with the respondent. Jenkinson J's order was made to protect those persons from the respondent's conduct. 47 There is no rule which requires that a respondent in contempt proceedings pay costs on a solicitor and client basis: McIntyre v Perkes & Another [1987] 15 NSWLR 417. However, the respondent's conduct which gave rise to these proceedings and the civil proceedings, and his conduct in these proceedings, make such an order appropriate. 48 There will be an order that the respondent pay the applicant's costs on a solicitor and client basis. I will make the declaration that the respondent has committed the contempts alleged in the Statement of Charge. 49 Mr Reid has indicated that he intends to appeal from this decision. 50 In those circumstances, I will hear the parties as to whether or not the warrant ought to lie in the Court until such time as Mr Reid has prosecuted an appeal. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. | sentencing when term of imprisonment will be appropriate respondent sentenced to imprisonment for nine months. contempt of court |
I then reserved my reasons for judgment. I have today, 23 March 2007, published my reasons for judgment in all three of the proceedings. I made the orders last Friday, because of the urgency of the situation. 2 The proceedings are inquiries into the conduct of elections for various national offices and offices of the Victorian Branch of the Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union ('the Union'), an organisation registered pursuant to Sch 1 to the Workplace Relations Act 1996 (Cth) ('the Workplace Relations Act '). The orders that I made were of two kinds. I made various declarations that the rejection by the returning officers of certain nominations for certain positions, and the acceptance by the returning officers of certain nominations for certain positions, constituted irregularities, and were void. The second kind of order I made was to direct the Industrial Registrar to make arrangements for the taking of the uncompleted steps in the elections on particular bases. The orders were that directions be given for the taking of the uncompleted steps on the basis that certain persons were, and other persons were not, candidates for particular offices. The first kinds of orders were made pursuant to the power conferred on the Court by s 206(4)(a) of Sch 1 to the Workplace Relations Act . The second kinds of orders were made pursuant to the power conferred on the Court by s 206(4)(c)(i) of Sch 1 to the Workplace Relations Act . 3 Upon my publishing the reasons for judgment today, counsel for one of the parties in the three proceedings has invited me to make further orders, pursuant to the liberty to apply, which I reserved in those orders. 4 Subsequent to the making of my orders last Friday, and to the making of arrangements by the Industrial Registrar with the returning officers for the completion of the uncompleted steps in the elections, on the bases that I had determined should occur, the returning officers have set down a revised timetable for the conduct of the elections. Under that timetable, the order of placing of candidates' names on the various ballot papers is to be determined by the returning officers at 12.00 noon today, 23 March 2007. The ballots are to open simultaneously on 12 April, and to close at 10.00 am on 3 May 2007. Counsel for the Union seeks to have the Court modify that timetable, so that the time for the ballot to open would be 19 April 2007, and that it would close at 10.00 am on 10 May 2007. There are two possible sources of power on which counsel for the Union relies in seeking these orders. One is the power given to the Court by s 206(4)(d) of Sch 1 of the Workplace Relations Act , to make an order incidental or supplementary to, or consequential on, any other order under the section. The other is the reservation of liberty to apply in the orders themselves. 5 As to the first basis, I am far from persuaded that the orders sought are orders incidental or supplementary to, or consequential on, any of the orders that I made on 16 March 2007. Of course, once election inquiries concerning the correctness of the returning officer's actions in rejecting certain nominations and accepting others are over, it is necessary for the elections to be resumed, and in many cases that involves the conduct of ballots for various offices. But this is not to say that s 206(4)(d) gives to the Court a general power to supervise the conduct of those further steps. The fact that one event follows another does not mean that orders can be made about the second event on the basis that those orders are incidental or supplementary to, or consequential on, the first event. It is necessary to emphasise that the orders that I made last Friday were not orders that would lead to the taking of the uncompleted steps in the elections. Those steps would have been required to be taken in any event. The orders I made were simply orders that lead to the taking of those uncompleted steps on particular bases, namely that certain persons were to be regarded as candidates for certain offices, and certain persons were to be regarded as not being candidates for certain offices. The connection between the orders that are now proposed and the orders that I made last Friday therefore appears to me to be far too remote for the orders sought today to be described as incidental or supplementary to, or consequential on, the orders I made last Friday. 6 The second basis on which the orders are sought today is that I reserved liberty to apply in the orders that I made last Friday. When I made those orders, I indicated to the representatives of the parties who were present that the purpose of reserving liberty to apply was to enable anyone who took the view that I had made errors in the detail of the orders I made to inform me about those errors at the earliest possible time, preferably before the orders were entered, so that they could be corrected. The orders themselves were complex, given that there were three election inquiries, each relating to different elections, and there was some overlap between the three proceedings in relation to the elections that they covered. I took the view, as I have said in my reasons for judgment, that it was necessary for me to give in each inquiry the relief that was appropriate to that inquiry, ie to make orders in relation to the elections that were the subject of that inquiry, and to refrain from making orders in any inquiry in relation to elections that were not the subject of it. As a consequence, there is not a complete set of the orders in any individual proceeding, and there is much repetition between the three proceedings. The primary purpose of the reservation of liberty to apply was to overcome any difficulties that may have occurred as a result of the quick preparation of those orders, so as to provide the returning officers with a clear guide as to how the uncompleted steps should be completed. The precise limits of liberty to apply reserved in an order have not been explored before me today, but I am prepared to accept that liberty to apply can extend as far as making orders for the working out of the consequences of the application of the orders that have been made. It is therefore necessary for me to turn to the grounds on which the orders were sought today. I should say that, to the extent to which the orders have been sought, they have not been sought by reference to any admissible evidence, but only by reference to assertions of fact from the bar table, some of which are controversial as between the parties. 8 Counsel for the Union advanced his argument in favour of the making of the orders on the basis that they were orders for both the proper and efficient conduct of the elections. He said that it was proper to delay the conduct of the ballots by a week, so as to provide all candidates with more time in which to campaign. According to counsel for the Union, the original timetable laid down by the returning officers for the conduct of the ballots provided for a period of three weeks and three days from the determination of positions on the ballot papers to the opening of the ballots. The current timetable provides for a period of two weeks and six days, which now includes what, at least to most people, is the Easter break. To some extent, the compression of the period may simply be the result of necessity. The original timetable was disrupted by the institution of the election inquiries, which had to be dealt with very swiftly. 9 I have to confess that I have had difficulty in understanding both counsel for the Union's assertion that more time was necessary for candidates to campaign, and why it is necessary for the additional time to be between the choice of positions on the ballot papers and the opening of the ballots. Since last Friday, when I made my orders, the identities of the candidates for the particular positions have been known. It has been possible for candidates to campaign from that time, both by way of advancing their own claims to be preferred for election to office and by way of denigrating those of their opponents. I do not understand counsel for the Union to be suggesting that there should be delay in the determination of positions on the respective ballot papers. I do not understand how it can be said that real campaigning is not possible until it is known whether the candidates whose nominations have now been accepted will be truly candidates or whether they will withdraw their nominations prior to the printing of the ballot papers in accordance with the provision in r 4.8(f) of the rules of the Union. As far as I can see, campaigning is possible at the present time. 10 I am also far from convinced that a long period for campaigning would necessarily be what all candidates would desire. Counsel for the applicants in two of the inquiries has put to me the submission, which I find persuasive, that some candidates may prefer a longer campaigning period, and others may prefer a shorter one. That is the very sort of thing that the Court should not enter upon deciding. For those reasons, I am not at all persuaded that any delay in the conduct of the ballots is required for the proper or fair conduct of the elections. 11 The second basis, efficiency, perhaps has more substance to it. I understand that, once the draw for positions on the ballot papers is completed at or after 12.00 noon today, the returning officers will, as soon as practicable, give instructions to the printers for the printing of ballot papers. Somewhere over 200 000 ballot papers will have to be printed. Once printed, they will have to be collected by the returning officers, collated and posted to those on the roll of voters. The returning officers are understandably keen to begin the printing process as soon as possible. I do not know whether they have arrangements with the printer that, from the printer's point of view, are dependent upon the printer's other commitments, so I do not know whether those arrangements can be disrupted by delaying the printing of the ballot papers. 12 What counsel for the Union points out to me is that he, and those advising other parties to the proceedings, have not so far had an opportunity to scrutinise my reasons for judgment, which have only been published this morning. Once they do so, there is the possibility that someone may decide to seek leave to appeal from that judgment and may also seek a stay of the orders that I have made, or perhaps some other form of interlocutory orders that would have an effect on the conduct of the ballots. If anyone did decide to appeal, and were successful in making some application for a stay or for interlocutory orders, then the printing of the ballot papers might be wasted, the ballot papers that had been printed might have to be thrown away, and others might have to be printed in the future, which would itself no doubt delay the conduct of the ballots. I am advised that, if those events were to occur, it would be public funds that would bear the cost of the ballot papers being wasted. 13 I can see that it would be an unfortunate event if the ballot papers printed were to be wasted because an application for leave to appeal were made. Nevertheless, I do not think it would be a proper thing for the Court to make an order delaying that printing on the material available to me at the present time. The primary responsibility for determining the opening and closing dates of any ballot rests with the returning officer, expressly pursuant to r 4.8(a) of the rules of the Union. This Court does not exercise any form of general supervisory role of the returning officers in the conduct of elections within organisations registered under the Workplace Relations Act . It is undesirable that this Court should exercise such a supervisory role. The returning officers have expertise in the conduct of the elections, and they are the best ones to determine what they should do in relation to the printing of ballot papers and when they should do it. I do not, therefore, regard it as proper for me to make orders that would delay the printing of the ballot papers in the present circumstances. 14 It may be that, if those representing the Union were to negotiate with the returning officers for some delay, the returning officers would be able to accommodate them. There would seem to be some benefit in doing that, if it were possible, in order to prevent waste, in case there should be an application for leave to appeal and an application for some form of interlocutory orders. It seems to me that, in these circumstances, I should not make orders of that kind. 15 For these reasons the application for the orders made on behalf of the Union this morning is dismissed. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. | registered organisation election irregularities in acceptance of some nominations and rejection of others orders made for further steps in elections to be conducted on basis that certain persons are, and certain persons are not, candidates returning officers fix new timetable application for orders modifying new timetable whether orders sought incidental or supplementary to, or consequential on, earlier orders whether orders sought within reservation of liberty to apply whether liberty to apply extends to working out consequences of application of orders already made whether proposed modifications to timetable provide for proper and efficient conduct of elections "incidental or supplementary to, or consequential on" industrial law words and phrases |
The Big Day Out has become an established event in late January or early February of each year in venues at the Gold Coast, Sydney, Melbourne, Adelaide and Perth. Australian and international performing artists appear at each concert. 2 Tickets for the Big Day Out 2007 festival in all five venues went on sale on 13 October 2006. They were available for purchase on the Big Day Out and Ticketmaster websites from approximately 9.30am on that morning and by about midday all available tickets for the Sydney concert had been sold. By 20 October all available tickets to the Gold Coast shows had been sold. At the time of the hearing all the Melbourne tickets had been sold, as had about half of the Adelaide and Perth tickets. 3 Creative is also running a weekly ballot over ten weeks on its Big Day Out website for extra tickets to the Gold Coast and Sydney shows. This allows people who have not been able to purchase a ticket prior to the shows being sold out to buy them at the promoter's original prices. The ballot is drawn automatically by computer on each Thursday until the end of December. The purpose of the ballot is to dissuade people from purchasing tickets at an inflated price from third parties when they still have the opportunity to purchase them from Creative. It is designed to combat the practice known as 'scalping'. That occurs when people buy tickets with no intention of going to the event and then offer them for auction at prices higher than the cost price on sites such as those of eBay International AG. 4 eBay is a Swiss corporation which operates a website in Australia as well as other websites in various places in the world. eBay's websites are part of an online global market place which the eBay group operates. Registered users of eBay websites, known as members, are able to buy and sell many types of goods and services online. eBay charges fees for sellers to advertise and offer items for sale on the eBay website. No fees are payable by buyers or bidders. Tickets to concerts and music festivals such as the Big Day Out are offered by eBay's members to others who wish to purchase on the eBay website. 5 A member who meets eBay's requirements for listing items for sale can use one, or a combination, of two different formats for sale, namely an auction format or a fixed price format known as 'buy it now'. These formats operate in the following way. In the auction format listing, the seller offers the relevant item or items, by describing it or them, setting a starting price and identifying the duration of the listing. Potential buyers or bidders search or browse the eBay website, visit the listing and place bids on the item. At the expiry of the listing the highest bidder is obliged, in accordance with the terms of eBay's user agreement, to buy the item from the seller for the price specified in the highest bid. In the fixed price format listing, the seller offers an item or items by again describing it or them, stating the fixed price and the duration of the listing. Buyers again search or browse the eBay website. If someone is interested in buying the item, there is no bidding involved. The buyer simply clicks on a webpage button 'buy it now' to purchase at the fixed price. The listing then expires. eBay says that there is a misleading or deceptive representation conveyed by a provision on the back of the ticket for the 2007 Big Day Out events. Should this ticket be re-sold for profit it will be cancelled and the holder will be refused entry. This condition specifically prohibits ticket re-sale through online market or auction sites. There are other online vendors but nothing in particular turns upon their terms of trading in Big Day Out tickets. Online sales have resulted in about 60% of all tickets sold for Big Day Out 2007. About 41% of tickets have been sold through the Big Day Out website. Ticketmaster, principally, and other ticket agencies have been responsible for the other sales online. Telephone sales by ticket agents account for another 7% and ticket agent outlets selling over the counter account for approximately 14% of sales. Other retail outlets account for the balance of sales. Online Fulfilment also arranges for the dispatch of tickets to purchasers. A purchaser would enter the Big Day Out website. A webpage appeared which offered the facility of buying tickets online by clicking on a link. The same page of the website also had a link for opening up the terms and conditions of buying the tickets online. If one clicked on the button to buy tickets, the purchaser was then redirected seamlessly and unnoticeably to Online Fulfilment's website. And, it is on the latter website that the transaction which resulted in the despatch of a ticket was completed. If the purchaser had clicked the terms and conditions link on Big Day Out's website prior to being redirected to Online Fulfilment's website, he or she would have seen that, inter alia, the wording of condition 6 of the conditions of sale which I have set out above. That wording was also printed on all of the tickets issued for Big Day Out 2007 festivals. 12 However, until 8 November 2006 Online Fulfilment's website contained the conditions of sale that had been used in the festival held earlier in 2006. Only condition 6 in those conditions of sale was in different terms to those used for the 2007 festivals. Should this ticket be re-sold or transferred for profit or commercial gain it will become voidable and the holder may be refused entry to, or ejected from the venue. The old condition 6 was repeated on five successive Online Fulfilment web pages which had to be accessed in order to buy a ticket online after the purchaser was redirected in the purchase of a ticket through the Big Day Out website. It was only changed after eBay commenced these proceedings and pointed to this anomaly. 15 There is one further, slight, difference in the wording in the websites and the wording of the tickets themselves. The tickets have always had the new condition 6 for the Big Day Out 2007. The first heading 'Conditions of Sale' has seven paragraphs underneath it, including the old or new condition 6. Next is a heading 'Conditions of Entry' with nine numbered paragraphs. The next heading is 'Safety' with four numbered paragraphs, and finally there is a heading 'Some Useful Advice' with six numbered paragraphs. All conditions shown on this ticket are to be read together with all other statements or directives either shown on this ticket or displayed on the premises. If the event is cancelled for any reason, only the face value of the ticket will be refunded. If the event is abandoned due to the forces of nature or any other reason, refunds are at the Promoter's discretion. Tickets will not be exchanged or replaced nor money refunded after purchase. The Promoter reserves the right to change the lineup and/or the date of the event without prior notification. In the event of change of the date or lineup, refunds will not be available. We play rain or shine. Should this ticket be re-sold for profit it will be cancelled and the holder will be refused entry. Tickets can not be purchased for use in unauthorised promotions/competitions. "Big Day Out" is a Registered Trademark and cannot be used without the Promoters' consent. Entry is at own risk. The Promoter and the Venue shall not be held liable for any loss, injury or damages sustained entering or within the premises. Small still cameras, including small digital cameras, are permitted but no sound or video recorders will be allowed inside the site. Professional cameras of any kind are not allowed on site without authority from the Promoters. No bottles, cans, weapons, fireworks, umbrellas, illicit drugs or alcohol will be allowed in to the site. All bags/containers are subject to a full search at entry to ensure the safety of patrons. Prohibited items that are confiscated will not be returned. Ticket holders consent to filming and sound recording as members of the audience. No pass outs will be issued unless otherwise advised. The Big Day Out is recommended for Mature Audiences (MA15). We reserve the right to refuse entry to children under the age of 15 years unless accompanied by a parent or guardian. Children under 5 are not permitted. All patrons entering the site must have a valid ticket. The Promoter reserves the right to refuse entry to any patron without appropriate identification. Patrons who wish to consume alcohol must have photographic identification (except N.Z.). Anyone found to be supplying or buying alcohol for a minor will be evicted from the event and will possibly face criminal charges. These are obviously useful for maintaining order and public safety. And the items under the heading 'Some Useful Advice' are appropriately so described. They are not contractual: e.g. '4. Avoid dehydration --- don't forget to drink water. 20 In Fay 165 CLR at 228 Brennan J (with whom Gaudron J agreed on this contractual issue at 165 CLR at 261) considered arrangements which had been made for passengers to pay the fare in Australia for a cruise in Grecian waters. They received an exchange order in Australia that would be handed over in Greece for the actual ticket. The exchange order was expressed in contractual language and reserved to the carrier the right to cancel any cruise. Brennan J considered that the contract was made when the fare was paid and that nothing in the wording of the ticket could affect the terms of the antecedent contract (165 CLR at 227). As he said, if no contract came into existence until the ticket was issued and accepted in Greece, there would be no consideration to support the carrier's right asserted in the exchange order to refuse to refund the passage money if the passenger cancelled. The payment of the fare may rightly be regarded as the price of an option to acquire a ticket, but the option was not to acquire a mere piece of paper. It was an option to acquire a voucher or certificate of entitlement to be carried on terms already agreed -- not on terms which the parties had yet to agree on. Such a construction of the circumstances flies in the face of common sense and cannot be accepted. When he left Australia the respondent had a contractual right to receive from the appellant on presentation of the exchange order in Athens a passage ticket which enabled him to board the vessel and occupy the specified cabin for the duration of the cruise subject only to such conditions as are found to form part of the contract. Many online purchasers were given no notice of this; indeed all online purchasers of the Sydney and Gold Coast concerts knew nothing of it; and those purchasing from the Big Day Out website were informed only of old condition 6, but later received tickets with the new one. It is necessary to look at each of the 4 methods of sale to appreciate their potentially differing legal consequences. The purchaser was presented with a webpage with a subheading 'Tickets and Shopping Cart Contents'. One could place an order by clicking on a box next to the words 'I have read and agreed to the following terms and conditions' (being those set out above with the exception that the old condition 6 appeared until 8 November 2006). A pop up dialogue box then appeared with a message 'Please agree the terms and conditions before you proceed' and the option 'OK' appeared in that box. The purchaser would next have to click the word 'OK' and the pop up box then disappeared from the webpage. The purchaser then clicked on to the box next to the words "I have read and agreed to the following terms and conditions' and a green tick appeared in the box. The purchaser then clicked on the words 'Place an order'. A new web page was opened with the subheading 'Tickets' and the words 'Order details'. After completing that, a dialogue box appeared and the purchaser then entered credit card and other details. Thereafter a webpage opened with the subheading 'Tickets' and the words 'You are about to order these items from the Big Day Out website' directly beneath them. Another full set of the conditions was set out on that webpage. Having clicked on the 'Send this Order' button, a new webpage opened stating that the order had been confirmed. It recorded that the purchaser would be receiving a confirmation email stating everything that would be needed to facilitate the payment process. The purchaser was told that once the email was read and all the steps carefully followed, he or she would receive the ticket(s) as quickly as possible. The webpage indicated that the order had been confirmed for the relevant ticket(s), the price had been successfully charged to the nominated credit card account and the ticket(s) would be mailed to the address given by the purchaser. An email was sent immediately following this which confirmed that the order had been successfully charged to the credit card and would now be processed and tickets mailed to the purchaser. 24 eBay contends that a contract in writing was made on the terms displayed on the Online Fulfilment website. eBay argues the contract was, in effect, signed electronically by the purchaser through his or her clicking on the relevant buttons agreeing to the terms and conditions, making payment and receiving the webpage and email confirmations of the order. On this analysis the contract was signed and completed after the payment and nominated purchaser details were accepted. The terms of the signed contract were those set out in the webpages detailing the terms and conditions in accordance with Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 ; (2004) 219 CLR 165. 25 eBay argues that, objectively, a reasonable person in the position of the parties would have concluded that terms and conditions upon which the ticket was sold to the purchaser were those repeated five times throughout the process on the different webpages. These incorporated old condition 6. The ticket that was delivered in consequence of a transaction occurring online before 8 November 2006, however, contained new condition 6 which eBay says can have no contractual force or effect because it had been added without agreement after the contract was made. Thus, eBay says, in addition to the other inaccuracies it claims, the ticket in such cases is misleading because of its different terms and it conveys a false representation that new condition 6 is a part of the contract. 26 Creative contends that new condition 6 is merely a statement in different language to the same force and effect of old condition 6 and has no difference in substance. 27 I find that the contract for purchase of tickets made on the Big Day Out website before the wording of old condition 6 was changed, occurred on terms that included the old condition 6 and did not include new condition 6. Since all the tickets for the Sydney and Gold Coast concerts were sold prior to the change in wording, it must follow that the 30,000 sold in this way from the Sydney concert and the 20,000 tickets sold for the Gold Coast concert contained terms which included old condition 6 and not new condition 6. 28 By sending a ticket with new condition 6, Creative represented that that was part of the contract under which the tickets were purchased and that the condition was effective as a condition of sale. That representation was in trade or commerce and was false. In particular, the ticket had the statement, which was false for online purchases from the Big Day Out website, that 'by purchasing this ticket you agree to' the inclusion of new condition 6. None of the tickets sold online by using the Big Day Out website prior to 8 November 2006 contained new condition 6. Creative was not entitled to represent to purchasers or to other persons into whose hands these tickets might come that new condition 6 had any contractual force or was at all relevant to the contract upon which the ticket had been acquired. Yet the very face of the ticket contradicted the contract which Creative had made on its website (or that of its agent, Online Fulfilment) with the purchaser. 29 Old condition 6 operated to confer upon Creative an election to avoid a ticket, if it were resold or transferred for profit or commercial gain. The ticket remained valid unless and until Creative acted by making its election: Suttor v Gundowda Pty Ltd [1950] HCA 35 ; (1950) 81 CLR 418. Moreover, old condition 6 indicated that the holder 'may be refused entry or rejected', again suggesting that Creative had first to exercise its election before that consequence would be asserted by it. 30 In contrast, new condition 6 is worded to operate upon the happening of an event, namely a resale for profit. On the occurrence of the event the ticket 'will be cancelled and the holder will be refused entry'. Creative says that the same contractual principles of construction apply and that the cancellation of the ticket, despite the imperative wording, is not a contractually automatic consequence of the occurrence of the event of resale for profit. That is because the purchaser is not entitled to rely upon his or her own default in adhering to the contractual requirements, but the innocent party, Creative, is entitled to elect whether to keep the contract alive and, if this is the true construction of the contract, it says that there is nothing misleading or deceptive about its use of words in new condition 6 to convey that meaning. The principle to be applied in such a case is that a party should not be entitled to rely upon his or her own default in respect of the occurrence which the contract provides will bring about its end. 32 In the present situation the intention of the parties is that new condition 6 is to benefit only Creative. The purchaser gains nothing from a termination arising from his or her being in default. Thus the purchaser has no relevant motivation to be in default under new condition 6 so as to render the ticket void. This is quite different from the situation in, say, a conveyancing contract which provides for the contract to be avoided on happening of an event which one or other party or both can bring about. In such a case the implication of a term which denies to the party in default the facility of engineering the end of his or her contractual obligation is necessary. The innocent party should not be put into the position that the party in default can escape from his or her obligation by breaching, rather than adhering to, the contract. 33 The purchaser of a ticket to Big Day Out 2007 has no relevant obligation the breach of which will benefit him or her in a way that it would be to his or her advantage for an automatic cancellation of the ticket to occur. Quite the contrary, the purchaser wishes no such thing to occur by his or her default. The natural and ordinary meaning of new condition 6 suggests that the evident purpose of it is to prevent the purchaser selling the ticket for profit on pain of it being cancelled if he or she did. In that context, the purchaser could not rely on his or her own default in making such a sale so as to escape from an obligation under the contract and thereby render that which he or she seeks to resell valueless. 34 In Gange v Sullivan [1966] HCA 55 ; (1966) 116 CLR 418 at 441, Taylor, Menzies and Owen JJ noted that the first step to deciding the question of construction in the case like the present was to understand the condition and its significance to the parties. Ltd. ((1950) [1950] HCA 35 ; 81 CLR 418), together with other cases, was relied upon to support the conclusion that non-fulfilment of the condition did not of itself bring the contract to an end but did no more than render the contract voidable at the instance of a party not responsible for the non-fulfilment of the condition. Whilst the effect of a condition must in every case depend upon the language in which it is expressed and a decision upon the meaning of one condition cannot determine the meaning of a different condition, the authorities cited do show a disposition on the part of courts to treat non-fulfilment of a condition such as that here under consideration as rendering a contract voidable rather than void in order to forestall a party to a contract from gaining some advantage from his own conduct in securing, or contributing to, the non-fulfilment of a condition bringing the contract to an end. Nonetheless, he noted that there was a plain disposition to treat such a clause as rendering the contract voidable not void: see also Havenbar Pty Ltd v Butterfield [1974] HCA 24 ; (1974) 133 CLR 449 at 456 per Menzies, Stephen and Jacobs JJ. Here, new condition 6, is designed to bring about automatic termination because of the breach by the purchaser. Such a breach is not rationally capable of being taken advantage of by the purchaser so as to call for the implication that the innocent party may elect to avoid the contract, because he or she has paid the money, obtained a ticket which is sought to be passed on, and then ceases to have any real interest in the subject matter. Rather, the clause is directed to preventing the purchaser in engaging in that very activity. There is no benefit to the vendor, Creative, in giving it an election in such circumstances as to whether to treat the contract as at an end. The wording of this new condition 6 suggests that it should operate to avoid tickets automatically. It was not suggested by Creative in argument how the application of the principle that a party is not entitled to rely upon his or her own default, should enliven the construction of new condition 6 that it be voidable rather than void. 36 The ticket gave a right of admission to a Big Day Out 2007 festival, subject to the conditions of entry. Obviously, new condition 6 forms part of the conditions of entry, because it is directed to the right to enter of a holder of a cancelled ticket. 37 The language of new condition 6 is quite different to that of the condition considered by the Full Court. I am of opinion that it is a delimitation of the licence. This is because it provides, in imperative language, that the ticket will be cancelled if the proscribed event occurs. The contractual intention is that the licence which presentation of the ticket at the door or place of entry into the Big Day Out 2007 festival would be given ordinarily will not be available if the ticket has been resold for profit. Even if I am wrong so to construe new condition 6, I am of opinion that an ordinary reasonable member of the class of holders and intending purchasers or holders of tickets would understand new condition 6 in this way. 38 It is common ground that an assignee or donee of a ticket who became a holder otherwise than through a resale for profit by the original purchaser, is not bound by new condition 6 and that such a holder is free to resell for profit. There is an ambiguity in the words 're-sold for profit'. An original purchaser could resell and realise a profit without having been motivated to make a profit. The choice for construction of the expression is between the subjective motivation of the seller as opposed to the objective fact of a resale at a price greater than $120. (The cost may vary depending on the nature of the transaction including any applicable booking fee or postage costs. In these reasons I will refer to $120 as an illustration of the approximate cost to purchase a ticket. ) The second sentence of new condition 6 prohibits two methods of sale, but must be read with the first sentence. The commercial purpose of new condition 6 is to prevent 'scalping' --- that is the purpose which reasonable persons in the position of Creative and original purchasers would have had in mind at the time of sale ( Zhu v Treasurer of NSW [2004] HCA 56 ; (2004) 218 CLR 530 at 559 [82] ). 39 It is necessary to construe new condition 6 so as to avoid it making commercial nonsense or working commercial inconvenience ( Zhu 218 CLR at 559 [82]). If the subjective intention of a vendor on eBay were relevant, new condition 6 would not operate automatically. There would be no readily ascertainable way of enforcing it without enquiry by Creative as to the subjective motivations of an original purchaser who resold. Accordingly, I am of opinion that the proper construction of 're-sold for profit' is that it operates on the objective fact of the price realised on resale being greater than $120. Each webpage had a clause stating that by continuing past it the user agreed to abide by Ticketmaster's terms of use which included its purchase policy. At the top of that page it was stated that the tickets would be mailed in late November 2006. By clicking on 'Big Day Out 2007' the purchaser was then taken to a Ticketmaster webpage headed 'Big Day Out 2007' with the venues and dates marketed by Ticketmaster on it (being Sydney, Melbourne and Perth). This page was mainly a publicity or general information page. The purchaser then clicked on the 'Buy Tickets' button and an events search results page opened showing the three venues being marketed. Each had a button for 'Find Tickets'. By clicking on the button for the relevant event, a new webpage opened containing event information and indicating that the box office was open. 41 The purchaser was told that if they were already a Ticketmaster member and had their billing information pre-registered they could log in on the log in button. If not, they were then directed to complete the information needed to become such a member. It was a condition of establishing such a membership that the user of Ticketmaster's website accepted the terms of use on the website as governing the relationship. That provided that the purchase policy would govern the order or purchase of any tickets through the site. The purchaser had to agree by using the site to abide by the terms of that policy. Each ticket that you purchase is a licence to attend a particular event and is subject to the additional terms set forth on that ticket. A ticket shall not be used for advertising, promotions, contests, or sweepstakes unless formal written authorisation is given by the Event Provider, provided that even if such consent is obtained, use of Ticketmaster's trademarks and other intellectual properties are subject to Ticketmaster's consent. 43 Once a person became accredited as a member, they were able to move to the next stage of the Ticketmaster website for a purchase. It took them to a page indicating that their billing information was as set out on the page and invited the purchaser to check its correctness. If correct, they were invited to click on the 'Continue Purchase' button. The next webpage that came up noted that for Big Day Out 2007 all tickets would be sent by registered post. Lost, stolen, undelivered or misplaced tickets would not be replaced. It noted that children aged 5-15 must be accompanied by a parent or legal guardian with a ticket and that conditions of purchase applied. The purchaser was then told to take three steps. 44 First, the number of tickets had to be selected, secondly, the relevant pricing and ticket locations had to be selected and thirdly, a choice of delivery method was offered. The purchaser was told that they had five minutes after hitting the 'Look for Tickets' button to complete the purchase. They were again invited to click on a link to review the purchase policy. The webpage told the purchaser that for best performance and to prevent transaction failures, tickets should be requested by using only one web browser. Orders were said to be subject to credit card approval and billing address verification. The reader was then invited to click on buttons for 'Look for Tickets', 'Cancel Order' or 'Check my Order'. By clicking on the first of those three buttons the purchaser was taken to the next webpage. It indicated the number and price of the tickets, the handling charge, the billing information, the name and address of the purchaser and contained a 'Continue Booking', 'Cancel Booking' and 'Check my Order' set of buttons. By clicking on the 'Continue Booking' button the next webpage opened. It was headed 'Important' and told the purchaser that to complete the transaction and to confirm their tickets they had review and confirm the information set out on that page, and then, and then click the 'Purchase Tickets' button at the bottom of the page. It was emphasized on that page that the tickets would not be confirmed until the 'Purchase Tickets' button had been clicked. After clicking on that button, a new webpage opened headed 'Ticket Purchase Confirmation' which thanked the purchaser by their Christian name for the order and stated 'This is your transaction confirmation page. Please print this page and store it as safely as confirmation of the transaction you have just completed ' (emphasis added). It noted that the purchaser would also receive a confirmation email to reiterate the same information. A purchase confirmation number was given and the relevant venue details and price were set out. At the foot of the page there was a notation that all orders were subject to credit card approval and billing address verification. The confirmation email was then sent which commenced, under the heading of its nature 'Thank you for purchasing tickets at Ticketmaster.com.au. We have received your order: BIG DAY OUT'. A confirmation number for this 'purchase' was then given. 45 It is common ground that during the whole of the process a purchaser from Ticketmaster online could not access any information which set out any conditions at all on the ticket or on the Big Day Out website. Thus, new condition 6 together with all the other provisions on the ticket were not communicated to the potential purchaser in the Ticketmaster online transaction. Nor was the potential purchaser given any opportunity to review or see those conditions. Nonetheless, the form of the transaction appeared to be one of a contract for purchase of the ticket which was recognised by the last two steps as having been 'just completed'. Tickets were not to be sent until late November, as the first page of the Ticketmaster online purchasing webpages stated. Thus, in the case of the Sydney concert which sold out on the day of its being first offered for sale on 13 October 2006, a purchaser would not even see the conditions sought to be imposed in the ticket itself until over six weeks after 'the transaction you have just completed' as noted on the final webpage in the series of purchase webpages. The question then arises as to whether anything on the ticket could, in those circumstances, constitute a term of the contract. 46 eBay said that the Ticketmaster online purchase was concluded when the final confirmation webpage came up, subject to the credit card and address details being valid. A purchaser could not replace or exchange the ticket or seek a refund after such a purchase. eBay's argument said that the only contract in this transaction was the one made using the online method of communication. Once that occurred, a purchaser was free to deal with the ticket as he or she saw fit. There was no notification to the purchaser that a sale by him or her in any circumstances was not permitted or would have a consequence of potential cancellation. There was no communication on Ticketmaster's website to draw to a purchaser's attention the existence of any condition such as new condition 6, nor was there any link provided for the purchaser to go to the Big Day Out webpage or any other source to find what conditions were sought to be imposed on the Big Day Out ticket that had been purchased in the transaction. 47 Creative, on the other hand, argued that because the purchaser already had agreed to membership of Ticketmaster online and to the terms and conditions of use, the purchase policy bound the purchaser to the terms of Big Day Out's ticket. The purchase policy was said to be 'subject to, and incorporate[s] by this reference, the Terms of Use'. Thus, Creative argues that the purchaser was on notice that there will be terms on the ticket. 48 Creative argued that there was in fact no contract formed until the ticket arrived and the purchaser had a reasonable opportunity to consider it. I am of opinion that that analysis ought not be accepted. The parties were contracting on Ticketmaster online in writing. They had to sign, albeit electronically, the terms of the purchase. They did so. The terms did not include any reference to, or ability to view, conditions now sought to be imposed on the ticket. 49 The Ticketmaster online purchase was a contract in writing signed by the parties. By clicking on the relevant buttons and, by the computer bringing up all terms needed to purchase a ticket, on behalf of Ticketmaster as agent for Creative, the whole transaction was in writing, signed and agreed by the parties. A reasonable person in the position of the parties would have regarded the transaction completed on Ticketmasters' webpage as the contract: Toll (FCGT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 ; (2004) 219 CLR 165. 50 When the purchaser received the ticket, the terms themselves precluded any opportunity to seek a refund (see condition of sale 3) because he or she was informed that tickets would not be exchanged or replaced, nor money refunded 'after purchase'. That is, the very transaction which had been confirmed by the series of webpages and the confirmation email generated by a Ticketmaster online transaction, could not be undone if the conditions of sale were part of the transaction. Creative's argument is similar to that rejected by Wilson, Toohey, Brennan and Gaudron JJ in Fay 165 CLR at 206, 228, 261. I reject it. 51 Because these conditions were not brought to the attention of the purchaser and were not available to the purchaser, perhaps for more than six weeks after the transaction was effected and the purchaser paid the price, I am of opinion that it is quite unrealistic to regard this ordinary consumer transaction as one in which the purchaser would have been free to return the ticket thereafter and receive a refund. The ordinary reasonable member of the public would be confronted with a representation on the reverse side of the ticket that the contract denied him or her the ability to return the ticket or get a refund on ascertaining that the conditions were unsatisfactory. 52 I am of opinion that condition of sale 3 is calculated to convey to a person who bought online from Ticketmaster that the transaction was completed online at the time of the webpage transactions. It follows that it did not contain any terms on the ticket. The vague and general reference in Ticketmaster's purchaser policy to terms being on tickets, cannot substitute for the necessity to draw specifically to someone's attention unusual or significant terms affecting the proposed relationship, if it is sought to claim that the contract contains those terms. This is the more so when a term like new condition 6 is not otherwise available to a purchaser and their attention is not directed to it clearly or, as in this case, at all. 53 In Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 at 170D, Lord Denning MR gave his well known example of the need for a prominent prompt such as a red hand pointing to an exemption clause, which would draw a purchaser's attention to it. If the Ticketmaster online contract was entered into in writing on the webpages, it is impossible to incorporate the terms on the ticket by reference because the purchasers are told that the ticket would be sent to them some time later. Thus, in the case of the many thousands of people who purchased tickets through Ticketmaster online on 13 October 2006 for the Sydney concert, the tickets would only be sent to them over six weeks later in circumstances where there was no suggestion on Ticketmaster's webpages that there would be any contractual restriction on the capacity of a purchaser to sell the ticket. 54 Creative argued that the purchaser could somehow return the ticket if, when it was ultimately received, it contained terms that were not to the purchaser's satisfaction. I am of opinion that this is unrealistic. Creative for its own commercial purposes offered facilities to the public for instantaneous online ticket sales including through the Ticketmaster web facility. If Creative wanted to impose a condition of contract in the Ticketmaster online sales such as is in the old or new condition 6, it had to bring notice of such a condition to the attention of the purchaser online at the time of the purchase ( Fay 165 CLR at 206, 228, 261). 55 Creative intends to sell over 220,000 tickets at $120 each, thereby generating revenue in the order of about $26 million. It is not unreasonable to expect it to get its contractual documents (including those online) right if it wants to rely on terms that have strict and perhaps drastic consequences for freedom of contract of purchasers from it . I am of opinion that a reasonable person considering the steps to purchase from Ticketmaster online would have considered them to amount to a contract between the purchaser and Creative, through the agency of Ticketmaster on the terms and conditions that were then and there available online. There was no incorporation by reference of provisions on the ticket. A purchaser would have to supply his or her name, work phone number, work address or some other phone number and address for the employee to continue. There were some conditions posted on a notice on the back wall of Ticketmaster offices behind the counter which may have been too small to read. Another notice entitled 'Conditions' was available for perusal. That notice stated that Ticketmaster was an agent of the seller and that all complaints were the seller's responsibility. It said that tickets were subject to the seller's conditions of sale 'a copy of which is available at the time of collection of the ticket'. Here, this must be a reference to the actual provisions printed on the back of the ticket, because it is common ground that Ticketmaster had no other material available at its direct booking offices which set out terms of the contract which Creative proposed to enter with an intending over the counter purchaser. 57 The Ticketmaster employee would cause the computer to print an account number and receipt for the purchaser. The employee would then ask for the payment of the price of $120. The employee handed over those documents together with what was described as a 'souvenir ticket'. The purchaser was advised to bring the receipt and souvenir ticket to the festival to gain admission. There was no material in Ticketmaster's offices or attempt by Ticketmaster employees to direct any attention to special provisions of the contracting ticket, including the presence of new condition 6. 58 Creative argued that when the purchaser was handed the ticket at the end of the over the counter sale he or she could review it and, if dissatisfied return it claiming a refund. The reality of the transaction is that the customer will have paid cash or had his or her credit card debited prior to the ticket being handed to him or her. The ticket itself contains a provision stating that no refunds would be made after purchase (condition of sale 3). And, there was nothing to draw particular attention to the operation of new condition 6 in the posited contractual relation created by the transaction over the counter. Condition of sale 3 is calculated to convey a representation that if a contract has been entered into, unless the purchaser at the Ticketmaster counter has the astuteness of an experienced commercial lawyer dealing with ticket cases, and can recognise the ability to return the ticket and demand a refund, and then persuade Ticketmaster to give them a refund, the ordinary person would consider that the transaction was closed. 59 Again, whatever be the precise contractual analysis of the position, the very terms of the conditions of sale are calculated to convey to an ordinary reasonable person reading them that they cannot get out of the conditions. Ironically, it is Creative that has argued that the purchaser can eschew the conditions it wrote and imposed on the ticket telling the purchaser that they could not get a refund. This unattractive argument has no commercial morality about it. These are consumer transactions, mainly effected with young people who are not experienced in the commercial world. Creative used its own drafting of contractual terms and the representations they convey as to the efficacy of those contractual terms to assert that the purchaser cannot get a refund. It then had senior counsel argue that, applying classical contractual analysis, the purchaser could ignore its own ticket wording because the customer in fact had a right to a refund. The argument is less than meritorious. Creative's argument makes the very words condition of sale 3 commercial nonsense ( Zhu 218 CLR at 559 [82]). I reject the argument. I am of opinion that a similar analysis to that which applies to Ticketmaster's over the counter sales applies here. 61 After 16 November 2006, following complaints brought by eBay in these proceedings, Creative sought to have all its selling agents at retail premises other than Ticketmaster, display a notice which, among other things, set out either on A4 or A3 pages the conditions of sale which were on the back of the ticket. There, new condition 6 was printed in red type, mindful of what Lord Denning MR had said in Thornton [1971] 2 QB at 170D. This device was effective for tickets purchased after 16 November 2006, as a matter of contractual analysis, to bring to a purchaser's attention the existence of the limitation in the condition of sale which was sought to be imposed as a contractual term. There is no evidence as to how many people since 16 November 2006 bought tickets over the counter at retailers in circumstances where the notice will have been effective to make the seven conditions of sale actual conditions of the contract of purchase of the ticket. HOW DOES NEW CONDITION 6 OPERATE? 63 The four different principal methods of sale involved the creation of a number of different types of contract, with different incidents at different times. In the example just given of an over the counter sale by a retailer, a sale on 15 November may have brought about a different contract to one which was made on 16 November. Nonetheless, the ticket that is purchased in either transaction will look exactly the same to third parties into whose hands it may come. 64 Creative used the various methods of sale described above to sell tickets for admission of the holders to concerts at the respective venues. As Mr Lees, one of Creative's directors, said tickets 'went on sale on 13 October 2006', and by midday on that date 'all available tickets for the Sydney concert had been sold'. He was speaking as an experienced promoter of concerts when he gave that evidence. Ordinary reasonable people in the position of Creative and each of the persons who had dealings online on the morning of 13 October 2006 and afterwards to obtain those tickets would have regarded a contract of sale to have been concluded when they logged off the relevant website, whether or not the physical ticket had been delivered to online purchasers. 65 Confirmation of orders, online and by email, served the purpose of enabling both parties to individual transactions to know each other's identity, the number of tickets, the price and the terms of their agreement. Any one purchaser was permitted to buy up to four tickets. It must necessarily have been a term of the sale that the tickets themselves were assignable and that persons other than the original purchaser would be entitled to use the tickets in order to gain entry at the venue. 66 Again, ordinary reasonable people in the position of Creative and the purchasers would have appreciated that a variety of possible circumstances could surround each sale. The purchaser may have bought the ticket for his or her own use; or for a gift for a spouse, partner, child, friend, colleague or in anticipation of inviting someone else, as yet not identified, to go with them. In addition, often for convenience, one person will buy tickets for a number of others and obtain reimbursement. And, as Creative proved, others will buy tickets for the purpose of 'scalping'. 67 Both old and new conditions 6 were directed at the discouragement of scalping. Creative argued that new condition 6 bound only, and applied only to, the actual purchaser. It accepted that a donee of the ticket or person who bought a ticket from an original purchaser (i.e. who contracted with Creative or its selling agents) was free to act as a 'scalper' and seek to resell that ticket at a profit. The language of new condition 6 does not convey to an ordinary reasonable member of the public the subtlety of Creative's legal analysis. Rather it uses the bold, direct and unqualified language of certainty --- if the ticket is resold for profit 'it will be cancelled and the holder will be refused entry'. 68 Creative argued that ordinary reasonable people would know that cancellation would only be possible if, first, it found out that resale for profit had occurred and, secondly, that the resale was by an original purchaser. It argued that therefore one should imply words like 'if we catch you' into new condition 6. eBay, on the other hand, argued that the wording conveyed a representation that Creative could and would catch all transactions. 69 These conundra are overlaid with the uncertainty as to whether old or new condition 6 formed part of a contract at all. The variety of contracts made by Creative with its purchasers shows that the status of the ticket as a contract will vary depending on how it was acquired. Yet, there was no doubt that tickets would change hands for any number of reasons and on any number of occasions. How, as a matter of reality, ordinary, reasonable consumers seeking to obtain tickets on eBay would know whether or not the ticket was susceptible to cancellation, if Creative's contractual analysis is correct, is impossible to envisage. Rather they would not engage in that analysis but would act as Creative's senior executives, Mr Lees and Ms McBeath, did by treating new condition 6 as applying regardless of whether the original purchaser was the vendor on eBay. All they did, when they identified a ticket number on eBay's website, was to cancel the ticket without enquiring whether the eBay vendor was the person who had originally bought the ticket from Creative (or its agents). 70 The hollowness of Creative's legal argument was exposed by this evidence of Ms McBeath concerning her and Mr Lees' cancellation of the ticket of a Ms Row, who had sold it on eBay for more than $120. And you would have been conscious that the person who was selling this ticket on eBay could have been a person who had received the ticket from the original purchaser. Is that correct? ... Correct. Correct? ... It wasn't a concern for me, no. ... Correct. Is that basically what happened? ... I believe so. Basically, that's what happened. That is a natural and ordinary meaning. Even if, the true contractual construction were as Creative's counsel submitted, the way in which new condition 6 is expressed leaves it open to other reasonable constructions: Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 85 [103] . A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also a fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that. It may be that, as a matter of practicality, that is how the condition operates. But the threat which new condition 6 conveys on an ordinary reasonable reading by a member of the public is that the person who sells a ticket having obtained it from Creative, whether by direct purchase or donation or otherwise, will be discovered: RAIA Insurance Brokers Ltd v FAI General Insurance Ltd (1993) 41 FCR 164 at 172-175 per Beaumont and Spender JJ. The implication conveyed by new condition 6 is quite clear. It is that Creative has the means of detecting a sale, will discover it, and will cancel the relevant ticket. Moreover, that is just what Ms McBeath and Mr Lees did with Ms Row's ticket, without the slightest enquiry as to whether she fell within what Creative's senior counsel later submitted was the proper construction of this condition. I am satisfied that the way in which Creative, through Ms McBeath and Mr Lees, interpreted new condition 6 is the natural and ordinary meaning of that condition which an ordinary reasonable member of the public would understand. Moreover, it was the construction on which Creative has acted. 73 Here, Creative has purported to use new condition 6 in a way it says ordinary reasonable members of the public would not understand it to operate. I reject Creative's argument. It is seeking to have its cake and eat it too. By its conduct in choosing the wording and distributing new condition 6 on the tickets for the Big Day Out 2007, Creative has conveyed, in substance, a representation that Creative is legally entitled to and will detect and cancel any ticket for any Big Day Out 2007 festival which is resold by anyone for profit. And the effect of that conduct is also to convey a representation that the holder of any ticket which is resold for profit will be refused entry to the Big Day Out 2007 festival for which it was issued. 74 Creative accepted, by its 'if we catch you' argument, that it could not detect all resales at a profit. Indeed, Ms McBeath's evidence was that Creative could not cancel tickets which had been sold on eBay unless it could identify the ticket number. She said that was '... because we can't trace every ticket'. It follows that Creative did not have reasonable grounds, to make the representation that every ticket resold for profit would be cancelled. Upon the acceptance of the ticket as entitling the person presenting it to entry into the event, a new contract will come into existence between the person presenting it and Creative on the terms of the conditions of entry endorsed on the ticket. This is necessarily so because the consideration for Creative admitting a ticket holder into the venue is that they agree to be bound by, among other things, directions that Creative may give for the purpose of ensuring their or other members of the public's safety. A ticket holder may not have had any contract with Creative for the purchase of the ticket. 76 The admission into the venue is the consideration Creative gives for a return promise that Creative will have power to revoke the licence (condition of entry 1). Creative argued that condition of entry 1 entitled it to revoke the licence for no reason, or any reason including, if it had the view that the ticket had been the subject of sale for profit in contravention of new condition 6. I am of opinion that properly construed, the conditions of entry should not be so read. Condition of entry 8 entitles the promoter to refuse entry to a ticket holder who presents themselves without appropriate identification. Other conditions of entry, likewise, give content to appropriate grounds for the refusal of entry, such as the carrying of video cameras or sound recording equipment which are capable of leading to a breach of copyright enjoyed by performers who play at the festival. Likewise, other conditions of entry (e.g. 4 and 8) ensure the ability of Creative to exclude ticket holders who reasonably could be seen as potentially disruptive. 77 I am of opinion that the condition of entry 1 read together with the other conditions of entry in light of the terms of the ticket as a whole, and having regard to the objective circumstances in which the contract for entry to the venue is entered into, does not give an unlimited right to Creative to refuse a person entry regardless of whether the original purchaser from Creative breached new condition 6 ( Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82 ; (1986) 161 CLR 500 at 510-511). 78 Next, Creative argued that the ticket constituted an offer of a licence on conditions of entry which included the right, in condition of entry 1, to refuse entry to the holder for any reason. The ticket gave no proprietary right to a ticket holder to attend the venue. Since Cowell v Rosehill Racecourse Company Ltd [1937] HCA 17 ; (1937) 56 CLR 605, it is clear that a ticket to attend an event such as Big Day Out 2007 simply gives the holder a licence which is revocable by the licensor. Revocation of the licence so given may be effective, even if the licensor is in breach of the contract by the act of revocation: Heatley v Tasmanian Racing and Gaming Commission [1977] HCA 39 ; (1977) 137 CLR 487 at 506 per Aickin J. The position may be different under the s 87 of Trade Practices Act 1974 (Cth) which is not confined to common law or equitable remedies. And, consideration may need to be given to the effect of terms implied by s 74 of Trade Practices Act 1974 (Cth). It is not necessary for the determination of these proceedings to enter into that field. 79 eBay responded that if Creative's argument that the unlimited scope of its power to refuse entry under condition of entry 1 were correct, then the arrangement entered into between Creative and a 'purchaser' could not, in law, amount to a contract because there was no consideration at all. eBay said that this would show that Creative was free to perform or not without having any liability or obligation if it refused entry for no reason whatsoever, referring to MacRobertson [1975] HCA 55 ; 133 CLR 125. eBay argued that, on this premise, there was no contract unless and until the ticket was presented for entry to the venue and Creative acted on the presentation to admit the presenter to the event. At that point a contract was entered into on the analysis above for the admission into the venue and for the governing of the relationship between the relevant ticket holder and Creative while the event was in progress. Moreover, for the reasons I have given new condition 6 conveys a representation that falsely asserts that tickets resold for profit will invariably be cancelled. 81 I am of opinion that eBay is entitled to a declaration, and an injunction to prevent Creative from engaging in the contraventions of s 52 of the Act which I have found. The parties asked for the opportunity to address on the form of relief. I will hear them and then make final orders. 82 The result at which I have arrived is unfortunate. I am satisfied that Creative intended new condition 6 to protect the market from cynical exploitation by scalpers who created an artificial scarcity of tickets. The scalpers then use sites such as eBay's web pages to make large profits for themselves. eBay itself profits from this practice. While there may be cases in which purchasers of tickets who bought intending to attend a Big Day Out festival subsequently find themselves unable to attend and need to sell, the evidence suggests that most sales on eBay are by scalpers preying on the desire of music fans to attend an event which was sold out early to scalpers. For this reason, I am not minded to grant eBay any orders for corrective advertising which might have the effect of encouraging it and scalpers to create distortions in the market which would adversely affect persons acquiring tickets to events who genuinely intend to attend the events at the time of acquisition. In that without prejudice letter Creative proposed that new condition 6 be amended by, in effect, identifying the purchaser alone as the reseller, saying that if the resale came to Creative's attention the ticket would become voidable and that the original purchaser or a purchaser from him or her may be refused entry. 84 The proposal suggested that any tickets issued in the future would be overprinted or have a sticker applied to replace new condition 6 with the proposed condition and that an A4 flyer notifying the change of condition would be delivered with any ticket sent by mail that had been purchased through the Big Day Out or Ticketmaster websites or across the counter at any Ticketmaster or other ticketing agency; and that the change to the condition be flagged prominently on the Big Day Out website. 85 On 1 December 2006 eBay's solicitors asked for more time and suggested that they would need to consider Creative's affidavit evidence in chief. They sought an extension to Thursday 7 December. But on 4 December, Creative's solicitors wrote withdrawing the offer and indicating that the proceedings would be contested. 86 I am of opinion that the offer was insufficient to resolve the proceedings in a way that would have produced an outcome as favourable to eBay as the orders that I have decided to make. 87 The conduct which I have decided to enjoin included conduct in relation to Ms Row the subject of my findings above (at pars [70]-[74]) which occurred virtually contemporaneously with the dispatch of the letter of offer of 28 November 2006. 88 Moreover the offer did not address one of the factual scenarios that eBay's evidence in chief had established, namely that no notice of any conditions had been given to purchasers online from Ticketmaster's website. 89 There was no proposal to notify prior purchasers of any change to the condition or indeed any contractual way in which such a condition could have been changed. In the offer Creative was not indicating that it would apply the change or interpretation retrospectively, or that it would use any particular mechanism to bring such a change to public notice. But, more importantly, its own conduct in relation to Ms Row indicated that it was very committed to a course of action which was inconsistent with the offer it was making in respect of past sales. 90 There is no evidence before me as to the stage at which the dispatch of tickets purchased online had reached as at the time of the sending of the letter of 28 November 2006, nor is there any indication in that letter that, if the tickets had not been sent, Creative would hold off dispatching them until proposals for settlement had been fully explored or at least until the response had been received to its offer of 28 November, 2006. 91 I am of opinion that the relief that I have decided to grant to eBay is more extensive than would have been afforded by a settlement along the lines proposed in the letter of 28 November 2006 and that therefore eBay was not unreasonable to have failed to accept that offer. It is, of course, unfortunate that there was no attempt to negotiate between the parties earlier on to resolve matters but that is not a matter which I can take further in determining who would bear the costs. 92 I am of opinion that eBay has succeeded in substance and is entitled to an order for costs. I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. | general contractual principles construction and interpretation of contracts offer and acceptance organiser of major music festival admission tickets sold through various methods purporting to contain condition providing for cancellation of ticket if resold for profit where resales of tickets through online market or auction sites sought to be specifically prohibited by condition of purchase where terms and conditions not drawn to the attention of purchasers in some instances where terms and conditions of sale differed from those on ticket in some instances whether condition of no resale for profit incorporated into contract trade practices act 1974 (cth) and related legislation consumer protection misleading and deceptive conduct or false representations organiser of major music festival admission tickets sold through various methods purporting to contain condition providing for cancellation of ticket if resold for profit where resales of tickets through online market or auction sites sought to be specifically prohibited by condition of purchase where terms and conditions not drawn to the attention of purchasers in some instances whether representation that condition prohibiting resale for profit was enforceable is misleading and deceptive contract trade and commerce |
(b) The Mualgal People undertake further anthropological research and any site inspections by 30 May 2008 weather permitting. (c) The applicant and the Mualgal People will commence further negotiations following research and site inspections, by 27 June 2008. (d) Documented negotiator agreements to address intra-indigenous matters between the applicant and the Mualgal People will be completed by 29 August 2008. (e) All necessary authorisation of the agreement between the applicant and Mualgal People will be obtained by 26 September 2008. 3 The application for native title was filed on 27 June 1996 which is now 12 years - close enough to 12 years ago. The registration test was applied on 3 September 1999 and not very much has happened since then until recent proposals for some mediation activity. 4 The matter, in fact, has been, technically, in mediation, external mediation, since 30 September 1998 and therefore it has been a very long time progressing to a point where the rights and interests of the Naghir People, through their claimant representatives, can be brought to some resolution. The representative of the claimant group is Mr Alfred Mills and Mr Mills filed affidavits on 23 July 1999 in relation to framework elements of the content of the claimed native title rights. 5 It should be said that the days of native title mediations or the progression of native title claims over horizons of 12 years are over. They are finished. It is no more. 6 So, what I propose to do is this. The work program can proceed, according to its own terms, but, in addition to that, I want to impose some steps in the progression of the matter and it may very well be that compliance with these steps is, in turn, a function of some anthropological work but I think the parties just have to do the best they can. 7 I am going to make an order that the applicant by 30 May 2008 (to be consistent with the work plan - I had intended to truncate the timeframe a little, but by 30 May 2008), the applicant is to file and serve on the respondent parties, a Notice of Facts and Contentions which is to set out, as it says, the material facts and the essential contentions that support the clam for native title rights. That Notice of Facts and Contentions needs to address the following things. 8 First, it should set out a description of the persons on behalf of whom the native title determination application is made, indicating the composition of the applicant group, any relevant subgroups, the criteria for membership of the applicant group, as I say, the name of those participants. 9 The second thing it should deal with is the description of the society that subsisted at the time of sovereignty or annexation pursuant to whose laws and customs the native title rights and interests were held in the relevant land. It should also set out a description of the society to which the members of the applicant group currently belong, that is, the 'current society' including relevant details of subgroups and related matters. 10 Thirdly, the Notice of Facts and Contentions needs to identify the connection or relationship between the original society and now the current society, from the time of sovereignty to the present time. It should attach, if at all possible, some form of genealogical or biological adoptive or other connection data showing the members of the applicant group. 11 The fourth thing the Notice of Facts and Contentions will need to do is set out briefly - or, perhaps not so briefly, but as best people can, the nature of or a list of the rights and interests which are now claimed and in respect of each of those rights and interests, some content as to where those rights existed; whether they are claimed on behalf of all members of the applicant group or not; whether the rights confer possession, occupation, use, and enjoyment of the relevant area upon the holders to the exclusion of others, or not and, if so, how that exclusion operates. It should identify the basis on which the rights or interests derive from the system of traditional laws and customs. In doing so, the Notice of Facts and Contentions will set out a statement of the rights and interests now claimed. 12 Fifthly, the Notice of Facts and Contentions will then need to set out a list of the rights and interests that were held by the original society and the content of those rights and, similarly, a list of the rights and interests that are now asserted and held by the current or contemporary society. 13 Sixthly, I would like the Notice of Facts and Contentions to set out a description of the traditional laws and customs under which each of the rights and interests are said to derive and that would be both in relation to the original society and then progressively through to, and including, the contemporary society. 14 Seventhly, it will, of course, be necessary to put some paragraphs into the Notice of Facts and Contentions setting out an outline of the facts relied upon by the applicant group to prove historical connection with the claim area. Plainly enough, some of that material might turn on anthropological data but it must be the case that some framework statements with some real content can be put down identifying facts which show that connection. 15 Eighthly, the Notice of Facts and Contentions would have to set out an outline of the facts relied upon by the applicant to prove contemporary connection with the claim area, including details of current use. If possible, the Notice of Facts and Contentions should annex a map of the area and a site information register, if that is at all possible. They are the kind of things that I have in mind that need to be done by 30 May 2008 by the applicant group. 16 I note from the affidavit of Mr Alfred Mills sworn on 23 July 1999 , that Mr Mills asserts some framework rights which were certified by the Torres Strait Regional Authority on 23 July 1999 arising out of meetings of relevant claim group members held on 8 June 1999 . For example, I regularly use bamboo from the land for the manufacture of spears. For example, I visit and maintain the graves of my relatives at Naghir. It is not too much to ask that by 30 May 2008 , the applicants ought to be able to say something more about it. 20 That brings me then, to the other matter which is the question of the Mualgal People and their responsive position as a party in this matter; the position that they take that they also assert native title rights over the whole of the claim area; and whether or not the claimant group on behalf of the Mualgal People are to become applicants in a separate application or co-applicants in this matter or, alternatively, whether they remain, for the purposes of discussion and mediation, respondents in this matter. 21 I propose to order the Mualgal People to file a Notice of Facts and Contentions which sets out all of the matters on their behalf that the applicants must set out on their behalf to establish the native title elements I have discussed. 22 In summary, I want the Mualgal People and their representatives to also file and serve on all parties a statement of facts and contentions which addresses the content of their claim, the source of their claim, the historical connection matters, the derivation to the contemporary society, and all of those matters which I have discussed as elements of the claim by the Naghir People. Those documents might obviously need revision later on, but I think by 30 May 2008, which provides the parties with the months of March, April, May - another three months, the parties ought to be in a position to be able to file that material and properly frame the Notice of Facts and Contentions supported by facts, and assertions of legal consequences flowing from those facts. 23 Accordingly, I order that the applicant group and the Mualgal People file and serve by 30 May 2008 a Notice of Facts and Contentions which addresses the content of the things I have just described. What I would like the parties to do is be guided and informed by the schedule of proposed orders which have been circulated to the parties, and which are the subject of the orders of French J in Leo Akiba, Joseph Tabitii, George Mye and Napoleon Warria on Behalf of the Torres Strait Regional Seas Claim v State of Queensland (QUD6040/2001) made on 2 February 2007. As you can see from the things I have said, what I have tried to do is identify each of the elements that the Notice of Facts and Contentions will need to address and in a sense, I have tried to synthesise some of the elements of the order of French J in a way which is adapted appropriately to the circumstances of this case, having regard to its history. But having said that, and so we can be very plain about it, in preparing the Notice of Facts and Contentions, it would be useful if the parties could seek to prepare the Notice of Facts and Contentions both having regard to these observations and also the content of the orders of French J. 24 That is not to say that I am making orders in terms of the orders of French J but the various matters which are addressed in the schedule to those orders are precisely the topics (and their content) that will be required in order to have a sensible mediation and to progress the matter. What I am really saying is, that I want the parties to do the best they can towards achieving most of that content but I recognise that since the matter has not progressed vigorously and the parties are relying upon some anthropological research, it may not be possible to comply in all of the prescribed detail that the orders of French J contemplate. 25 But again, I would like the parties to do the best they can by reference to that document in preparing, filing and serving the Notice of Facts and Contentions. Having said that, what I do not want to do is review the matter in June 2008 and find that we have a scant, abbreviated, helicopter-high, abstracted set of propositions in the Notice of Facts and Contentions that do not really attempt to come to grips with the real detail and content of what is required because the basic message is that the Court is not going to allow matters to meander for 12 years. Those days are over. So these matters either move forward or they come to some other result. 26 Ms Denisenko says that three Elders in the Mualgal group have health concerns. Assistance has been sought from the representative body for preservation of evidence purposes. One Elder in particular suffers from Parkinson's disease, is in hospital and is frail. 27 I note that an application may be made for the preservation of evidence. When it is made, the Court will deal with it. However, let me say this. It is inevitable that applications for preservation of evidence will come forward on behalf of individuals who have lived their lives in remote communities and where a claim is made (whether it be 1996 or slightly later - but in this case, in 1996) and where other People - the Mualgal People - also make a claim, 12 years later. Now, we are talking about steps towards gathering anthropological evidence to enable some discussions to take place in June so that something might happen in August and with a bit of luck some other things will happen in September 2008. 28 To everyone's surprise, as time has washed away down the river, we suddenly find that individuals who are in frail communities and frail circumstances are endangered and may be at risk of losing their lives and so preservation of evidence applications have to come forward. What is really critical in these kind of matters is that the interests of the claimant groups be protected by advancing these matters to conclusion within timeframes that enable rational people, who are not infirmed but are old, to be able to formulate and give their evidence. So this is the very dilemma that arises when matters linger on for 12 years. 29 I propose to re-list the matter for review on Monday, 2 June 2008 at 9.30am and we will see where things are. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. | consideration of a work plan proposed by parties for the period december 2007 to 26 september 2008 consideration of the need to make orders for the parties to prepare, file and serve a notice of facts and contentions by 30 may 2008 in order to progress the conduct of the principal application consideration of the need to make clear that claims to native title rights in and over relevant lands and waters must be actively progressed consideration of proceedings filed on 27 june 1996 now being approximate 12 years ago native title |
Narnia has pleaded guilty to knowingly furnishing false information contrary to s 155(5)(b) of the Trade Practices Act 1974 (Cth) ("the Act"). Mr Clarke has pleaded guilty to procuring the commission of that offence by Narnia, thereby contravening s 11.2 of the Criminal Code Act 1995 (Cth). Mr Clarke was and is the sole director of Narnia, which for practical purposes, is his alter ego. During August 2004, Mr Andrew Hack entered into an agreement with Narnia to acquire a hairpiece for $15,500. He did so shortly after being discharged from a psychiatric ward of the Royal Hobart Hospital, where he had been treated for depression. Narnia agreed to Mr Hack providing a deposit of $3,000 and paying the balance in instalments. It was agreed that once the $3,000 deposit had been paid, Narnia would order the hairpiece to be made up. Importantly, cl 3 of the agreement permitted Mr Hack to terminate the agreement, without penalty and with the return of his deposit, if the order had not been placed. If this contract is terminated after manufacturing has commenced, an amount equal to the amount expended by AHS in order to supply the custom designed hair replacement shall be deducted from the amount paid by the customer, and the remainder of any deposit and balance paid shall be refunded to the customer. When his mother discovered that he had done so, she questioned him about the agreement, given that his only source of income was a disability pension. Mr Hack asked his mother to terminate the agreement and get his $1,800 back. Mrs Hack contacted Mr Clarke, who asked her to set out in writing why Mr Hack should be released from his agreement and have his $1800 returned. At this time no order had been placed for Mr Hack's hairpiece and cl 3 entitled Mr Hack to terminate the agreement without reason and without penalty. Mrs Hack wrote to Mr Clarke who did not respond to her. Mrs Hack engaged a solicitor to act on behalf of Mr Hack. The solicitor was informed by Mr Clarke that he had advanced the deposit to the franchisor on Mr Hack's behalf. Mr Clarke said he was $1,950 out of pocket which he demanded to be paid within 30 days. Mrs Hack then complained to ACCC about Advanced Hair Studios and Mr Clarke. ACCC commenced an investigation as to whether Narnia had induced Mr Hack to enter the agreement due to unconscionable and/or misleading and deceptive conduct and whether there had been false and misleading representations made to Mr Hack about his rights under cl 3. On or about 5 April 2007, ACCC issued a notice to Narnia under sub-ss 155(1)(a) and (b) of the Act. The notice, amongst other things, stated that the Chairman of ACCC believed that Narnia was capable of furnishing information and producing documents relating to the matters that may constitute contravention of ss 51AB, 52 and 53 of the Act. Amongst the information that ACCC required Narnia to furnish were the details of its customer complaint handling procedures, including details of how the complaint by Mrs Hack, on behalf of her son, concerning Advanced Hair Studios and/or Mr Clarke was dealt with by Narnia. ACCC suspected that Narnia and Mr Clarke had not followed Narnia's franchisee obligations in dealing with the complaint because the franchisor had informed ACCC that had those procedures been followed it would have directed Narnia to release Mr Hack from the agreement and refunded his deposit. ACCC suspected that Narnia and Mr Clarke did not follow the complaints handling procedure so that they could mislead Mr Hack into believing that he was not entitled to get his $1,800 back and that he should pay a further $1,950 before he would be released from the agreement. Mr Walsh notified Mr Clarke. Mr Clarke contacted Mrs Hack (Mr Hack's mother) and discussed the complaint with her. Mr Clarke invoked clause 3 of the contract between Mr Hack and Advanced Hair Studios. That is that he notified Mr Hack that the monies paid by him to date would be sufficient to cover administrative costs and expenses by the Franchisee and that Mr Hack was discharged from the contract and had no further obligation to the Franchisee. Also, Mr Clarke did not tell Mr Hack that he would be discharged from the agreement without further obligation to the franchisee. During Mr Clarke's examination pursuant to s 155(1)(c) of the Act, he admitted that his answer set out at [13] above was false. The answer also conflicted with the text of demands made by him by facsimile transmission to Mr Hack's lawyer. The parties acknowledge that ACCC has been put to additional time and expense as a result of the false information which went to the heart of its investigation. The false information, which conflicted with other information from Mr Hack, his mother and their lawyer, led ACCC to engage in a costly and time consuming examination process under s 155(1)(c), in which Mr Clarke was examined on 23 and 24 July 2007 for in excess of a day and a half. The maximum penalty for breach of s 11.2 of the Criminal Code by Mr Clarke is the same as that for breach of s 155(5)(b) of the Act. The maximum penalty of 12 months' imprisonment reflects Parliament's view that "the provision of false information in response to a s 155 notice is a serious offence"; see Australian Competition and Consumer Commission v GIA Pty Ltd [2002] FCA 1298 at [19] per Heerey J, see also Australian Competition and Consumer Commission v Rana [2008] FCA 374 at [50] per North J. Pursuant to s 17A of the Crimes Act the Court is not to pass a sentence of imprisonment unless, "after having considered all other available sentences", it considers that "no other sentence is appropriate in all the circumstances". In GIA , Heerey J considered that a mid-range penalty was appropriate because the relevant conduct was "more a matter of minimisation and evasion than denial or the laying of a false trail"; at [19]. In the current case, the conduct was in the nature of denial and the laying of a false trail. The nature and circumstances of each offence make it a serious transgression for Narnia and Mr Clarke respectively; see s 16A(2)(a) of the Crimes Act which requires the Court to take into account the "nature and circumstances of the offence". On the face of the conduct, the offence by each defendant should attract a high range monetary penalty. I accept that it would not be appropriate in all the circumstances to imprison Mr Clarke, especially given that he has pleaded guilty and has no prior convictions. The applicable considerations in amelioration of penalty in the current circumstances include the following: The factors referred to in the preceding paragraph weigh in favour of a reduction in penalty from the high range to a range in excess of a mid-range penalty but below that of a high range penalty. It is most important that persons furnishing information or giving evidence in response to a notice issued by the ACCC under s 155 of the TP Act do so frankly and honestly. It serves the public interest that the ACCC be enabled to carry out its investigations efficiently and effectively. Section 155 of the TP Act is directed to that end. If a person who is required to give evidence under s 155(1)(c) of the TP Act gives false or misleading evidence, not only does this have the immediate effect of obstructing and delaying the particular investigation: it also has the potential to direct the ACCC away from other sources of information and to draw human and financial resources away from its other work. The general public should know that conduct of that kind will be treated seriously by the Court. Having regard to the importance of general deterrence, as stressed by Lindgren J in Neville , and the ameliorating factors referred to at [22] above, I consider that a monetary penalty between mid-range and high range should be imposed. The charge is too serious to warrant the imposition of a conditional discharge under s 19B(1) of the Crimes Act in respect of Mr Clarke. To do so would be inconsistent with the approach adopted by this Court in Neville, GIA and Rana . The disqualification of Mr Clarke from managing another corporation under s 206B of the Corporations Act 2001 (Cth) is a matter which Mr Clarke should have had regard to before committing the offence. Accordingly, a fine of $5,600 will be imposed on Narnia and fine of $1,400 will be imposed on Mr Clarke. I would have ordinarily imposed a penalty of $7,000 on Narnia but have reduced that amount by $1,400 to reflect the penalty imposed on Mr Clarke. I have done so given that Narnia was, in practical terms, Mr Clarke's alter ego. One must be careful to avoid what is, in effect, double punishment of a sole director of a company; see Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd (No 2) [2002] FCA 1349 at [27] ---[29] per Heerey J. The penalties are to be paid into the Consolidated Revenue Fund on or before 20 May 2009. It is agreed that the defendants should pay the prosecutor's costs of the proceeding. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. | sentencing where first defendant charged with knowingly furnishing false information contrary to s 155(5)(b) of the trade practices act 1974 (cth) where second defendant charged with aiding, abetting, counselling or procuring the commission of an offence pleas of guilty considerations relevant to penalty trade practices |
An order approving the entry into the Supply Deed by the Applicant. An order that the Applicant's costs of this application be paid on a full indemnity basis from property held by the First Applicant pursuant to the orders of the Court on 2 and 7 September 2009 or the assets of the Third Defendant. Such further or other order as the Court deems fit. The Company operates from premises at 386 High Street, Prahran (the Premises ) under the name "Prahran Tyre Centre" (the Business Name ). 5 On the appointment of the Receiver, the Company was not trading. On 11 September 2009, the Receiver began to trade from the Premises under the Business Name. On the same day, the Fifth Defendant, Prahran Tyre Centre Pty Ltd ( PTC ), demanded that the Receiver remove the signage at the Premises containing the Business Name on the basis that it belonged to PTC. As a result, the signage was removed. 6 Following that event, the Receiver formed the view that the quickest, most practical and cost-effective way to begin trading was to utilise the services and branding of Jax Quickfit Franchising Systems Pty Limited (ACN 112 050 058) ( Jax ), as the Premises had previously been operated as a Jax franchise. The Receiver informed the Court that he believes the Jax brand has a good reputation and market recognition and can be expected to generate solid and stable income. Without a recognisable brand name the Receiver informed the Court that he further believes he would have difficulty maintaining the revenue of the Company. 7 The Receiver currently has an ad hoc agreement with Jax that entitles him to utilise the Jax brand without charge and access the services of an experienced Jax manager and trading stock from major wheel and tyre manufacturers. The Receiver seeks to enter into a more formal arrangement. To that end, Jax has offered to enter into a Supply Deed with the Receiver that grants a licence to the Receiver to use the "Jax" and "Jax Quickfit" names and provide trading stock (on credit) necessary to operate the Business at the Premises (the Deed ). The Deed commences on the date it is executed and continues until terminated by notice in writing. Notice is immediate in the case of the Receiver. However, Jax must give seven days written notice to the Receiver to terminate the Deed. 8 Moreover, under the Deed, in consideration of the Receiver agreeing to trade the Business and for other good and valuable consideration, Jax indemnifies the Receiver in respect of any claim (a defined term in the Deed) made against the Receiver which is referable to trading the Business (to the extent that the property of the Company is insufficient) and in respect of the costs of this application. In those circumstances, the Receiver applies to the Court under s 424 of the Corporations Act 2001 (Cth) (the Corporations Act ), or alternatively, O 26 r 7 of the Federal Court Rules (the Rules), for approval or authorisation to enter into the Deed on behalf of the Company. The operation of the operative clauses of the Deed is conditional upon the Court approving the Receiver entering into the Deed. 11 There are a number of principles relevant to the exercise of the Court's power under s 477(2B). The same restraint must apply when the question is whether the liquidator should be authorised to enter into a particular transaction the benefits and burdens of which require assessment on a commercial basis. Of course, the compromise of claims will involve assessment on a legal basis, and a liquidator will be expected (as was made plain in Re Chase Corporation (Australia) Equities Ltd ) to obtain advice and, as a prudent person would in the conduct of his own affairs, advice from practitioners appropriate to the nature and value of the claims. But in all but the simplest case, and demonstrably in the present case, commercial considerations play a significant part in whether a compromise will be for the benefit of creditors. Moreover, in so far as the Receiver makes the application under O 26 r 7 of the Rules, the Court has power to approve the Receiver entering into the Deed: University of Western Australia v Gray (No 6) [2006] FCA 1825 at [66] ; Australian Securities and Investments Commission v Ludgates Corporate and Advisory Services Pty Ltd [2003] FCA 1368 at [23] . The Receiver does not seek, and the Court will not provide, advice on the question of his own commercial judgment: Re Mineral Securities Australia Ltd (in liq) [1973] 2 NSWLR 207 at 231-2; Re One.Tel Networks Holdings Pty Ltd (Hall as rec and mgr) [2001] NSWSC 1065 ; (2001) 40 ACSR 83 at 91. 14 As noted earlier, without a commercial arrangement with Jax, the Receiver may find it difficult to preserve the value of the goodwill of the Company. By entering into the Deed, the Receiver will be able to continue to operate the Business and will be able to access a greater volume and variety of stock from and through Jax at Jax's buying price. There is no evidence to suggest that Jax will receive a benefit disproportionate to the risk they undertake, namely the indemnity described earlier (see [8] above). 15 By reason of the issues raised in the underlying substantive proceedings, I accept the submission of the Receiver that it was appropriate for him to bring the matter before the Court: Re Bell Group Ltd (in liq) [2009] WASC 235. First, the Receiver trading the Business at the Premises itself is contentious. However, the approval does not determine the disputed issues in the underlying substantive proceedings, which primarily relate to the entitlement to the assets and undertaking of the Company: cf MTM Funds Management Ltd v Cavalane Holdings Pty Ltd [2000] NSWSC 922 ; (2000) 158 FLR 121 at [17] ; Re Bell Group Ltd (in liq) [2009] WASC 235 ; Re Mento Developments (Aust) Pty Ltd (ACN 005 862 457) (in liq) (2009) 73 ACSR 622 at [49]. As the Receiver submitted, if the Receiver is permitted to trade and does so successfully, the assets and undertaking of the Company will be protected or preserved and possibly enhanced: s 57 of the Federal Court of Australia Act 1976 (Cth) and Martyniuk v King [2000] VSC 319 at [15] . None of these parties appeared to object to the Court granting the approval sought by the Receiver. The Seventh Defendant, Ms June Danks, has notified the Court that she does not intend to participate in the substantive proceedings. However, the First and Third Defendants should have been put on notice of the Orders sought by the Receiver. 17 In light of the principles as set out above in relation to ss 424 and 477 (2B) of the Corporations Act and O 26 r 7 of the Rules and in the circumstances of this case, I consider it appropriate that the Court grant approval to the Receiver to enter into the Deed. The Orders giving effect to that approval will be stayed until the Receiver has served a copy of the Orders and these reasons for judgment on the First and Third Defendants and has filed an affidavit of service with the Court. The First and Third Defendants will be given until 4:00pm on 26 November 2009 to object to the making of the orders. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. | approval sought by receiver to enter into agreement principles on which court will grant approval corporations |
The application is sought to be made on the company's behalf, primarily pursuant to O 35 r 7, of the Federal Court Rules , alternatively pursuant to s 482 of the Corporations Act 2001 (Cth). The company was wound up on 5 May 2006 on the petition of the Deputy Commissioner of Taxation following the service of a statutory notice of demand. There was no appearance for the company at the hearing, notwithstanding due service of process upon the company. There was no appearance of any other creditor at the hearing. 2 I am satisfied that the failure to comply with both the statutory notice of demand and the petition was due to inadvertence. The registered office of the company was not altered. As a result, persons concerned with the administration of the company did not become aware of the proceedings except, in effect, by accident. 3 Counsel have referred me to the decision of Hodgson J in George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 as providing an example of the use of a provision such as O 35 r 7 in circumstances such as the present. It is also submitted that the factors which his Honour took into account in a passage on page 465 in making the order in that case are all present here. The order was made in the absence of the defendant. The application has been brought promptly. The liquidator is here and represented, as is the petitioning creditor. Australian Securities & Investments Commission has no opposition, although in reality it adopts a neutral stance. A statement of affairs has been tendered and there has been evidence led from one of the directors, from the company's bookkeeper and from an external accountant or financial adviser which indicates that the company is solvent. Most particularly, the financial fate of the company in the short to medium term depends upon its relationship with its bankers, St George Bank, and there is in evidence a letter from that company which, in effect, undertakes to permit payments to be made to satisfy the amount of the demand by the Deputy Commissioner and the costs incurred by the Deputy Commissioner and the liquidator. 4 As I indicated in the course of argument, there is a question in my mind about the preferred method of dealing with this situation because the appointment of a liquidator has consequences which can be likened to those in rem rather than simply being an inter partes order. However, Hodgson J's approach is a clear precedent for what is sought. I am disposed to follow it, including the grant of leave to the directors to bring the proceedings. 5 The practical result of this order is that the proceeding will be restored as a defended matter and then adjourned to a later date. The liquidator ceases to hold office and of course, on one view, apart from the de facto consequences, was never properly appointed. In an endeavour to secure the position, all I can do is to order as a term of granting the application that the company pay the costs both of the Deputy Commissioner and of the liquidator arising out of the making of the order and the making of this application. I also take note of the undertakings to the Court given by counsel on behalf of two of the directors of the company to procure various payments to be made when St George Bank makes the funds available. I stand the matter over until 9.45 am tomorrow for orders to be made on the bases that I have indicated. I grant liberty to apply in the meantime. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. | application to vacate winding up order made in absence of company application under o 35 r 7 of the federal court rules to vacate winding up order made in absence of company corporations practice and procedure |
The Centrelink officer refused to direct amendment of an internal email containing what Mr Duncan said is incorrect personal information about him. 2 For the reasons that follow the appeal is dismissed. The decision of the Federal Magistrates Court dismissing his application, being made on an application for summary dismissal, was interlocutory in character. Leave is required to appeal against such a decision. While ordinarily little would be required to justify the requisite grant of leave against a summary dismissal the proposed appeal is without merit and utility. Mr Duncan has in fact achieved a significant amendment and annotation to the email of which he complained. The grounds upon which he seeks to appeal are without merit. Leave to appeal will be refused. The appeal will be dismissed as incompetent and Mr Duncan will have to pay the costs of the respondent. His letter was an application for amendment to personal information held in Centrelink. The information was said to be contained in an email from a Centrelink Officer Mrs E. Greif to Edith Cleary another Centrelink Officer. The email was dated 26 April 2002. Mr Duncan was employed by Centrelink (ex DEETYA) and was retired due to inefficiency. He has appealed to every appeal board available, and has been on the whole unsuccessful. I have sent him, over a period of years, a substantial amount of paper under FOI, and he has appealed to the AAT for various FOI decisions. Mr Duncan is not currently receiving any Centrelink benefit. The documents he wants annotated are located on FOI files and on personnel files. It is my opinion that Mr Duncan, having failed through appeal processes to change his situation, is trying to generate unproductive case work for Centrelink, particularly FOI. Mr Duncans request for annotation will take up a lot of my time, and I am not sure that it is in the public interest for me to spend time on his case when I could be working on cases where there is a genuine need for FOI. It will make it difficult to process other requests within the 30 day time restriction. Is this a case where the use of this Section may be appropriate? 2. that he was employed by Centrelink (ex DEETYA) and was retired due to inefficiency. 3. that he appealed to every board available, and has been on the whole unsuccessful. 4. that the documents he wants annotated are located on the FOI files and on personnel files. 5. that, having failed through appeal processes to change his situation, he is trying to generate unproductive casework for Centrelink, particularly FOI. Mr Duncan said that each of the challenged statements was 'without basis in fact whatsoever'. I was seeking her professional opinion. The statements I made in the e-mail where to give, what I believed, a quick round up of events up to that date. (sic) I did not attempt to relay to Ms Cleary every minute detail involved in the case, as this was not appropriate. You may not agree with any of the statements in my e-mail, however it would be inappropriate to amend the e-mail because it would not change the opinion held at the time by me. Your request is refused. I would like to offer you the opportunity to annotate your file, whereby your opinion in each case could be stapled to each original folio listed above . I have decided to uphold the original decision, not to amend details in that e.mail. 8 On 3 November 2003 Mr Duncan filed an application under the Administrative Decisions (Judicial Review) Act 1977 ('ADJR Act') for judicial review of Mr Oakley's decision in the Federal Magistrates Court. He claimed by way of relief a declaration: 'that each of the respondents statements of personal information is without basis in fact whatsoever, and that knowingly referring these statements to the Tribunal as 'relevant' documents in accordance with s.37(1)(b) of the AAT Act was an attempt to pervert the course of justice in respect of application W2002/409 before the tribunal". 9 Mr Duncan's application for judicial review was dismissed by McInnis FM on 12 November 2004 on an application by the Secretary of the Department of Family and Community Services for summary dismissal --- Duncan v Secretary, Department of Family and Community Services [2004] FMCA 800. It may be noted that, when the matter came on for hearing before McInnis FM, there were appeals pending in the Federal Court from other decisions of the Federal Magistrates Court relevant to Mr Duncan. The learned Magistrate awaited the outcome of those matters before delivering judgment on the summary application. The judgments for which he waited were that of Nicholson J in Duncan v Hotop [2004] FCA 274 delivered 22 March 2004; and my judgments in Duncan v Fayle [2004] FCA 723 and Duncan v Administrative Appeals Tribunal (No 2) [2004] FCA 1258. The latter judgment was delivered on 28 September 2004 having been heard in August 2004. 10 The Magistrate's decision turned on the question whether there was "adequate provision" made in the Administrative Appeals Tribunal Act 1975 ('the AAT Act') for review of the determination of the review officer such that the Court should decline to hear the judicial review application as a matter of discretion --- Section 10(2)(b)(ii) of the ADJR Act. His Honour followed the approach, which he said had been adopted in the decision of the Federal Magistrates Court in Duncan v Hotop [2004] FCA 274 and upheld by Nicholson J on 22 March 2004. The Magistrate said that there was "...an appropriate avenue of appeal arising from ss 62(2) and/or section 55(3) of the FOI Act, both of which I am satisfied provide adequate provision under which the applicant is entitled to seek review by the AAT and ultimately judicial review of any AAT decision pursuant to s.44 of the AAT Act" . Mr Duncan's aversion to proceedings before the AAT was not in itself a sufficient basis upon which the Court would exercise its discretion in his favour and against the submissions made on behalf of the respondent. 11 In Duncan v Hotop [2004] FCA 274 Nicholson J dismissed an application by Mr Duncan for an extension of time to appeal against an earlier summary dismissal decision made by McInnis J. That decision was made in proceedings relating, like these, to an attempt to have Centrelink documents amended on the basis that they contained incorrect personal information about Mr Duncan. Mr Duncan sought judicial review under the ADJR Act of a decision of the Administrative Appeals Tribunal ("AAT") adverse to him. His application was summarily dismissed in reliance upon section 10 of the ADJR Act on the basis that the proper avenue for relief was section 44 of the AAT Act. Nicholson J regarded the decision of the magistrate as one involving the exercise of a discretion and a matter of practice and procedure. There was no error demonstrated in the exercise of that discretion and so the application for extension of time was dismissed. 12 In Duncan v Fayle [2004] FCA 723 Mr Duncan appealed against a decision of the Federal Magistrates Court upholding a Registrar's decision to refuse to accept his application for judicial review of an AAT decision under the ADJR Act. The application was rejected by the Federal Magistrates Court on the basis that it was frivolous and vexatious. I allowed Mr Duncan's appeal against that decision on the basis that an application under the ADJR Act could not be treated as frivolous and vexatious merely because of the existence of an alternative remedy under section 44 of the AAT Act. The power to decline relief under section 10 of the ADJR Act is discretionary. It is not fettered by a principle that where there is an adequate alternative remedy, relief under the ADJR Act will always be refused. 13 Mr Duncan filed a notice of appeal against the decision of McInnis FM on 3 December 2004. On 28 January 2005 he wrote to the Court seeking a referral under Order 80 of the Federal Court Rules for pro bono legal assistance. He attached reasons for his appeal referring to the Reasons for Judgment. There was a delay in dealing with this request however on 21 October 2005 a certificate was signed under Order 80 of the Federal Court Rules referring him for legal assistance. On the same date a recommendation was made to the Chief Justice that the matter be dealt with by a single judge. The Chief Justice so determined under section 25(1A) of the Federal Court of Australia Act 1976 (Cth). 14 Mr Duncan was advised of the referral for pro bono assistance on 26 October 2005. Counsel was found under Order 80 who was prepared to assist him on a pro bono basis. The documents were forwarded to counsel in November 2005. Inquiries were made of counsel in March 2006 about the situation with respect to the appeal. Counsel advised that she was in the process of drafting written advice to Mr Duncan. Nothing further was heard for some months and ultimately on 7 December 2006 the matter was listed for directions on 30 January 2007. I made directions on 30 January 2007, when Mr Duncan appeared in person, that he should file and serve any written submissions in support of the proposed appeal by 27 February 2007. The Secretary was to file and serve any submissions in reply by 20 March 2007. Any submissions in reply to those of the Secretary were to be filed by 27 March 2007. Mr Duncan agreed that the matter could be dealt with on the papers. He was given the option of not proceeding on the basis that if written submissions were not filed by 27 February 2007 the appeal would stand dismissed with costs. 15 Mr Duncan filed his written submissions on 16 February 2007. The Secretary filed submissions in reply on 23 March 2007 and Mr Duncan filed further submissions in reply to those of the Secretary. He also filed a proposed amended notice of appeal on 16 February 2007. 16 At para 7 of his written submissions Mr Duncan states that the Centrelink email sent by Mrs Greif to Ms Cleary has now been endorsed with a "correction". 17 A copy of the email as amended is attached to the Secretary's submissions. The words "due to inefficiency" which appear in the second paragraph of the email have been ruled through and that paragraph headed "AMENDED UNDER FOI: TO BE DISREGARDED". It is then signed by an FOI Review Officer and the signature is dated 21 July 2006. Nevertheless the judgment is effectively final so far as Mr Duncan is concerned. In such a case the threshold for the grant of leave is not as high as a case in which a procedural ruling is the subject of challenge --- Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572 ; (2000) 104 FCR 564 at [42] --[44]; Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 400. In a case such as the present which has the practical effect of finally determining the rights of the parties "a prima facie case exists for granting leave to appeal" --- Ex parte Bucknell [1936] HCA 67 ; (1936) 56 CLR 221 at 225. On the other hand leave may be refused where an appeal would appear to achieve no useful purpose. In this case the Secretary also contends that Mr Duncan is out of time, as time has long expired for the making of an application for leave to appeal under Order 52 rule 10(2A) of the Federal Court Rules . An extension of time for making such an application and the grant of leave to appeal, he argues, should be refused on the ground that there is no utility in the proposed appeal. 19 The grounds in the proposed Amended Notice of Appeal are general and repetitious although no doubt they represent Mr Duncan's best effort as a self-represented litigant to express his case. They are supported by extensive written submissions made by him. I have had regard to his proposed grounds in considering the merits of the appeal and also the utility of the relief sought. The grounds of appeal which convey useful meaning reduce to the core proposition that the learned Magistrate erred in law in finding that there was "... an appropriate avenue of appeal arising from section 62(2) and/or section 55(3) of the Freedom of Information Act 1982 ...". On that basis, it is said, the discretion conferred by section 10 of the ADJR Act to decline relief under that Act because of the availability of alternative remedies, was not enlivened. They include the power to affirm or vary the decision under review or to set it aside and substitute another decision. The Tribunal may also remit the matter for consideration in accordance with any directions or recommendations it makes. Appeals from the Tribunal to this Court on questions of law are provided for in section 44. That is not the most appropriate vehicle for a decision under section 10 of the ADJR Act. It invites a finding that because there is an alternative remedy the discretion under section 10 of the ADJR Act will necessarily be exercised adversely to the applicant [appellant]. The question whether section 10 should be invoked to deny relief is perhaps better dealt with as a preliminary question. 28 In this case the learned Magistrate recognised that he had had a discretion. He cannot be criticised therefore on the basis that he fettered that discretion impermissibly by application of a rule that it must be exercised adversely to an applicant [appellant] who could otherwise proceed under section 44 of the AAT Act. 29 The original email was largely a piece of internal advocacy by Mrs Greif against embarking on what she regarded as a time-wasting and unnecessary exercise in the annotation of records relating to Mr Duncan. Most of what she said was by way of her opinion about the utility of his request and its purpose. She made what could be characterised as factual statements that Mr Duncan was "retired due to inefficiency" and "had appealed to every appeal board available and had been on the whole be unsuccessful". 30 Mr Oakley's response to Mr Duncan on review did not set out, as required by section 54(4) of the Freedom of Information Act , read with section 26(1) , findings on material questions of fact referring to material on which those findings were based and stating the reasons for the decision. It might reasonably be inferred that he agreed with Mrs Greif's reasons as set out in her reply to Mr Duncan's request but he did not say so. 31 Mr Duncan argues that the above omission on the part of Mr Oakley means that there was no review decision and therefore no foundation for an application to the AAT. That contention is unsustainable. There was a decision by Mr Oakley. His failure to comply with section 26 does not deprive it of that character. As section 26 itself makes clear, by the premise upon which it operates, there is a distinction between the making of a decision under the Act and the provision of adequate reasons for that decision. In my opinion there is no basis for the contention that there was no avenue of appeal to the Tribunal under section 55. That avenue was available it would allow review on the merits and also a more complete disposition than could be available on judicial review. 32 In my opinion the appeal proposed by Mr Duncan has no merit. Neither in my opinion does it have utility. Mr Duncan has achieved a significant amendment and annotation to the email. Apart from that the email is largely an expression of Mrs Greif's opinion. A further pursuit of this matter by Mr Duncan in respect of that email is a time-wasting imposition on public officials who have serious work to do. Moreover it offers little or no benefit for him. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. | freedom of information application for amendment of personal information in internal email application refused refusal affirmed on internal review application for judicial review to federal magistrates court application dismissed summarily alternative avenues to administrative appeals tribunal exercise of discretion under section 10 of administrative decisions (judicial review) act appeal against decision of federal magistrate leave to appeal required proposed appeal without merit proposed appeal serving no useful purpose subsequent amendment and annotation of internal email. administrative law |
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